State support is the basis for the growth of loading of forest products, Large enterprises of the LPC are ready to significantly increase production on the Russian market due to import substitution. But they do not have enough funds to implement promising investment projects. They need help with this. There are reserves for growth As noted in the Ministry of Industry and Trade, the situation in the Russian forest sector in 2015 remains difficult.

On the one hand, the solvent demand of wood processors has played a positive role in strengthening the domestic market. The prices offered on it by consumers were established at such a level that they turned out to be competitive with the prices that foreign buyers gave for Russian raw materials.

On the other hand, the recent weakening of the ruble has crossed out the positive aspirations of domestic forest processors. Many companies, which traditionally expected a seasonal increase in demand for finished woodworking products, experienced a 15-20% decrease in the volume of orders in the summer compared to the same period in 2014, with the price of final products remaining unchanged. 

In such a situation, with a high credit burden on business, the ruin of enterprises that traditionally focus on the domestic market began in the summer. This affected, first of all, factories for the production of mouldings, glued beams, and construction wooden beams. Enterprises with a low credit load, production facilities that focus on government orders in the field of construction, as well as companies that have managed to partially reorient themselves to export remained afloat.

According to experts, autumn in the timber industry could begin with a decrease in output. And as a result – a decrease in the volume of loading by all modes of transport, including rail. According to Deputy Minister of Industry and Trade Georgy Kalamanov, the LPC faced constraints at the general economic and industry level. The Ministry of Industry and Trade has previously insisted on using state support tools to stimulate the development of the timber industry. And in this situation, they seemed necessary.

Such a tool, according to G. Kalamanov, was subsidizing interest rates on loans received by enterprises of the complex, and increasing the volume of financing under existing subsidies by more than 20% (140 million rubles), followed by its increase by more than 60% by 2016, to 1.4 billion rubles. If earlier such measures were aimed at compensating for the costs of purchasing raw materials in the off-season (the specifics of the market is such that it develops cyclically), now subsidies on loans were supposed to help enterprises that actively invested in large investment projects. This was supposed to contribute to the creation of import-substituting production facilities for the production of products of deep processing of wood and support the modernization of the pulp and paper industry. Positive expectations At the beginning of the year, there were indeed positive trends in the LPC. This is reflected in the volume of loading of timber, as well as its processing products.

A number of companies in 2015-2018 assumed to increase production volumes due to their new projects. Accordingly, an increase in shipments by rail was also expected. For example, according to the general director of the Kastamonu plant, Ali Kilych, the construction of the second stage of the plant for the production of MDF boards is expected to be completed by the end of February 2016. Investment projects would be difficult to implement without a railway. "With its help, we solve three tasks: we deliver methanol and carbamide, we import timber, we ship finished products. The wagons leave the SEZ "Alabuga" to the station. Tikhonovo, from there to the Round Field and further across the country," A. Kilych said. A solid development program was recently presented by the Russian Forest company, which was also supposed to lead to the formation of additional cargo flows of forest products. Such forest cargo senders as Syktyvkar Plywood Plant LLC, Zheshartsky LPC LLC, Norwood SM LLC were ready to increase transportation along steel highways. However, they were slow to make a decision due to lack of financial resources. 

 Currently, JSC "Russian Railways" is considering the possibility of establishing a lowering index to the Price List No. 10-01 within the tariff corridor for long–distance transportation of forest goods - subject to the mandatory presentation of additional volumes for transportation. However, as recognized in Russian Railways, the efforts of the railways alone would hardly be enough to significantly increase cargo flows. LPC needs state support. Are the measures taken in August enough for them to implement their plans? That's the question that worries many.

Judging by the volumes of raw materials purchased in the off-season, it can be concluded that many players expect an increase in shipments of finished products. "We have stocked up on raw materials in full. According to forecasts, production output and loading in the near future will exceed last year's figures," said Andrey Larionov, Head of Logistics Department at JSC Kondopoga. According to Alexey Yaroshenko, the head of the forestry department of Greenpeace Russia, subsidies will become a certain incentive for increasing the volume of LPC products. However, only large wood processors will use them. As well as flexible rates of railway fares, if this proposal finds support. This will contribute to the further concentration of production in the forest sector, which will be accompanied by the further extinction of small and medium-sized enterprises that will not receive support. Hence the concern of A. Yaroshenko: according to him, support for the forest sector should be balanced.

In addition, he has concerns that the law on the federal budget will reduce the upper limit of the total amount of subsidies provided, which will limit access to loans to LPC enterprises. However, the Ministry of Industry and Trade believes that not all enterprises should be supported at this stage, but only those that are able to produce import-substituting products. After all, they are now laying the foundation for the future growth of LPC production, which, as a result, will be accompanied by an increase in the volume of railway loading. The state has enough funds to ensure such growth.

Alexander Solntsev