The region's forestry industry is in the loss zone

The authorities of the Khabarovsk Territory plan to adopt a strategy for the development of the forest industry, which will solve at least part of the accumulated problems. Market participants complained about staff shortages, deteriorating quality of raw materials and tariff barriers to business. Experts believe that there is nothing good in the near future for the industry.

Representatives of the Khabarovsk Territory Ministry of Natural Resources and business discussed the problems of the forestry industry. According to Minister of Natural Resources Vasily Shikhalev, the development strategy for the forestry industry for the next three years will be considered at a meeting of the regional government in July. Today, Mr. Shikhalev stated, the region’s timber industry “almost 100%” works “for export” to Asian markets, and there “the situation is complex and unpredictable.”

The authorities observed a steady increase in wood production (up to 9.5 million cubic meters) until 2008, and after the crisis this figure dropped to 6.2 million cubic meters, noted Deputy Minister Vyacheslav Kovalev. As a result of “structural transformations in the industry” in 2004–2012, it was possible to form seven holdings, which control more than 60% of the leased forest resources.

According to Mr. Kovalev, investment projects for processing receive significant support: regional government guarantees for industry workers to receive loans currently amount to 2.4 billion rubles. In 2005–2011, 37 billion rubles were invested in the forestry industry, which is six times higher than financial injections for the same previous period. As Mr. Kovalev noted, when the plants under construction reach their designed capacity, up to 5 million cubic meters of wood will be processed annually in the region. At the same time, the forest industry supplies only 4-5% of its products to the domestic market, but for the progressive development of the industry it should be 20-25%, the official complained.

However, he also noted positive dynamics in the development of the industry. “Despite the fact that our logging volumes have decreased, the efficiency of using forest resources has increased,” noted Vyacheslav Kovalev. In addition, the share of processed products in exports is 20%. However, over the past five years, the volume of reforestation work in the region has decreased and forest management work has stopped, the ministry admits.

In the context of a simultaneous increase in production costs and an increase in duties, and a poorly developed domestic market, small and medium-sized enterprises, which use about 4 million cubic meters of timber, find themselves in a difficult situation. In 2011, such enterprises managed to develop only 30% of the allocated resources, and processed less than 5%, emphasized Vyacheslav Kovalev. According to the authorities, it is advisable to create small-scale processing enterprises in the region and establish their connections with large factories.

The staffing situation in the region's forestry industry has also worsened - currently only 16 thousand specialists are involved in it. And large holdings are puzzled not only by the lack of specialists, but also by the quality of their training. RFP Group President Zareh Harutyunyan is convinced that personnel training is becoming a key problem in the industry. Young specialists, according to Mr. Harutyunyan, lack practice. “We can pay them scholarships and take them to practice,” said Zareh Harutyunyan. He also believes that it is necessary to involve new forest resources in economic circulation.

In addition, the quality of raw materials is deteriorating, market participants note. “The further we go into the forest, the worse the quality of the fund becomes,” believes Konstantin Beznosyuk, deputy director of Business Marketing OJSC. Low-commodity wood does not have a high price in Asian markets. With the cost of delivery of one cubic meter at $50 in the next two to three years, the production of low-quality wood will not be profitable, Mr. Beznosyuk believes. According to him, this will negatively affect the companies' projects.

The tariff policy of product carriers also significantly complicates the situation in the industry, businessmen complained. “Operators have increased their rates by 200%. Tariff rates of 80 thousand rubles. per wagon are absolutely impassable in order to collect low-grade wood from the Solnechny village area and send the raw materials to the plant,” said one of the market participants. According to his calculations, with transportation costs of about $990 per cubic meter and its price on the Chinese market at $200, industrialists are incurring serious losses.

“Given such losses, we developed deep processing,” indignant director of the Dal Research Institute of Market Vadim Zausaev. The expert believes that “nothing good” should be expected for the forest industry in the near future. “Wood processing turns out to be ineffective. I’m afraid China won’t give us a cushion,” noted Mr. Zausaev. The expert sees a way out for the domestic market in wooden housing construction, which is not yet in demand by consumers. General Director of Smena Trading CJSC Alexander Sidorenko stated that the industry is “entering a zone of stable losses.” However, Mr. Zausaev is confident that the situation will normalize if the authorities and business make joint efforts to eliminate the problems.

Maria Konstantinova

The further into the forest