Northern forests are waiting for state assistance – Newspaper Kommersant No. 206 (7407) dated 08.11.

Russian timber merchants, through regional officials, are asking the government and deputies for new support measures, the main ones of which have already become standard. We are talking about postponing obligations on investment projects, compensation for transport costs and improving export conditions. Most strongly, the market recognizes, they are needed by companies in the North-West, focused on deliveries to Europe. Experts expect a drop in indicators in certain areas of the timber industry by 15%, but they expect the situation to stabilize as early as 2023.

As it became known to Kommersant, the governors of the Arkhangelsk and Vologda regions Alexander Tsybulsky and Oleg Kuvshinnikov, as well as the head of the Republic of Karelia Artur Parfenchikov, will send appeals to Mikhail Mishustin in the coming days on measures to support the timber industry. Officials point to the difficulties of the timber industry enterprises of the North-West after the loss of large EU markets, the rupture of contracts for the supply of equipment and price cuts. Because of this, capacity utilization is reduced, timber harvesting volumes are falling, and for some types of products, enterprises operate at a loss, as transportation costs have increased and prices have more than halved, says a Kommersant source familiar with the content of the appeals.

According to the heads of the regions, a three-year extension of the deadline for fulfilling obligations to create and modernize timber processing infrastructure facilities, a moratorium on orders to disrupt the schedule and a ban on excluding investment projects from the list of priority projects until 2023 can help. They also propose to adjust investment projects in a simplified manner in terms of the location of the site, the list of equipment, volumes and range of products, commissioning dates, investment volumes, etc. 12 months for timber industry enterprises of insurance premiums in 2022, extending the moratorium on bankruptcy, increasing subsidies for transport costs.

Timber industry companies agree that enterprises in the European part of the Russian Federation suffered the most. Nikolai Ivanov, Vice President for the Implementation of State Programs, Sustainable Development and Forest Policy of the Segezha Group, explained to Kommersant that the company participated in the preparation of proposals for possible forms of state support. “It is advisable to focus not on finding options for direct subsidization of the forestry business, with the exception of direct compensation for sharply increased logistics costs, but on the transfer of mandatory tax and other payments during the adaptation period,” he said.

Roslesinforge told Kommersant that the Russian timber complex is now in a difficult but not critical state, and the decline in production is not as strong as, for example, during the pandemic, and most enterprises are busy. They recall that in 2021 the Arkhangelsk and Vologda regions were among the leaders in timber harvesting, that is, their indicators fell from a high base. Now the decline in timber production in the Northwestern Federal District is 16%, Roslesinforge specified. At the same time, they say there, for the main type of products of the regions of the Northwestern Federal District – pulp, paper and cardboard – the fall is insignificant, 3%. In addition, experts explain, some of the support measures requested by regional officials are already in place. According to Roslesinforg, the situation in the Russian timber industry will stabilize in the first half of 2023.

Marina Zotova from WhatWood notes that in the first nine months, lumber production decreased by 7.5%, to 22.5 million cubic meters, and by the end of the year, the agency predicts a drop of 10-15% from the record 2021. The expert notes that in the context of sanctions and restrictions on exports, which accounted for 70% of sawn timber sales, their consumption in the domestic market cannot load the installed capacity. In her opinion, the timber industry companies could be supported by quick actions to reduce the time for approval of requests for transportation, setting quotas for producers of the North-West to compensate for transportation costs and other measures.

Olga Mordyushenko