Russia will ban the export of softwood or rough processed wood from 2022

Russia will ban the export of softwood or rough processed wood from 2022

On September 30, Putin announced that Russia would ban the export of coniferous logs and precious hardwood timber from 2022. In an interview with Russian business daily, industry insiders said that this will help increase the quantity of scarce wood raw materials in Russia, but the state needs to support a large number of market participants, especially those in the Far East.

According to the source of the Russian businessman daily, the Russian government has long been discussing the ban on timber export, and regulating the forestry market is one of the main tasks of the new government.

In 2019, matvyenko, chairman of the Russian Federation Council, proposed a temporary ban on the export of coniferous logs during the revision of the Russian federal forest code. However, kobelkin, Minister of natural resources and ecology of Russia, proposed to impose an export ban only on China, and 70% of Russia’s timber exports were sold to China.

Segezha group, one of Russia’s largest forestry companies, spoke positively of the export ban. Ivanov, the company’s managing director in charge of the implementation of the national plan and forest policy, said it was necessary for the state to support the wood processing industry. Besides hardwood logs, the shortage of raw materials was obvious. Although segezha group’s raw material self-sufficiency rate has reached 70%, the company said it would buy more timber after the export ban.

Russia will ban the export of softwood or rough processed wood from 2022

At the same time, Ivanov called for a clear definition of the concept of “rough wood”. The most important thing is that the dry sawn timber from the bundled kiln should not fall under this item. Ivanov also expressed concern about the short transition period of the ban: “I don’t think all market participants have time to readjust, especially SMEs in the Far East.”

The representative of Russia’s Ilim group pointed out that the government’s practice of regulating the forestry market is correct, and banning the export of unprocessed timber will increase the amount of raw materials available to domestic wood industry producers. At the same time, the company’s representatives also believe that it is important to formulate a set of measures to promote the development of domestic wood processing industry in Russia.

However, most market participants in the Russian forestry market believe that a total ban on log export is a dangerous measure, which may have a negative impact on the operation of the whole industry, especially the forestry market in the Far East. The profitability of many companies in the Far East has declined due to restrictive export tariffs on raw timber.

Since Russia’s accession to the WTO in 2012, the country’s timber export began to implement a quota system. Only timber processing enterprises can enjoy the export quota of 6.5% of the relevant tax. The export tariff of timber outside the quota will be increased from 25% to 60%, and will be as high as 80% by 2021. In 2019, Russian log exports decreased by 25% to 4.5 million cubic meters. The Far East timber export association once asked Russian Prime Minister mishukin to reduce the wood export tariff of all enterprises to 6.5%, but it was not supported.

The Russian government said it would support relevant enterprises. Putin has ordered the introduction of the preferential loan program to relevant enterprises from January 1, 2021. Yevtuhov, Russia’s Deputy Minister of industry and trade, said the government would launch a special national plan to support the readjustment of the forestry market. In his view, enterprises in the industry have enough time to establish processing facilities. Since there is still more than a year before the export ban, there is no risk for timber enterprises including the Far East.

At the same time, the Russian government plans to establish an information system to monitor the situation from forest area to terminal sales. Russia’s deputy prime minister in charge of forestry, abramchenko, said that the Russian government would monitor every timber transaction with the customs and tax authorities. If the consigned timber does not have a certificate of origin, all related transactions will be blocked. The system is planned to be put into operation in trial mode in January 2021 and officially put into operation in July 2021.

Frorova, an analyst from whatwood, said the export ban was not an unexpected decision, but the introduction of such severe measures in such a period of time is likely to have a negative impact on the industry. She explained that export markets for softwood and precious hardwood have been subject to quota and tariff restrictions, especially in the Far East, where many businesses have been paralyzed. Florova believes that it may take longer for forestry market participants, mainly timber harvesting companies, to adapt to change. She added that in the absence of Russian raw materials, the Chinese market had found a way to cope and began to import wood from New Zealand and Germany.

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