Sappi helps put land claims project back on track

April 30, 2009

Sappi is working with a community trust to manage 8 000 ha of land, half of which is planted to commercial forestry, in the Lothair area of Mpumalanga. The planted areas comprise mostly eucalyptus and wattle. The farms were bought from private commercial farmers by the Lands Claims Commission in terms of government's land restitution programme, and transferred to the Somhlolo Trust some two years ago.

Young gum at Somhlolo farm New plantings at Somhlolo farm
Gert Broekman, Elijah Nkosi, and Leon Hoenderdos inspect a young gum compartment on the Somhlolo farm.

New plantings on the Somhlolo estate.

The Trust represents the Ludlambedlu community land claimants, who total about 5 000 members. There are about 1 200 community members living on the farms, many of whom are employed by forestry contractors working in the area.

Sappi, who had timber supply agreements with most of the previous owners, immediately started communicating with the Somhlolo Trust in order to provide assistance with the management of the timber. On 21 August 2007 Sappi and the Somhlolo Trust signed a Plantation Management Plan (PMP) and Timber Supply Agreement with the community which will terminate in 2021.

As part of the PMP agreement, Sappi is responsible for providing a full management service which includes free seedlings for the areas to be replanted, loan facilities for forestry activities of up to R4 000/ha at a subsidised interest rate, as well as harvesting and delivery of mature timber. Due to the terms of the agreement, as well as the volumes committed, the Trust will receive a premium on all timber delivered.

Training is another integral part of the agreement. The overall objective of the project is to train the community to, over time, take over the full management of the timber operations. Sappi's responsibility will thus change from manager/trainer to business coach and technical advisor.

According to Winston Smit, strategic manager for Sappi Forests, the Somhlolo project has provided the company with valuable experience in managing community-owned plantations, and they are proud of the progress they have made so far. He said that in the 18 months since Sappi started managing the Somhlolo farms, the Trust members have become far more actively involved in the business. He says that the long term objective is that the Trust will take over management of the farms from Sappi.

The farms were previously owned by private farmers, and were reported to be in a state of neglect when Sappi took over the management due to the long delays in awarding the claims and transferring the land to the community, as well as the fact that the beneficiary community was under-resourced and unable to start managing the farms immediately. Roads were eroded, open and planted areas were overgrown with weeds, firebreaks were not prepared properly and harvesting and silviculture regimes neglected.

As a result, when Sappi's Lothair field staff took over the management a lot of work had to be done to get the properties back into shape.

Winston said that Sappi had invested considerable resources to rehabilitate the farms, and their intention is to get them up to the same standards as their own plantations. Fires in 2007 and 2008 damaged about 300 ha of plantations, most of which has been harvested. Many of the roads have been repaired, wattle jungles cleared and compartments replanted.

He said that the Somhlolo farms are also benefiting from Sappi's research and the planting of improved seedlings and clonal stock.

The Somhlolo estate is made up of several properties around Lothair, the furthest of which are 60 kms apart, which makes management and logistics quite difficult.

Chairman of the Somhlolo Trust, Elijah Nkosi, works closely with Sappi Lothair's forestry management team of Gert Broekman and Leon Hoenderdos. Elijah has many years of experience in the forestry industry with HL & H and Global Forest Products. His input into the management of the forestry business is therefore key.

Community members are working under the mentorship of established contractors doing scheduled silvicultural and harvesting work to empower them to run their own businesses in future. Ad hoc forestry work is being done by smaller, community-based contractors.

The Trust also runs 500 beef cattle on the open areas of the farms, and a charcoal business utilises timber from the clearing of wattle jungles and re-growth. A blueberry growing and eucalyptus oil business are also prospects for the future, according to Elijah.

Sappi staff assist the Trust with the development of business plans and financial management of non-forestry businesses.

To date Somhlolo has delivered 16 733 tons of timber to the value of more than R7 million rand. The community will soon be awarded another 6 049.012 ha of which approximately 3 000 ha is planted to timber. Sappi and the Somhlolo Trust are in the process of negotiating a suitable agreement in this regard.

Elijah said that the hardest part of his job is managing the expectations of the community, as he has to make them understand that forestry is a long term business. However, he is confident that the project is big enough to provide plenty of business opportunities for community members who want to get involved.

According to Leon, there have been a lot of additional expenses at the start of the project because of the poor state of the farms they took over. He said that Sappi is providing the funds to the Trust for rehabilitation work by means of a loan account.

"The whole project is being monitored and intensively managed by Sappi, and the trustees are being trained in this regard so that they understand the budgeting process and why decisions are being taken," said Leon. "Once we have achieved a more stable environment, with roads upgraded and infrastructure improved, the business will start showing profits and we can get more involved in small enterprise promotion."

He said that the project was "a very high priority" for Sappi and that success was imperative.

Management on the ground is not easy as there are numerous stakeholders to keep happy.

"The community's cattle are allowed on the farms, and we try to manage that. They also get firewood for free, and free building poles."

He said that so far they are working well with the Trust, and the fact that Elijah has forestry experience and understands how the business works is a great help to his team.

Published in March/April 2009

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