The Russian government has adopted a 12-year strategy for the development of the country’s timber industry which should see its production increase three or four times.
Over the next 12 years, the industry needs investment of Rb795bn. According to Sergey Mitin, deputy minister of Minpromnauka, the ministry of industry, science and technology, about Rb60-70bn will be invested in the timber industry each year (most of the balance will go to the pulp and paper industry, with plans including construction of five pulp and paper mills costing US$1bn).
This timber spending ups the ante considerably, with the investment figure last year reported at a mere Rb17bn. Mr Mitin said that one of the main mechanisms for improving the investment climate in the industry would be changes to duties. The ministry has already sent a proposal to the government on changing export and import duties for timber production, suggesting a return to the level of import duties that existed up to the end of 2001. Since the beginning of 2002 import duties were reduced by an average of 20%.
Meanwhile in January-November 2002 the timber and pulp and paper industries increased output volume by 2.7% compared with the same period of 2001, according to the state statistic committee. Wood based panel production rose by 5.6% to 2.5 million m3 but lumber output was down by 7.3% to 16.1 million m3, production of door blocks fell 5.5% to 3.7 million m2, and removal of logs was down by 6.2% to 78.8 million m3.
Trailing growth
Growth in the timber industry’s production volumes is below that of Russian industry as a whole and the rise in wood based panels production in the third quarter of 2002 was unexpected. Industry analysts attribute it to rising demand from the furniture industry.
In general, the state of the timber and pulp and paper industries in 2002 did not differ greatly from that of 2001. According to the Economics Institute, output volume increased by 3.4% compared with the previous year but production of merchantable wood will be down by 1.5% and sawn timber production reduced by 0.6%.
Improvement in 2003
However, the same experts forecast some improvements in 2003. Output volume will increase by 4.9% compared with 2002. As a result of an emphasis on the creation of interseasonal reserves of wood, plywood production is expected to rise by 9.8%, wood based panels production by 0.8%, sawn timber by 6.1% and merchantable wood by 3.5%.
According to Minpromnauka, Russia’s share of the global wood market as for hard currency incomes is less than 3% today, and 22% from these incomes are generated by round timber exports. Other production accounts for just several per cent: saw-timber – 2.8%, plywood – 3.7%, paper and board – 1.3%, etc. As a whole, raw wood already accounts for nearly 40% of Russia’s exports.
Russian timber exports for 2003 are forecast at about US$4.5bn. That represents an increase of around 3% on the previous 12 months.
But the results of 2002 as a whole show that, in spite of attention paid to the wood sector by the Russian government, external factors rather than the new economic structures it is trying to impose, remain the key driving force behind the industry’s development.