So you are not prepared to explain why FLS should run at a loss by providing products to sawmills at below economic price. FLS as you point out is a government agency.
Then we as tax payers are being asked to pay yet more tax to coffers of the Scottish Government which are then distributed to their failing agencies.
You as a former part of the management of FLS clearly understand the economics, but are unable to provide a coherent answer as to the economics of a government quango. In the meantime all of us in the private sector will keep paying the taxes and get shouted at if we question where they go.
Basically as a Government Agency FLS is tasked with delivering Govt policies. An organisation tasked with delivering Govt policies cannot perform financially in the same way as an organisation tasked with maximizing shareholders returns. The "public goods" that those govt policies deliver (whether you personally believe they are "good" or not) have a value. That value is not a direct monetary value but is still a value in terms of public health, access, community benefits, ecological benefits etc etc etc.
The annual subsidy for delivering these public goods traditionally ran at around £30-40m but has reduced to £15-20 m in recent years. I am not aware of why last year spiked but there would have been a very specific reason as the annual subsidy has to be negotiated and justified annually.
FLS is not a failing agency, it is the only part of Scottish Govt that operates in any way remotely close to a commercial footing, the only part of Scottish Govt that is remotely close to being financially neutral.
Yes, there are issues but, again, most of these issues are related to govt policies - Public Procurement rules being the biggest headache for anyone involved in trying to balance the books of their department. In my personal experience Public Procurement legislation (there is a Scottish Public Finance Manual that runs to hundreds of pages) at times resulted in the wrong people being given the wrong contract at the wrong time but the rules are written to avoid officer awarding contracts to "their pals" and avoid fraud - in that respect they are very successful.
A govt agency cannot be seen to ignore govt regulation!!
The other factor that FLS have to deal with - on a daily basis - that commercial businesses do not is MSP's questioning virtually every thing they do. This is usually as a result of a constituent raising a query about something they simply don't like. MSP's like to ( try to) keep every voter happy. These queries usually cumulate with an understanding MSP and little change but take an inordinate amount of time. In the last two years of my working life I reckon I spent 60% of my time dealing with complaints (usually baseless) and MSP/Ministerial questions.
Ultimately the reason FLS are a (financially) inefficient public agency is because......they are a public agency.......
If you want more information please feel free to take this up with your MSP and/or submit Freedom of Information requests.