Released on: September 22, 2008, 11:17 pm

Press Release Author: Hakan Ekstrom

Industry: Agriculture

Press Release Summary: The Russian Federal Government is trying to assist
development of its forest industry by adding export taxes on logs, thereby limiting
competition by foreign companies for the Russian timber, as reported by Wood
Resource Quarterly. These taxes are currently 25% of the log value (minimum €15/m3)
for softwood logs and are scheduled to increase to a minimum of €50/m3 (about
US$78/m3) from January 2009.


Press Release Body: Seattle, USA, September 23, 2008 -- With the assumption that
Russian exports of softwood logs may come to a halt in January next year due to
prohibitively high log export taxes, there could be about 35 million m3 of softwood
logs available to the domestic industry. The question is, will the Russian forest
industry be able to expand the production capacity and process this wood
domestically? Unfortunately, the short answer to this question is: NO.

The Russian forest industry has increased softwood roundwood consumption on average
4 million m3 per year the past five years, but because of poor infrastructure, lack
of investment capital, corruption, burdensome bureaucracy, lack of respect for
property
rights and political uncertainty, it is not likely that the industry will be able to
expand much more rapidly in the near future than it did the past five years. This is
going to have huge negative ramifications for thousands of Russian loggers, forest
managers, and workers involved in the transportation of wood.

The biggest changes in the Russian forest industry have come the past five years
with substantially higher production of wood-based panels in particular. The pulp
industry has not expanded as fast, although there are plans both for expansion of
existing pulpmills and for new greenfield mills in the coming years. The area with
the slowest growth has been that of lumber, with softwood production up only about
20% the past ten years and hardwood lumber production even declining 70% that seen
in 1997. In summary, the only major expansion within the industry has occurred in
sectors which account for only a small share of the total log consumption in Russia,
according to WRI.

The Russian government’s involvement in the domestic log market will have
unintentional consequences. Short-term, the effect of the Russian log export tax
will be to reduced employment in the forest sector rather than to increase it;
exactly the opposite effect hoped for by the Federal Government when it decided to
restrict log exports.

Global pulpwood and sawlog market updates are included in the 50-page publication
Wood Resource Quarterly. The report, established in 1988 and with readers in over 20
countries, tracks wood prices in most regions around the world and also includes
regular updates of international pulp, lumber and biomass markets.
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Contact:
Hakan Ekstrom
Wood Resources International LLC
P.O. Box 1891
Bothell, WA 98041,USA
+14254028809
info@wri-ltd.com
http://www.woodprices.com

Web Site: http://www.woodprices.com

Contact Details: Contact:
Hakan Ekstrom
Wood Resources International LLC
P.O. Box 1891
Bothell, WA 98041,USA
+14254028809
info@wri-ltd.com
http://www.woodprices.com