Can we improve the situation of the Russian Timber Industry?

Table of Contents

1. Introduction

2. Forestry in general

3. The Russian industry in general

4. Situation of the Russian timber industry

5. Problems
5.1. Economic problems
5.2. Illegal logging
5.3. Wildfires
5.4. Ecological problems

6. Solutions
6.1. Solutions to the economic problems
6.2. Solutions for illegal logging
6.3. Solutions for the wildfires
6.4. Solutions for the ecological problems

7. Conclusion

Bibliography

Appendix: Picture 1

Picture 2

Picture 3

Picture 4

Picture 5

1. Introduction

“The forests are carrying the heaven. If we are cutting them, disasters will follow.” That is a common legend from the Indians.^[1]

We are cutting the forests, so it is interesting to look at the problems resulting from this. The general topic is Russia, and actually the Russian timber industry has to suffer from different problems. In this documentation I will answer the question “Can we improve the situation of the Russian timber industry?”

The Russian timber industry means the forests in Russia, the exporting wood and also all processed timber products exported to other countries. The situation of this economic sector is not optimal at the moment, but the conditions are quite good, so there is hope. If we get solutions for the main problems, it is possible to solve them in the future.

At first I will treat forestry in general and the Russian industry in general, so that the Russian timber industry is understandable and in a context. Then I will talk about the situation of the Russian timber industry in general because this knowledge is necessary to understand the problems. After that I will illustrate the resulting problems the Russian timber industry has today. The first one will be the economic problems. The next problem is illegal logging, which leads to many other problems. Other problems I will deal with are the environmental difficulties like the burnings of the forest. After knowing all this I will give some possible solutions. In the end I will give a conclusion, which functions like a short summary.

This topic fits very well in the general topic of our Seminar Course because the Russian timber industry is very important. Russia exports the largest amount of timber all over the world, so it is interesting to have a closer look at this economic sector. Like in many other fields in Russia, there is also continuity in the timber industry because many problems are still the same, like wildfires and illegal logging. But there are also many aspects which have changed in the last years. The economy is permanently changing. In nearly each chapter you will recognise the change and the continuity of each problem.

2. Forestry in general

Before we can start talking about the Russian timber industry we have to look at the forestry in general to have a general overview.

For most of the people, in the Ancient Times, the middle Ages and today, the forest is a place of recreation and recovery. It was also used like that although the importance and the usage of forests changed during the centuries.^[2]

When we are talking about the timber industry at first we have to define the most important terms, which are forest and cultivated forest.

Forest means an area where many trees are growing. The forest belongs to the originally forms of vegetation which proceed all kinds of human culture. This type we call primeval forest.^[3]

Cultivated forest is a forest which is established for a regular economical enterprise.^[4]

The difference between this two is that a cultivated forest is used to make profits and for economic aims.

Since the 18th century regional and international timber markets were developing in Europe. A lot of money was earned in this sector. This earned money was partly used to pay the protection and creation of the forests.^[5] Back in the past forest was a treasure and the owner got very rich. But for a couple of years the income of timber sells does not cover the costs of the business anymore. Therefore new solutions are necessary. On top of that the protection of the environment must be regarded, too.^[6]

Generally you can say that the forestry sector has to face more and more problems in the whole world because the forest areas are getting less and natural disasters are increasing a lot. It needed a hundred million years to create the rainforest. It needed 40 years for the human beings to destroy half of it. So if we do not act now, there will be no rainforest in 40 years anymore.^[7] But not only the rainforests are concerned, the protection of the forest and nature are also important in Europe and Asia.

3. The Russian industry in general

Russia wants to become more important in the world market. In this case Russia is very ambitious.^[8] Russia wants to be separated from the other states, but in the same moment it does not want to be isolated. It is always feared that other countries are taking part in their national affairs.^[9] Germany and Finland also want to cooperate more with Russia concerning trade. The presence of Russian companies in the European markets is growing constantly.^[10]

Russia has got a lot of mineral resources, conventional and renewable energies, forest and fertile soils. Russian exports consist to nearly 50 percent of natural resources. This means that there is only few processing and only a low added value. Russia tried to develop the country in the industrial sector, but they succeeded only in the oil fields in Siberia and the pipeline infrastructure.^[11]

The trade partners can be separated into two major groups: the EUcountries and the GUS countries. But the EU states are nearly seeing Russia only as a country exporting energy to them; they want to import oil and gas. The EUstates depend on the Russian oil and gas very much. Russia has become more attractive for these states during the last years due to the increasing prices for energy. Russia exports a greater variety of products into the GUSstates, but also here oil is the most important. In the Russian exports to China, Japan and the USA oil is not playing such a big role because there is no pipeline network like into the European countries. Never the less the export into these states is increasing. This shows that Russia tries to explore new markets.^[12]

4. Situation of the timber industry in Russia

Scientists estimate that the timber industry brings the Russian economy about 20 billion dollars every year.^[13]

But still the Russian timber industry could play a more important role in the economy. In 2004 timber and wood processing only made four percent of the production in Russia. According to some scientists the timber industry could be like a gold mine. 25 percent of the forests of the world are in Russia. “The total area of forests in the Russian federation is 1173, 4 million ha, and the reserves of standing wood exceed 82 billion cubic meters.^[14] The annual increase of wood in Russian forests is 932, 2 million cubic meters with an allowable cut of 520 million cubic meters, of which only 22% are currently used. Thus, the potential of the national timber industry is no less than the oil, iron and steel industries.”^[15] The timber industry could develop to one of the most important industries in Russia.

The regions with a lot of wood are Primorsky, Khabarovsk, and Irkutsk. They belong to Southeastern Siberia and the Far East of Russia. After the era of Gorbachev and his perestroika a lot of wood processing companies were closed. That led to a loss of many jobs, taxes and energy. 1989 more wood was used regionally. So about the half was needed for the usage in their own region. A quarter was used in other regions, and 30 percent was sent to other countries. In that time 20 percent of the timber production was processed timber like sawn wood and plywood. The amount of processed wood decreased a lot. Nowadays the amount is only seven percent. Today the roundwood production (which is only very less processed wood) is growing in the regions with a lot of forestry, but it still has not reached the level of 1985, when it was very high. The sawn wood production reached its climax in 1990 and it is falling constantly. The detail course you can see in Picture 1 and in Picture 2.^[16]

During the Soviet era too much wood was harvested. Out of this reason the quality of the forests decreased. Mature conifer forests were replaced by shrubs and deciduous trees. Some experts maintain that the decline in timber harvest shows that the forests could recover from the over logging^[17]

5. Problems

A general problem is that today a lot of timber is harvested in a wasteful and destructive way. Especially the Asian markets are interested in large diameter valuable trees. Therefore only the best trees are cut. Because of the lack of processing companies small pieces of wood and branches are left on the grounds. In former times these pieces were used to produce plywood out of it. It is also possible to make woodchips out of them, but there are only some producing companies in Russia today. This increases the risk of wildfires. (See chapter 5.3) The logging of timber in protected rivers causes a lot of damages to plants and animals at the banks.^[18]

5.1. Economic problems

Russia wants to support investments into the processing wood industry. It wants to invest at least 300 million Rubble which was about 8, 1 million Euro in 2008. The requirement is that the wood has to be processed on the Russian ground. The first aim is to support the construction of low wood houses because it needs a lot of raw materials. On top of that the government wants to make new streets in the forests and to abandon customs duty on imported machines to process timber. For comparison in Russia are 1, 5 km of streets in the forests per 1 ha of forest, but in Western Europe and in North America there are 10 to 40 km per 1 ha forest.^{[19] [20]}

The lack of streets in the forests holds back the development of the timber industry in Russia.

Since 2006 the customs on round timber are increased constantly to strengthen the regional forest processing. The aim is that the exports of unprocessed woods are not profitable anymore. They are beginning to succeed. The export of round wood decreased in January 2008 in comparison to the month of the year before. The need of wood for furniture, building material and paper can be satisfied only by a half of the domestic wood production, the rest has to be imported, although Russia has 25 percent of forest worldwide.^{[21] [22]} This shows a mismanagement of the Russian industry because Russia exports the world’s largest amount of wood (but a huge part of it is unprocessed wood).

Furthermore a big problem is the low quality of timber processing in Russia because many machines are very old, as you can see on Picture 3.^{[23] [24]} Therefore the gain out of the sold timber is quite low.

Another economic problem results from illegal logging. There is a new EU timber legislation which forces timber importers to verify the legality of their products. This regulation becomes effective on March 3rd, 2013. The consequence may be that Russia must not export timber to Europe anymore.^[25] Therefore probably the profits will decrease a lot.

[...]

^[1] Launer, Ekkehard: Zum Beispiel Holz. Hört mit der Zerstörung der Wälder auf, oder wir sind gezwungen, sie zu verteidigen. Göttingen: Lamuv Verlag: 1989 : page 31

^[2] Holzberger, Rudi / Fesseler, Ernst: Der Wald. Zwischen Wildnis und Monokultur. Ravensburg: Buchverlag Otto Maier 1989: page 86

^[3] Köpf, Ernst Ulrich: Forstpolitik. Stuttgart: Verlag Eugen Ulmer 2002: page 68

^[4] Ibid: page 68

^[5] Zundel, Rolf: Einführung in die Forstwirtschaft. Stuttgart: Verlag Eugen Ulmer 1990: page 6970

^[6] Köpf, Ernst Ulrich: page 68

^[7] Launer, Ekkehard: page 16

^[8] Smith, Alan: Russia and the world economy. Problems of integration. New York: Routledge 1993

^[9] Fischer, Peter A.: Quer durch das neue Russland. Reportagen zur russischen Wirtschaft und Gesellschaft. Zürich: Verlag Neue Zürcher Zeitung 2008: page 78

^[10] Ivanenko, Vlad: Rußlands Platz auf dem Weltmarkt. Exportstruktur und Integrationsoptionen. In: Ost Europa 57. Jahrgang no.4 (April 2007): page 5255

^[11] Ibid: page 58

^[12] Ibid: page 57

^[13] http://en.wikipedia.org/wiki/Forestry_in_Russia

^[14] http://www.zukunftsregion.org/desktopdefault.aspx/tabid1889/

^[15] http://www.russianforestryreview.com/files/docs/rfr_promo.pdf page 3

^[16] http://www.forestsmonitor.org/en/reports/548670/549162

^[17] http://www.forestsmonitor.org/en/reports/548670/549162

^[18] http://www.forestsmonitor.org/en/reports/548670/549162

^[19] http://www.holzconsulting.de/aktuell/branchenmeldungen/russlandwillinvestitioneninholzindustriesubv.php

^[20] Aström, SvenErik: From Tar to Timber. Studies in Northeast European Forest Exploitation and Foreign Trade 16601860. Helsinki: Finnish Society of Sciences and Letters 1988: page 125127

^[21] http://www.holzconsulting.de/aktuell/branchenmeldungen/russlandwillinvestitioneninholzindustriesubv.php

^[22] Peter, Marcus: Russia and the WTO. Comparative analysis of Russian and WTO law. BadenBaden: Nomos Verlagsgesellschaft 2004: page 4344

^[23] http://www.holzconsulting.de/aktuell/branchenmeldungen/russlandwillinvestitioneninholzindustriesubv.php

^[24] http://www.wirtschaftsblatt.at/home/international/osteuropa/268931/index.do

^[25] http://www.iucn.org/about/union/secretariat/offices/europe/?8302/RussiamaylosetheEUtimbermarket