LOGJAMS IN THE SOVIET TIMBER INDUSTRY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84T00926R000200060003-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 46
• Document Creation Date: December 22, 2016
• Document Release Date: January 26, 2012
• Sequence Number: 3
• Publication Date: December 1, 1983
• Content Type: REPORT

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Direct rate of
Inte1G nce 25X1
Lo 'ams in the Soviet
Ti ber Industry
SOV 83-10206X
December 1983
~ COPY 4 4 ~
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Industry, SOV 83-10206X, December 1983.
Notice to recipients of DDI Research Paper Logjams in the Soviet 1 in~ber
Please make the next-to-last sentence in the last paragraph on page 3 read as
follows:
In addition, some pulp and paper plants that emit toxic discharges have fieen
accused of destroying trees.
440
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T~mber Industry
L gjams in the Soviet
A Research Paper
II,
This lipaper was prepared by
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f the Office of Soviet Analysis. 25X1
Com
dire
ents and queries are welcome and may be
ted to the Chief Soviet Economy Division,
SO
A,
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Secret
SOV 83-10206X
December 1983
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Summary
/rdormation available
as of l 1 November / 9831
was used in this report. ~
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Timber Industry
Logjams in the Soviet
Lagging production of forest products played an important part in the
general industrial slowdown in the USSR after 1976. Transportation tie-
ups stand out as the critical constraint, but an aging capital stock and low
investment, fuel and power shortages, and high labor turnover also
dampened performance in the sector. We project a modest recovery by
1985 as rail bottlenecks ease, although the Soviets are unlikely to achieve
plan goals. Prospects for production and export earnings should be brighter
by the end of the 1980s as world market conditions improve and are likely
to be even better by the turn of the century as a result of serious depletion
of world forests.
late 1970s despite the rise in timber prices during most of the period.
After rising at an average annual rate of 2.5 to 3 percent in 1961-75,
production in the forest products industry actually fell by an average of 0.3
percent a year in 1976-81. Output in the two main sectors-logging and
sawmilling and woodworking-declined even faster. Partly as a result of
the slide in output, hard currency export earnings from forest products-
the USSR's fifth-largest earner-leveled off at $1.0 billion annually in the
Because of the close integration within the forest products industry,
difficulties in logging spread quickly to other sectors after 1976. Rail
transport and, in some instances, fuel and power shortages proved to be the
most critical constraints as Soviet officials cut back on allocations to the in-
dustry, which was given a relatively low priority:
? The volume of timber hauled by rail declined sharply. With rail lines
saturated and railcars in short supply, Soviet railroad officials chose to
divert rolling stock earmarked for timber shipment to the movement of
grain and other critical commodities. Meanwhile, the average length of
haul increased as logging operations shifted to remote regions in Siberia,
the Urals, and northern parts of the European USSR. The average
stayed fairly stable from 1970 to 1977, but it rose sharply in the late
1970s to peak at 1,739 kilometers in 1981-the longest haul for any
major commodity in the USSR.
? Transportation bottlenecks had a ripple effect on raw material flows.
sawmilling operated at little more than 80 percent of capacity during the
1976-80 period because of shortages of timber. Pulp and paper inven-
tories fell to 40 percent of the norm, with many factories dependent on
day-to-day deliveries. Some plants reportedly shut down production
entirely.
Secret
SOV 83-! 0206X
December l 983
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? Fuel shortages hampered logging operations, and electricity brownouts
limited production and damaged machinery in the pulp and paper sector.
The forest products industry was also handicapped by an increasingly
obsolete capital stock and shortfalls in carrying out its capital investment
program:
? The condition of fixed capital-most of it 35 to 40 years old and at a
technological level comparable to that of the United States in the 1930s
and 1940s-deteriorated considerably, with more frequent breakdowns.
Utilization rates for equipment also fell, as most machinery was involved
in production for less than half of the working days in the plan period.
? The falloff in capital investment constrained plant commissionings,
particularly in the pulp and paper sector. A traditional and heavily used
source of capital replacement-imports-dried up because of scarce hard
currency reserves and the general strain in relations after the invasion of
Afghanistan.
? The official two-pronged investment strategy~onstruction of large-
scale forest industry complexes in eastern Siberia and renovation of
facilities in the northwestern and Ural regions-ran into large cost
overruns and delays. Renovation disrupted production, and many projects
were abandoned because funds had been used up.
Manpower shortages-most critical in logging-have persisted because the
harsh climate and lack of infrastructure make it difficult to recruit and re-
tain sufficient workers. To supplement the traditional labor force:
? Some 300,000 prisoners, at least 10 percent of the labor force in forest
products, have been placed in forced labor at logging camps and
sawmills.
? About 30,000 foreign workers are harvesting timber in isolated undevel-
oped areas. Roughly 7,000 to 10,000 North Koreans have been cutting in
the Far East, and 19,000 Bulgarians currently log in Komi ASSR
Soviet plans call for the production of forest products to increase by 17 to
19 percent during the 1981-85 period. We do not believe that the Soviets
will be able to come close to reaching these goals. Railroad bottlenecks will
ease to some degree, but the lack of major capital outlays will leave
equipment and machinery in poor shape. The forest products industry will
feel the pinch of declining Soviet birth rates, although forced labor will
continue to provide a cushion. The expansion of guestworker agreements
will be limited because of Soviet xenophobia and domestic labor shortages
in the labor-exporting countries.
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We estimate that by 1985, production of commercial timber will stabilise
between 279-284 million cubic meters (m'), while lumber will fluctuate
between 96 and 98 million m' (versus 275 million m' and 96 million m' re-
spectively in 1982). Particleboard and fiberboard are likely to be high-
growth commodities in forest products because there is ready demand for 25X1
these cheap substitutes for lumber. Pulp and paper output probably will
grow by 1.5 to 2.5 percent a year, with a possible spurt near the end of the
plan period because of capacities coming on stream at Ust'-Ilimsk
We project hard currency earnings at between $1.1 billion and $1.5 billion
(1981 prices) for the rest of the 11th Five-Year Plan period, primarily
because of sales of about 14-16 million m' of commercial timber and 7 mil-
lion m' of lumber. The Soviets have long-term trade commitments and
compensation agreements with Japan that guarantee a large volume of
exports and insulate Moscow from wide fluctuations in market prices
Export prospects, however, could improve dramatically by the end of the
1980s. In the late 1980s, world prices may rebound signficantly from the
nadir in 1982, and Moscow can expect to increase its share of the West Eu-
ropean market as a result of overcutting of forests in Sweden and Finland.
Increases in exports may also be directed toward China and Japan.
Beijing-deficient in timber resources-has concluded agreements with
both Soviet and American foresters. Limitations in Soviet ability to harvest
and transport timber and rising Chinese import requirements suggest,
however, that the Soviet Union will not shut the United States out of the
growing China market
Prospects for improved earnings with Japan are more tenuous because of
the recession and structural changes in Japanese industry. Yet, Tokyo's
heavy reliance on trade and large processing capacity leave the door open
for future increased trade. Improved trade with Japan will depend on
economic terms of trade, political considerations, and Soviet quality
standards.
Longer term trends are likely to make the USSR's prospects even brighter.
Experts believe that at the turn of the century tropical forests may be
heavily depleted. The USSR's almost unlimited supply of coniferous stock,
although not a perfect substitute for tropical reserves, could then capture
large new markets. To benefit from this situation, Moscow will need to
improve road and rail networks in Siberia and the Far East, as well as the
infrastructure in these regions. The Soviets will have to market timber
aggressively, step up sorting and grading procedures, and increase the
chemical treatment of wood. Under these favorable conditions, hard
currency receipts from timber sales could triple or even quadruple.
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1. USSR: Forest Resources, 1982
2. USSR: Workers in the Forest Products Industry
USSR: Average Annual Growth of Forest Products Output 5
4. USSR: Production of Principal Forest Products
6. USSR: Average Annual Growth of Outputs, Inputs, and 8
Productivity in the Forest Products Industry
7. USSR: Average Annual Growth of Fixed Capital in the Forest 8
Products Industry
8. USSR: Commissioning of New Capacities in the Forest 9
Products Industry
USSR: Average Annual Growth of Employment in the Forest 9
Products Industry
10. USSR: Imports of Equipment for the Forest Products Industry 17
11. USSR: Production Targets for the Forest Products
Ministry, 1981-85
12. USSR: Planned Expansion and New Construction of Major Soviet 20
Pulp and Paper Mills, 1983
A-2. USSR: Planned and Actual Growth Rates for the Forest Products 26
Industry
A-3. USSR: Annual Growth of Output by Sector in the Forest Products 26
Industry
A-4. USSR: Distribution of Investment Funds by Activity in the Forest 27
Products Industry, 1976-80
A-5. USSR: Timber Transported by Rail, 1960-81
A-6. USSR: A Comparison of Annual Allowable Cut, Actual Cut, and 28
Mean Annual Increment in Logging
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~,
Figurles
1. ~
USSR: Organization and Input-Output Flows of the
Forest Products Industry
2
2. ~
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USSR: Share of Capital Investment Allocated to the
Forest Products Industry
8
- - --
--
3. i
Transport of Timber
10
- -__-
4. ',
USSR: Output of Forest Products and Forest Products Hauled
by Rail
1 1
5.
USSR: Choke Points in Transport of Timber by Rail, 1976-82
12
6.
~
USSR: Average Length of Haul for Rail Shipments of
Forest Products
13
7. ~
- - -
Equipment of the Forest Products Industry
- __ --
16
rt
- -
A-1. ',
USSR: Three-Year Average Annual Growth in the
Forest Products Industry
29
A-2.
USSR: Unfinished Construction in the Forest Products Industry
29
A-3. ',
USSR: Forest Resources in the Soviet Union
31
A-4. ~
USSR: Age Structure of Forests
33
A-5.
USSR: Species Composition
33
A-6. !
i -__
Leading Producers of Timber
_ _ __
34
A-7. I,
Leading Exporters of Commercial Timber
- - - - ----
34
-- _I_ --
A-8.
!- _ -
USSR: Exports of Forest Products
35
A-9. I
USSR: Composition of Forest Products Exports
35
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Logja~s in the Soviet
Timb r Industry
Logging, sawmilling end woodworking, and paper
manufacturing-thr a of the Soviet Union's oldest
industries-have not fared well in recent years. Pro-
duction has satisfied either domestic requirements
nor its export potenti 1.
Shortfalls in forest products have significantly affect-
ed other branches of industry. Although lumber is no
longer the main building material, shortages of
k construction, especially of
lumber have held ba
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housing and rural in rastructure.'
According to Soviet ~ress accounts, many foods could
not be packaged and~so did not reach store shelves.
The Soviet press alsq reports that increased produc-
tion of paper and car
reduced waste of the
8 percent. The Chem:
mineral fertilizer sec
insufficient boxes any
dboard for packaging could have
fruit and vegetable harvest by
kcal industry, most notably the
itor, sustained losses because of
d bags, as did other industries.
Declining productio has affected foreign trade as
well. A major timbe exporter since czarist times, the
USSR is less able to satisfy its world timber markets
at a time when it ba ly needs new sources of hard
currency earnings.
This report reviews the performance of the forest
products industry si ce 1960, examines the problems
that have emerged, nd assesses the short- and long-
term outlook for pro uction and efficiency0
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Organization of the ndustry
The forest products ndustry consists of six closely
related sectors (see gure 1): logging (22 percent of
Construction industries ~n the West have also shifted away from
lumber as the primary b~ilding material. The emergence of com-
the industry's gross value of output in 1972), sawmill-
ing and woodworking (39 percent), furniture (17 per-
cent), other woodworking (5 percent), pulp and paper
(16 percent), and wood chemicals (1 percent).
The logging sector supplies timber to the other sec-
tors. Activities include cutting and hauling timber,
extracting natural resins and tars, producing fire-
wood, and making railroad ties
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The sawmilling and woodworking sector processes the
timber, turning it into lumber, plywood, particle- 25X1
board, fiberboard, prefabricated construction compo-
nents, wood chips, and other large wooden items.~~ 25X1
The.l~urniture sector depends primarily on lumber
from the sawmilling and woodworking sector, al-
though it receives some wood directly from the log-
ging sector.
The other woodworking sector acquires much of its
wood from the sawmilling and woodworking sector,
although the logging sector contributes about one-
fifth of its requirements for raw materials. The sector
manufactures consumer items-such as wooden dish-
es, household utensils, sporting goods, and matches.
The pulp and paper sector manufactures wood pulp
(or cellulose), paper, and cardboard. It relies on the
logging and wood chemicals sectors, and on electric
power for inputs
The wood chemicals sector turns out dry-distilled
chemicals, resins, turpentine, and wood chemistry
byproducts and depends heavily on the logging sector
for its inputs.
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Figure 1
USSR: Organization and Input-Output Flows
of the Forest Products Industrya
e Source: Narodnoye Khozyaisrva 1974, (identified as Narkhoz in the n Final demand is private or public consumption, investment, or export.
following figures and tables) and Input-Output Structure of the Soviet
Economy 1972, Foreign Economic Report No. 10, US Department of ~ Intermediate demand refers to output that will undergo further processing
Commerce: Bureau of the Census, April 1983. This figure illustrates the by other industries.
input-output relationships between sectors in the forest products industry.
Resource Base the USSR claims, Moscow could almost double pro-
The Soviet Union has the largest forest cover in the duction with its vast untouched reserves; the actual
world-roughly one-fifth of the world's productive cut is only 56 percent of the allowable z cut.
timberland (see table 1 and appendix A). Brazil,
Canada, and the United States follow in terms of total 'The allowable cut is the volume of wood that loggers can harvest
timber resources. The USSR also leads the world in every year without damaging a healthy, balanced forest. Theoreti-
cally, aforest should be managed on a 100- to 150-year cycle, with
volume of coniferous reserves. The other conifer-rich equal shares harvested and regenerated each year
countries are Canada and the United States. Even
allowing for some exaggeration in the potential that
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Table 1
USSR: Forest Resources, 1982
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Forested land (million h~
ctares) 792
Total growing stock (mil
ion cubic meters) 84,150
Total mean annual incre
ent b (million m') ____ _ 881
Allowable cut ~ (million
_ _ 640
')
Actual cut (million m')
357
a Forest lands refer to ar
as that can support the growth of trees,
while forested lands are
defined as areas that are covered by
timber.
b The term "mean annua
increment" (MAI) refers to the volume of
wood added yearly to th
growing stock.
The allowable cut is th~
volume of wood that loggers can harvest
every year without dama
mg a forest. Theoretically, a forest should
be managed on a cycle o
100 to 150 years with equal shares being
harvested and regenerat
d each year. Soviet forests do not fit this
profile; they are heavily
Bighted with overmature stands. This
imbalance is reflected in
the difference between the MAI and the
allowable cut. The Sovie
s in recent years have tried to eliminate
this discrepancy by belt
forest management. If they are success-
ful, the allowable cut coi
d reach the level of the MAI by the end of
the century.
Forest land a (million hegtares) _ 1,275
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In exploiting its res urce base, however, the USSR
has had to deal wit several factors:
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? Accessibility: Newly 75 percent of Soviet forests lie
in the remote terra
where mountains,
development. Only
tories of Siberia and the Far East
bogs, and permafrost impede
half of this area is accessible to
commercial cutting because of a lack of roads.
Age: About 70 pet
resource base are
reason, half again
cut. These overma
defects such as kn
quality of the pros
? Species: The speci
larch dominaies. 1
cause of its high r
the machinery, a s
this species for do
cent of all stands in the Soviet
~vermature. Probably for this
as many trees die each year as are
tare stands frequently contain
ots and crooks that lower the
facts made from them.
es mix is mainly coniferous, and
,arch is difficult to process be-
~sin content. The sap penetrates
:haracteristic that limits use of
mestic consumption or for export.
Because of its high density and consequent tendency
to sink in water, l~rch is best transported by rail.
? Reforestation: Timberlands commonly are not re-
planted after clearcutting,' and many young trees
are destroyed during logging and the construction of
factories and roads. Although the lack of reforesta-
tion is not an immediate problem, it will force the
USSR to draw on more remote areas for wood and
to incur greater costs in the coming decade.
? Overcalling: Because extraction costs are so mach
higher in the Siberian regions (see appendix A,
Table A-1 for a comparison of costs over time),
Moscow has concentrated cutting in the northwest-
ern RSFSR, the forest region exploited by the czars.
Timber reserves in this zone have accounted for only
20 percent of the country's total resources but have
contributed nearly 70 percent to the annual cut.
Many coniferous tracts already have been overcut.
? Fires: Forest fires have destroyed vast timberlands
in the Transbaikal, Siberia, Karelia, and the Urals.
these fires were numerous
and their size particularly severe in 1979, 1981, and
1982. Especially noteworthy was the damage in
1982 to timber reserves in Khabarovsk Kray, where
approximately 100 million cubic meters (m') of
timber burned. This represents about 1 percent of
the region's growing stock and roughly seven times
the yearly export of logs. Khaborovsk Kray is an
area whose production is targeted primarily for
export.
? Pollution:
~a pulp complex at Bratsk, one of the main
processing centers, has cut its operations by half
because of pollution it caused in Lake Baikal. In
addition, some pulp and paper plants have been
accused of destroying trees that have toxic dis-
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charges. While this pollution has not had a major 25X1
effect on the natural resource base, the Soviets are
discussin cleanu programs for the next decade.
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Management and Labor Force
About 100 separate organizations manufacture forest
products. The Ministry of Timber, Pulp, Paper, and
Woodworking (Minlesbumprom), although it is the
main administrative body, handles only a little over
one-half of the logging and approximately two-fifths
of lumber production. It accounts, however, for all
pulp and paper processing. The State Committee of
Forestry harvests about 18 percent of the annual
timber cut and independent loggers and sawmillers-
who are loosely associated with different ministries,
collective farms, construction units, and factories-
account for most of the remainder (25 percent of
logging and three-fifths of Sawmilling). In terms of
employment, the Ministry oversees 60 percent of the
full-time workers in the logging, Sawmilling, and pulp
and paper sectors (see table 2). The State Committee
of Forests employs roughly 15 percent of the forest
products work force, almost exclusively in logging,
and the independents make up the remainder of the
labor contingent.
Timber quotas for the independent loggers' output are
included in the plans of the sponsoring associations
and are directed by the State Planning Committee
(Gosplan). Loggers and sawmillers must provide the
wood to the overseeing organization. There is much
duplication. loggers and
sawmillers from different associations operate similar
processing facilities in parallel, "separated by a deaf
bureaucratic fence," that prevent economies of scale.
These independent units operate at a high average
cost with loggers earning twice the average wage paid
by the Ministry. Despite the incentive of high wages,
productivity is low. According to one Soviet scholar,
labor productivity in these units is between one-half
and one-third and sometimes as low as one-fifth that
of loggers in Minlesbumprom. In addition, in contrast
to Minlesbumprom, independent loggers reforest only
a small part of the area they log and generally fail to
improve the infrastructure of the region.
In the competition for timber, the concessionaires
often harvest only the best timber and ignore less
valuable wood, thereby reducing the utility of the area
for exploitation. In some areas, specifically near
Bratsk and parts of the Baikal-Amur Mainline Rail-
road (BAM), the independents commandeered major
Table 2
USSR: Workers in the
Forest Products Industry
Total
4,059
4,086
Logging
1,178
1,045
Sawmilling and woodworking
1,348
1,357
Pulp and paper
269
290
Wood chemicals
14
a
16 e
Furniture
500
a
628 e
e Estimated.
b This category counts independent workers employed by other
ministries, university students, Komsomol members, criminals, and
seasonal laborers, who are not included in the official forest
products industry labor statistics.
sections of the timber tracts that were set aside for use
by the Ministry. They are able to circumvent the
established plans easily because these workers log in
remote areas beyond administrative control.
The labor force in the Soviet forest products industry
has some special characteristics that bear on its
performance.
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in the USSR some 300,000 prisoners, at least 10
percent of the forest product labor contingent, are in
forced labor at roughly 350 logging camps and saw- 25X1
mills.'
The strenuous labor and location of the work involved
in logging are characteristics well suited to the Soviet
penal system-a system that stresses rehabilitation
through labor and seeks to isolate impure segments of
society. The use of convict labor is not new to the
forest products industry. The czars, too, sentenced
criminals and political prisoners to remote timber
settlements. Current operations are concentrated in
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Table 3 j
USSR: Average An~ual Growth of Forest Products Output a
Forest products industry)
2.6
2.9
2.6
-0.3
2.3
Logging
0.8
1.2
0.8
- 2.2
0.1
Sawmilling and wo
dworking
1.4
1.2
0.1
-3.1
0
_
Furniture
'
-
10.4
-
9.1
8.8
5.4
6.8
~
Pulp and paper
7.7
7.2
5.0
0.5 2.6
Wood chemicals ~
4.4
-4.4
3.5
0.9 0
a CIA's index of Soviet industrial production. These indexes are
calculated to account fod the distortions in Soviet data that result
from changes in double-counting and disguised inflation.
0
- 1.3
- 0.7
4.9
the Urals, the Northwest, the Volga-Vyatka, and the
Siberian economic
motivation, equipm
labor has generally
ship than other fore
egions. Because of problems with
nt, and living conditions, convict
ower productivity and workman-
t products workers.
In addition, about 0,000 foreign workers, or roughly
1 percent of dourest c logging and Sawmilling workers,
are allowed to harv st wood in isolated undeveloped
areas. Since 1967 s me 7,000 to 10,000 North Kore-
ans have been cutti g timber in the Far East, and
19,000 Bulgarians currently log in Komi ASSR.
Finnish workers maQce up the remainder and are
located in the Kola ~Peninsula.s
r arrangements, the labor export-
d either retain the remainder for
y it to external financial accounts.
es have been used to pay for
~t of goods and services, for future
~y debt. Guestworkers are offered
and financial benefits-food is
is free, and lodging is either free
;es are higher than in their native
Finally, women represent roughly 50 percent of all
workers in the forest products industry. They take on
some of the most physically demanding jobs, particu-
larly at delimbing sites, where they manually remove
branches and sort logs.
In productivity, workers in the Soviet forest products
industry lag far behind their counterparts in the West.
The labor force is widely dispersed throughout south-
ern Siberia, the northwestern European RSFSR, and
along the Pacific coast-regions similar to Canada in
terrain and climate. Nonetheless, for the reasons
discussed in the following section, output per Soviet
lumberjack is about one-fifth that of a Canadian
woodsman.
lion).
Output
Although the USSR remains the world's largest
producer of lumber and the second-largest harvester
of logs (the United States is first), the forest products
industry slowed Soviet industrial growth during the
1976-80 Five-Year Plan. (See table 3 for industry
growth rates and table 4 for absolute levels of produc-
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Table 4
USSR: Production of Principal Forest Products
e Estimated.
Source: Narkhoz for appropriate years.
From 1961 to 1975, output in the forest products
industry grew by an average of 2.5 to 3 percent per
year. Between 1975 and 1980, performance deterio-
rated abruptly as output on average fell by 0.3 percent
per annum. Production in the two main sectors,
logging and sawmilling and woodworking, declined
substantially.
The phasing of the decline-the logging sector was
hurt before others-suggests that the effects trickled
down the tine. (See appendix A, table A-3 for annual
percentage changes in production for individual
sectors of the forest products industry and figure A-1
for a graph of three-year moving average growth
rates).6 Although the logging sector has rarely exhibit-
ed annual growth over 4 percent, a marked slowdown
began around 1971. One year later the slowdown
spread to the sawmilling and woodworking sector,
with the annual rate of decline in production acceler-
ating so much that in 1979 output dropped by 6
percent. Pulp and paper did not feel the pinch until
1977. During the first part of the seventies, pulp and
paper grew by 4 to 6 percent per annum, but the rate
dropped in 1977 to less than 2 percent and in 1979
output declined by 6 percent. Furniture production
grew by 8 to 9 percent per year in the early 1970s and
by nearly 6 percent per year during 1976-80. Such a
high growth rate in the face of an industrywide
slowdown suggests that the sector was given priority
as a gesture to increase consumer welfare.
More recently, performance in the forest products
industry has been mixed. In 1981 and 1982, produc-
tion of commercial timber continued to decline. Out-
put of lumber stagnated in 1981 and fell slightly in
1982, while the pulp and paper and furniture sectors
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Table 5 I
USSR: Index of Fodest Products Production
!i
~
Weight in Total
Index
__
1970 1980
Logging sector i
36.8 30.5
Fuelwood
7.9
7.8
Industrial logs
92.0
92.1
Sawmilling and woodwo king
~~
~~
33.9
26.0
Plywood ~
11.2
12.8 ~~
Lumber i
88.8
87.2
Furniture
15.5
27.4
Pulp and paper I
13.1
15.2
Newsprint ~
9.2
9.2
Wrapping and pack
ng
8.7
7.4
Printing '
3.9
4.0
Writing paper
7.9
6.7
Sacking
5.9
5.9
Offset printing
2.0
2.1
Deep printing ~ 1.3
1.2
__
Lithographic I 0.3
0.2
Cartographic 0.5
0.4
_ _ Cable insulation 2.5
3.1
Capacitor paper ~ 0.7
0.7
Waxing paper I _ 0.4
__
0.4
Other paper ~ _ 12.9
13.5
Paperboard 42.3
44.3
Wood chemicals ~ 0.8
0.8
Note: The CIA index of utput in forest products is based on 22
production series reporte by the Soviet Central Statistical Admin-
istration. Most data for aper commodities were dropped in the
early seventies, however, so these are estimated from total paper
output reported in the N rkhoz.
rebound.
enjoyed spurts of gr wth. Preliminary data for 1983
indicate that there ill be modest improvement this
year. Most importa t, the output of commercial
timber has stopped is decline and exhibited some
growth, while the p oduction of paper continues to
As the volume of production fell in the late 1970s, the
quality of output also continued to be a problem.
Government grading of forestbased products was uni-
formly low, especially for the highly processed com-
modities, and the product mix did not conform to the
specifications of either industrial or household con-
sumers. One Soviet survey found that the products of
34 separate enterprises did not meet state standards.
a primary reason for
the low-average quality is the absence of the measur-
ing and quality control equipment used in most US
plants.
Some common complaints relating to quality are:
? Lumber is often excessively moist, leading to speedi-
er decay, warpage, and difficulty in handling. Only
14 percent of lumber in the forest products industry
is kiln dried, while in the United States and Canada
almost all lumber is processed in this way.'
? Poor finishing and trimming of lumber is common-
place. Only 60 percent of lumber produced is edged
(the ends of planks are cut evenly).
? Only two-thirds of wooden railroad ties are chemi-
cally treated for resistance to the weather. Other
types of products used outdoors are not treated at
all.
? The lack of standardization of products limits econ-
omies of scale and requires greater quantities of
storage space. Some railroad rolling stock often
serves as temporary or permanent warehouses.
' The percentage of kiln-dried lumber is slightly higher, about 35
percent, in Ministry enterprises. Independent loggers rarely have
access to such equipment and therefore the share is much smaller.
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Table 6
USSR: Average Annual Growth of Outputs,
Inputs, and Productivity in the
Forest Products Industry a
Factor Pro- -0.2 0.6 0.5 -2.0 -0.4 -1.2
ductivity a
Capital -7.7 -3.8 -5.3 -6.4 -4.5 -5.2
Labor 3.3 2.5 3.1 0.1 1.5 0.6
a Combined factor productivity is calculated using aCobb-Douglas
(linear homogeneous) production function. Inputs of labor and
capital are weighted with their respective income shares in 1970,
estimated in the derivation of GNP at factor cost in that year.
Labor is assigned 69.5 percent and capital 30.5 percent.
Source: CIA's index of Soviet industrial production.
Figure 2
USSR: Share of Capital Investment
Allocated to the Forest Products Industrye
Lugging, snwmilling, ,md woodworking sectors
e Including small amounts of investments made by collective farms; data for
other years exclude such investments. In value terms, capital investment for
the logging, sawmilling, and woodworking sectors amounted to 5.4 million
rubles (comparable prices) in 1971-75, 5.9 million in 1976-80, and 1.3 million
in 1981 and in 1982. The pulp and paper sector's share of investment totaled
2.4 million in 1971-75, 3.2 million in 1976-80, and 0.6 million in 1981 and in
1982. The total ruble amounts for capital investment in the timber branch
were 7.8 million rubles in 1971-75, 9.1 million in 1976-80, and 1.9 million in
1981 and in 1982.
Table 7
USSR: Average Annual Growth of Fixed
Capital in the Forest Products Industry a
1961-
1966-
1971-
1976- 1981
1982
65
70
75
80
Capital stock
9.3
7.4
7.7
6.6 5.5
6.2
Capital investments
6.0
2.9
5.6
0.2 5.6
0
quality-control checks. Some plants cannot pare costs
to these levels and manufacture a number of forest
products at a loss. In addition, wood products have
been in such short supply at these low prices that
consumers have bought up existing inventories, re-
moving the incentive that oversupply might have been
to improve quality. This may change, however, be-
cause wholesale prices for products have been raised
recently. The US Embassy reports increases of rough-
ly 30 percent, while reporting from the Soviet under-
ground press places the price hikes at 40 percent.
Supplies of Capital and Labor
Some of the slump in output during the 1976-80
period can be traced to a slight fall in the growth rate
of inputs of capital and labor into the industry.
Compared with the 1971-75 period, the average annu-
al growth rate of fixed capital declined by almost
2 percentage points; the ongoing decline in the labor
force was arrested somewhat (see table 6). As a result
total inputs increased by an estimated 1.8 percent a
year during 1976-80, compared with 2.1 percent a
year during 1971-75.
Fixed Capita[. After a steady increase in the 1960s
and early 1970s, the growth rate in capital stock
declined in the 1976-80 period (see table 7). The flow
of capital investment became a trickle in the 10th
Five-Year Plan, as Moscow shifted more funds to
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Table 8
USSR: Commissiol
the Forest Product
S.3 L 1 4.S 0.9 0.7 0.7
2.1 0.4 0.9 0.2 0.3 0.1
S09 102 271 S4 2SS 11S
Total Annual Total Annual Total Annual Total Total
Average Average Average
a Including capacity or mating in new construction and in expan-
sion and construction o existing plants. Source: Narkhoz 1980.
I
I
energy and agriculkure and substantially cut back the
increases in total i~
to the forest produ
industry's share of
percent. By 1982 t
3.7 percent (see fig
The downturn in it
commissionings of
older plants (see tal
new capacities ads
than half those adc
pulp and paper pla
produced primarily
in 1981, when caps
production were ac
1976-80. Several lc
completed, primari
volume of unfinish
however, was still 1
1976-81.Only abo~
was allocated to ne
Labor. Except for
ment in the forest ~
in decline since 19
lumberjacks, in pa
The 1981 investment
made by collective far
investments. ~
ping of New Capacities in
~ Industry a
lvestment primarily affected the
new plants and the expansion of
ale 8). In the pulp and paper sector,
:d in the 1976-80 period were less
led in the previous five years. The
nts that did come on stream
newsprint. The situation improved
lcities of 255,000 tons for paper
Ided, nearly as much as in all of
mg overdue projects were finally
ly the complex at Ust'-Ilimsk. The
ed construction for the industry,
sigh-over 70 percent throughout
It 20 percent of the new investment
w construction (see appendix A).
Table 9
USSR: Average Annual Growth of
Employment in the Forest
Products Industry a
he pulp and paper sector, employ-
roducts industry has been stable or
i5 (see table 9). The number of
ticular, has been shrinking steadily
figure includes small amounts of investment
s: data for other years exclude such
Forest prod-
0.3
-0.6
-0.4
ucts industry
Logging
-0.8
-1.2
-0.9
Sawmilling
0.8
0.4
0.2
and wood-
working
Pulp and
1.7
0.9
1.3
paper
o.l -a.s
___ ___
-0.8 0.6
since the mid-1960s, although technological advances,
especially improvements in automation have compen-
sated somewhat.
Manpower shortages in logging-most critical be- 25X1
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flow-have persisted for two reasons. The harsh
climate and lack of infrastructure make it difficult to
recruit and retain sufficient workers. In addition,
fertility rates among Russians, who traditionally work
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A convoy ojwood islloated
down the Kem River in the
Karelian portion 4f the USSR.
RiverJlotation is cheap and
fuel efficient.
Timber piled up at railroad
yards and trantler points be-
cause q(a lack q(rolling stock.
Loggers haul timberjrom the
forest on "corduroy"or wood-
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in logging, have been~l declining, thus decreasing the
I
The traditional sour s of supplementary labor-
criminals, university tudents, Komsomol members,
seasonal laborers, an independent workers-have
been tapped to main ain an adequate labor force in
the forest products i dustry. They account for as
much as one-third o the workers in the logging and
sawmilling sector. T e Soviets, however, do not seem
to have relied on for ign labor to relieve the tight
labor supply. The nu ber of imported workers has
been small, slightly fiver 1 percent of the overall
timber labor force.
Productivity
Deficiencies in prod ctivity, however, rather than a
failure to provide en ugh labor and capital, accounted
for almost all of the oor performance of the forest
products industry in he late 1970s. Combined factor
productivity of labor and capital changed little in the
forest products industry during the late 1960s and
early 1970s (see tablf 5). Beginning in 1976, however,
factor productivity b~oke trend and turned sharply
negative. During the 10th Five-Year Plan, the indus-
try posted an absolu a average annual decline of
2 percent, one of the poorest performances in all of
Soviet industry.
Growth rates for bot
deteriorated in the s
experienced a rapid
falloff slowed from 1
during the next 10 y
other hand, showed
ments than in the p
the Ninth Five-Year
ty essentially stagna
capital and labor productivity
me period. Capital productivity
ecline in the early sixties. The
65 to 1970 and then accelerated
ars. Labor productivity, on the
n increase but in smaller incre-
t. After some resurgence during
Plan (1971-75), labor productivi-
ed over the next five years.
Factors in the Produ~Ctivity Downturn
l
wnturn in productivity are
The sources of the d
many-and assessin their influence is more art than
science. In order of elative importance, the industry
has been afflicted b
? Transportation sn rls.
? A raw material sq eeze.
? Machinery breakdowns and a lack of equipment.
? Manpower shorta~es in key occupations.
? Organizational conflicts.
Figure 4
USSR: Output of Forest Products
and Forest Products Hauled by Rail
ioo
- Output of forest products
Forest products hauled by roil
problems.
The industry seems to have been overwhelmed by the
severity, concurrence, and interconnections of these
Transportation
Rail. Transportation snarls were perhaps the major
source of the recent difficulties in the forest products
industry (see figure 3 for photographs of timber
transportation). Since the mid-1970s the performance
of the Soviet railroad system has deteriorated as lines
have become saturated. Bottlenecks appeared early in
the 10th Five-Year-Plan period and worsened to near
crisis in 1979, a year of particularly severe winter
weather. The forest products industry, notably the
logging sector-the industry's prime supply point-
was hit hard.9
As figure 4 shows, the decline in the volume of timber
hauled by rail is steeper than the decline in timber
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Figure 5
Choke Points in Transport of Timber by Rail, 1976-82
evastopol~
8la~A
Y~\
MOSCOW
Arkhangelsk
VOrkut
t[key .~ i
~~~
S~ '
tr 'r ~ .,
~'~eku,~
~,
rsq I
Iran
output; this ratio of rail transport to production was
roughly 60 percent in 1975 and fell to 52 percent in
1980. In absolute terms, the volume of timber shipped
by rail peaked in 1975 at 187 million tons and has
fallen steadily since.
The reason for this plunge in rail service seems to
have been the priorities set. Timber is neither a major
nor a strategic rail customer; its share of total freight
tonnage is only about 4 percent. As the demand for
rail freight services outpaced growth in railroad trans-
port capacity during the 1976-80 period,
railroad officials probably chose
to cut back rolling stock earmarked for timber ship-
Moscow even imposed bans and embargoes on timber
traffic as thousands of railcars were diverted from
other operations to move grain imports and other
The United States Goremment has not recognized
the incorporation of Estonia, Latvia, and Lithuania
into the Sovist Union. Other boundary representation
s not naceaaardy autnonmgve.
Arctic Ocean
Japan.,.
critical commodities. No such bans had been neces-
sary during the Ninth Five-Year Plan period. The
consequences of these delays and backups were severe
for logging operations. Logs piled up at downstream
river concentration points and at railroad depots.
According to Soviet calculations, the amount of
timber that accumulated at these transit facilities was
two to five times the amount that the yards were
designed to accommodate and considerably higher
the early 1970s.
the bottom layers rotted, a process
indicating that the wood had been ignored for two to
three years. In some cases, the log decks became so
high that they collapsed in the spring when the ground
softened and gave way. (See figure 5 for specific areas
that had large backups and major delays in timber
transport during the 10th Five-Year Plan).
China q ~igco
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The narrow selectio of railcars compounded the
difficulties caused b~ limited rolling stock. The
Soviets elected to ap
construction to gond
example, estimates t
shipped in the last fe
This type of car, hov
portion a large share of railcar
plas. A recent US study,10 for
hat almost 70 percent of timber
~w years was carried in gondolas.
fever, is not designed for the
shipment of bulky c mmodities such as timber. More-
over, logs were tran orted in unprocessed form,
deflating the volume
40 percent.
of usable product by 30 to
Shoddy work is end mic in the Soviet Union, but this
problem seemed to i tensify in the rush to put timber
back on the tracks. ress reports note some of the
---~-~ - -
?Wood was not sor d by size or species.
? Haphazard loadin was common, and both logs and
railcars were dam ged by excessive rubbing.
? Rail cars designed~to carry logs were not repaired
and maintained. ~
? Derailments occurred when chains holding logs in
place snapped. i
? Lumber and plywdod, not protected against mois-
ture and dirt, werd damaged.
~,
The situation was m
location of the forest
1970s, while the sup
timber products deer
changed. Processing
parts of the USSR, ~
new woodlands in Sil
parts of the Europea
reflected in the avers
stayed fairly stable f
sharply in the late se
ters in 1981-the lot
commodity in the U~
one-fourth of Soviet
remote areas, leading
6,400 kilometers-rc
Washington and Ha~
ide worse by a shift in the
products industry. In the late
ply of rail cars for transporting
'eased, the structure of demand
centers remained in the western
vhile logging camps shifted to
Feria, the Urals, and the northern
n USSR. The separation is
tge length of haul. The average
rom 1970 to 1977, but it rose
wenties to peak at 1,739 kilome-
tgest average haul for any major
iSR (see figure 6). Approximately
timber now comes from these
to transport distances of up to
iughly the distance between
~vaii (see appendix A, table A-5).
'? See Wharton Associate, October 1983, Can Andropov Kickstart
Figure 6
USSR: Average Length of Haul
for Rail Shipments of Forest Products
750 X950
Roads. Road networks are virtually nonexistent in
lumbering areas, preventing large-scale transfer of
logs by truck. Loggers do rely, however, on tempo-
rary, secondary dirt, gravel, and ice roads to haul
timber from the forests.
Past neglect of the secondary road system hurt the
forest products industry in the 1976-80 period. Har-
vesting had been extended year round in the 1960s,
and, since the road system performed well enough at
that time, Soviet planners did not allocate additional
capital for road construction. The situation changed
in the late 1970s as timber tracts around existing
roads were depleted. As the Soviets moved into more
remote woodlands, the average initial hauling dis-
tance from cutting areas to transit points increased
from 10 kilometers in the late 1940s to 45 kilometers
in the late 1970s, with the largest increase occurring
during 1976-80.
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The Soviets were forced to construct new corduroy
(wooden plank) roads. Over 35 million m' of timber
were diverted in 1976-80 for laying roads-far more
than in any other plan period. In the summer
trucks slid off these
poorly designed roads. Moreover, they lasted only for
two seasons-mud weighed down the logs and caused
them to sink. These difficulties were compounded by
the deep snows of the 1979 winter. (Winter is the peak
hauling season in logging because spring and summer
thaws turn most roads into swamps.)
Water. Aggravating the situation was Gosplan's deci-
sion in the 1976-80 Plan to restrict the use of ships for
transporting timber and its reluctance to use river
flotation of logs. The share of transport via water did,
however, increase slightly relative to shipments by rail
and road. Timber shipped in raft bundles or on barges
accounts for about 12 percent of all river traffic.
Water transport handles about half as much timber as
rail and is especially important for pulp and paper
plants, many of which are situated along navigable
waterways. Some 3.3 liters of fuel are used in trans-
porting one cubic meter of timber over 1,000 kilome-
ters via river. By comparison, the Soviets use 12.8
liters of fuel to ship this amount by rail and 56.6 liters
to haul it by truck. Why the Soviets did not make
more extensive use of waterways as rail transport
approached gridlock is puzzling. The prevalence of
larch in the timber cut and its tendency to sink might
have discouraged a major shift to transport by water,
however, despite lower fuel and maintenance costs. ~
Squeeze on Raw and Intermediate Materials
Transportation bottlenecks during the late 1970s had
a ripple effect on raw material flows in the forest
products industry. Unlike other Soviet industries-
such as steel and chemicals where shortages of raw
materials constrained growth-the forest products
industry is endowed with almost unlimited resources.
The industry instead had trouble conveying wood to
and receiving materials from other sectors.
Sawmilling was one of the primary casualties of the
delays in transportation. On average, sawmills were
operated at little more than 80 percent of capacity
during 1976-80. Soviet press reports indicate that this
unused capacity resulted mainly from shortages of
timber. Ironically, while most mills were starved for
wood during this period, a few sawmills in Komi
ASSR received more than they could handle, and the
timber rotted before it could be milled. The structure
of the sawmilling sector exacerbated transport diffi-
culties: most mills are small, each with acapacity-
about half that of a comparable US facility-that
negates any economies of scale for transportation. In
addition, they are located in remote areas, far from
regular transportation networks, placing additional
burdens on the railroad.
Inadequate supplies of materials from other industries
also hampered the growth of the forest products
industry. According to our evidence, acute shortage of
diesel fuel and gasoline hindered logging in more than
15 oblasts in the winter of 1978/79. These shortages
were caused partly by severe weather and the result-
ing increased demand for fuel. Petroleum products
are critical for the logging sector because electric
power cannot be substituted to run hauling and
cutting machinery.
The pulp and paper sector, at the end of the product
flow line, suffered most from the raw material short-
ages. From 1976 to 1980, mill yard inventory fell to
40 percent of the norm. Open press sources noted that
many pulp and paper factories were left without
reserve stocks of wood, forcing them to rely exclusive-
ly on day-to-day deliveries. In some cases, factories
had to halt processing temporarily. Even when raw
materials were delivered, pulp and paper factories
operated intermittently because there were not
enough railcars to transport finished goods. According
to Soviet press accounts, pulp and paper combines in
Karelia were forced to store overflow output outdoors
and in production areas; from 1978 to 1980 plants
shut down a number of times. We have no evidence of
such occurrences during the 1971-75 period. Other
articles in Soviet trade journals indicate that the
quality of pulp deteriorated following an increase of
aged, less healthy trees in the harvest. The poor pulp
tore easily when manufactured into paper and led to
greater equipment downtime.
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Cutbacks in allocati
ed operations in the
managers complains
in power, which in 1
and damaged mach
paper factories con9
cal power and mush
According to our ev
electricity cutbacks
at least until 1987.'
shortages of the cha
manufacturing durj
jons of electric power also restrict-
s pulp and paper sector. Factory
red of brownouts and fluctuations
kurn caused temporary shutdowns
linery and products. (Pulp and
fume enormous amounts of electri-
operate on continuous flow.)
~idence, the Soviets expect these
to interfere with paper production
',There is also evidence of spot
~micals used in pulp and paper
Ing this period.
Capital Stock
The deteriorating ndition of capital stock and the
difficulties in repla ing it have contributed to the
decline of the fores products industry (see appendix
B), although this is a long-term trend and probably
only reinforced the effects of transportation bottle-
necks and interrup ions in the supply of materials,
fuel, and power. N arly two-thirds of the factories in
the industry, accor ing to complaints in the Soviet
press, are filled wit~i outdated equipment. According
to a US industry a pert, several major plants operate
on a technological evel comparable with that of the
United States in th 1930s and 1940s. Most sawmill
equipment dates fr m World War II-some is 35 to
40 years old-and ~annot handle the same amount of
timber cutting as modern mills
about 4, 00 modern sawmills could replace
the 35,000 the US R now employs. These figures
reflect the Soviet t ndency to keep equipment and
machinery in servi e for unduly long periods. The
actual retirement rate in forest products (3.8 percent
in 1970 and falling~to 3.0 percent in 1981) is much
below Western refs ement schedules.
The decision to pos pone modernization was costly for
the forest products industry. Equipment reached a
critical stage in its service life during the 1976-80
period.
breakdowns and re
the number of
pairs increased significantly com-
pared with that du ing the Ninth Five-Year Plan.
Independent logge s who operated outside the Minis-
try had even less a cess to new capital and had to
contend with even snore breakdowns. Utilization rates
only three out of every 10 skidding tractors (machines
that haul timber) actually removed wood from the
forest during this period. Two were assigned to other
industries-probably agriculture and construction;
another two were in working order but stood idle,
probably because of lack of fuel. The remaining three
required repairs and were waiting for spare parts.
With more flexibility in logging operations, some of
the problems in transportation could probably have
been ameliorated (see figure 7 for examples of logging
equipment).
Moreover, the forest products industry managers
made poor investment choices with the reduced funds
given to them in the 1976-80 period. The expansion of
facilities in the European USSR, with its already
developed infrastructure would seem to have made
more sense. But the Soviets chose atwo-pronged
investment strategy-construction of large-scale for-
est industrial complexes at Bratsk and Ust'-Ilimsk in
eastern Siberia and renovation of older facilities in the
Northwestern and Urals regions. Both endeavors
yielded disappointing results.
Plans indicated that growth of the forest products
industry in Siberia would continue to follow the
traditional extensive path, relying on the region's
untapped resources, but growth was hindered by large
cost overruns, delays, and coordination problems.
Difficulties in commissioning Bratsk and Ust'-Ilimsk
facilities resulted from poor planning, the harsh cli-
mate, peculiarities of building on permafrost, delays
in the delivery of construction materials, and prob-
lems in retaining workers.
In the northwestern regions of the European USSR,
the plan to promote intensive growth (more productive
use of inputs) by upgrading equipment and redesign-
ing facilities did not succeed. Although we do not
know all the reasons for the failure, Soviet statements
have indicated that production was disrupted in the
construction process and a number of projects were
abandoned in midstream because funds had been used
up. Moreover, ministry rhetoric aside, complaints in
Soviet trade journals note that most enterprises only
expanded capacity by using obsolete technology rath-
er than renovating.
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For the USSR the traditional sources for state-of-the-
art forest products technology have been imports from
Finland, Sweden, West Germany, Japan, and CEMA
partner Poland. Forest products machinery played a
small role in the Soviet import structure-its share of
total imports remained 2 to 3 percent throughout the
1970s. According to foreign and US researchers,
however, the forest products industry is one of the
Figure 7. Equipment ojthe Forest Products Industry
Top Left: A Ural 222 chainsaw. Above: An alternative to the
traditional logging chainsaw is a feller-buncher. In one continuous
operation, avice-like cutting wedge jells and then trany(ers the
trees to trucks. Middle Left: Such tracked skidders (or hauling
machines) easily become mired in the mud oJ'theforest and remain
idle because c!/'the lack ojspare parts. Note the choking cables.
Left: A P-2 log loader adapted from an agricultural tractor.
heaviest consumers of foreign equipment in the Soviet
economy, with 20 to 25 percent of its total capital
stock originating abroad.
Because of such significant reliance on foreign ma-
chinery, the downturn of timber machinery imports,
beginning in 1978, constrained production even fur-
ther (see table 10). Limits on imports resulted primari-
ly from scarce Soviet hard currency reserves and the
reduced trade flows brought about by Western sanc-
tions precipitated by the invasion of Afghanistan.
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Table 10
USSR: Imports of quipment for
the Forest Product Industry a
1970
1971
19 2
1973
1974
1975
1976
101.4
66.0
12.8
141.8
140.9
145.8
182.9
a Source: Vneshnaya to~govlya for appropriate years.
n This series has been adjusted for inflation by a derived CIA index of machinery prices.
Estimated. I
While forest produ~ts machinery was not specifically
put under embargo the general strain in relations at
that time caused many new timber barter negotiations
to be canceled or stponed. Imports from Japan were
most affected.
Assimilation of for~ign technology, always difficult
for Soviet industry, slowed during the 10th Five-Year
Plan. For example,~the USSR purchased expensive
pulp and paper ma~lufacturing machinery for the
Bratsk and Ust'-Ili sk complexes from Finland, its
major supplier. Tht~ equtpment remained idle for two
and a half years be ause of delays in the construction
of buildings. Fores products managers were forced to
store much of the achinery outdoors, and it was
subsequently ruine in the frigid climate. Realizing
the technical diffic lties in linking Soviet and foreign
machinery, the Sov ets decided to concentrate the rest
of their Finnish u chases on turnkey plants. Howev-
er they neglected to
train wor ers; cap tty was un erutilized and some
equipment was da aged.
The Japanese equi ment bought during the period
was designed fors all-scale facilities and a milder
climate. The origin 1 plan for use in older plants in
the northwestern SFSR was altered, and the equip-
ment was diverted o the large-scale facilities of
Siberia, where it d' not work well.
Other Factors
Our analysis of the factors already discussed-trans-
portation snarls, ra materials shortages, obsolete
equipment, difficul y in commissioning new plants,
and the decline in ' ports-suggests strongly that
they were significant elements of the story of declin-
ing production in the forest products industry after
1976. The case is not so clear cut for human factors.
Low worker morale, high labor turnover, bureaucratic
infighting, and poor management have been chronic
throughout Soviet industry. The cumulative and com-
pound effects of an unfavorable social and managerial
situation in the forest products industry, however,
may have contributed to the decline in forest products
output and productivity.
Labor. Loggers, the industr 's backbone have alwa s
worked in or conditions.
(lumberjacks worked 20-hour days dur-
ing the peak harvest season in late summer and early
fall. Although logging is relatively dangerous any-
where, the Soviet accident and injury rate,
is significantly higher
Even though wages have increased substantially since
1965 and are now more competitive with salaries of
higher priority sectors, labor turnover has remained
high. Ninety percent of lumberjacks in Siberia leave
within a few years. Poor housing and lack of public
and cultural services are major impediments to labor
stability. Some loggers endure the most primitive
living conditions, moving from one makeshift camp to
the next. The persistent bad conditions probably have
discouraged workers, who had hoped to see improve-
ment.
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Meanwhile, the level of training of new forest prod-
ucts workers has actually declined since the early
1970s. Soviet press reports note that only three out of
every 100 new workers in the pulp and paper sector
had any vocational training, far fewer than in previ-
ous plan periods. Many other forest products workers
did not even complete secondary school, which sug-
gests that the industry is a dumping ground for poorly
educated workers. The skilled personnel drain was
most acute for maintenance, repair, and instrumenta-
tion jobs.
Organization and Management. Facing mounting
difficulties in many forest products areas, Soviet
managers struggled to maintain the production plans.
In many ways, they became their own worst enemies.
While it is not possible to measure statistically the
mismanagement and interministerial rivalry during
the 10th Five-Year Plan, the level and tone of press
complaints indicate these factors affected the decline
of output.
In recent years the forest products industry has had
no coordinating center; the timber and sawmilling and
woodworking sectors were under a different ministry
than the pulp and paper sector. With the pressure to
halt the decline in production that began in 1975,
Soviet sources indicate that managers in these two
ministries were quick to blame each other, wasting
time on bureaucratic infighting. Moreover, they only
reluctantly coordinated efforts, a critical mistake in
an industry so closely linked in terms of raw materials
supply. According to Soviet press reports, forest prod-
ucts managers did not intervene in intrabranch distri-
bution and could not make on-the-spot decisions to
provide raw materials to their own factories. Such
inflexibility and uneven use of resources occurred
partly because of the strict requirements set by the
State Committee for Material-Technical Supply
(Gossnab), which was established to replace the minis-
terial supply system and to prevent the perennial
problem of hoarding.
According to US Embassy monitoring of the Soviet
press, relationships deteriorated to such a point that in
1980 the Soviets merged the two sectors. Such admin-
istrative reshuffling is not new to this industry; the
sectors have been separated and joined six times since
1945. We believe some improvement is evident, but
major cracks seemed to have been mere] a ered
over. lines of
authority are still blurred, and another layer of
management, which clogs the decisionmaking process,
has been added. Gossnab still interferes in some of the
internal management. Most important, Soviet reorga-
nizers did not tackle fundamental problems in com-
munication and ideology that divide the logging and
pulp and paper sectors. (Managers in these sectors
have different views of the purpose and use of timber-
lands.)
Although poor planning and lack of coordination had
always been evident in the forest products industry,
from 1976 to 1980 the Soviets no longer had slack in
the system to absorb mistakes. The vagueness of plan
goals also affected production. For example, the log-
ging plan was poorly defined with cutting require-
ments specified only for coniferous and deciduous
trees. Wood processing equipment is geared to one
species of trees; using the wrong species decreases the
machinery's efficiency and working life.
Production
Soviet plans for the 1981-85 period call for production
in the forest products industry to increase by 17 to 19
percent or 3.2 to 3.5 percent annually from the levels
achieved in 1980. (Goals for specific commodities are
listed in table 11.) Because quotas for independent
loggers and sawmillers are not included in the Minis-
try plan, actual output of roundwood and lumber will
be higher; independents account for three-fifths of
lumber production and one-fourth of timber harvest-
ing. Most raw wood and forest products will continue
to come from the more accessible forests and plants of
the European USSR. Cutting this area will increase
short-term timber production but will further delay
the development of the rich, remote Siberian forests.
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Table 11
USSR: Production T
Forest Products Min
hrgets for the
pstry, 1981-85 a
Actual
Output
1980
Planned
Output
1985
Timber-industrial and fi~el-
wood (thousand m')
315,700
__
335,900
Industrial timber
(thousand m')
Including:
Wood chips
~
9,700
16,500
_
Lumber (thousand m') ~
73,600
81,800
_
Plywood (thousand m') ~__
2,022
2,600
Particle board fi
(thousand m') ~
5,118
8,430
Fiberboard (million m') ~
469
666
Furniture (million rubles)
6,086
7,686
Pulp (thousand metric to s)
7,123
9,520
Paper (thousand metric t ns)
5,288
6,4_76
Cardboard (thousand me ric
tons)
3,445
4,960
Total
Growth
1981-85
(percent)
6
a Source: V.P. Tatarinov,' azvitie lesozagotovitel'noi promyshlen-
nosti i transporta lesa: L soekspluatatsiia i lesosplav (Moskva:
VNIPIEIIesprom, 1982), . 33. Data for particle board and fiber-
board corrected in accord nce with the Narkhoz. Quotas for
independent loggers and awmillers are not included in this plan.
Actual output, especially or timber and lumber, will be higher.
When we consider tl~e 0.3-percent average annual
decline in the last pl
optimistic, indeed, u
~n period, these goals seem
nrealistic. Our best estimate is
Lion of commercial timber by
that by 1985 produce
Minlesbumprom and
tween 279 million a
million m'. These le
production but will
goals.
independents will stabilize be-
d 284 million m' while that of
els will represent an increase in
of approach the 1981-85 plan
The foundation of o~tr estimate of improved perform-
ance is the consensu among Western industry experts
that there will be a ebound from the sharp decline in
output, especially fr m the abnormally low levels of
production in 1982. The strength of the recovery a
growth rate of 1.5 to 3.2 percent for commercial
timber and 1 to 2 percent for lumber~lepends on
weather, transportation, and capital stock. Recent
trends suggest that transportation tieups-the major
element in renewed growth-will ease to some degree
in the rest of the 11th Five-Year Plan. This sector has
been given top-level attention in Andropov's discipline
campaign, resulting in a housecleaning in the mana-
gerial ranks. The Soviets focused on such measures
because they never expected bottlenecks on rail lines
and still believe the root of the problem to be bureau-
cratic inefficiency and hoarding of reserves.
A campaign to involve factories and other shippers in
the repair of damaged freight cars has been imple-
mented and will have a positive effect as well. New
performance indicators emphasize tonnage of traffic
originated rather than distance of haul. These
changes will reduce incentives for long hauls and may
shift attention to heavier freight-like timber. Further,
Gosplan has set more demanding rail schedules to
improve turnaround time and has given local officials
more autonomy. The opening of major sectors of the
Baikal-Amur Mainline (BAM), too, will aid the ship-
ment of timber. These rail lines will cross rich,
previously untapped tracts; will relieve traffic conges-
tion; and will direct more timber for export to Pacific
customers.
All problems will not disappear for the railroads,
however. Freight car shortages and poor maintenance
of rolling stock will still plague the system and thus
will put a cap on timber production. The ceiling of 3.2
percent growth in timber production (also the expect-
ed growth rate for 1983) reflects the highest estimates
of transportation performance and the consequent
elasticity of demand for rail services by the forest
products industry.
Athough improvement in transportation will relieve
raw material constraints in other sectors, the effect on
lumber production will be diminished because of
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structural weaknesses. The dispersal of milling opera-
tions in remote regions far from transportation net-
works, will dilute the flow of timber to this sector and
limit growth.
Further, replacement of obsolete equipment, upgrad-
ing of technology, and expansion of capacity will
continue and contribute to increased production. Yet
the optimistic goals will not be achieved because of
low investment and consequent delays. Investment
allocations for the forest products industry have not
been announced, but we do not believe a share
increase is likely for any of the sectors; instead the
industry probably will receive less funding because of
its low priority. Moreover, we foresee no future large-
scale projects for forestry before the late 1980s. ~
Production of particleboard and fiberboard will prob-
ably grow dramatically from the present low levels.
To increase production, the Soviets can use wood
waste; the investment required is minimal compared
with that for highly processed products. The demand
for these cheap alternatives to lumber and plywood
already exists and promises to be strong in the future.
Growth of output in pulp and paper will be supported
by the cellulose and paper mills-whose construction
had been delayed-that will begin operation in the
11th Five-Year Plan (see table 12 for projected new
capacities in 1983). For example, parts of the large
Ust'-Ilimsk mill probably will begin production before
1985. We project that paper and pulp production will
increase by about 2.5 to 4.0 percent per year with a
possible spurt near the end of the plan period but will
fall far short of the plan goal of a 30- to 40-percent in-
crease for the entire Five-Year Plan.
The Soviets also announced goals for increases in
labor productivity of 16 to 18 percent during the 11th
Five-Year Plan, or about 3 to 3.5 percent a year.
Again, we believe the Soviets will not achieve such
gains but may see some improvement, partly because
of Andropov's discipline campaign.
Production will be hindered by labor shortages result-
ing from declining birth rates, which will be felt
throughout the economy. The forest products indus-
try, saddled with a low priority, will feel the pinch of
Table 12
USSR: Planned Expansion and New Construction
of Major Soviet Pulp and Paper Mills, 1983 a
Svetlogorsk Pulp and Paper Plant
(Expansion)
70,000 tons, pulp
Khaborovsk Kray
Amursk Pulp & Paperboard Combine
(Expansion)
40,000 tons, pulp
Leningrad Oblast
Svetgorsk Pulp & Paper Combine
(Expansion)
140,000 tons, pulp
Syktyvkar Forest
Industrial complex (new construction)
100,000 tons, paper
Svetogorsk Pulp & Paper Combine
(Expansion)
160,000 tons, paper
Amursk Pulp & Cardboard Combine 40,000 tons,
(Expansion) cardboard
e Source: "New Capacities for 1983," Lesnaya promyshlennost',
29 January 1983, p. 1, col. 1.
More than 70 construction projects are scheduled to come on
stream in the timber branch in 1983, but only the major ones are
included in the table. The 1983 plans are marked by a sharp
reduction in new construction and a concentration of investment on
projects already started or nearing completion.
fewer workers more severely, although the use of
forced labor will continue to provide a cushion. Be-
cause of manpower pressures, we believe the Soviets
will continue to let foreign workers log in isolated
areas. Any expansion of this guestworker force will be
small, however. Several factors inhibit a significant
increase in the use of foreign labor. Bulgaria, the
source of most foreign labor, is experiencing its own
domestic labor shortages. In addition, Soviet xenopho-
bia is strong, and there exists a real fear that guest
workers would cause discontent in the local populace.
Though relatively isolated, foreign workers inevitably'
have some contact with the Soviet population. Conse-
quently, Soviet citizens get first-hand reports of high-
er living standards in the labor-exporting countries.
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Candidates for new uestworker a reements are Cuba
and China. President
Castro raised the po sibility of sending some 500
workers to cut limb r in 1980 when Cuban timber
import requirement went unfilled." More recently,
the Soviets agreed t the exchange of 1 million m' of
Soviet lumber for C inese textiles and foodstuffs of
equivalent value. TI>/e tentative agreement provided
that Beijing supply he labor needed to cut the wood.
The use of foreign 1 bor, however, was not mentioned
in press reports oft a final agreement. We believe the
Soviets will allow a mall number of Chinese loggers
to fell trees in the b rder areas because of the need to
earn hard currency nd the desire to improve Sino-
Soviet relations. Ho ever, we think it very unlikely
that a substantial C inese contingent would be per-
mitted in the USSR even if the strong traditional
Japan, the major purchaser of roundwood and wood
chips, processes the wood into pulp, paper, and lumber
for housing. Japanese imports have fallen slightly in
the past two years because of sluggishness in housing
and the consequent buildup of inventories. Most
Japanese trade comes under compensation agree-
ments (see box).
animosity between t e two nations eased.
Exports
Timber is presently ~he USSR's fifth-largest hard
currency earner, follpwing fuels, armaments, gold,
and machinery (see appendix A for additional infor-
mation on exports). ~f the roughly 40 million m'
exported annually,12 about 16 million are low-value
logs and another 7 trillion are semifinished lumber.
The remainder is pl wood and other processed board,
pulp, paper, and car board. In terms of volume, about
75 percent of Indust ial roundwood exports and 40
percent of lumber a ports go to hard currency coun-
tries. Long-term rec procal barter agreements with
Finland and satellit countries account for much of
the rest." Hard curr ncy earnings from timber sales
averaged about $1 b llion per annum from 1976 to
1980, peaking at $1. billion in 1980 as a consequence
of sharply higher w ld prices. Earnings in 1981,
about $1.1 billion, d opped because of generally poor
economic conditions and the worldwide slump in
forest products prod ction and trade.
" Ina 1979 Party Congre s speech, Castro promised to send 10,000
Cuban workers to the So iet Union, but he probably made the
remark to gain media alt ntion.
logs.
" As part o guestworker greements, the Soviets receive a portion
of the timber cut by labo -exporting countries. If all this timber
were sold to the West, ha d currency receipts would be roughly $80
million.
The United Kingdom remains the primary buyer of
lumber, although its share of Soviet exports has
decreased in the past 20 years. Exports of other wood
products such as paper, cardboard, and plywood go
mainly to Eastern Europe.
Soviet exports account for only about 4 percent of the
world timber trade. The other leading exporters are
Canada (19 percent), the United States (13 percent),
Sweden (10 percent), and Finland (10 percent). West-
ern scholars, however, have found that Moscow pos- LAX"I
sesses market power in all its major hard currency
markets for timber, where it accounts for 20 to 25
percent of all sales. Evidence presented by the acade-
micians shows, however, that rather than manipulat-
ing prices in such markets the Soviets have been price
takers.
Sales of the two main exports, industrial roundwood
and lumber, have consistently amounted to about 5
and 7 percent, respectively, of total domestic produc-
tion. We expect this ratio to hold. The Soviets will not
be able to increase the exportable surplus much by
either diverting timber from domestic uses or from
other Communist countries. Shortages of wood prod-
ucts already plague many sectors of the economy,
interfering particularly with construction projects and
packaging. Moreover, most exports to Eastern Europe
and Finland are covered by CEMA and long-term
reciprocal barter agreements under which the Soviets
receive quasi-hard currency goods (that is, goods
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shipments from the countries ceased). Most of the
arrangements involve logging equipment from Fin-
land, Poland, and Czechoslovakia. Finnish timber
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The major impetus behind the rapid expansion of
Soviet trade with the West in the 1970s was the
desire to support economic growth in the 1980s and
1990s. The Soviets believed they could best accom-
plish this by acquiring capital and technology to
exploit their rich natural resource base (especially in
Siberia) and expand production in key industrial
sectors
To provide the necessary large amounts of foreign
exchange, the USSR sought to arrange compensation
agreements as a more palatable way of meetin debt
re a ment obli ations.
Under these compensation
agreements, Western companies contracted to supply
equipment Jor Soviet projects, and the Soviets ob-
tained guarantees from the.firms to purchase Soviet
products-ojten.from the output oJthese projects.
Most past barter deals involved natural gas, coal,
and chemicals, but some major contracts were writ-
ten with Japan and Francelor timber:
? From 1969 to 1973, Tokyo exported $166 million
in bulldozers and other timber processing equip-
ment in exchange for 8 million m' of Soviet timber,
wood chips, and pulp.
? A 1971 agreement provided for another $SO million
in Japanese equipment for Soviet shipment of wood
chips and pulpwood.
trade amounts to nearly $100 million annually and for
the two Bloc countries imports and exports are in the
same range.
The Soviets have attempted to increase hard currency
exports of more highly processed products, such as
paper, cardboard, and plywood. The hard currency
earnings from the sale of these products amounted to
roughly $24 million in 1981, and future earnings will
probably continue to be small. Western customers
have resisted Moscow's overtures because of the poor
quality of Soviet products. The investment in money
? Under the guidelines ojthe 1975-79 contract, Japan
exported $500 million in forestry equipment and
took delivery oJ'17.5 million m' oJlogs and 900,000
m' of wood products.
? France assisted in the building oj'a pulp plant near
Ust' Ilimsk in the early 1970s and received $61
million in cellulose.
? Under the terms of the original 1981-86 barter deal,
Japan was to receive 10-12 million m' of commer-
cial timber and 1.2 million m' of lumberfor
delivery of forestry equipment. The Japanese grant-
ed $950 million export-import bank credits to
finance the deal. Because oj'the current Japanese
trade surplus, machinery credits were cut in half
for 1983; it is not certain what 1984 negotiations
will yield.
In addition, to the Japanese contracts, the large
integrated forest complex at Ust =Ilimsk was built
and equipped collectively by eve CEMA countries
under aquasi-compensation arrangement. Poland,
Bulgaria, Romania, East Germany, and Hungary
invested a total oj$456 million. Total repayment is
set at 205,000 tons of cellulose per year beginning in
1979 and will run for 12 years
and time required to bring production up to Western
standards is substantial. The only commodity that will
probably bring in more business from the West is
particleboard-an inexpensive composite board that is
used as a substitute for lumber. There is strong
demand for particleboard in the developed countries,
and relatively few changes in the production process
are needed to satisfy hard currency purchasers.
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We believe that by 985, hard currency export earn-
ings will be $1.1-1.5 billion (1981 prices), representing
primarily the sale o about 14-16 million m' of
roundwood and 7 m llion m' of lumber. Underlying
our estimate is our lief that the supply of timber for
export will increase s production bottlenecks are
reduced and dourest c consumption remains con-
strained. Moreover, he Soviets are protected against
volatile swings in th market because of long-term
trade with Finland nd Japan that guarantees signifi-
cant amounts of ex rts. We see modest recovery in
the importing natio s, particularly in Japan where
housing and other c nstruction investment has turned
upward. However, t e range of the estimate reflects
our uncertair_ty reg rding the strength and duration
of the world econo
a small price rise be
Timber prices are n
col, according to tra
the Soviets wish to i
fluctuations in mon
is recovery. Similarly, we project
ause of this increased demand.
gotiated in a yearly trade proto-
e officials in the USSR, because
sulate themselves from wide
hly market price quotes
I
By the late 1980s t)~e Soviet position may improve.
Western experts ex ct prices to rebound significantly
as the business cycl for the housing-dependent forest
products industry t rns upward. Moscow can reason-
ably expect gains in the West European markets as a
result of forced red ctions in exports by Sweden and
Finland-major So iet competitors. The Scandina-
vian forests have be n overcut and will not be able to
sustain the current xport volume for long
Substantial increas
deficient in timber
sources of wood, as
can foresters. We t
the most of this sit
ing with American
market. Limitation
ments suggest, how
completely shut the
market.
s in export volume may also be
east-China and Japan. Beijing is
esources and is searching for
is evident from the negotiations
nts with both Soviet and Ameri-
iink the Soviets will try to make
ation by developing Siberian
he Chinese border and by compet-
;ompanies bidding for the Chinese
in Soviet ability to harvest and
3 rising Chinese import require-
;ver, that the Soviet Union will not
United States out of the China
Prospects for improved earnings with Japan are more
tenuous." Japan's present requirements for raw mate-
rials have been reduced by recession and structural
changes. However, Tokyo's heavy reliance on trade
and large existing capacity suggests that Japanese
businessmen might be interested in increased timber
imports when economic conditions improve. More-
over, Japanese businessmen have traditionally looked
to Siberia and the possible development of its mineral
and timber treasures. Furthermore, Soviet-Japanese
business ties in timber have always been strong, and
we believe the Japanese forest products industry
probably does not want to damage relations by reject-
ing new projects completely out of hand. If the Soviets
offer attractive prices in the economic agreements,
limit politically motivated preconditions, and push to
meet Japanese quality standards, Moscow could cap-
ture alarge share of future Japanese purchases.
Perhaps the most likely future deals would involve the
construction of pulp and paper plants on Sakhalin
during the 12th Five-Year Plan. This project has been
planned for some time, but Moscow and Tokyo
alternately rejected construction during the 1970s
because of domestic considerations. Another project
that might be resurrected is a forest complex at the
Angara Yenisey river basin-an unexploited area of
some of the world's best timber. If Moscow offers
better terms, Tokyo, as well as Finland, could become 25X1
partners in this project, although Tokyo's signals
indicate it would prefer a smaller scale program.
the Soviets could
boost ion an ar currency earnings quickly
by concentrating on lumber and wood chips. By
investing comparatively small amounts in kiln driers
and packaging for lumber, the Soviets could undercut
the prices importers would pay to reprocess the whole
logs. To accommodate Japanese requests for wood
chips, Moscow has chipped good quality roundwood,
while some one-half million m' of wood chips and mill
residue were discarded as waste. By purchasing some
.5X1
25X1
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separating machinery, the Soviets could earn hard
currency from the sale of this valuable byproduct,
save the roundwood for processing of other commod-
ities, and use an enormous amount of waste materials.
We see no indication, however, that Moscow is mov-
ing in these directions, most likely because of a
perception that composite materials are more profit-
able and that waste is unimportant.
Year 2000
Experts from the Food and Agriculture Organization
of the United Nations, the World Bank, and the forest
products industry foresee long-term trends that could
enhance the position of the Soviet forest products
industry. They point to the accelerating rate of deple-
tion of global forests and are particularly alarmed by
the rapid rate of deforestation of timber areas in the
tropics (tropical forests are usually comprised of hard-
wood trees). Although not all forestry analysts agree,
many believe that "the tropical forest ecosystem as we
know it will virtually disappear from the face of the
earth by the end of the 20th century."
If such depletion does occur, the scarcities of hard-
wood will not be permanent. Unlike coal and oil, trees
are a renewable resource and once replanted can grow
back in about 40 to 80 years. During the regrowth
period, however, the Soviets could reap substantial
benefits. The USSR's almost unlimited supply of
coniferous stock, though not a perfect substitute for
hardwood, might capture new markets and would
enjoy an almost certain price rise.
The main Soviet competitors will be the United
States, which has vigorously practiced forest manage-
ment and thus can count on a significant stable yield
for the next 40 years, and, to a lesser extent, Canada.
Ottawa will be unable to match Soviet and American
production because of present overcutting in critical
regions.
Demand will probably rise most for raw timber and
wood chips-a situation that will most benefit the
USSR because of its enormous reserves and its weak
processing sector. Customers in the Third World and
China will rely on wood for fuel and construction and
those purchasers in the industrial countries, most
notably Japan, have large capacities to process timber
themselves. To take advantage of the favorable mar-
ket, Moscow will need to improve transportation. A
good road network will be necessary to exploit rich
inaccessible timber tracts in Siberia and the Far East;
the agenda of priorities for all transport will have to
shift so that wood can be hauled to port facilities. The
development of the BAM and settlement-albeit
slow-of the Far East suggests that these will not be
critical constraints. Furthermore, the Soviets will
have to market timber aggressively, step up sorting
and grading procedures, and perhaps even increase
chemical treatment of wood. The most expensive, yet
potentially most lucrative, avenue Moscow can take to
improve its market position is to expand technology
for the use of larch. Under this favorable scenario,
hard currency receipts from timber sales could triple
or even quadruple.
Thus, Soviet forestry and forest products may be a
Cinderella industry, given a low priority now but
destined for much greater attention.
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Appendix A
Table, Charts, and Maps
Table A-1 ~
USSR: Production C~sts in Timber Extraction a b
II
Production cost ~ 12.14
(rubles per m')
all timber, including fuelw~ood
Commercial timber 51 65
Percentage change in cost all
timber, including fuelw
Soviet official cost increas
for timber
a Source: Narkhoz for appkopriate years. These increases in extrac-
tion costs correspond prim~rily to the development and exploitation
of timber tracts in Sibenaand the Far East; the costs include an
artificial 12-percent charge on fixed capital.
b Methodologyjor Calculi
A series for capital stock ~
capital growth indices for
/974, p. 196 and Narkhoz
machinery and equipment
stock series was the 1972
66).
The capital stock series w;
[ion (Narkhoz for appropr
the ruble value of the amc
The amortization charge i
production for each year t~
meter of roundwood prods
substituting commercial ti
excludes wood used for fu
ling Changes in Cost ojProduction.
as derived by converting the fixed
'ores[ exploitation (found in Narkhoz
1980, p. 141) into the ruble value of
The benchmark figure for this capital
apital stock survey (Narkhoz 1974, p.
is multiplied by the percent of amortiza-
iate years) charged per annum to obtain
rtization charge.
n turn was divided by total roundwood
~ derive an amortization charge per cubic
iced. (A second series was calculated,
tuber production. Commercial timber
~l.)
The charge per unit was divided by its percentage of timber
production's manufacturing cost for each year to produce an
approximate cost in rubles for 1 m' of wood. These data were found
in Narkhoz for 1970-78. Estimates were made for 1979-82 because
data were omitted in more recent editions.
A capital charge was added to the base manufacturing cost to
obtain a cost of production (rubles/m'). This capital charge was
derived by multiplying the assumed interest rate (12 percent) by the
derived stock figure for each year and dividing this figure by the
total physical units produced each year. Agzin, two series were
used, one for all timber and another for commercial timber.
The percentage changes in cost of production were translated into a
derived index that can be compared with the official index. The
difference between the two indices reflects the fact that official
Soviet cost figures include only amortization (or depreciation) as a
charge for the use of fixed or working capital. A synthetic interest
charge of 12 percent, the convention used by Western scholars, was
incorporated to approximate capital's contribution.
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Table A-2
USSR: Planned and Actual Growth Rates for the Forest Products Industry a
Average Annual
Growth Rate
Average Annual Average Annual
Growth Rate Growth Rate
1971- 1971 1972 1973 1974 1975 1976- 1976 1977 1978 1979 1980 1981- 1981 1982 19834
75 80 85
CIA index of Soviet 2.6 2.8 2.0 2.7 1.8 3.6
production
a Sources: Planned growth rates were either directly reported or
were calculated based on a sample of reported data; reported
growth rates were found in or calculated from data given in
Narkhoz.
b Planned growth rates are not always announced for individual
years.
The official rate of growth reported by the Soviet statistical
authorities is biased upward because gross output weights are used
and thus double-counting occurs. In addition, official data allow
disguised inflation to enter the indexes under the guise of new
product pricing, so this inflation is counted as real growth. The CIA
constructs synthetic indexes based on a sample of commodities in
physical terms, which are aggregated with fixed prices and value-
added weights. Value added is gross output less intermediate inputs
consumed. More specifically, value added includes profits, wages,
depreciation, and other payments to the factors of production plus
indirect business taxes and subsidies (as a negative income).
c Preliminary estimates.
Table A-3
USSR: Annual Growth of Output by Sector in
the Forest Products Industry a
Logging
Sawmill-
ing and
Wood-
Furni-
lure
Pulp
and
Paper
Wood
Chemicals
Logging
Sawmill-
ing and
Wood-
Furni-
lure
Pulp
and
Paper
Wood
Chemicals
__
working
working
1960
-4.7
1.8
18.4
4.5
1.5
1972
-0.3
0.1
8.9
4.5
-0.6
1961
-3.8
-0.7
15.8
6.0
3.3
1973
1.9
-1.7
9.7
5.9
10.7
19_62
0.8
0.6
12.5
7.0
2.1
1974
-0.3
-1.0
8.3
4.3
7.2
1963
4.6
1.9
10.0
5.6
1.0
1975
2.7
1.3
7.8
4.9
3.6
1964
3.8
4.0
6.1
7.5
9.0
1976
-3.5
-2.6
5.7
4.9
-1.1
1965
-1.3
1.1
7.8
12.6
6.7
1977
-1.8
- 2.8
6.5
1.9
3.2
1966
-1.0
-3.0
7.6
10.7
-3.2
1978
-3.9
-2.9
6.1
-1.7
0.3
1967
4.5
2.2
11.9
8.2
2.1
1979
-3.5
-6.1
3.0
-5.8
0.8
1968
0.4
0.9
10.1
5.0
-2.7
1980
1.6
-I.0
5.5
0
0.1
1969
-1.4
2.1
7.1
5.4
-9.2
1981
0.1
0
6.8
2.6
0
1970
3.8
3.8
9.0
6.9
-8.5
1982
-1.3
-0.7
4.9
0.1
0
1971
-0.1
2.0
9.3
5.5
-3.1
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Table A-4
USSR: Distribution of Investment Funds by Activity in the
Forest Products In ustry
Table A-5
USSR: Timber Transported by Rail
19k0
1965
1970
1975
1976
1977
1978
1979
1980
1981
1982
Tonnage hauled 1Q5.6
(million metric tons)
175.1
178.8
187.0
173.2
168.4
165.9
144.8
146.9
151.6
142.8
Freight traffic (bil-
lion ton kilometers)
2 9.7
263.0
294.5
307.7
284.8
277.1
282.1
242.6
251.8
263.7
247.2
Average length of
haul per ton (kiiome-
ters)
1, 87
1,502
1,647
1,645
1,644
1,645
1,700
1,675
1,714
1,739
1,731
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Table A-6
USSR: A Comparison of Annual Allowable Cut,
Actual Cut, and Mean Annual Increment in Logging a
Allowable Cut (Million m')
Actual Cut (Million m')
Utilization of Allowable Cut Total Mean
Utilization of
(Percent)
Increment
A
l
Increment
M
A
l
Total Conifers
Hard-
woods
Total
Conifers
Hard-
woods
Total Conifers
Hard-
woods
nnua
Increment
(Million m')
ean
nnua
Increment
(in percent)
USSR
1970 625.6 397.8
227.8
343.2
260.6
82.6
54.9
65.5
36.3
844
47.7
1975 640.1 407.2
232.9
353.1
265.1
88.0
55.2
65.1
37.8
881
46.7
1980 638.4 404.6
233.8
327.5
238.8
88.7
51.3
59.0
37.9
891
43.5
Northwestern Europe and the Urals
1970 255.1 143.3
111.8
225.5
154.2
71.3
88.4
107.6
63.8
279
95.6
1975 253.9 141.7
112.2
223.0
149.4
73.6
87.8
105.3
65.6
292
91.8
1980 250.9 138.3
112.6
198.5
127.5
71.0
79.1
92.2
63.1
324
74.1
Siberia and the Far East
1970
370.5 254.5
116.0
117.7
106.4
11.3
31.8
41.8
9.7
565
22.5
1975
386.2 265.5
120.7
130.1
115.7
14.4
33.7
43.6
11.9
589
24.4
1980
387.5 266.3
121.2
129.0
111.3
17.7
33.3
41.8
14.6
567
26.1
a Source: M. M. Drozhalov, "Lesopol'zovanifu-effektivnost' i
kachestvo," Lesnoe khoziaistvo, No. 7, (1982) pp. 36-38.
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Figure A-1
USSR: Three-Year
Growth in the Forc
Average Annual
st Products Industry
- I~urniturc I Saamilling and wruidworking
- Pulp and paper ~ Digging
Wood chcmiealti ~
(imwlh rotes ore a nvrvin@laverage orer a three-year period to smooth out
Iluctuations and rebounds. ~,
Figure A-2
USSR: Unfinished Construction in the
Forest Products Industry a
~nr~~n ~unie,
~.~ioo
VIII
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Figure A-4
USSR: Age Structure of Forests
I
" Refers to the oldest trees which are also rcudy lire harvest, although
must hove passed the pnm~ time for felling and have lust some commercial
value.
Fi are A-5 ~
g
USSR: Species C'pmposition
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Figure A-6
Leading Producers of Timber, 1981
Japan
West Germany
France
Figure A-7
Leading Exporters of Commercial Timber, 1981
us
Indonesia
Malaysia
USSR
Australia
Canada
France
West Germany
O 5 10 IS 20
Million cubic meters
0 50 100 150 200 250 300 350
Million cubic meters
Commercial timber
C Fuelwood
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Figure A-8
USSR: Exports o~' Forest Products, 19808
i
Million eubic meters ~
40 ~
I
I
Figure A-9 ~~
USSR: Composition of Forest Products Exportse
Wood-based Panels ?.~^'~,
Commercial timber-r
and wood chips
Lumber Pulp and paper
p ~~~.
m
a ...,~s
Commercial timber
and wood chips
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Appe~dix B
Spec is Problems With
Mac finery, Equipment,
and ethnology
Soviet press account$ are the main source of informa-
tion on the use of m chinery, equipment, and technol-
ogy in the forest pro ucts industry. Examples are
discussed in the Poll wing section.
I
Pulp and Paper
Problems with pulp end paper machinery begin at the
initial phase of prod ction-debarking. Wood bark
appears as dirt in fi 'shed paper so it should be
removed when proce sing most grades of pulp. Be-
cause debarking also boosts sawmill efficiency, logs
should be stripped b fore they are cut into boards and
planks. Yet Soviet p ess accounts in 1975 noted that
only 40 percent of ti ber had gone through this
indicates a shortage of machin-
ery. There is no indication that this situation has
improved. Moreover,) the Soviets use some machinery
that is obsolete and cumbersome, including chain
debarkers, which area uneconomical because they strip
wood together with hark. (American companies dis-
continued this method 20 years ago.)
After debarking, log designated to become paper or
pulp are put onto chi ping machines where large
rotating disks reduc them to small chips. In some
plants, chipping mac fines stand idle because there are
no blades available. ccording to Soviet sources, in
1979 only one-third f the needed blades were sup-
plied.
The chips, now calle~ cellulose, cook in steam boilers
or digesters, are was ed, and pass through filters and
rollers that remove t e water and slivers. Again the
capital stock is inad uate. Digesters are badly worn.
There are neither en ugh evaporator units nor enough
of the various rollers for the filtering machines.
If this thickened pul is to become white paper rather
than cardboard, blea king follows. This process repre-
sents the biggest bot leneck in the entire system:
? To conserve funds, 'the Ministry of Timber, Pulp,
Paper, and Woodw rking purchased inadequate fil-
ters from the Mini try of Chemical Machinery but
did not buy backup pumps or screens. Consequently,
the entire flow of production must be stopped when
these simple mechanisms need repairs.
? The pipelines in bleaching installations are not
designed to withstand the necessary levels of pres-
sure and often burst. As for many other machines,
parts are hard to replace. They must be custom
made, because standard new parts are usually a
different size and weight.
? Bleaching towers are placed outdoors and not in
protected, heated shelters. Chemicals in the bleach-
ing shops often corrode the filters and drums of the
washing units because the wrong alloy of steel was
used.
After bleaching, the washed and rethickened pulp is
carried through a series of rollers and becomes paper.
With high-speed papermaking machinery, effective
operation depends on frequent inspection and mainte-
nance, which is frequently neglected.
25X1
25X1
Logging
Technology in the to in sector is also inadequate.
oviet chain saws 25X1
are substantially inferior. On average, Russian chain
has only 25 percent of the life of chain manufactured
in the United States. Much Russian chain is not 25X1
usable at all-because the link holes are not uniform-
ly drilled, binding, rapid wear, dullness, and break-
down result. Most skidders (hauling machines used
only in the forest), have choking cables rather than the
grapples on Western machines. These devices slow
down production because an extra worker, achoker-
man, must be employed to operate them, and they
permit only a small bundle of trees to be moved.
'The lack of spare parts and insufficient repair work
restrict operations of other logging equipment, partic-
ularly tracked vehicles that have many parts. For
25X1
25X1
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example, according to a 1980 Soviet trade journal, a
logging truck worked an average of only 148 days and
a skidding tractor 108 days out of 270 because of
shortages of spare parts. The situation was even worse
in 1981 when logging trucks were used only 51
percent of the time.
The Soviets rely on tracked vehicles, spinoffs from
military technology, rather than wheeled vehicles.
Wheeled equipment is preferred by Western foresters
because it requires less metal to build and is more
productive and maneuverable. The Soviet tracked
vehicles easily become mired in mud when under full
load-one-third of the forested area of the USSR is
swampy. Tracked vehicles are also abused. Machines
are overloaded and the center of gravity is thrown off
when large, old trees are harvested. As a consequence,
traction and maneuverability are reduced, and the
machines are strained to their limits. There is no
indication that the Soviets are preparing to make the
major change over to wheeled vehicles. In any event,
Moscow must make do with tracked equipment for a
considerable period because converting production to
wheeled equipment would take 10 years or more. ~
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Secret
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