Business will buy wood

Small and medium businesses will be allowed to buy wood for making timber. It was impossible due to amendments to the Forest Code since 2009. The Government is revoking them.

The Government Commission on lawmaking approved the amendments to the Forest Code prepared by the Ministry of Environment. The amendments allow small and medium businesses to buy afforestation for making timber. The land will remain federal property. The official information published by the press service of the Ministry at tis web-site says that the draft will be studied at the session of the Government.

The amendments to the Forest Code will repeal a number of limitations, which complicated the business for small timber makers since 2009. Rent of forest plots became the only way to legally receive standing wood for all ventures. But such rent also imposed obligations of defense and protection of the forests. Small ventures were unable to cope with those. Some of them occasionally did some timber harvesting in small lots. Until 2009, individual entrepreneurs could, upon a concrete order, buy small lots of timber at sale-and-purchase auctions, but the adoption of the Law 32-FZ made them choose: whether to terminate their activities or to harvest lumber illegally. According to the relevant data from 2013, 76% of all timber was harvested from rented plots. According to the authors of the explanatory notice to the draft law, most renters are individual entrepreneurs: out of 8 thousand persons, who rented forest plots, 5 thousand harvest less than 20 thousand cubic meters per year each, which is less than 20% of all lumber harvested. Alexander Bolomatov, Partner of the Law Firm "YUST", says that Vladimir Putin, speaking in April of 2013 at the State Council session, mentioned the lack of access of the small businessmen to lumber harvesting as one of the main problems of the forest sector. The session resulted in the elaboration of that draft law. It makes the access to lumber harvesting for small and medium businesses easier.

There are currently two ways to harvest lumber in Russia: rent of forests and purchase of forests. The Forest Code (FC) presumes that lumber harvesting is done on the basis of an agreement of rent of the forest plot. This is a rather protracted and serious procedure, which includes an auction and elaboration of a project of cultivating of the forest, which must contain reproduction measures.

Afforestation for timber harvesting may be bought, but only in exclusive cases. These include the situations stipulated by regional laws for meeting state and municipal needs (part 8.2 of Article 29 of the Forest Code), purchases of works of defense, protection and reproduction of forests with simultaneous sale of afforestation о закупках работ по охране, защите и воспроизводству лесов с одновременной продажей лесных насаждений (part 8.3 of Article 29 of the Forest Code) and timber harvesting for the citizens’ personal needs (Article 30 of the FC).

Besides the permission to buy wood, says Alexander Bolomatov, the draft law also simplifies the terms of rent of afforestation: it introduces a model agreement of rent of forest plots (the rights and obligations of the parties will be standard for the entire country) and a simplified procedure of access of small ventures to the rent auctions. The prices of the forest plot rent agreements will include a territorial coefficient for calculating the expenses of protection and restoration of the forests. The coefficient will be different in every region, but the Government will elaborate the general method. A.Bolomatov is convinced: “These funds will bolster the regional budgets, which should stimulate the development of that industry and generate profits for the region. This will give more income to the regional budgets and be favorable to the restoration of the forest sector”.