The forest is not cut down, but the rates are flying – Newspaper Kommersant No. 5 (7450) of 01/13/2023

Indexing the rent for the use of forests instead of calculating it on the basis of actual harvesting will cost Russian timber merchants about 3 billion rubles. in 2023. In the opinion of timber market participants, this may further worsen the situation in the industry. However, experts emphasize that rent in Russia is significantly cheaper than in other countries, and indexation does not go beyond inflation.

Participants in the forest industry intend to apply to Deputy Prime Minister Victoria Abramchenko with a request to impose a moratorium on increasing rental rates after 2023. This decision was made at a meeting with the participation of representatives of the government of the Arkhangelsk region, the regional Duma and the heads of the largest local forestry enterprises, as well as the Vologda and Kostroma regions.

The Government of the Russian Federation, by a decree of December 23, 2022, increased the rates for the lease of forest plots in 2023 by 6% due to increasing coefficients, although a level of 3.9% was discussed before. Further annual indexation is also expected: in 2024 – by 4.7%, and in 2025 – by 4%. Thus, the participants of the meeting indicate that the increase in 2023-2025 compared to the level of 2022 will be 15.5%.

Timber companies have asked the government many times for a temporary abolition of rent indexation due to sanctions and falling production. According to market participants, logging in 2022 decreased by an average of a third. According to the Vyatka Chamber of Commerce and Industry, in 2023, harvesting is expected to fall by 30-50% in the region amid sales problems (especially hardwood pulpwood) and lower prices for plywood raw materials and softwood sawlogs.

“For the whole of 2022, we have been asking the government to support the timber industry complex, which, especially in the North-West of the Russian Federation, is in a difficult situation. This is due to a number of reasons, including the refusal to purchase traditional foreign customers and the lack of a free train – it is difficult to deliver products to other markets. Industry enterprises are experiencing great difficulties, barely making ends meet,” said Alexander Dyatlov, deputy chairman of the regional assembly of Arkhangelsk, during the meeting.

The increase in rental rates will lead to an additional burden on each large timber industry enterprise in the amount of several tens of millions of rubles a year.

Thus, the head of the Titan group of companies, Alexei Kudryavtsev, noted that the additional burden for the company would be about 50 million rubles. In Russia as a whole, this amount could amount to about 3 billion rubles. “Logging volumes are falling, and many enterprises are operating at a loss, and raising rates for an unused cutting area can lead to even worse consequences,” says a Kommersant source in the industry.

In December, the head of the Ministry of Economy Maxim Reshetnikov held a meeting, following which the ministries, including the Ministry of Finance, considered it expedient to determine the rent for forest plots in 2023 based on actual logging (see Kommersant dated December 26, 2022). “But now it is not clear when this decision will be made and whether it will be made at all,” say industry participants. The Ministry of Economy did not comment on the situation. The Ministry of Natural Resources, which should be developing the document, told Kommersant that “such a possibility is being worked out at the government site” and the resolution can be developed only after “considering the issue with all interested authorities.”

At the same time, Kommersant’s sources note that the increase in rent will be more painful for medium and small companies, while for the largest players, the increase in costs will be insignificant. Roslesinforge explains that the payment for the use of forests, including for logging, in Russia is several times lower than in other large regions of logging – Europe, the USA and Canada. In addition, the increase in the rate of payment for timber harvesting by 6% is fully in line with the inflation forecast of the Central Bank of the Russian Federation for 2023 – 5–7%. “The rates of payment for forest use cannot be changed in any direction, depending on the situation – it is necessary to change the approach to charging fees, taking into account many factors. The rent approach to the formation of fees, which, in addition to the qualitative and quantitative characteristics of forests, will take into account the dynamics of prices for raw materials and finished products, is more beneficial for both the state and tenants,” Roslesinforge believes. But for the transition to it, a re-registration of the forest fund and digitalization of the industry are needed, experts say.

Olga Mordyushenko