COMPANY PROFILE
2013
Forestry SA
There is no substitute for wood
CompANY PROFILE
There is no substitute for wood Editorial: Roland Douglas Production: Chris Bolderstone
Michael Peter, Executive Director at Forestry SA, tells IndustrySA more about the work that is constantly going on to develop and advance the forestry industry in times when there are a number of questions about its future direction.
In December 2012, we spoke to Roy Southey of the Wood Foundation and he told us that promoting the use of timber (and wood in general) in the construction industry was one of the top priorities for the Foundation and for the forestry industry as a whole. This month, that point was reiterated by Michael Peter, Executive Director at Forestry South Africa (Forestry SA), and he says that while wood is a brilliant material for construction, too often people are looking to steel as a substitute. “The Institute for Timber Construction (ITC) have become quite alarmed by the substitution of timber for steel,” says Peter. “I don’t think from a cost perspective or an environmental sustainability perspective steel should be a competitor to timber but it’s quite a convenient material to work with. “The ITC have been lobbying us to support a campaign
PAGE 2 nov 13
to promote the use of timber, not just from a structural perspective but in civil engineering and architectural environments as well. There is a concerted effort under way to raise awareness about timber as Europe is years ahead of South Africa. We’ve traditionally only used timber for roof trusses and things like that but there are so many more uses in the built environment. “With light gauge steel, if you can get a sure supply, the prices tend to remain fairly stable. However, from a sustainability perspective, it’s a non-starter. From an energy intensive perspective, it’s a non-starter and if South Africa goes ahead with the proposed carbon tax in 2015, that could price steel out of the market as a substitute for wood,” he says. The Wood Foundation offers four key reasons as to why wood is the perfect building material: Firstly, it is carbon neutral. Trees absorb CO2 as they grow. Secondly, using
Forestry South Africa
wood instead of other building materials saves on average 0.9 tonnes of carbon dioxide per cubic metre. Thirdly, wood has the lowest embodied energy of any mainstream building material and lastly, wood has the best thermal insulation properties of any mainstream construction material on the market. There are of course many other reasons why wood is a great building resource but these four are very important and very current. So what is being done to promote increased forestation in South Africa? Well, Peter says that there are a number of initiatives under way but one of the main challenges is that of regulation. “We estimate that there is at least another 200,000 hectares that could be turned into timber plantations in areas that don’t compete with agriculture,” he says. “There is huge scope for replanting areas that were exited, like the Mpumalanga escarpment areas, and areas in the
Western Cape. There is also scope for replanting many of the government plantations that have gone backwards under state administration; there really is massive scope for increasing forestry, I would estimate that comfortably another 350,000 hectares could be planted but the real challenge is not physical, it’s regulatory. “There are areas that have been identified for new forestation, that have water available, where the private sector is willing to fund but where investment is not taking place and this is purely because of the bureaucratic, regulatory environment.” The forestry industry falls under the care of the Department of Agriculture, Forestry and Fisheries (DAFF) and Minister Tina Joemat-Pettersson and they have made it clear that their objectives include the encouragement of economic growth, job creation, rural development and the sustainable use of natural resources.
nov 13 PAGE 3
CompANY PROFILE Peter says that a relationship between government and Forestry SA on a political level could potentially provide huge benefits to both parties. “If you look at other industries in the country” he explains, “they generally enjoy a lot of state support in terms of reducing the regulatory burdens. This industry has never attracted any of that; even support for research and development, common around the world, is not coming for forestry in South Africa from the government. We have raised the issue with them many times and they have acknowledged it and raised policies around it but they never seem to be able to get any funding to support research and development. “We would treasure a closer relationship with government on a political level,” he says.
HELPING SMALL GROWERS A closer relationship with government would not only help the association to navigate the regulatory environment, it would also help Forestry SA take strides towards achieving one of its primary objectives - to bring the emerging small scale timber grower sector into the mainstream of forestry activity. “This has been part of the objective of not only the industry but the government too, especially post 94,” says Peter. The 20,000 emergent small scale growers are immensely important to the country’s industry as between themselves and the larger growers, they own or control no less than 93% of the total plantation area in the country which makes up around 1% of the country’s total landmass. “Quite a few small growers have increased their timber holdings; they’ve increased the size of their plantings partially from cash generated through forestry and also through going to large scale growers for support,” says Peter. There are 11 corporate forestry companies and around 1300 commercial timber farmers active in the South African forestry industry, all of whom hold membership with Forestry SA. These larger members offer support to smaller timber growers and create mutually beneficial arrangements which help the industry as a whole to prosper. “All the small growers in the country have been supported by established members of the industry. They’ve provided soft or interest free loans, they’ve provided selectively bred strains of seedlings and they’ve provided technical expertise which has helped smaller growers to grow organically. Other small growers have diversified their business and gone into farming vegetables and cattle and so on and all of this has come off the back of the revenue from forestry,” explains Peter. “Many small growers are now contractors to other
PAGE 4 NOV 13
medium and large timber growers and they are using the skills that they have learnt from being in the industry as a small grower themselves. Some are even supplying into larger companies which is beneficial for both. “In this sense, there has been growth. A lot of growers are no longer known as small growers; they’ve got a foot up in the industry and have gone on to work in all areas of agriculture and add value to the forestry industry,” he says. While progress has been made, there are many more opportunities to assist with the development and growth of small scale businesses in the industry. Peter explains that a new initiative has been put in place to allow small businesses to partner with bigger, more established companies and potentially improve the BBBEE relationships that currently exist. “We’ve launched the business development forum, which we are trying to get government to support. This is aimed at creating additional partnerships between larger and smaller growers because the industry is committed, along with government, to empowering previously disadvantaged people in the country,” he says. “A concern has been that we may be missing an opportunity where large companies are finding black partners who sometimes aren’t even in forestry and we have small growers who are already in the business who would perhaps be more appropriate black economic empowerment partners to be involved not just in equity deals but in the other empowerment opportunities of larger organisations.
“The question is, can we capture new markets and develop new products for which the timber can be used” So we’ve launched this forum to create the platform so larger players can talk to smaller ones and see how the established sector can improve its BBBEE in the industry by targeting specifically smaller timber growers.” While this project is still in its infancy, support from the government could help to move it along and it would provide great support for smaller growers who are actively seeking assistance.
ORGANISED LABOUR Because of Forestry SA’s significant membership numbers, three separate groups were formed under the supervision of an overall executive committee. These groups are; the Large Growers Group (corporate timber growers), the Medium Growers Group (commercial timber farmers) and the Small Growers Group (emergent timber growers). Over time it became apparent that the vast majority of the issues
Forestry South Africa
which FSA deals with, are of importance to all three groups, so about four years ago it was decided to amalgamate the structures. As a result each of these groups is represented on the general and executive committees of FSA. Because of FSA’s broad constituency which consists of all races and scales, it is recognised by the government and the private sector as the representative body for the industry. However, even with this recognition from the government, Peter suggests it can still be difficult to get State support for the sector on issues because of the lack of an ‘organised labour movement’. “We have small groups of employees scattered throughout the country and they are expensive and unprofitable for trade unions to represent, so they are generally ignored. “On the one hand, the industry hasn’t had to deal with the negative impacts of industrial actions that have been seen in other sectors but on the other hand, it’s a lost opportunity in that you can’t exert influence over the government as you don’t have organised labour to speak for your sector within that government,” he says. “In mining, motor manufacturing, and clothing and textiles industries, where the workforce is highly concentrated in specific areas, it’s easy to mobilise people. As a result those sectors enjoyed high levels of government support. In forestry it’s a whole lot more expensive and less profitable for trade unions.
“While I would really value a more active and mobilised trade union movement in the South African forestry sector for the purposes of lobbying government as the labour movement is part of the tripartite governance structure in South Africa, it’s highly unlikely to materialise just because of the logistics and costs involved with organising people who are fragmented and scattered. Of greater concern however is the damaging impact of the labour movement that one has seen in other sectors such as mining and motor manufacturing. This makes one wonder whether the benefits of greater government appreciation and support for the sector, would be outweighed by the negative impacts of industrial action, seen in other sectors.”
THE FUTURE Considering only around 1% of South Africa’s land is covered by plantations and the fact that they are such a valuable resource, one of the main questions surrounding the industry is, how can we increase the forested areas in the country? DAFF says: “Forests and woodlands are crucial to the protection and conservation of the soil, and play a vital part in water cycling. They also help moderate water flows and reduce sedimentation in streams and reservoirs. The nation’s forests and woodlands contribute significantly to South Africa’s remarkable range of fauna and flora, much of it
NOV 13 PAGE 5
CompANY PROFILE
unique.” Add to this the fact that forest woods are important construction, fuel and food resources and you begin to realise the importance of increasing forested areas. “Everyone in the industry is looking at what products generate the best kind of return,” says Peter. “There is quite a strong movement towards growing more eucalyptus for chemical cellulose because that’s a product where demand has remained strong. Similarly the Presidential Infrastructure projects in the pipeline, will see increased demand for sawntimber, timber board and mining timber in the future.” “Forestry SA represents timber growers but we are also involved with other associations such as Sawmilling SA and the Pulp and Paper Manufacturers Association. About three years ago, the industry got together and we decided we needed to do something to promote forestry and forest products, not just timber. To do this, we established the Wood Foundation and although it has been very difficult because of a depressed market, the Wood Foundation has done some very good work at exhibitions and in other areas promoting timber and wood in general for construction.” Increasing and protecting forested areas is also on the agenda of the private sector and companies like Mondi (international packaging and paper group) are very involved in the design of landscapes and other conservation projects. “They are an extremely responsible company and provide support to our organisation and to the industry more broadly,” says Peter. “It’s immensely beneficial. I can’t even begin to quantify the value we get from not just Mondi but from all of our
PAGE 6 NOV 13
members. We are a very small association given the size of the industry and our members give us a lot of their time. For example, our current Chairperson is the Director of Mondi Forests and the Chairperson of our Medium Grower Group who has held that position for many years, is the Forestry Director of Bracken Timbers, which is a medium sized forestry and sawmilling company. Furthermore all of our growers, large medium and small effectively serve on our various committees dealing with land, transport, environment etc. So while we get a lot of financial and inkind support from industry to keep the association going, without this additional support from our members, the association would be a great deal more costly to run,” he says. As is often the case, we also find that those members and companies who serve in FSA’s various structures, are best positioned to ensure and appreciate the value which they get from the association and its key partners such as the Forestry and Agricultural Bio-technology Institute and the Institute for Commercial Forestry Research. Obviously, backing like this fills the industry with confidence and it is likely that their support will be integral to increasing the amount of land covered by forests.
CLIMATE CHANGE Climate change is such a difficult topic for any industry as facts are difficult to come by but in forestry it often spreads worry and concern because the general theory is that if temperatures rise, some parts of the world are going to get too hot for forests to survive. In April, a report in the Proceedings of the National
Forestry South Africa Veritas Academy of Sciences of the United States (PNAS) was published stating that by 2050 half of the Cape Winelands could be lost to climate change. Peter says that an independent study by Forestry SA back in 2007 came to the conclusion that the Western Cape would indeed get drier but he also states that it is important to find out exactly what the future holds and not base decisions on rough theories. “Forestry SA commissioned its own study in 2007 as to the likely impacts of climate change and all the evidence seems to suggest that the Western Cape, home to the Winelands and some of our timber plantations, are the most at risk. All of the models predict an increase in drying in those areas and this would present a significant risk to the forestry industry in that region. “It’s very difficult to be sure however, because the timescales are hard to predict and there’s also predictions in the same models that the eastern parts of the country could also get wetter and hotter with less frost, which could mean new areas will be suitable to timber growing, so we are trying to understand properly, exactly what climate change does hold for the industry but it’s not an exact science. “Do you start growing heat tolerant species or drought tolerant species or a species able to handle increased rainfall? It’s extremely hard to predict. Certainly the consensus is that the Western Cape is going to get drier but if this only starts to manifest in 90 years time, as a recent model suggests, one can grow another four rotations of sawtimber in that period. Also the change will be gradual and this should give us ample time to developed appropriate cultivars for the area,” he says. “The bigger and more present challenge posed by climate change, is likely to be in the area of forest protection, where the spread and management of pests, diseases and fire may become harder and more costly to manage.”
CHALLENGES & OPPORTUNITIES Away from the challenges the industry faces with assisting its smaller growers, increasing its plantation areas, dealing with climate change and fighting for government support, there is also the question of sustainability. The industry cuts a large number of trees every year and some people have questioned the industry’s sustainability, especially with volumes of timber apparently decreasing every year. Peter explains that sustainability is not a problem and in fact, timber stocks have increased. “The decline in volumes is not a decline in productivity; it’s related to depressed market demand,” he says. “From a sustainability perspective, there is no challenge whatsoever,
we have increased the stock of timber in South Africa by about 3.5 million tons simply by cutting less than what we could have because of the depressed market demand. “The question is, can we capture new markets and develop new products for which the timber can be used. We don’t want a situation where we have tons of stock but nobody to sell it to.” Sustainability is also a topic for discussion in terms of how long the industry can realistically go on creating jobs before automation and technology take those jobs away. Again, Peter is firm in his stance that mechanisation in the industry forms an opportunity and not a threat, saying: “Most of our timber plantations are in steep, mountainous areas where there is high rain fall so mechanisation is not possible everywhere. We will always need significant levels of manual labour in the industry because of the typography, the nature of some of the operations and where timber is grown in South Africa. Having said that, where we can mechanise, it offers opportunities for higher skilled work and higher paid jobs so I don’t think mechanisation should just be seen as a threat to jobs but rather as a chance to create higher value opportunities and increase profitability. Without increased profitability, investment will move to places which are more costeffective.” For the smaller timber growers in the country, although mechanisation presents potential profitability, the initial outlay is just too high to consider. “There are more than 20,000 independent timber growers in South Africa who are not wealthy enough to buy major machines, unless they come together but then there would be inefficiencies of moving the machines around the farms. It just doesn’t seem to be an economically viable option for many growers,” says Peter. “The real threat is rising input costs,” he says. “For the smaller growers, who are not vertically integrated, rising input costs cannot be offset in the sale of forest products and there is a risk that they might get out of forestry.” Obviously, that would be a disaster and something to avoid at all costs but with the business development forum, the Wood Foundation and the opportunities on the horizon regarding the potential areas for new plantations and replanting, there are opportunities for the industry and if DAFF supports and embraces the plans then, hopefully, progress will be made. Peter is also highly optimistic about the new markets opening up in the rest of Africa. He says “While South Africa’s geographic position used to be a disadvantage in accessing global markets, we are very well placed to take advantage of the growth in demand for forest products from African countries.”
.
NOV 13 PAGE 7
CompANY PROFILE
Contributing to
a sustainable future mondi is an international packaging and paper Group, with production operations across 30 countries. The Group’s key operations are located in central Europe, Russia and South Africa, and as at the end of 2012, mondi employed 25,700 people. mondi Group is fully integrated across the packaging and paper value chain, from the growing of wood and the production of pulp and paper (packaging paper and uncoated fine paper), to the conversion of packaging paper into corrugated packaging, industrial bags, extrusion coatings and release liner. mondi is also a supplier of innovative consumer packaging solutions, advanced films and hygiene products components.
PAGE 8 OCT 13
Forestry South Africa Veritas
Mondi is actively involved in a number of critical projects that seek to protect biodiversity, help indigenous vegetation to flourish and protect endangered flora and fauna from extinction. DESIGNING FUTURE LANDSCAPES BASED ON ECOLOGICAL NETWORKS Mondi is a leader in promoting research and development into Ecological Networks (ENs). ENs are interconnected land corridors or nodes of natural vegetation within forestry or commercial farming operations that can help to maintain biodiversity. They are incorporated into an overarching design and management strategies that link source areas to nature reserves, while maintaining biodiversity in the production landscape.
INTENSIVE ALIEN INVASIVE PLANT CONTROL Invasive alien plant species pose a serious threat to biodiversity and water resources in unplanted areas. Mondi continues to develop its intensive management programme, which has significantly improved the way invasive alien plant species are controlled. Mondi’s Invasive Alien Plant Programme has cleared a total of 60,000 hectares of indigenous forest, woodland, wetland and grassland from invasive alien plants over the last three years. This has a positive impact on water quality and yield and is an important part of conservation measures.
HIGH CONSERVATION VALUE AREAS Photo: Jacqui Shuttleworth
Mondi was the first forestry company to have proclaimed nature reserves within its landholdings, namely Gelijkwater Mistbelt Nature Reserve and Mount Gilboa Nature Reserve. Mondi continues to identify areas of high conservation value and to pursue their active stewardship, and Mondi has set aside 76,398 hectares in South Africa for conservation (25% of our landholding).
PROTECTING THREATENED AND ENDANGERED SPECIES Mondi’s landholdings are home to a number of threatened and endangered species, and Mondi continues to take steps towards their protection. This includes being proud supporters of EWT’s African Crane Conservation Programme and Oribi Conservation Programme.
FIND OUT mORE about Mondi’s conservation efforts by visiting www.mondigroup.com/sustainability
OCT 13 PAGE 9
+27 11 803 3403 www.forestry.co.za
(0)1603 618 000 info@industrysa.com East Coast Promotions Ltd, Ferndale Business Centre, 1 Exeter Street. Norwich, Norfolk NR2 4QB