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Technology, machines, equipment and tools for forestry, logging,
bioenergy, woodworking and furniture industry

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Russian forestry market

CURRENT STATE OF THE FOREST SECTOR

The last two decades of active Russian political and economic reforms have shown the forest sector of the country to be comparatively slow in adapting to market relations and requirements. The forest sector is not a priority of national forest policy. Russia accounts for over 20 percent of the world forests, but its share in the world forest products trade is below 4 percent. Semi-processed roundwood and sawnwood make up over 54 percent of its exported wood products. Forests occupy over half of the land of the country, but the share of the forest sector in the gross domestic product (GDP) is only 1.3 percent; in industrial production, 3.7 percent; in employment, 1 percent; and in export, revenue is 2.4 percent. These facts prove that the colossal forest potential of the country is essentially under-utilized. The opportunities presented by the forest sector are clearly underestimated by state economic policy and policy-makers.

 


Picture 1

 

FOREST INDUSTRY OUTLOOK

According to the Outlook Study to 2030 made by Food and agriculture organisation of United Nations «the forecast assumes improvement in the current regional allocation of forest industries. Advanced processing in the richly wooded regions of Siberia and the Russian Far East will develop at higher rates. Siberia will increase its production capacity for sawnwood by 5.6 million cubic meters, plywood by 2 million cubic meters, fibreboards by 2.9 million tonnes, and paper and paperboard by 2.8 million tonnes. Large investments and radical progress in the investment climate would be necessary to materialize these forecasts. This problem stretches far beyond the area of influence of the forest sector. According to the World Bank index of ease of doing business, Russia ranks 120 in the list of 183 countries of the world (World Bank, 2012). The Government of the Russian Federation has pledged to lift the Russian rank up to the twentieth position within the next six years. This achievement would be an important precondition for the gradual transition from the inertial to moderate and then to the innovation scenario of development, presented in this Outlook Study».

STATE SUPPORT AND PROSPECTS OF DEVELOPMENT

For the last year, the Ministry of Industry and Trade of Russia approved 95 investment projects to the total amount of about RUR 413 billion (EUR 10,2 billion) and the expected volume of raw material processing of about 73 million cubic meters a year. 17 priority investment projects in the field of forest exploitation were placed in operation with the total amount of investments of RUR 58.8 billion (EUR 1,5 billion) and the rated wood cutting of 7 million cubic meters.
At the same time, about 12 priority investment projects are going to be implemented every year.

According to the forecast of social and economic development of the Russian Federation prepared by the Ministry of Economic Development, the 2015 investments into woodworking will increase more than 77% as compared with those of 2011. The investments into pulp-and-paper production, publishing and printing activities will grow 27%. A more substantial increase of investments into woodworking by 2015 as compared with those into the pulp-and-paper industry is caused by a deeper fall of woodworking investments in 2009-2010, as well as higher risks of implementation of pulp-and-paper projects. The forecast mentions that by now, the Ministry of Industry and Trade of Russia has approved 114 investment projects to the total amount of about RUR 418.7 billion (EUR 10,4 billion) and the expected volume of raw material processing of about 80 million cubic meters a year. Since the mechanism of priority projects was triggered, their implementation absorbed RUR 177.9 billion (EUR 4,4 billion) of investments, including RUR 11.1 billion (EUR 274,8 million) in 2011. 24 priority investment projects in the field of forest exploitation were placed in operation with the total amount of investments of RUR 70 billion (EUR 1,7 billion).

 

 

Picture 2. The main sources of investment are considered own and funds raised by national commercial entities and by foreign investors, as well as own timber enterprises funds: profit and depreciation expense, resources to issue shares. Source: Conception of the strategy of Russian forestry sector development up to 2020. - Report of Minpromenergo Rossii, 2008