Challenges for forestry sector
Industry feels state does not recognise its success
THIS past year has been another challenging one for the forestry industry‚ according to Silas Cele‚ chairperson of Forestry South Africa (FSA).
In the 11th annual FSA report for the year ending December 31 last year‚ he says timber volumes declined once again year-on-year and were almost half-a-million tons‚ or 3.2%‚ down on 2011.
Michael Peter‚ executive director at FSA‚ confirms the challenging market conditions saying the forestry sector has not regained the highs in volumes or prices of 2008‚ which has seen margins erode.
He says the forestry sector’s appeal to government over the past few years has been to recognise its success with regard to broad-based black economic empowerment (BBBEE) and relative low water usage in comparison to its outputs.
“Two independent reports show in 2010 the industry was 100% ahead of its BBBEE Charter targets‚ and while 60% of the country’s water is allocated to agriculture only 5% of that is reallocated to commercial timber plantations.
“Yet‚ forestry returns R35.4-billion or 27.4% of the agriculture sector’s GDP‚ contributes 146 300‚ or 22.5%‚ of agricultural jobs and has 30 000 independent black growers who have entered forestry as a result of industry financing‚ partnerships and joint ventures with no government finances facilitating the entry of those small growers‚ most of whom entered the market long before the country embraced the need for BEE in legislation.
“Furthermore‚ we are the only industry to pay a stream-flow reduction levy for the water we use for which there is no material cost to the government as there are no dams or irrigation schemes needed in forestry.”
Peter says there is insufficient recognition by government of the disproportionate contribution of forestry to the country‚ whether it is in terms of GDP‚ balance of trade‚ job creation or social development in the rural landscape.
“There are 252 rural schools that are supported by the forestry industry. We provide rural medical clinics‚ skills development‚ training and enterprise development.
“Rural Development and Land Reform Minister Gugile Nkwinti is on record as saying the models the forestry industry has put in place to deal with land claims are unparalleled.
“While 95% of land claims that have been settled in the agriculture sector have failed to continue in ongoing farming activities and therefore failed the land reform beneficiaries‚ more than 90% of the claims that have been settled in forestry have continued to generate benefits for the land reform beneficiaries‚” says Peter.
Forestry’s success on a number of different empowerment and social development fronts does not seem to be recognised by government as a result of the lack of a lobby from organised labour in the sector.
Peters says the more than 40 000 black timber growers‚ contractors and entrepreneurs in forestry‚ who have built their businesses from the ground up over the past two decades‚ did so with no financial or technical support from the government.
Nonetheless‚ FSA does report some positive developments too.
Cele says some of the highlights for last year were the major shift in attitude from Transnet Freight Rail towards the sector‚ which has seen significant decreases in tariffs‚ a commitment to recapitalising important branch lines and sidings which serve the industry and added impetus to improve levels of service rendered.
He says the National Ports Authority proposed an 18.1% increase in tariffs for 2012-2013 and‚ based on FSA’s submission along with others‚ the Ports Regulator of South Africa finally approved an increase of just 2.76%.
FSA was also successful in persuading the Department of Water Affairs to increase water tariffs by no more than the rate of inflation.