Khulanathi: sourcing timber from small growers

August 31, 2010

An exciting new black empowered procurement company is sourcing timber from thousands of woodlot growers in Zululand and supplying fibre to Mondi's pulp mill in Richards Bay.

Khulanathi Forestry members Khulanathi Forestry truck
Khulanathi directors meet with growers at the Mfekayi depot (left to right) William Gama (Khulanathi), Siyoni Dube (grower), David Gumede (Khulanathi), Thoko Mlungwana (grower), Thokazani Mfekayi (Khulanathi) and Albert Nkwanyana (grower). Timber being delivered to the Khulanathi depot at Mfekayi in Zululand. After it has been weighed it will be hauled to the mill in Richards Bay.

 

 Khulanathi Forestry (Pty) Ltd was formed in April 2007 after the closure of the Mondi group's Khulanathi out-grower scheme. The programme, which was launched in 1989 and attracted over 3 000 growers from the coastal areas of Zululand, was closed in 2007 due to what Mondi's Bob Hunt described as "an unsuitable model no longer appropriate to community forestry".

The new commercial Khulanathi is co-owned and managed by former Mondi Khulanathi employees Thokozani Mfekayi, David Gumede and William Gama, with Mondi Zimele as its strategic partner.

The new company has picked up where the outgrower scheme left off and purchases timber from many of the same small growers that Mondi assisted with loans, seedlings and extension services. The difference now is that these growers have planted and harvested several crop rotations and they no longer require the same levels of financial, logistical and technical support.

Khulanathi operates four depots equipped with weighbridges and loading facilities at Sokhulu, KwaMbonambi, Mfekayi and Esikhaweni. The growers, whose woodlots range in size from one hectare to several hectares, use local contractors to harvest their trees and haul them to one of the Khulanathi depots where they are weighed and stacked. Khulanathi has contracted a transport company to deliver the freshly harvested timber to Mondi's mills in Richards Bay. All the timber passing through the depot is eucalyptus.

Good personal relationships
Khulanathi CEO, Thokozani Mfekayi, said his company is delivering around 7 000 tons of timber to the mill every month. He said the key to their success is the good personal relationships that they have developed with the growers.

"We've been working with most of these people for quite a long time so we know what their needs are and we are flexible enough to be able to meet them half-way," said Thokozani.

For instance they realised that quick payment is important, so they pay growers market-related prices within a week of them delivering their timber to the depot. They also provide free advice on planting and woodlot maintenance, and assist with negotiations with contractors if requested to do so.

"There are about 60 local contractors providing services to our growers, employing around 650 people," said Thokozani. "We also use local contractors to operate our depots, so the communities see the value of working with us."

While Thokozani manages the business from their offices in Richards Bay, David and William spend most of their time in the field interacting with growers. Between the three of them they have many years of experience in community forestry.

Mondi Zimele, which is the Mondi Group's enterprise development arm, played a key role in Khulanathi's establishment by providing financial backing and on-going administrative and technical support. Mondi Zimele has a 30% ownership stake in Khulanathi Forestry (Pty) Ltd, in line with its mandate to invest in and become shareholders in enterprises involved in Mondi's value chain.

"Mondi Zimele does our books and if we need support in any area of our business we can call on them," Thokozani said.

Mondi Zimele, together with Khulanathi, is looking at ways to support the flow of genetically superior Mondi seedlings to outgrowers, which will improve the productivity of their woodlots.

The growers are harvesting around 100 tons of timber per hectare after a five-year growing period, and if they wait another two years before harvesting they can double that tonnage, Thokozani explained.

"For most of these households it's their only form of income. They're doing it for themselves and it's making a huge difference to their lives," he said.

Published in July/August 2008

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