Russia’s timber industry is facing a catastrophic financial collapse, with half of all enterprises at risk of closure within the year, prompting desperate appeals to the government for emergency protection from creditors.
Industry Appeals for Government Protection
Major timber companies from the Arkhangelsk region have drafted an appeal to First Deputy Prime Minister Denis Manturov, warning of mass bankruptcies. They are requesting an immediate three-year moratorium on the initiation of bankruptcy proceedings by creditors, arguing that even large firms have exhausted their financial reserves. The companies are also seeking a deferral on tax and mandatory payment debts for at least three years, followed by an instalment plan. They further plea for the government to write off all tax arrears accumulated by the sector as of 1 January 2026.
Financial Collapse of Timber Sector
Official statistics reveal a staggering reversal for the industry. According to Rosstat data, the forestry and logging sector posted a net loss of 2.2 billion roubles for 2025, a dramatic fall from a combined profit of 3.2 billion roubles the previous year. The proportion of loss-making enterprises has surged to 45%, up from 40% in 2024. Industry representatives estimate total losses over the last three years exceed 15 billion roubles.
Export Market Collapse and Reduced Subsidies
The crisis is driven by a perfect storm of falling export prices, soaring transport tariffs, and increased tax burdens. The traditional lucrative export market to Europe has been severed, forcing producers to rely on less profitable trade with China. Compounding the problem, state support has been slashed. Export compensation funds were reduced from 7.6 billion roubles in 2023 to just 550 million allocated for 2026, while subsidies for maritime shipments from northwestern ports have been terminated entirely.
Tax Pressure and Enforcement Actions
Instead of relief, struggling companies face aggressive enforcement from tax authorities and bailiffs. Firms with overdue tax payments are hit with substantial penalties and enforcement fees, a move described in the appeal as “finishing off” businesses already in dire financial straits. The sector’s appeal starkly notes that necessary state subsidies have been cut by orders of magnitude as the Kremlin prioritises military spending and the war in Ukraine, leaving timber enterprises to face the crisis alone.
Wider Economic Context
A general director of one of the largest timber enterprises in northwestern Russia stated the difficulties are not new but the situation has finally “reached the bottom,” though he noted this was “good” because there is nowhere left to fall. His assessment, reported by industry participants, forecasts that every second timber industry enterprise, including major producers, could exit the market by the end of 2026. Worsening economic conditions, inflation, and prohibitively expensive credit have exhausted whatever financial buffer companies once held, rendering them unable to service debts and pushing a once-profitable industry toward collapse.
