Arkhangelsk forest is far from China – Newspaper Kommersant No. 166 (7367) of 09/09/2022

The decrease in the cost of timber and the need to reorient their supplies to China resulted in losses for timber companies in the North-West of the Russian Federation. Enterprises of the Arkhangelsk and Vologda regions are asking for more subsidies to compensate for logistics costs during exports. They also offer Russian Railways to allocate quotas for container trains with forest products to travel to the east. Experts disagreed: some consider the solution of these issues to be fundamental, while others call the current support measures sufficient.

As it became known to Kommersant, the timber companies of the North-West of the Russian Federation are asking local and federal authorities to help them reduce the logistics costs for exporting products, which is now being reoriented from the European market to the east. The main problems are a multiple increase in the cost of transporting products against the backdrop of a decrease in prices for it, as well as a deterioration in the situation with shipment by rail.

As noted in the letter of the deputies of the Arkhangelsk Duma to the governor of the region Alexander Tsybulsky following a meeting with timber companies in early September, it is necessary to increase subsidies for actually incurred transport costs when exporting sawn timber and pellets – to a level of at least 50% without limiting limits and on a quarterly basis. Now, the government decree of July 28, 2022 suggests that from January 1, 2023, companies will be able to compensate for the transport costs of their products shipped after July 1, 2022. The subsidy will be up to 80% of logistics costs, but not more than 25% of the cost of production and not more than 300 million rubles. for one organization.

In August, enterprises of the Vologda Oblast also applied to the Union of Timber Manufacturers and Exporters with a similar initiative. They pointed out that the price of lumber fell by almost 30%, to $260 per 1 cubic meter, and continues to fall. The turn of the flow of goods to the east led to a three-fold increase in the cost of transportation, to $117 per 1 cubic meter, and a drop in prices on a plant basis by 43%. As a result, the price of finished products on the basis of FCA at the sawmills of the North-West Federal District has become lower than the cost, so that export-oriented sawmills are forced to reduce output or stop.

At the same time, manufacturers pointed out that the limitation of the amount of logistics subsidies to 300 million rubles. makes it meaningless for large enterprises. For example, companies exporting less than 72,000 cubic meters of sawn timber will be able to recover up to 65% of the costs incurred, while those exporting more than 250,000 cubic meters will be able to recover only 19%, which puts them in an uncompetitive position. In this regard, the Vologda timber merchants are asking to cancel the maximum amount of the subsidy. This request was relayed by the union to the government of the Russian Federation.

Arkhangelsk enterprises are asking to establish a monthly quota for Russian Railways for sending direct container trains to China and the ports of the Far East for each manufacturer. Alexander Dyatlov, Chairman of the Arkhangelsk Regional Duma Committee on Timber Industry, Nature Management and Ecology, clarified that in the near future the governor plans to send a letter with these proposals to Deputy Prime Minister Victoria Abramchenko.

JSC Russian Railways “Kommersant” said that such quotas are not provided. “Priority in transportation is determined strictly in accordance with the temporary order, the main principle of which is the priority acceptance of goods from those industries that provide the highest employment and contribution to GDP,” the monopoly said.

Andrey Frolov, vice-president of the Union of Timber Manufacturers and Exporters, notes that subsidizing transportation for enterprises in the European part of Russia that bear losses is a matter of principle. In his opinion, the distribution of subsidies retroactively for 2021 and the first half of 2022 would also be a significant help. Mr. Frolov says that the government has already prepared a draft resolution raising the maximum level of logistical compensation to 500 thousand rubles. and extending it to January-June of the current year.

At the same time, the director of Roslesinforg, Pavel Chashchin, is sure that from the point of view of the operation of checkpoints, there is no competition between timber and other products, since at border crossings there is a volume of goods agreed with foreign partners according to nomenclatures. And it is impossible to change the ratio of these cargoes in favor of one or the other, says Mr. Chashchin. Therefore, in his opinion, other solutions are needed, in particular, wood processing to a finished product, containerization and the formation of logistics combined with the sea. According to the head of Roslesinforg, the existing measures of state support for business are sufficient, but not everyone has information about the tools that are being created for them.

Olga Mordyushenko