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Far Eastern foresters offered transparent bargaining
The Far Eastern Federal District proposes to transfer the sale of timber to the electronic exchange
Already this year, timber sales launched at the end of last year through the St. Petersburg International Commodity and Raw Materials Exchange (SPIMEX) can be expanded. According to regional authorities in the Far East, the sale of timber through an electronic exchange platform will lead to overcoming gray logging schemes, transparency of pricing and streamlining of exports. Foresters themselves and representatives of the Ministry of Industry and Trade of the Russian Federation insist on the voluntary nature of the participation of enterprises in exchange trading.
BEYOND THE FOREST TRADE
The governor of the Khabarovsk Territory Sergey Furgal proposed organizing exchange trading in timber back in 2018, when analysis showed that the forest industry paid about one billion rubles annually in the form of tax deductions to the regional treasury. Approximately the same amount of the budget was spent on the restoration of roads broken by timber trucks. At the same time, according to customs, the volumes of timber sold and data on the composition of valuable species in it differed greatly from the reports of logging companies. According to the regional authorities, the manipulation would be avoided by trading through an exchange that has a specialized IT platform, since all transactions with wood will become transparent.
Last summer, at the site of the International Economic Forum in St. Furgal, SPbMTSB President Alexei Rybnikov signed a cooperation agreement. At the end of 2019, Khabarovsk Territory conducted trial sales of timber through this exchange. In total, in the fourth quarter, 2,2 thousand cubic meters of timber harvested in the region according to state orders were sold on an electronic site.
Primorye joined the testing of exchange trading. The first auctions showed that the exchange is the most universal tool for determining the fair market value of goods, said Valentin Karpenko, Minister of Forestry and Protection of Wildlife Objects of Primorsky Krai.
“The total transaction price exceeded the average market value of timber by 10-60% for individual items,” he informed.
Sales of forest products through exchange mechanisms in the Russian market are showing growth. The total trading volume of timber at SPIMEX in 2019 exceeded four million cubic meters, which is almost twice as much as in 2018. About two thousand contracts were concluded on timber trade.
“The exchange has experience of successful cooperation with a number of Russian regions, including the Krasnoyarsk Territory, the Republic of Udmurtia, the Novgorod Region and others, where, after the start of the state forest sale through the exchange, the prices for timber increased several times. A similar potential for growth in revenues from timber sales exists in the Khabarovsk Territory. Exchange trading allows you to identify a fair, truly market price of timber and increase the tax base, ”the SPIMEX management emphasizes.
EVERYTHING ON THE EXCHANGE
The regional authorities intend to extend the new forest trade procedure to a wide range of companies. Moreover, from the development of exchange trading in the domestic market, the transition to the export of timber through the exchange is logical. In a situation when the industry is experiencing a serious decline in production (for example, in the Far Eastern Railway, the loading of timber in January-February decreased by more than a third compared to last year's result - up to 464,4 thousand tons), the innovation would help expand the markets for loggers of the Far East.
As noted in the government of Primorsky Krai, the basis of the exchange mechanism uses universal contracts that allow, simultaneously, within a single trading session, to purchase wood on an electronic site for companies representing different countries.
The authorities of Primorye have already announced that together with SPIMEX they will direct their efforts to ensure that bidders do not encounter the problem of long-term clearance of their goods: they mean accelerated passage of phytosanitary and customs control, the issuance of a CITES permit (certificate) for valuable forest species.
Similar measures are implied in the Khabarovsk Territory. A regional government has already held a meeting on this matter with timber merchants.
“In accordance with the decision of this meeting, we are working, that is, we are analyzing the opportunities and prospects for the further development of exchange trading. Moreover, the decisions were advisory in nature, ”said Alexey Tsaregorodtsev, Executive Director of Lesprom DV, in an interview with EastRussia.
However, the company does not undertake to evaluate in detail the prospects for innovation for their business. The authorities of the Khabarovsk Territory want to deprive the investment project LLC Lesprom DV on woodworking priority status. According to officials, the company’s management twice ignored the region’s demand to comply with the basic conditions of the agreement, according to which they were granted economic privileges.
“We are implementing an investment project recognized at the federal level, and the regional government has taken such a position that we do not fit into the framework that was allocated to us. We are proving the opposite, now the matter is being considered in court, ”said Alexei Tsaregorodtsev.
At the same time, the regional authorities put forward the idea to oblige forest enterprises that have the status of a priority investment project to exchange trading. This was announced in February by Sergey Furgal at a meeting with the President of SPIMEX.
“We can add a condition to the list of requirements for obtaining the status of a priority investment project - this is the sale of wood through the exchange. A similar practice is encountered in the licensing of petroleum products trade. It is necessary to initiate this amendment, together with SPIMEX, turn to the Russian government, ”the press service of the regional government quoted the governor as saying.
PRO ET VS
The Ministry of Natural Resources of the Russian Federation has already launched a similar initiative. The mechanism is as follows: since the state cannot automatically oblige all owners of the harvested forest to sell it in one way or another, the grounds for the emergence of a right to wood are established. Accordingly, amendments are made to two regulatory legal acts: the Forest Code, according to the procedure for the emergence of ownership of timber, and the Federal Law “On Organized Tenders”, where, in fact, the type of bidding is listed - exchange. So far, the bill is undergoing approval.
However, the Ministry of Industry and Trade of the Russian Federation, which is directly involved in the development of priority investment projects, expressed a position on the voluntary participation of enterprises in exchange trading.
“We are not against the exchange itself, but against the obligatory sale of all wood on it,” the ministry said, adding that the requirements to trade exclusively through this channel of product supply are premature.
The same point of view is held by the timber producers themselves. As EastRussia was told in the RFP Group, roundwood turnover in the domestic market is not completely transparent. Some of the volumes are sold in cash, including to companies that produce lumber with minimal processing and do not recycle its waste.
“As a possible measure to increase the transparency of timber trade in the domestic market, we consider it expedient to introduce an exchange trading tool that will allow all processors to compete for roundwood,” says Ekaterina Lyukshinova, Deputy General Director for Investment Projects, LLC Managing Company “RFP Group”. - At the same time, we believe that the mandatory introduction of exchange trading on the foreign market is impossible, since the foreign market is unique, built on trusting partnerships. And at present, timber exports are fairly transparent and well controlled by government agencies and financial institutions. ”
Therefore, on the issue of voluntariness of participation in the exchange, the holding supports the position of the Ministry of Industry and Trade.
“The investor should have the right to choose product sales schemes, including for the possibility of entering new markets,” said Ekaterina Lyukshinova.