According to preliminary estimates, Russia’s trade revenue for 2001 is expected to be down 150% on last year. One of the reasons for this dramatic reduction is a decline in timber exports although, despite this, timber remains in third place in terms of export volumes after fuel and energy, and metallurgy.

For instance, the Ministry of Industrial Science estimates that for the first 10 months of 2000 timber export volumes were up by 4% on the same period of 1999, and reached about US$3bn. From January-November 2000, export volumes of round timber (excluding exports to CIS countries) jumped by 11%, export volumes of sawn timber by 22%, plywood by 7% and cellulose by 26%.

However, according to the ministry, while timber exports enjoyed limited growth, world prices for some production – paper, in particular – increased. Export sales of all types of paper were worth around US$670m, and export volumes increased by 10% to around 1.5 million tonnes.

Russia’s timber industry processed more than 92 million m³ of wood in 2000 – 10% more than in 1999. For the 10 months of last year cellulose production was 22.5% higher than in 1999 at 4.05 million tonnes, including 1.8 million tonnes of market cellulose – a growth of 20%. Paper production increased by 15.2% to 2.75 million tonnes, board production rose 24.6% to 1.6 million tonnes, while plywood production reached 1.32 million m³, up 15.3% on 1999. Production of sawn timber, wooden sleepers, wooden houses, fibreboard and particleboard, paper and wooden packaging also showed increases.

Meanwhile, Miron Tatsun, president of the timber trade’s organisation, believes that the most pressing problem facing the industry is that of attracting investment. The potential value of Russia’s annual timber production is about US$140bn, but at present only US$3.5-5bn is exported.

In this regard, the agreement between the Foreign Trade Bank and the organisation signed last November is expected to be very promising. According to the agreement, the Foreign Trade Bank will assist the union to solve current and strategic problems, including those connected with the realisation of investment projects. The bank can guarantee the projects as well as attract investment from both the domestic and foreign markets.

&#8220Experts consider that the absence of forest and wood product certification on a large scale causes considerable financial damage to Russia. The government estimates that the price of non-certified Russian timber on the world market is 20-30% lower than products from other countries”

Another programme that is supposed to improve the industry’s fortunes is the certification of more than 2 million ha of forest to Forest Stewardship Council criteria due to be carried out this year.

Experts consider that the absence of forest and wood product certification on a large scale causes considerable financial damage to Russia. For instance, according to calculations by the Minnauki timber department and the natural resources ministry, the price of non-certified Russian timber in the world market is 20-30% lower than wood products from other countries. Russia’s annual negative profit runs into US$700-800m.

Today, more than 10 large timber companies – including the Archangelsk pulp and paper mill, Volgai, Vologdalespromî and Bratsk – have announced that they are pursuing certification.

As a whole, last year’s industry results are considered to be rather good. The Russian timber industry has recently joined the list of lucrative industries whose profitability is now about 25%.

Practically all experts agree: the vertically integrated structures that have been formed in several regions (Irkutsk, Perm, Archangelsk regions), which cover the whole production cycle from forest harvesting operations to producing paper and wood products, contribute greatly to the industry’s success.

On the other hand, under such favourable circumstances timber trade leaders suggest that the time is right to raise the question of wage rates because pay levels in the timber industry are still 26.7% below the average of other industries.