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. Last Updated: 07/27/2016

New Timber Rules Paralyze Industry

MTIllegal timber, near Kineshma, Ivanovo region, that will be used to build cabins. Catching illegal loggers is difficult because rangers have been disbanded.

Editor’s Note: This is the first of two stories about the forest industry.

KINESHMA, Ivanovo Region — In better years, Olga Vladimova’s midsize timber company employed 120 people. These days, it has only four.

“There is no legal way to access timber resources now,” Vladimova, a mother of three in her 30s, said from behind the wheel of her all-terrain vehicle as she drove through the countryside surrounding the small town.

“My husband and I will sell timber from our stockpiles to live on for the next few months,” she said. “After that, I don’t know what will happen.”

Vladimova’s Yelnat-Les is one of 36 timber companies in the forest-covered Kineshma district of the Ivanovo region, which lies east of Moscow and is crossed by the Volga River. But six of the companies recently filed for bankruptcy, and the rest are floundering, largely because of federal legislation that has all but paralyzed the industry.

The Forest Code, a raft of laws that have been phased in since 2006 to regulate all aspects of forest management, was supposed to modernize the industry and encourage sustainable forest use by large companies on long-term lease contracts acquired through auctions. The federal government passed responsibility for forest administration to the regions, while responsibility for forest protection and reforestation passed from the government to the businesses leasing the forest area.

But since March, when the latest section of the Forest Code came into force, the only way to legally access any Russian forest for commercial use is to lease a plot for at least 10 years. Companies can also bid for short-term contracts to provide forest works, which include planting saplings and thinning the forest.

But what’s in place on paper does not seem to be happening on the ground.

“In practice, the regional government does not hold auctions for potential renters, or it makes up lots of large forest areas that small businesses cannot handle,” Vladimova said.

A week after her company won a six-month contract for forest works in January 2008, Vladimova said, “three people showed up on my doorstep offering me the option of paying them 3 million rubles [about $95,000] or facing the consequences.”

After she refused, the company underwent 47 checks in the course of the six-month contract from the regional environmental watchdog and a district office of the regional forestry agency.

“I spent more time pushing papers and complaining about unlawful checks than taking care of the forest,” she said.

Forest works contracts these days invariably go to a local state unitary enterprise affiliated with the local forestry agency rather than private companies.

A police official in the Ivanovo region said illegal logging has exploded since the Forest Code was first introduced in 2006. Damage from illegal logging reached 90 million rubles in 2007, the latest year for which figures are available, said the official with a district office of the regional police’s economic crimes department, speaking on condition of anonymity because he was not authorized to talk to reporters. The official did not have figures for 2006.

One group of loggers incurred 1.25 million rubles of damage in a single month in 2007, and although one person was charged the money has not been paid, and the group is now logging in a neighboring district, the official said.

Maria Antonova / MT
A cabin being built out of illegally harvested timber. Illegal logging now accounts for 30 percent of Russia’s timber.

There are four or five such groups working in the district at any given time, he said, and prosecuting them is next to impossible because cut timber no longer suffices as evidence in an investigation. Unless the loggers are caught red-handed, they can pull out lease documents for any forest plot in the country and say they are simply transporting the timber, the official said.

“Tree stumps that are left in the forest are disfigured or destroyed so the timber cannot be tied to a forest plot,” he said.

But catching loggers red-handed is difficult because the Forest Code disbanded the rangers who monitored the forest. “There is no forest protection at all,” the police official said.

Vladimova conceded that some people preferred to operate illegally — a decision that carries its own risks despite the lack of forest rangers. Last year, eight people engaged in the illegal timber business in Kineshma died under unusual circumstances, Vladimova said.

She said some private companies have found a loophole that allows them to work legally in the current situation — recruiting elderly women.

“The only way for private firms to access the forest these days is to work with local babushkas, who have the right to request timber for personal use,” Vladimova said. “If you can find 40 babushkas, you can get enough volume to get a company going.”

She said it was too much work for her company to round up elderly women by going door to door.

Vladimova’s hardships may not represent the state of the country’s entire forest sector, which covers about 880 million hectares, according to the United Nations Timber Committee. But many small businesses are likely to close because of the Forest Code update in March that made it illegal for companies to purchase the right to cut a certain volume of timber from a designated forest plot.

In 2008, timber prepared by small and medium-size companies under such agreements comprised half of all timber prepared in some regions, said Vladimir Bondarenko, head of the Russian Timber Union in the Komi republic.

In Komi, small timber harvesters prepared 1.6 million out of the 6 million cubic meters of timber harvested, employed about 3,200 people and are scattered over many small towns and isolated forest villages, he said.

“The responsibilities laid out under lease agreements are too complicated for small firms,” Bondarenko said. “Some firms may keep working as contractors for large holdings, but they are not likely to merge because they are too independent and far apart.”

The new law strongly favors large companies and basically ignores people in remote villages for whom cutting down trees is one of the last ways to sustain themselves, forestry experts said. Villages, already hit by the collapse of the communal farm system, have now been dealt another blow. In the Ivanovo region, latticed wooden houses constructed a century ago are slowly sinking into the ground, with roofs caved in and windows boarded shut as residents move to big cities like Moscow to work as security guards and shopkeepers.

“The decision to outlaw purchasing agreements was done without consulting any experts,” Bondarenko said. “Its effects will be drastic and long term.”

The Komi timber union sent a letter to Prime Minister Vladimir Putin in March asking for the government to reconsider. Similar pleas also came from the Perm region in June and Kemerovo in February.

As companies struggle under the law, their production is falling sharply. In the first six months of the year, board lumber, hardboard, and plywood output dropped by 30 percent to 40 percent year on year, while pulp and most paper products fell by 10 percent to 30 percent, according to the State Statistics Service. About 30 percent of Russia’s timber is exported in rough, uncut form, while 25 percent is used for personal needs such as firewood and building dachas.

The law is likely to increase the scope of illegally cut timber because people who depend on the forest for survival will continue to cut down trees, said Alexei Yaroshenko, head of the forest program at Greenpeace Russia and moderator of the Forest Forum web site, which is one of two main discussion grounds for the forest sector in Russia.

Illegal logging accounted for 20 percent of all timber harvested in the country before the introduction of the Forest Code in 2006 and now has increased to 30 percent, Yaroshenko said.

Although the Forest Code appears to have few fans in the industry, experts like Bondarenko of the timber union don’t want another overhaul.

“Changing it yet again will kill the industry altogether. We should just make careful improvements,” Bondarenko said.

Since 2006, the law has been amended six times, and two more sets of amendments are in the government pipeline. Each change required the industry to adapt and update its documentation.

Small and midsize companies are still leasing forests in the Leningrad region, but many are likely to terminate their leases before the end of the year because of the difficult requirements of the law, said Denis Sokolov, director of the Timber Industry Confederation of the Northwest, who wants the law scrapped.

For one thing, the law leaves the protection of forests up to the leasers, but the audits that determine the makeup of forests in most regions were carried out a decade ago or more. The last audit in the Nenets autonomous district was carried out in 1944, Sokolov said.

“That’s enough for a pine forest to become fully grown, be struck by lightning and burn down to the ground,” he said. “How can something be protected if you don’t even know what it is?”