Association "Russian Forest" on the indexation of tariffs for the use of forest plots

In December 2022, the Government of the Russian Federation increased the rent for the use of forest plots by 6%. The industry is waiting for further annual indexation: 4.7% in 2024, 4% in 2025. The overall increase in prices for forest users in the next three years will be 15.5% compared to the level of 2022.

Representatives of the governments of the Arkhangelsk, Vologda and Kostroma regions, as well as heads of local forestry enterprises, have appealed to Deputy Prime Minister Victoria Abramchenko with a request to impose a moratorium on rent increases after 2023. According to timber industry representatives, the increase in rates will worsen the already difficult situation of enterprises, and in general, due to indexation, the industry may lose about 3 billion rubles.

Olga Kalyuzhnaya, President of the Russian Forest Association: “Rent indexation does not go beyond inflation. But at present, many enterprises are forced to operate at a loss, and the withdrawal of even small players from the market will bring more damage to the timber industry than an increase in rental rates can do”.

For its part, the Russian Forest Association is taking the following steps:

• The Association has repeatedly come forward with proposals to provide a deferral of payment of rent for companies in a difficult economic situation. As an alternative solution, it is possible to pay a rent based on the actual volumes of timber harvested.

Today, the Krasnoyarsk Territory and the Republic of Udmurtia already have such a practice. At a meeting of the Expert Council under the State Duma Committee on Ecology, Natural Resources and Environmental Protection on October 25, 2022, the Russian Forest Association proposed recommending that all constituent entities of the Russian Federation adopt this experience and create working groups that forest users who find themselves in a difficult economic situation could apply to. The deputies unanimously supported the need for such recommendations.

• The initiative of the Association to pay rent based on the actual volumes of timber harvesting was also supported. The Federation Council, by letter No. 2.3-08/964 dated December 28, 2022, sent to the Government of the Russian Federation the decision of the Council on the Forestry Complex under Yu. A decision is expected from the regulators.

The same document provides for consideration of the issue of introducing a moratorium on the termination of forest lease agreements, which we also discussed earlier, including at a meeting with Minister of Natural Resources Alexander Kozlov on May 25, 2022.

The Russian Forest Association continues to insist on the importance of making a decision on both points, including the moratorium on termination of lease agreements.