Measuring the forest sector’s sustainability progress
Sappi plantations in KwaZulu-Natal supply the Saiccor mill in Umkomaas with raw fibre used to produce dissolving pulp for the export market.
The International Council of Forest & Paper Association’s (ICFPA) latest Sustainability Progress Report demonstrates progress in seven key areas of sustainability and highlights the role the forest sector can play in helping to meet global climate goals.
“Forestry workers and consumers of forest products are in the unique position to drive our move to a world with less dependence on fossil energy and fossil-based materials,” noted Jori Ringman, ICFPA President and Director General of Cepi (the Confederation of European Pulp and Paper Industry). “They are doing this through sustainable forest management, advancing the forest bioeconomy, and recovering more and more paper and paper-based products and packaging for recycling.
“I am proud of the work and leadership ICFPA has built over nearly 20 years. This report demonstrates the global impact of associations working together on a common set of commitments," he said. The ICFPA Sustainability Progress Report tracks progress achieved in 2020-2021. The overall trend is positive – reflecting that the industry continues to improve in key sustainability areas from baseline years.
Key progress on ICFPA’s sustainability performance indicators include: • 50% of procured wood fibre came from third-party certified sustainably managed forests, a 38-percentage point increase from the 2000 baseline year. • Greenhouse gas emission intensity decreased 23.5% from the 2004/2005 baseline year. • The energy share of biomass and other renewable energy increased to 63.7%, a nearly 11 percentage point increase since 2004/2005. • Sulphur dioxide emission intensity from on-site combustion sources decreased 74% from the 2004/2005 baseline year. • Water use intensity decreased 9.5% from the baseline year. • Investment in health and safety interventions yielded a 30% reduction in the global recordable incident rate from the 2006/2007 baseline with the number of recordable incidents falling to 2.81 per 100 employees annually. • In 2021, 59.9% of paper and paperboard consumed globally was reprocessed by mills to make new products, marking a 13.4 percentage point increase in the global recycling rate since the year 2000.
The 2023 ICFPA Sustainability Progress Report also includes info about the 2023 international finalists for the ICFPA Blue Sky Young Researchers & Innovation Award. The theme was ‘Building a Lower Carbon Economy with Climate Positive Forestry and Forest Products’.
Sappi’s Ngodwana mill in Mpumalanga.
Representing South Africa among the top three finalists was Leane Naude, a Master of Science (Chemical Engineering) student at North West University, who presented a more cost-effective purification method for lignosulphonate, an abundant and versatile alternative to fossil-based fuels. ICFPA serves as a forum of global dialogue, coordination and co-operation. Currently, the ICFPA represents 16 pulp, paper, wood and fibre-based associations from 27 countries, including many of the top pulp, paper and wood producers around the world.
South Africa, through the Paper Manufacturers Association of South Africa, is a longstanding member of the ICFPA and contributes data and case studies to the Sustainability Progress Report.
Leading the drive for transformation of the Forest Sector, Nelly Ndlovu (FSCC chairperson) and Makhosazana Mavimbela (FSCC Executive Director).
The Minister of Forestry, Fisheries, and the Environment, Barbara Creecy, has appointed a new Forest Sector Charter Council board, that will serve for a three-year term. The board is chaired by Ms Nelly Ndlovu, Executive Director of Mondi Zimele, and includes representatives from government, industry, labour and communities.
This is the third Council board to be appointed since the amalgamation of the Forest Sector Code, now Amended. The Council’s mandate is to encourage, facilitate and support the achievement of B-BBEE targets as set out in the Forest Sector codes, and to monitor and report on the Sector’s transformation progress.
Forest Sector Charter Council Board Members:-
Nelly Ndlovu, Chairperson (Executive Director, Mondi Zimele - Mondi’s enterprise development unit) Makhosazana Mavimbela - Executive Director, FSCC Michael Peter (Executive Director, Forestry South Africa) Dwayne Marx (CEO SA Forestry Contractors’ Association) Tanucia Coopasamy (Transformation Manager, Mpact Ltd) Roy Southey (Executive Director, Sawmilling SA) Lulamile Xate (Chairperson, Cape Pine and MTO Forestry) Tshepo Makhene (Head of Projects, Southern African Clothing & Textile Workers Union) Pierre Tullis (Operations Manager, SA Utility Pole Association) Thandi Mokwena (Executive Director, Matsino Business Enterprise – small-scale forestry & processing business) Kwena Komape, (DDG, Department Agriculture, Land Reform & Rural Development) Lindiwe Mavundla (Director BBBEE & Policy Unit, Department of Trade & Industry) Tyrone Hawkes (Vice-president Strategy & Business Development, Sappi) Pumeza Nodada (DDG, Department Forestry, Fisheries & Environment) Bruce Breedt (Executive Director, SA Wood Preservers Association) Penwell Lunga (Executive Director Corporate Affairs, KAP Industrial Holdings Ltd) Darryll Sauer (community representative) Mlungisi Bushula (community representative)
Note: The appointment of the two community representatives to the Council has still to be confirmed.
Addressing the first new FSCC board meeting recently, Nelly Ndlovu had this to say: “Today marks for me, and I certainly hope for you all - a new dawn, an opportunity to help drive, facilitate and support the change we want to see within our sector. Whether it be building resilience within our communities, facilitating the development of skills for our sector, promoting diversity and inclusion - in particular women - across all spheres of our sector, or supporting enterprise development and the creation of economic pathways - all of which will ultimately contribute positively not only to our Sector but also to our country.
“The work of the FSCC is important, as it is through our work of driving transformation and facilitating the implementation of B-BBEE, that the purpose and character of our entire Forest Sector is magnified. So, as we begin our journey, let us always keep in mind the critical importance of our mandate.”
Commenting on Nelly’s appointment as Chairperson, FSCC Executive Director Makhosazana Mavimbela said: “I have not only known Nelly as a CEO of Mondi Zimele but have interacted with her on some of the FSCC initiatives such as CEO visits, She is Forestry SA webinars etc. I am personally excited to work with Nelly as she is vibrant, very knowledgeable, courageous, confident, and very influential, and more so a strong supporter of women empowerment. I am confident that I will be the main beneficiary of her exceptional leadership skills, her positive attitude and deep knowledge base about the South African Forest Sector.”
Broad-Based Black Economic Empowerment (B-BBEE) is a legal imperative for all businesses operating in the Republic of South Africa. In the Forest Sector context, the B-BBEE imperative is given legal force through the Amended Forest Sector Code, 40803.
Forest Sector transformation making progress
Khosi Mavimbela, Executive Director of the Forest Sector Charter Council.
The Forest Sector Charter Council, which is charged with supporting, promoting, guiding, facilitating, reporting and monitoring transformation of the Forest Sector by securing stakeholder compliance with the Amended Forest Sector Code, has noted encouraging trends in its latest ‘Status of Transformation’ report.
The Amended Forest Sector Code (FSC) applies to all entities operating in commercial forestry and first-level processing of wood products, and operating as Medium & Large Enterprises (MLEs), Qualifying and Small Enterprises (QSEs) and Exempted Micro Enterprises (EMEs). These include wood fibre processors, growers, sawmillers, pole treaters, charcoal manufacturers and forestry contractors. All entities are required to report annually to the Forest Sector Charter Council (FSCC) on their Broad-Based Black Economic Empowerment credentials as per the B-BBEE Act as Amended.
Big increase in submissions A total of 113 businesses active in the South African forestry industry submitted valid B-BBEE certificates and affidavits to the FSCC during the 2021/2022 period – a significant increase over the 37 certificates submitted in the previous year. These statistics reveal a growing level of engagement with B-BBEE at all levels of the industry, despite a challenging business environment on many fronts.
A noteworthy achievement that was highlighted in the recently released 2021/22 Annual Report on the Status of Transformation in the Forest Sector, published by the FSCC, was that a growing number of medium and large forestry businesses submitted their B-BBEE certificates with underlying reports. These underlying reports provide valuable insights into each measured entity’s B-BBEE performance against the scorecard targets, and may also be an indicator of greater engagement with transformation initiatives. B-BBEE performance, however, was pretty much on a par with previous years. This is reflected in the B-BBEE level achieved by forestry businesses. MLEs, with an annual turnover in excess of R50 million, maintained an average B-BBEE Level 4; QSEs (annual turnover between R10 million and R50 million) averaged Level 2; and EMEs (annual turnover up to R10 million) also achieved a Level 2 average. “The forestry industry continues to make great strides in transforming the socio-economic landscape of the sector,” states the FSCC Annual Report. It also notes that the inclusion of Forestry in the Public Private Growth Initiative (PPGI) and the commitments reflected in the Forestry Sector Masterplan further demonstrates the sector’s commitment to investment, growth and transformation. The Forest Sector’s contribution to the PPGI initiative was an investment commitment of R11.7 billion. The initiative has so far created 4 644 jobs and has resulted in improved collaboration between the private and public sectors, notes the FSCC Report.
Figure 1 below compares the number of valid B-BBEE certificates and affidavits submitted to the FSCC by MLEs, QSEs and EMEs over the past three years. The total number of 113 certificate and affidavits in 2021/22 shows the highest number of submissions received since the gazetting of the Amended FSC and is a significant increase when compared to the 2020/21 reporting period. The FSCC Report also notes that the increase in the number of submissions received may be the result of the good working relationships that the FSCC has established with the various Forest Sector Associations “that assisted greatly in the collection of the information”. It is also an indicator of the Forest Sector’s overall commitment to transformation.
MLEs, including SAFCOL (the only state-owned Forestry enterprise) submitted 24 certificates and underlying reports - six more than in the previous year. For the first time since reporting on the Amended FSC, all MLEs that submitted valid B-BBEE certificates also submitted underlying reports. QSEs submitted a total of 46 B-BBEE certificates and affidavits, with eight certificates received from so-called ‘Unenhanced’ entities i.e., those with black ownership below 50%. All the eight Unenhanced QSEs also submitted underlying reports. Forty-three affidavits were received from EMEs, a significant increase from the previous year as well. Notably, significant increases were recorded from QSEs and EMEs which may be as a result of the bigger companies demanding B-BBEE credentials from their suppliers for the recognition of points on the Enterprise and Supplier Development element in particular. This is a crucial element as QSEs and EMEs are the chief beneficiaries of B-BBEE.
Figure 1: Certificates Received by Company Size over three reporting years
Figure 2 below shows the total number of submissions (B-BBEE certificate or affidavit) received for the 2021/22 reporting period, broken down into the Sub-Sectors. A high number of submissions were received from Contractors and these were mostly from QSEs and EMEs. Once again zero submissions were received from the Charcoal manufacturers.
Figure 2: Certificates Submission by Sub-sector, 2022
The Forest Sector’ transformation status is measured in terms of five key elements which contribute to Broad-Based Black Economic Empowerment, namely: Ownership, Management Control, Skills Development, Enterprise & Supplier Development and Socio-Economic Development.
Medium and Large Enterprises (MLEs) The Medium and Large Enterprises are the biggest contributors to the B-BBEE programme by virtue of the size of their businesses (annual turnover above R50 million). This grouping includes the highest number of consistent B-BBEE reporting entities and is mostly represented by the larger Corporates. MLEs achieved an average of 80 points and maintained a level 4 B-BBEE rating on average. In the reporting year under review, slight declines were observed in four of the five scorecard elements, namely Ownership, Skills Development (SD), Enterprise and Supplier Development (ESD) and Socio-Economic Development (SED). The biggest decline observed under the Skills Development element was anticipated.
“This could be as a result of a combination of factors such as a decline in revenue, the reprioritisation of the spend or that some of the skills development initiatives could not be recognised as per the learning matrix,” remarked Khosi Mavimbela, FSCC Executive Director.
The decline in the ESD score could also be a consequence of reduced profit margins due to COVID-19 impacts.
The Management Control element showed slight improvement. This is encouraging, given that most sectors across the South African economy score particularly poorly on this element. Only four MLEs had women executives on their boards, which indicates that the sector is still dominated by male executives. The decline in the participation of women on the boards of companies is a concern, as there were positive trends in this indicator in previous years.
The performance of MLEs on the Socio-Economic Development element over the past three years has been outstanding. This is still one of the best performing B-BBEE elements in the Forest Sector. These activities have a big impact in the rural areas where opportunities are otherwise limited.
Notably, the report reflected on the transformation performance of forestry companies listed on the Johannesburg Stock Exchange. All four (Mondi, Sappi, York and Merensky) are not only consistent reporters, but have also achieved good scorecard scores.
SAFCOL also continued to perform well though was disadvantaged by the low representation of women on their board as well.
It is interesting to note that most government departments require at least a Level 4 rated entity when awarding tenders, licences, grants etc., which means that most MLEs fall within this procurement frame.
Figure 3: MLE Overall Performance per Element as a Percentage of the Compliance Target
Qualifying Small Entities (QSEs) QSEs are measured entities with an annual total turnover between R10 million and R50 million. QSEs are either Enhanced (majority black owned) or Unenhanced, (minority black owned).
Eight B-BBEE certificates were submitted by Unenhanced QSEs with the balance of 38 submitted by Enhanced QSEs. Sixteen Enhanced QSEs achieved a Level 1 with the remaining 22 achieving a Level 2. Five of the Unenhanced QSEs achieved a Level 1 score with the remaining three each receiving a level 2, 3 and 8 rating respectively.
Unenhanced QSEs performed exceptionally well in all the scorecard elements, achieving about 80% and above in all the elements and even achieving the full score on the Socio-Economic Development element.
The overall performance of QSEs is displayed in Figure 4 below.
Figure 4: QSE Overall Performance per Element as a Percentage of the Compliance Target
Exempted Micro Enterprises (EMEs) EMEs (annual turnover below R10 million) are the main beneficiaries of B-BBEE. In most cases, such entities provide contracting services to the bigger entities. The Forestry Sector Masterplan acknowledges the need to develop EMEs engaged in forestry work as they have the potential to create more local jobs. The average black ownership profile within this group is 54% while the average black women ownership is 8% showing a decline from the previous year.
Figure 5 below shows the level achieved by the reporting EMEs in the year 2021/22.
Figure 5: EME B-BBEE levels achieved, 2022
Conclusion “Commendable and very encouraging” is how the FSCC Annual Report described the Forest Sector’s overall B-BBEE performance, especially since it was achieved at a time when the entire world was recovering from the negative economic effects of the COVID-19 pandemic.
The Report noted that inconsistent reporting is still prevalent amongst the QSEs and EMEs, the majority of whom did not report in the previous two years.
“This is a call for concern considering that these are the main beneficiaries of the B-BBEE Policy and hence their participation in the forest economy is of chief importance,” commented Khosi.
“To those companies who continue to embrace meaningful B-BBEE, we thank you. My wish is for all if not more forest companies to continue to implement impactful B-BBEE, not only as a legal imperative, but more so as a strategic objective. We want to see the development of new sustainable businesses in all categories so as to efficiently grow the forest economy and broadly include as many potential role players and B-BBEE beneficiaries as possible,” concluded Khosi.
Municipal plantation in safe hands
The dam and recreation area provide the backdrop for some fine sawlogs.
While a number of municipal plantations around KZN appear to be falling into disrepair under inexperienced and inefficient management, the Vryheid municipal plantation is bucking the trend and flourishing in the hands of a no-nonsense ‘caretaker’ lessee who was raised on the farm and has a special interest in its future.
In 2020 Hendrick Mbatha secured a three-year lease to operate the 680 ha estate, located just outside Vryheid, which is owned by the Abaqulusi Municipality. It includes a scenic dam which provides the town with fresh water, as well as several hundred hectares of pine, wattle and gum.
Hendrick grew up on the farm and has been working in various capacities in the forestry industry for the past 25 years. Both his father and grandfather were working in the industry so forestry is in his blood. He says his family was moved off the farm in 1990.
In 2014 he lodged a land claim for the farm on behalf of the Grootgewacht Community, which to this day has not been resolved.
Hendrick Mbatha, who secured a ‘caretaker’ lease for the Vryheid municipal plantation, is passionate about forestry and going all out to build a sustainable business.
In 2020, when the previous 30-year lease for the farm came to an end, Hendrick put in a strong bid to take over management of the farm. He secured a three-year ‘caretaker’ lease and has been running the farm ever since.
Now forestry is a long-term business with tree rotations ranging from eight to 30 years, so there is not much you can expect a lessee to achieve in such a short space of time. But Hendrick has gone all out to maintain and improve the estate. He has renovated the dilapidated buildings on the farm and fixed up the recreational area around the dam that is used and enjoyed by locals. He has fenced the entire farm to keep out goats and cattle that were damaging growing trees, and has re-planted wherever he has harvested.
He has been converting some of the pine areas to shorter rotation gum and black wattle, which he believes makes business sense for the future sustainability of the farm. Gum species planted are a mix of E. grandis, E. dunnii and E. smithii.
Every fifth row in this wattle compartment has been felled to provide easy access and give the remaining trees more room to grow.
With his three-year lease coming to an end all too soon, he is already busy negotiating with the Abaqulusi officials for an extension, pending the finalisation of the land claim.
“I want to keep the farm clean because it’s coming to us, so I work hard for the future,” says Hendrik.
He says that there was a lot of negativity in the district when he first secured a lease to run the farm, with many people predicting that it would rapidly fall into disrepair, as has happened in other municipal plantations around the province.
But Hendrick says that he has worked hard to build relationships with neighbours and local stakeholders, and many of the people who were doubting him before are now shaking his hand.
He supplies pine sawlogs to the previous lessee, RF Gevers, who owns a large sawmill nearby, and also allows them to cut grass around the farm for winter feed as it helps to reduce the fuel load, thus reducing the fire risk. He expressed his appreciation for the support he has received from the directors of RF Gevers who have provided him with assistance and advice over the past two years.
A well maintained grassland and wetland area, and a nice pine compartment.
The picnic area around the dam is spic and span, the grass is mowed regularly and he has built braai stands and fixed up the toilet facilities – much to the delight of the local day visitors. He has also renovated an old building next to the dam and uses it as his office, equipment store and workshop. He has cut down some huge old gum trees growing wild around the dam, and says the dam’s water levels have risen as a result.
Standing pine is sold to RF Gevers; gum and wattle timber is sold to TWK and Sappi, and he has been supplying fresh wattle bark to NTE.
Eza Mapipa, Forestry Development Officer at NTE, is extremely impressed with the productivity on the farm which has supplied NTE’s Stillwater depot in Vryheid with some 700 tons of fresh bark during this past season.
Eza Mapipa at the NTE depot just outside Vryheid where Hendrick Mbatha delivers his fresh bark.
“I am glad that NTE could open the market opportunity for Mr Mbatha so he could get paid the right price for his good quality bark,” commented Eza. “Mr Mbatha is doing a great job, and it is nice to see a municipal plantation that is running so well.”
Hendrick employs 25 people on the farm, and hires additional help when needed. The farm is not certified, but Hendrick says he will address that when the future of the farm is more certain. The timber growing on the farm is insured through Safire, and he joined the local FPA last year.
Hendrick and farm supervisor Mandla Ndlovu were happy to show SA Forestry around the farm and were clearly proud of their handywork. Farm roads are well maintained and have been recently graded, with good drainage ditches and runoffs. We saw a healthy wattle compartment where every fifth row had been felled and the slash stacked neatly in rows. A team of workers was busy hoeing around some recently planted Eucalyptus, and a local farmer was cutting and baling grass for cattle feed. Open and riparian areas are well maintained with little alien vegetation evident. The recreational area around the dam is immaculate.
Overall, we saw a shipshape tree farm run effectively by a highly motivated farm manager, who means business!
The farm building has been renovated and serves as an office, equipment store and workshop.Proud tree farmers … (left to right) Mandla Ndlovu (farm supervisor), Hendrick Mbatha and Eza Mapipa of NTE.The entire perimeter of the farm has been fenced to keep out cattle and goats.Hendrick Mbatha uses a trail bike to get around the farm.Farm workers hoeing around recently planted gum seedlings to eliminate competing weeds.The removal of big gum trees that were growing around the dam has resulted in improved water levels. Note the well maintained plantation road.
National Minimum Wage – but can employers afford it?
A national minimum wage of R23.19 per hour has been set for all workers in South Africa, including forestry and farm workers, effective from 1st March 2022. No doubt that the legislation is well intended, but compliance across the rural areas of South Africa is another story.
The National Minimum Wage (NMW) for 2022 has been set at R23.19 per hour, which translates to R185.52 for an eight-hour day, and R3 710.40 for a month with 20 working days. This represents a 6.9% increase over the 2021 NMW.
The new NMW was Gazetted by Thulas Nxesi, the Minister of Employment and Labour, on February 8, and comes into effect on 1st March 2022. It applies to all workers in South Africa, including farm, forestry and domestic workers.
The only employee group exempt from the NMW are Expanded Public Works employees, whose minimum wage for 2022 has been set at R12.75 per hour.
Reaction to the NMW increase has generally been positive. It marginally improves the real value earnings of bottom rung employees in South Africa (it is 1% above the December CPI inflation rate of 5.9%) and comes as no surprise to the majority of employers who were expecting an inflation-linked increase.
However it follows a hefty 16.1% increase in the NMW that was introduced for farm and forestry workers last year (2021) when their minimum wage was boosted to reach parity with the NMW.
Commented Forestry South Africa’s Executive Director, Michael Peter: “FSA believes the increase is very reasonable considering the above CPI increases our sector has experienced over the past few years. It is also very positive to note that in contrast to previous years, FSA was given an opportunity to provide recommendations to the National Minimum Wage Commission to inform their decision."
However a major ‘red flag’ for the forest sector in South Africa is that it appears that the vast majority of small scale timber growers operating in tribal authority areas are not complying with NMW legislation, meaning that they are unwilling or are unable to pay forestry workers the national minimum wage.
A recent survey of small scale timber growers undertaken by the Sustainable African Forest Assurance Scheme (SAFAS) in several tribal authority areas in KwaZulu-Natal, including Matimatolo, Ozwathini, Hluhluwe, Mandeni and Richmond, found that there was 0% compliance with the NMW. The consequence of this is that these growers are not legally compliant and are thus also unable to achieve forest certification, which means they are excluded from premium timber markets.
This points to the reality that there is a parallel economy operating in rural tribal authority areas where wages are significantly lower than they are in the rest of the country. The SAFAS survey found that the average wage for a chainsaw operator working for a small scale timber grower in the surveyed tribal authority areas was R101 per day, while the average wage of a general forestry worker was R74 per day. According to the Department of Labour, all workers in South Africa, irrespective of the size of the business employing them - or its geographic location - are entitled to a wage not less than the NMW.
Employers who have valid reasons for not being able to pay the NMW can apply for an exemption, but it is an extremely onerous process that small scale timber growers are unlikely to be able to navigate. This leaves them in a situation where they are forced to conduct business outside of the law of the land. To address these and other problems, the SAFAS team is in the process of developing alternative mechanisms to provide small scale timber growers with market access via a ‘Community Label’.
But it seems that it is not only small scale timber growers who are struggling to comply with NMW legislation, and that many commercial farmers in South Africa are in the same boat. Christo van der Rheede, Executive Director of Agri SA, said that the increase in the minimum wage raised concerns around the ability of many farmers to continue operating their businesses profitably, and to contribute towards employment creation in labour-intensive sub-sectors. He said farmers have had to absorb extraordinary increases in input costs over the past few years, ranging from fertilisers to fuel prices, electricity price hikes and the double-digit increase of the minimum wage in 2021.
This, he says, has come against the backdrop of the dilapidated condition of rural and some provincial roads which have been rendered all but impassable, with the result that farmers struggle to get their crops to market.
To add to farmers’ woes, he says large-scale locust outbreaks have occurred in parts of the Northern Cape and Western Cape. Plus there have been torrential flooding and hailstorms in North West, Free State, Limpopo, KwaZulu-Natal and Mpumalanga which have had a devastating impact on farmers, some of whom have lost 100% of their crop.
16.1% minimum wage increase for forestry workers
The National Minimum Wage for farm workers – including forestry workers – has been set at R 21.69 per hour, an increase of 16.1% over the 2020 minimum wage of R18.69 per hour.
The new minimum wage takes effect from 1st March 2021.
In the past the Minimum Wage for farm workers was set slightly below the National Minimum Wage, taking into consideration factors impacting on the rural economy in South Africa. However this special dispensation for farm workers no longer applies, with the farm worker Minimum Wage reaching parity with the National Minimum Wage from 1st March 2021. Hence the big jump of 16.1%, which is way ahead of inflation, currently around 3%.
A wage of R21.69 per hour translates into R 173.52 per 8-hour day, or R 3 470.40 for a 20-day working month – before deductions.
According to Employment and Labour Minister Thulas Nxesi, the National Minimum Wage Act makes provision for employers that are genuinely unable to pay the National Minimum Wage to apply for official exemption.
While this wage increase will be good news for forestry workers, it is likely to be a challenge for many employers involved in the forest sector – particularly those reliant on manual operations – as their wage bill faces a hefty increase from March 1st.
Poor timing
According to Francois Oberholzer, Operations Manager for Forestry South Africa (FSA) which represents the majority of growers in South Africa, the timing of this wage increase is particularly unfortunate.
“The State has a history of poor timing and implementing major changes when conditions could not be worse,” commented Francois. “The implementation of the minimum wage should have been timed during periods of high growth and low unemployment. This increase comes when the country is experiencing record high unemployment and when businesses are the least profitable they have ever been.
“FSA did make a submission to the Minimum Wage Commission’s proposed increase. Like other industry associations in the agriculture sector, our recommendations were unfortunately not successful. As an industry we support the objectives of the Act regarding the need to eradicate poverty and inequality, but we would have preferred to see a phased approach to the equalization of the minimum wage.
“The 16% increase in minimum wage will without a doubt place a lot of pressure on the forestry sector. This is exacerbated by low international prices for dissolving pulp since 2019 as well as a poor production year in 2020 due to the pandemic that saw a 15% decrease in volumes produced year on year.”
According to FSA, this minimum wage could result in further job losses and increasing mechanisation in the forestry sector.
“It is a bit early to estimate any levels of job losses,” said Francois. “The forestry sector in many instances pays wages above the minimum wage. This is unfortunately not the norm and FSA will soon conduct a survey to quantify the impact of the significant increase in minimum wage which will provide some insight on possible job losses.”
Small-scale growers Does this increase put wages out of the reach of most small-scale / community forestry operations … meaning they will likely be unable to comply, which has other consequences, e.g. they can’t get certified if they don’t comply with the minimum wage?
“The small and medium growers will undoubtedly be most severely affected,” continued Francois. “We do hope that all growers that will not be able to implement the new minimum wage apply for the exemption offered by the State.
Unfortunately, the exemption is only a one-year deferment and most small-scale growers will find it difficult to comply to the new minimum wage the following year. More information on this exemption is available on our website www.forestrysouthafrica.co.za.”
Not enough Jerry Nkosi of the Chemical, Energy, Paper, Printing, Wood & Allied Workers’ Union (CEPPWAWU), which represents some 3 000 forestry workers, welcomed the increase in the minimum wage, but said it wasn’t enough to address the inequalities in the South African labour market.
“CEPPWAWU welcomes the announcement by Government that the NMW for the forestry and farm workers will increase from 1 March 2021,” commented Jerry. “However, given the inequality and the big gap between the income of forestry and farm workers compared to other sectors, the increase is not much significant. An increase is an increase but it is the value that counts. Is this a valuable increase? Yes. Does it address the gaps and inequalities? No.
“It is in this vein that CEPPWAWU is advocating for the amendment of the Constitution for the Wood and Paper Bargaining Council to include forestry. This will allow forestry workers to be covered by the Council and allow the Union to negotiate for them centrally.”
The forest sector currently employs around 59 000 people directly across South Africa. Latest figures show that nationally unemployment is edging above the 40% mark, with the majority of jobless people residing in rural areas.
