Forest Club model projects and sites

Issue 20, April 2002

Russia is in intense search for the national idea. The forest branch of Russian industry is also involved in this process, but it turned out to be a series of banalities and proverbs.

The public and the academic science have developed and discussed the Environmental Doctrine of Russian Federation. More narrow departmental science is more inclined to develop the Russian National Forestry Policy, which fails completely to be published in mass media for general public. It is doubtful, however, that all that fussy activity had any serious outcomes.

Top-ranking officials of the Natural Resources Ministry - the manager of Russian forestry since May 2000, are more concrete. The remains of former 'Rosleskhoz' (the state body, which ruled over Russian forestry until May 2000, when was abolished) are overwhelemd with an itch to 'increase the logging area'. The minister, who had ruled over tax collection and building of highways before (in both branches under his management the shattering results were obtained) currntle has no time to solve the problems of forests.

At last, however, the 'magic formula' has been found: the annual allowed cut growth, growth of logging payment, the timber roads operating all-the-year-round. After that forest branch of industry should become stable well. The question, who exactly would buy the products of 'intensified forest use' and for what price, - is not analyzed.

The players of the forest industry, that found themselves without appropriate representation in Russian bureaucratic machine, are fully confident that the major problem of Russian forestry is the default of appropriate ministry. They aren't confused with the experiments performed within the last decade which has repeatedly showed that all the efforts of that kind are unavailing.

The slogan has been spread: "Russian forestry is potentially capable to bring not that current 'trifling sum' of $4-6 millions per year, but $30 and even up to $100 billions annually". The political heavyweights, drowsed earlier, at mention of such tempting sums have awoke at last. The Communists and the political group 'Narodniye Deputaty' ("The People's Deputies") already have proposed to declare a state monopoly for trade with these 'billions'. They actively trying 'to sell the bearskin before the bear is shot'.

Such delirium of the state bureaucracy are turned step-by-step into the core of "Russian national idea" of forestry. Their propagation and, especially, to their realization means to deal the final blow to the economy, when it already sinks into permanent coma. The method and prognosis to heal this disease are obscure. It is evident, however, what the sensible analysis of real position of Russian forestry on the world market, if will not help, at least will not hurt.

EXPLOITATION OF RESOURCES - AGAIN

On some natural characteristics Russia is undoubtedly great forest empire. 22 percents of all world forests belong to Russia. Just as like the greatest in the world resource of timber.

Table 1. Shares of forest sector in world trade.

From the economical point of view, however, the forest sector of Russian economy is completely ineffecient. From almost $142 billions of world forest trade in 2000 to the share of Russia falls less than 3 percent. Especially brightly feebleness of the Russian wood quadrant is visible in comparison with Sweden and Finland (table 1).

The neighbours of Russia have 30-40 times less areas covered with forests than Russia, their volumes of timber cuttings are 2 times less than Russian, but, nevertheless, their rate of export of wood production is in 2-2,5 times higher. Even taking into account import of round timber (by the way, basically from Russia) by Sweden and Finnish timber enterprises this picture though influenced, but hadn't been changed esseially.

That situation, has, unfortunately, the deep historical background. All the last decades the world market of wood was energetically advanced. So, its revolution was raised from $100,4 milliards in 1990, up to $141,6 milliards in 2000.

Against a background of this rapid growth the share of USSR on the world wood market was steadily reduced, despite of biggest in the world of the areas and resources of wood. In 1970 it was 7%, in 1980 - 4,8 %, in 1990 - 3 %. By 2000 the share of Russia in the total world export of wood made up already 2,7 %.

The home market of the wood in Russia is rather insignificant and is packed. Its intensive expansion is not expected because of the hopelessly low buying capacity of biggest part of the population.

Where the dreams of Russian forest and political figures to achieve potential volumes of timber sales they stated recently: $30 billions per year (the volume of Canada that is the largest world exporter of forest) and even $100 milliards annually (70% of all world wood export) come from - is unclear.

Nevertheless, the Nature Resources Ministry is full of optimism and enthusiasm and going to develop this plain pattern: "Russia is the great forest empire. The basic problem of Russian forest sector is the low, only on 23%, logging of allowed annual cut, that is concerned with threefold decrease in volumes of logging in last decade". In this connection the major task of Nature Resources Ministry and its forestry departments is arrangement of conditions for expanding of timber cut and rising of intensity of allowed annual cut use. It is the opinion of the heads of Nature Resources Ministry, it should result in growth of the state incomes from wood sector.

The only force, to bother the ministry is Russian nature conservation sociability. They, owing to their "ignorance" (according to the opinion of officials from Nature Resources Ministry ), persistently do not want to recognize, that to intensify the usage of design logging area should be the major task of the Russian wood facilities in XXI. At the same time, speaking in mass-media on this theme the chief figures of Nature Resources Ministry carefully avoid of frank discussion. It is necessary to begin the discussion in absentia.

Table 2. World's top ten biggest timber logging countries

World statistics of wood trade clearly demonstrate, that the total amounts of logging, as well as extent of usage of design logging areas, are not a warranty of economic effectiveness of forest sector of economy (table 2).

In volumes of timber logging India, China, Brazil and Indonesia leave Canada behind. However in volumes of wood export they are behind it more than 6 times.

Comparison of Ethiopia and Sweden looks even more interesting. Judging by the volumes of timber cutting, Ethiopia almost in 1,5 times more successfully utilizes its forest resources than Sweden. But Sweden, however, exports of wood on $10 milliards, and about the Ethiopian wood export it is heard nothing.

Bright illustration of that fact is also dynamics of timber logging in Germany, that was reduced from 84 millions cubic meters in 1990 to 38 millions cubic meters in 2000. However the German wood export has increased from $6,4 billions up to $9,9 billions annually. Let us note, that nor Germany, neither Finland - another well-known world leading wood exporter, are not listed in "top ten" of largest timber cutting countries of the world in 2000.

It is interesting, that Russia also demonstrates, though weaker expressed but similar to German dynamics. In 1990 USSR, having logged 386 millions of cubic meters, managed to export of wood only for $3 milliards. Russia, in 2000 logged 158 millions of cubic meters (in 2,4 times lesser), nevertheless, had forest export for $3,8 milliards (more than on 25% growth).

The great volumes of timber cuttings do not guarantee bigger volumes of wood export at all. Only the ratio of export and home consumption determine the position of the country on the world market. It can be roundwood, as in Ethiopia, India, Nigeria, largely in China, Indonesia, Brazil, or paper and saw-timber, as in USA.

Only on volumes of export of unprocessed round timber Russia takes the first place in the world. USSR, and further Russian Federation demonstrate dynamics opposite world trend. In cost parameters structure of the world forest sector and the similar parameters of the Soviet (Russian) one varied as follows (table 3).

Table 3. Share of various wood products in the total amount of wood export

	1961			1990		2000
	World		USSR	World	USSR	World	Russia
Round timber	11%		22%	8%	26%	6%	35%
Saw-timber	30%		59%	17%	35%	16%	19%
Cellulose	16%		1%	15%	12%	13%	8%
Paper and cardboard	33 %		1%	46%	18%	48%	22%
Note: there are only the part of wood products, so that the total sum not equal 100%.

In 1961 the share of Russian export of paper and cardboard, and also of saw-timber was about one third of all the world export. In 2000 situation has changed remarkably. Russian export of paper and cardboard rose sharply and has made almost a half of all the world sales (48%). The share of saw-timber reduced in 2 times (from 30% to 16%). The share of sales of round timber in world export also was reduced in 2 times (from 11% to 6%).

The dynamics of wood export structure of USSR (Russia) had its specific characteristics. Against a background of growth of sales of paper and cardboard, drop of sales of saw-timber, that coincide with world tendency, though in smaller extent, the share of export of round timber grew constantly and noticeably.

An a result the structure of Russian wood export has moved to raw material - round timber, which by 2000 became the major point of wood export of the country and has provided 35 % of all the sales amount. Even in 1961 the share of round timber in total amount of the Soviet wood export made 22%, and the basic exported wood product, according to official statistics, was saw-timber (59% of total amount).

In the total amount of world export of round timber the share of Russia falls 27%. The share of USA ( second place ) makes 10%. However, considering the costs of sales USA and Russia change their position. USA make 19% of total amount of timber sales on the world market for account of export of round timber, and Russia makes only 17% (table 4).

Table 4. Export of round timber in 2000.

Thus, Russia is the world largest exporter of raw timber, but the stock is of low-grade, that affects its cost.

Such amount of wood, if Russia refuses of export of its forest in the form of raw material (round timber), processes it into cellulose and sold it even for average price on the world market, it could gain not $1,3 billions, but $2,5 billions. With further processing of timber and export it as paper, this parameter can grow up to $3,5-4,0 billions.

If such scheme was put in practice (maintaining current volumes of timber cutting), it would allow to raise value of Russian exported wood by $2,0-2,5 milliards (more than 50%). The experience of Finland and Sweden demonstrates that this rising of wood trade effectiveness is still far from scope.

However for the last 10 years in this direction was very little of real state support. All actions were reduced to maintenance of existing production capacities (that are technically backward) in workable condition and its particular reconstruction. Attempts to build new plants were failed, despite of many talks on this. The Russian pulp and paper industry continues to be shocked by regular redistributions of the property. An example of such phenomena is recent events on Bratsk Pulp and Paper Plant (Irkutsk region) that happened in December 2001 - January 2002 with subsequent large-scale "expropriation".

In the Russian Government likely there are state bodies, that are capable estimate the situation as real. On the expanded board of the Ministry of Industry and Science, passed in February 2002, a question on "Main directions of wood industry development" was examined. The sensible suggestions were made public. In particular, perspective of expansion of volumes of Russian wood export were estimated quite realistic in $6 milliards by 2010. All these good wishes, however, were published for the last decades repeatedly and so repeatedly were not put in practice.

The direction the Nature Resource Ministry on frantic expansion of volumes of timber-cuttings with the purpose of "rising of annual allowed cut use" will result only in continued delivery to the timber processing plants of Finland, Japan and also China (where export of Russian round wood basically goes to) of Russian raw timber.

To what extent rising of volumes of the Russian wood export by $2,0-2,5 billions annually if possible for account of steady raising of the rate of sales of raw timber? At a current price level additional supply in 50-60 millions cubic meters annually will be necessary for this purpose. This, is apparently, rather insignificant in comparison with fixed design logging area. But the realization of such scheme raise great doubts.

First, for the market, even such capacious and quickly growing as Chinese, simply not requires such amount of raw material at once.

Secondly, more and more serious limiting factor turns out to be environmental and social consequences of loggings in Russia. It is already apparent in a case with Finland and Sweden, becomes appreciable in Japan. It is possible to expect, that in the course of time the Chinese consumers will face this problem.

Third, existing transport infrastructure is not ready for such volumes of traffic. For example, transport lines to China were choked autumn 2001. The growth of traffic rates under pretence of roads reconstruction will quickly make export of round timber from distant regions economically senseless.

Fourth, it is not apparent that in those regions of Russia, from where export of round timber is potentially effective taking into account tariff for its transportation, there will be adequate supplies of wood to provide economically effective long-term growth of loggings in such volumes.

The officials of forest sector are fond of speaking about the huge areas and great resources. They prefer to not consider such problems, as transport accessibility, stores per acre, climatic conditions, huge losses as a result of forest fires and pest insects and many other things.

The forest sector of Russia becomes a victim large-scale bureaucracy of experiment. The result is known beforehand. A history of the Soviet forest industry showed that huge volumes of loggings were raised, but the industry turned out to be incapable to provide neither domestic needs, nor essential export. But, it seems that current heads of Russian timber facilities learned nothing.