The Russian forestry sector’s output volumes for the first half of 2005 were much the same as in 2004. There was slight growth in hardboard, chipboard and pulp and paper production and a slight downturn in sawn wood production. Only plywood output increased considerably.
According to the state statistics service Rosstat, sawnwood production amounted to 10.4 million m3 (3% below that of January-June 2004); plywood production rose 13.4% to 1.3 million m3; hardboard production increased by 9.1%; and chipboard production was up 5.7% at 1.8 million m2.
In June, sawnwood production was 98.9% that of June 2004, but 11.3% higher than in May. Plywood output was 16.9% higher than in June last year and 5.1% up on May; hardboard production increased by 12.7% on June 2004 but it was only 97.8% that of the previous month. Chipboard output increased by 12.8% and 3.4% respectively.
Export market
Trends in the timber export market seem more positive. According to the Federal customs service, sawn timber exports increased by 12.2% to 2.78 million tons, pushing up revenues by 25% to US$592.4m. Plywood exports were up 10.3% to 505,300m3, while revenue rose by 40.7% to US$175.5m.
Overseas investment in the Russian timber sector continues to rise, but it seems this is not helping to achieve government aims for the industry to undertake more further processing. In fact the volume of wood being converted in the country is reported to be falling.
Forest Code
Another hot topic is the Russian Forest Code. Currently still under discussion, the State Duma plans to adopt the Code in the second reading in the autumn. However, it still faces opposition, with members of the Upper Chamber – Council of Federation claiming that it includes numerous contraventions of the Russian Civil and Land Codes.
Some opponents of the new rules believe they are a vehicle for privatising Russia’s forests. But president Vladimir Putin denies this and recently reiterated that in his view Russia was not ready for privatisation.
The way forward, he said, is to introduce long-term leases while the forests remain in state ownership. Following this, the government agreed to extend forest leases from 49 to 99 years. In addition, timberland will be leased under an auction system.
There are still some hopes that the new Code will be adopted by the end of the year although some forestry industry experts argue that there have been so many amendments that the document has been rendered senseless. The initial concept supposed that the state would step back from forest management and leave it to private owners. However, the concept has changed step by step and, now that it is clear the forests will remain under state ownership and management, its critics say that the document contains contradictions that need to be resolved.
Meanwhile, there are plans to create a new confederation encompassing all timber industry associations and unions. It is proposed that the self-regulatory organisation will work more effectively with the government and business to solve the industry’s problems. The confederation is to be set up during the International Wood Forum in St Petersburg in October and it is possible that the state will give this organisation some controlling function when the new Forest Code is finally adopted. In particular, it may have responsibility for the ‘prequalification’ of participants in timber auctions, and a role in ensuring the transparency of timber sourcing and in combatting illegal logging.
The latter has also become an increasingly important issue in Russia, and the government is looking at measures to combat the problem. Penalties for illegal loggers have already become more severe and the government says it has actively joined the international process against illegal trading.
