Russian Forest Industry: Krasnoyarsk Europe

RUSSIAN FOREST INDUSTRY: KRASNOYARSK – EUROPE

Olentsova Y. A. Krasnoyarsk State Agrarian University, Krasnoyarsk, Russia

Russia is one of the main players in the forest-based sector. Not only Russia is an important global player, its forest resources and forest industry also have a vital role to play on the regional level within the European and Russian forest- based sector.

The total area of forested territory in Russia is 776.1 million ha. The main bulk of the forests (78%) are concentrated in Asian Russia, with only 22% located in European Russia. The Krasnoyarsk region is a leader in timber harvest volume. The region has a long-term program (up to 2015) providing $3 billion of investments into forest related industries. A number of projects have already been completed. The construction of expensive facilities is quite an exception to the rule. An average sum for investment into timber processing is about 10-20 million, witch is equivalent to the construction of a large perspective sawmilling plant. A new MDF plant with a rated capacity of up to 70,000 m3 per year was commissioned in the city of Lesosibirsk (the Krasnoyarsk region) in March 2007. The plant has no analogues in the region; the book log filled long before the commissioning date demonstrated high demand for MDF on the domestic market. The sum of the investments was $25 million, and the authorities of the Krasnoyarsk region compensate for bank credit rates. This is considerable support for the newly built plant. The Plywood Plant in Sosnovoborsk (the Krasnoyarsk region) is the biggest timber processing investment project in the region for the time being. The majority of the technological equipment was delivered from the USA for immediate installation. The Plywood Plant is being built on the territory of a former Krasnoyarsk plant of trailer machines. The rated capacity of the plant will be 600,000 m3 per year, including 350,000 m3 of commercial veneer. The project is being developed at the expensive of Midway United CJSC, a joint Russian-USA company. The total volume of the investment is $150 million. Russia is Europe’s biggest supplier of broadleaved plywood. For many decades, Russia has considered plywood to be a key-industry, exporting an important part of the production to Europe as well as to other parts of the world. In 2006, Russia exported about 740,000 m3 of birch plywood to European countries. But Europe is by far Russia’s first export market for plywood. The share of Russia in European imports remained fairly stable over the past decade, contrary to Chinese imports, which accelerated at a high pace. In absolute terms, Russia is still Europe’s largest foreign plywood supplier. One of the main reasons for this is that the quality of Russian plywood on the European market is quite close to European standards, especially when compared to Chinese import. The serious involvement of the Russian plywood sector in the European market is demonstrated by the fact that four leading Russian plywood producers are members of the European Federation of the Plywood Industry. The total industrial production of the Russian timber industry is evaluated. There has been no high-speed development of the timber industry in comparison with other dynamically developing sectors. The output of the timber sector is largely dependent on the activities of the major pulp and paper mills and wood processing holding companies, and the policies they implemented for modernizing their businesses. The growth in production in timber and paper products was the result of the introduction of new facilities for manufacturing wood-based panels, cardboard, large-format plywood, newsprint and wallpaper, corrugated cardboard, and offset cut paper. Russia discernibly lags behind the leading players on the market for products from timber and pulp and paper as a consequence of inefficient export structures. Round wood is the prime commodity of export, along with the cheaper products from woodworking and pulp and paper facilities. Russia sends 35% of its forestry resources for export in the form of unprocessed timber, and only 2-5% of Russian timber is processed into finished materials. According to expert assessment, by 2015 there will be an anticipated reduction in the proportion of round wood offered for export, from 33% to 8%, and an increase of the export share for high-level processed wood products, including paper and cardboard, from 21% to 28%. Export of birch and pine round wood to China and Japan are the most attractive deliveries. The gross profit margin generated by Russian logging firms when supplying materials for domestic processing is one of the highest, especially compared to European margins. There will be a supply shortage of round wood in Europe, Asia and Africa over the coming five years. Russia plays an important role for the European woodworking industries. Strong positive economic development has created and will further create good business opportunities. The Russian market is an interesting market for Europe to invest, and Europe is an excellent market for round wood export from Russia. Russia is a member of the European Confederation of Woodworking industries, the European Organization of the Sawmill Industry and the European Federation of the Plywood Industry. Active cooperation within the organizations and their projects can be an excellent opportunity. It can also prove to be beneficial for Russia in supporting the development of the regional common market as well as improve their markets in Asia, as Europe is actively involved in standardization and marketing on Chinese and Japanese markets. In view of future developments, both for the Russian and European woodworking industries, it is necessary to have clear proactive policies that stimulate developments favoring a strong woodworking industry and create investment opportunities. References 1. Grevtsov, A. Russia is adding value to wood/ A. Grevtsov // Russian forestry review. -2007. -№2. 2. Saikovsky, V. Russian timber industry development prospects/ V. Saikovsky // Russian forestry review. -2008. -№3.