Russian output of timber, pulp and paper rose 7% in volume in the first five months of the year compared to the same period in 2003, according to the Ministry of Economical Development and Trade.
Within this total, production of industrial wood rose 2.7%, to 40.3 million m3, sawn timber by 4.4% to 7.9 million m3, and paper production by 8.4% to 1.6 billion tons.
Log removals reached 50.3 million3, plywood production 916,000m3 and chipboard 1.5 million m3.
The ministry forecasts that forest products output for the year will rise 6.5% this year, with industrial timber expected to grow by 3.2% to 84 million m3 and sawn timber by 7.6% to 19.8 million m3.
Local sources report that Russia’s timber production and exports continue to be dictated by the raw materials supply situation. Only 20% of the domestic annual timber harvest is further processed in Russia into paperboard, plywood or panel products. At the same time, imports of processed timber and paper products increase every year, reaching US$2.3bn in 2003.
Tax changes
This trade imbalance clearly concerns the Russian timber sector and analysts are demanding changes in the import and export customs and tariff regime. They say export duties on cellulose, paper and paperboard are too high, making value-added processing unprofitable for Russian com-panies. Import duties on these products are also said to be too low, sucking in more goods from abroad and adding further disincentive to domestic production.
To foster processing and manufacturing, the forest products industry also wants to see import duties axed on production equipment that cannot be obtained in Russia. They maintain that using new wood processing technology could allow Russia to boost export earnings by up to US$100m.
The government now seems ready to make concessions in these areas. For instance, in May export duties on laminated wood products were scrapped and there is serious talk that import duties for some production equipment for pulp and paper manufacturing will be cut.
The minister of economic development and trade German Gref has additionally announced that export duties on hardwood pulp will be reduced from 10% to 5%.
Another topic of debate and source of some controversy is the country’s new Forestry Code. Although it was approved by the government in March, public reaction remains negative and the code has not yet been adopted. The main sticking point is the question of private ownership. The authors of the code say that private investment could attract desperately needed new funding into the industry. Overall, they claim, adopting the new rules could help to add RB1.8bn to the industry’s annual profits.
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“The government maintains that outstanding disagreements over the code are not serious, but some experts still believe that there is little prospect of its early adoption” |
Conservation concerns
But opponents of the new rules – mostly regional governors and ecologists – say that privatisation should not be considered until a system is in place to ensure the protection of “national and ecological interests”.
In April even president Vladimir Putin and prime minister Michail Fradkov felt compelled to intervene in the dispute. Mr Putin said that adoption of the code should not be rushed and Mr Fradkov declared that he was against private ownership of forests at present. As a result, the code was sent back to the Duma for “recommitment” and it has been decided that private forest ownership will be regulated by another federal act, yet to be finalised.
But this compromise has only satisfied some of the Forestry Code’s opponents. Some are still taking issue with other aspects, with regional authorities opposing the recommendation that timber land should only be sold via auction.
The government maintains that outstanding disagreements over the code are not serious, but some experts still believe that there is little prospect of its early adoption, or of resolving the disagreements over forestry privatisation.
