Timber exports will be dismal this year, with exports falling twice as fast as timber production.


The bad export performance can be partly explained by a small drop in world prices for sawn timber and by chaos and rising costs in the transport system on which remote sawmills in the Arctic Circle, Siberia and the Far East rely.


But Exportles, the main exporting agency, says the biggest cause is the confusion caused among Russian producers by the stop-and-go signals from government economic policymakers.


By comparison, for Russia's other major raw materials exporters such as oil, domestic prices are fixed at a low level and world prices are high. Producing for export has always been attractive.


According to Exportles's industry figures, production of sawn timber goods is expected to fall 15 percent, but exports will fall from $870 million in 1991 to $500 million this year, a drop of 43 percent. Uncut timber production is expected to drop 23 percent, but exports will fall 41 percent, from $860 million to $500 million.


Adolf Krapotkin, deputy chairman of Exportles, the former monopoly exporter, says, "For us as timber exporters it's hard to admit we are unreliable but we are surrounded by turmoil".


At the start of the year, domestic timber prices were still a fraction of the world price and producers were rushing to export.


But early this year, the government changed currency laws to require the sale of 40 percent of hard currency earnings at a low exchange rate and imposed export duties of 35 percent of world prices on most raw materials. At the same time domestic timber prices had jumped, so Russian producers lost their incentive to export.


But then, changes to foreign trade rules were announced in June that required 50 percent of hard currency to be sold at a rate determined by the market. Exports became attractive again. All the more so because producers learned that Russian buyers might promise to pay high prices but had a bad habit of not paying their debts.


Krapotkin says many Western businesses need to understand the pressures the inadequate banking system creates for Russian producers. Even when Western prices are higher, it may take months for Western payments to land in the enterprise's account.


The role of Exportles itself has been another unsettling factor in the industry. The old centralized export system has withered and Exportles now accounts for only 40 percent of current exports.


Trade was liberalized in 1989 and over the past few years more and more Western traders have developed direct links with the 47 Russian businesses that are licensed to export timber, bypassing Exportles.


Krapotkin says Exportles, a joint stock company owned by producers, is content to compete in a free market on its merits as a sales agent.


But he says many small entrepreneurs establishing links with Russian exporters lack "professionalism".


Even without outright corruption, Krapotkin says, erratic pricing between exporters undermines long-term customers who are being undersold by operators out for a quick buck.


Apparently, other exporters agree since several have now joined with Exportles to form a Timber Exporters Association to combat "dumping" of timber products on the world market.