UNION OF TIMBER MANUFACTURERS AND EXPORTERS OF RUSSIA

GENEVA

UTMER

Andrey ProkopovMember of Board of UTMER

CURRENT SITUATION IN FOREST SECTORAND VOLUNTARY CERTIFICATION

IN RUSSIA

Joint UNECE Timber Committee and International SoftwoodConference Market Discussions

Legislation

New laws and others normative acts of the Russian Federation influencing on the Russian Forest Industries Sector

• New Forest Code.• Decree of the Government of the Russian Federation (round

wood export duty)• Decree of the Government of the Russian Federation (sawn

wood export duty)• Decree of the Government of the Russian Federation (List of

Priority Projects in the area of forest resources developing)

Legislation

Comments

• In compliance with the new Forest Code, all forestry expenditures including fire control and pest control have been shifted onto forest leasers. It's possible to forecast that the quantity of small and medium independent forest harvesting enterprises should decrease and the cost of wood should rise.

• Increase a duty rate on export of round wood has already had effect on drop in deliveries to the EU countries in 2007 (-30%) as compared to the corresponding period of the last year. It’s possible to predict a decrease in export volume of industrial wood to the Asian-Pacific Region as well since April 2008.

PRODUCTION

114,7248272721644741000 m³Chipboard

109,6428227,5390683,71000 m²Fiberboard

101,21357,41341,51000 m³Plywood

102,211098,310856,91000 m³Sawnwood

98,750156,950825,81000 m³Industrial roundwood

%1st half 20071st half 2006

PRODUCTION

107,77256,76735,8Far Eastern Federal District

91,812107,313184,7Siberian Federal District

98,23024,43078,3Ural Federal District

99,95966,65975,1Privolzhskiy Federal

District

101,1132,9131,5South Federal District

102,217680,217294,4Northwest Federal District

90,13988,84426Central Federal District

%1st half 20071st half 2006Industrial roundwood

PRODUCTION

97,4577,6592,8Far Eastern Federal District

104,43340,13200,7Siberian Federal District

104,6937,9896,4Ural Federal District

97,91806,11844,8Privolzhskiy Federal District

121,7132,8109,1South Federal District

103,53293,63182,6Northwest Federal District

98,01010,21030,5Central Federal District

%1st half 20071st half 2006Sawnwood

Softwood export January-June 2007

6520,73The others

2064,791CIS

8585,521Total, including

Sawn softwood

19611,5The others

249,2735CIS

19860,78Total, including

Industrial roundwood -- coniferous

1000 m³

Sawnwood export

8585,527 485,37Including sawn

softwood

8 820,927 716,04Total

1st half2007

1st half2006Million cbm

7 716,04

8 820,92

7 485,37

8585,52

1st half 2006

1st half 2007Including saw nsoftw ood

Total

Sawn softwood export

115,6185 648160 535Lithuania

138,3296 250214 221Estonia

132,4400 781302 627Poland

102,341 94941 013Spain

66,545 94869 078Austria

96,5183 048189 716Netherlands

96,1149 279155 343Italy

85,1218 904257 355Ireland

103,7371 972358 577United Kingdom

89,360 87668 135Greece

116,6245 845210 921France

104,5261 805250 630Finland

98,6400 342406 051Germany

133,8136 216101 784Belgium

%1st half 20071st half 2006m³

The National Council of Voluntary Forest Certification

in

Russia

Russian Forest and Forestry

• Principal species of wood, ml. ha:- Larch- 261.4- Pine - 115.2- Spruce-74.6- Birch -95.9- Aspen -20.1

• Total volume of wood - 81,900,000 m3• Allowable cut is over 500, 000, 000 m3

(where 300 ml.m3 –coniferous forest)

168, 500, 000 m3 was logged in 2003, where:

• clear cutting -128, 000, 000 m3(1/4 of allowable cut)

Why only ¼?• Forests are located in remote areas

with poor road networks and high transportation expenses

• Old and low capacity equipment etc.

Forest Certification Scheme,content:

1 - The Standard of forest management– 10 Principles– 36 Criteria

• 15 Environmental • 7 Economical• 14 Social

– 104 Indicators2 - Rules for forest management certification

procedures3 – The Standard of chain of custody4 - Logo use rules5 -Rules for governing and functional bodies of the Scheme