Tyumen region decided to focus on the development of highly profitable wood processing industries

In the near future, new mini-pulp and paper mills and corrugated production may appear in Tyumen. A detailed discussion of the potential of the region was held within the framework of the National forest forum-2019 in Tyumen from April 11 to April 12.

The Tyumen region occupies a huge area of 11,396 million hectares in terms of forest areas. In monetary terms, the volume of exports of the forest industry of the Tyumen region is quite modest – only $46 million.

Points of growth of the Tyumen forest complex

Today in the Tyumen region one of the largest producers of plywood in Russia works, but if for area it is large volumes, in comparison with volume of production of plywood which is issued in the territory of Russia, it only 3,2 %. In addition, from the point of view of regional export policy, the Tyumen region, unfortunately, is not included in any rating.

President of the Union “Сhamber of Commerce and Industry of the Tyumen region” Eduard Abdullin noted the prerequisites for increasing Russian exports to foreign markets. According to experts of the Chamber of Commerce and Industry (CCI) , the timber processing industry of the region has a huge unrealized potential.

For the further development of timber processing in the Tyumen region “the point of growth and obtaining an exclusive opportunity to represent in the foreign market the products made of wood” is the deep processing of wood into paper, cellulose, corrugated cardboard and Kraft paper, as well as the production of other products from wood with high added value, which have a demand and prices that grow annually”, – said Mr. Abdulin.

Geographically, the Tyumen region is quite far from the export markets, if we do not consider Kazakhstan and other Central Asian countries. The delivery of the products to the consumer, “eating up all the profits”. Therefore, it is absolutely unprofitable to produce low-margin products.

Also, the CCI of the Tyumen region believes that an additional tool of motivation for Russian enterprises to sell products for export will be a partial compensation of transport costs for the delivery of products to the border of the country of the final consumer.

According to the Deputy of the State Duma, Chairman of the State Duma Committee on natural resources, property and land relations Nikolai Nikolaev, entrepreneurs of the Tyumen region can consider the construction of a mini-pulp and paper mill: “More and more in the timber industry are thinking about the development of projects for wood processing, not only the export of round timber.”

In addition, Mr. Nikolaev emphasized that “over 10 years the structure of exports has changed significantly and at the moment the share of unprocessed wood in the volume of total exports is less than 1/3”. Therefore, if there is information in the media that “everything is sold in Russia”, it must be checked for accuracy.

Strategy Partners partner, head of energy and resources practice Andrey Zauter noted that the discussion of existing problems in the forest sector and the proposal of options for further development of the industry should be carried out within the framework of industry events: “I am glad that an industry platform – the National forest forum-2019 has been formed, which is mobile and takes place in different regions. And the accumulated range of problems that exist in the timber industry, began to transform into proposals, not complaints.”

Mr. Zauter believes that each forest region of the Russian Federation has its own characteristics, which are important to take into account and “transform the goals of the Strategy-2030 from the Federal level to the regional ones”. At the same time, consider not only the construction of mini-pulp and paper mills but also enterprises for the production of chipboard and corrugated.

“For the development of deep processing in the forest complex, including the construction of a pulp mill, requires a symbiosis of the state, business and science,” – said Andrey Zauter. He drew attention to the fact that the state offers various measures to support business both at the Federal and regional levels. The Russian export center also provides additional financing to Russian entrepreneurs.

In Russia, national certification may soon replace FSC and PEFC

The increase in the cost of production is affected by the cost of raw materials. Deputy of the State Duma, Chairman of the expert Council on chemical and forestry, woodworking and pulp and paper industry at the state Duma Committee on economic policy, industry, innovation development and entrepreneurship Alexey Kanaev said that the cost of forests is influenced by several important factors. First, it is a centralized trade in round timber on the forest exchange. It allows to exclude unscrupulous forest users from business and to raise prices for untreated wood: “Last year, 1 million m3 of wood was sold through the St. Petersburg international mercantile exchange, but already for 1Q 2019, the sales volume amounted to 1.6 million m3.” Work through the official system allows you to generate tax payments to the Federal budget and open the data for the determination of customs duties.

Last year, for the first time in 12 years, the cost of Russian timber was equal to the income from its use: the Russian timber industry brought 46 billion rubles to the Federal budget. But, as Mr. Kanaev noted, “for reference, in the Soviet years, the income from the forest complex reached 25 % of the country’s budget, so there is still much to strive for and grow.”

Secondly, in order to ensure the transparent functioning of the industry, “it is necessary to understand what we manage.” On this issue Alexey Kanaev emphasized that it is necessary “to carry out detailed work on updating of forest management”. This work is performed by the Federal forestry agency subordinated institution of Roslesinforg. However, every year the actual need for those forests that can be involved in the turnover reaches 80 million hectares, and funding at the Federal level does not allow to carry out work in full. Therefore, the proposal of Mr. Kanaev was to consider the possibility of increasing funding from the Federal budget to determine the boundaries of forest resources.

The third component of the forest price is the correctly selected markets. At the end of 2018, only 19 million m3 of roundwood from the total volume of forest products sold (230 million m3) were sold abroad. Despite the fact that Russian cardboard, paper, cellulose, lumber and plywood are in demand in foreign markets, it is also necessary to develop the domestic market of processed wood, including the market of wood housing construction in our country. In Russia, wooden house building has a huge potential for growth, but, unfortunately, the programs to support this sector of the forest complex are in their infancy. Thus, according to Alexey Kanaev, the replacement of wooden products with other building materials will not only contribute to the growth of the market of wooden housing, but also increase the profitability of woodworking enterprises in the country.

By simplifying the schemes of collecting documents for the implementation of investment projects at the legislative level, it will help to attract more companies to the industry and accelerate the construction of new production facilities in Russia, which will increase the volume of deep processing of wood and the growth of production with high added value.

Ambiguous reaction was caused by the statement of the representative of the power about the new project of certification of the wood: “Certainly, for large players of a problem to be certified today on FSC, but on PEFC isn’t present. But, in my opinion, as representatives of a sovereign state, we should assess the negative risks of the possible use of these certification systems: there are already examples of pressure on Russian timber producers with the use of non-competitive methods of influence.”

Mr. Kanaev suggested considering the establishment of a national certification scheme with its own added value, which could serve as a safety mechanism in certain negative scenarios. At the National forest forum in Tyumen, a draft national certification system was previously presented. It is possible that in the near future, instead of international standards, Russia will begin to use its own.

Logging in Russia will soon become 100% clear

Managing Director of JSC “St. Petersburg international commodity exchange” (SPIMEX) Alexey Ryzhikov supports transparent logging in Russia and in the future will help to increase the number of electronic trading platforms in the field of forest sales.

However, Mr. Ryzhikov doubts the feasibility of introducing a national certification system in Russia. In his opinion, we should first turn to the Federal antimonopoly service and analyze the market for certification services in the forest industry:

“The existing certification creates barriers to market development. LesEGAIS is a depository system for the securities market, which can be used to obtain accurate information which company possesses the necessary documentation. The main issue that interests the forest consumer is the origin of raw materials. If our state accounting system will give a 100 % guarantee of the origin of the forest, the question arises – why do we need national certification. I don’t quite understand. I am for the national system, but its cost is far from effective.”

Alexey Ryzhikov hopes that in the next period of questions to the system, LesEGAIS will not remain, as now, the exchange between the forest and the forestry Agency signed an agreement in which access to the system and powers in aid for its improvement will be at the international trade and commodity platforms.

Increase the profitability of Russian forestry and additions to article 72 of the Forest code, according to the Director of SPIMEX, – the obligation of implementation on the exchange part is not less than 30% products tenants, if they are in the business of sales. According to the calculations of the exchange experts, this share of the sold products is profitable.

In addition, an obstacle in the work of forest enterprises is the imperfection of the methodology for the distribution of quotas for the export of roundwood, which exists today in Russia. According to Mr. Ryzhikov, quotas receive non-targeted companies, and middlemen who take the profits for itself: “The technique you need to cancel or make changes to it. And if the companies will have the opportunity to free sale, outside the distribution of quotas by the Ministry of industry and trade, we will see what the real sector will choose – to trade “in gray”, or to receive from the sale of 100 % of the cost.”

Nikolay Nikolaev agreed with Alexey Ryzhikov, that Russia needs to develop an objective trading forest and to use reliable electronic platforms, and intermediaries in the forest industry and should be removed. When conducting centralized trading, the reliability of the company will be a priority, and one-day companies will not find a place in the list of responsible forest users, which will also increase the number of woodworking enterprises that are purposefully ready for the development in our country of production of products with high added value.