The Russian timber sector is falling behind other industries as growth has slowed to more than in 1.5 times below that of Russian industry as a whole.
According to the state statistics committee RF Goscomsta, the timber and pulp and paper industries increased production volume by 2.6% in the eight months of 2002. Particleboard production grew 3.3%, to 1.7 million m3, but sawn timber output fell by 4% to 11.8 million m3 and log removals were down by 3.5% to 61 million m3.
There was also a slight downturn in the woodworking industry: for the first seven months output of the main products fell by 0.3%.
This downward trend in the timber industry – coupled with growth in the pulp and paper sector – has been evident over the past two years. Experts consider that one reason for the increase in pulp and paper volumes is the growth in volume of the food industry – one of the main consumers of this product.
Priority sector
Meanwhile the Russian government has identified the timber industry as a priority sector that could provide economic growth. Arkadiy Dvorkovich, deputy minister of economic development and trade, believes development of the timber industry could provide annual growth of 10%.
Mr Dvorkovich said such growth depended on a state strategy for the industry. He said that the government did not support a “united forest ministry”, but did favour having a leader responsible for the industry’s development. The Ministry of Economic Development and Trade has suggested creating an interdepartmental working group including representatives of different ministries and departments.
The ministry forecasts that the industry’s production volumes will rise 14-23% by 2005, with strongest growth in sawn timber, board and paper.
Investigations underway
There are already two programmes investigating the industry’s development. One was established by the Ministry of Industry, Science and Technologies and the other by the Ministry of Natural Resources, which is responsible for forestry. Their task is to unite the interests of business and establish the means to quadruple production growth by 2015.
The proposal by the Ministry of Industry stresses the need to fix strategic targets for the industry’s development. The proposal by the Ministry of Natural Resources suggests that forest resources should be used more effectively and central to this is the establishment of a forest code. The main change is the recommendation to reduce the powers of federal, regional and municipal authorities and strengthen state control.
Another area of reform is customs legislation – in particular, the gradual growth in export duties for certain kinds of round timber and, at the same time, a reduction in duties for value-added goods such as furniture, paper and board. For example, the Ministry of Industry suggests a reduction in export duties for value-added products from January 2003, and an increase on duties for export of raw materials dating back to July 2001. The first step in this direction has already been made: in September export duties on wood pulp were abolished and in July export duties on plywood were reduced. However, the state customs committee opposes the immediate introduction of duties to prohibit raw material exports.
The Ministry of Economic Development is sceptical about the recommendations of these two ministries and the customs committee because they may not be in the interests of the Russian economy as a whole. The ministry is trying to find a compromise for the reforms and this presupposes some containment of the rate of growth in timber harvesting – up to 1-2% a year – and at the same time growth in the wood processing industry of 6-10% a year.
