Jun 27, 2021
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“Oligarchs are kicked out of the forest”

After a decade of declining roundwood exports, the government has taken drastic measures. Within a few months, a complete ban on the export of raw timber was introduced. At the same time, a new state monopoly will appear on the market, which will ensure a smooth transition from the export of round timber to its complete processing.

Russia is preparing to ban the export of round timber. Last year, at the height of the coronavirus crisis, Vladimir Putin announced that a decision had been made at the highest level on the need to stop the export of unprocessed and roughly processed timber as soon as possible. In general, the president has once again refuted the arguments of the “all-panders” who accuse Putin of squandering our natural resources. True, they cannot make up their minds in any way. When it comes to oil and gas, Putin “works” for the United States and Europe, when it comes to timber – for China.

Exaggerated but problem

Seriously now. The problem of exporting round timber really exists in our country. True, its scale should not be exaggerated either. When the deforested forests of Siberia are shown from a bird’s eye view, we must understand that we are talking about separate areas that do not reflect the overall picture.

A little more than 200 million cubic meters of forest is cut down in Russia every year. This corresponds to the permitted volume of felling, which is determined by the state every year. At the same time, the “black” lumberjacks account for only about 1.5 million cubic meters of wood. Someone can probably say that this is still a lot. But if you look in general, it is less than 1% of the total felling volume. All in all, Russia has 102 billion cubic meters of forest. That is, even if we do not engage in reforestation, which, according to various estimates, ranges from 30 to 70%, our country will have enough green resources for 510 years.

Nevertheless, the state intends to make our forest sector an important driver of economic development.

First of all, the industry should completely abandon the export of round timber and move to the deepest possible processing. It should be noted that this trend has been observed for quite a long time even without Putin being banned. So, back in 2010, 45 million cubic meters of round timber were exported from Russia. By the end of 2020, this figure decreased threefold – to 15 million cubic meters. At the same time, the export of sawn timber increased by 63%: from 11 million to 18 million cubic meters. This became possible thanks to the gradual introduction of quotas and export duties by the government, which opened access to foreign markets only to companies engaged in timber processing.

By 2020, it became clear that a strict ban was needed to completely stop the export of unprocessed timber. At the same time, radical measures threatened the loss of jobs for tens of thousands of people in Siberia and the Far East, as well as the desolation of hundreds of settlements living in forestry. Nevertheless, it should be noted that mainly small private farms are engaged in logging, from which traders buy round timber and send it for export. But processing plants are usually created by large vertically integrated holdings that have financial resources for investment. Subjects of SMEs are deprived of such an opportunity.

Solve to the end

Therefore, preparing for a complete ban on timber exports from 2022, the government is creating a state-owned company that, during a transitional stage, will provide a centralized purchase of round timber from small farms with the possibility of selling it to the external market.

In addition, the new state-owned company will perform the functions of supplying enterprises with unprocessed timber. Nowadays, the situation is not uncommon due to the lack of raw materials. In the vast territories of Siberia and the Far East, it is difficult for businesses to establish contact with each other. For example, in the Far Eastern Federal District there are underutilized capacities capable of processing 3 million cubic meters of wood per year. At the same time, the “timber” export of the Far East is 4.7 million cubic meters. Of course, it is more profitable for the state to operate processing enterprises, for which raw materials are in surplus. As for the remaining 1.7 million, they will continue to be exported, but, firstly, this will be done through the state monopoly, and secondly, only until additional processing facilities are built in the region.

Thus, we see a clear and well-considered policy of the state to refuse the export of unprocessed timber. It is fully consistent with the course of rejection of commodity dependence. In the oil and gas industry, we are also building capacities for deep processing of hydrocarbons, the same is happening in metallurgy, and now in the forestry sector.

Konstantin Dvinsky

Photo: Parilov / Shutterstock

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