Forestry South Africa held its 20th Annual General Meeting in the KZN midlands recently, hosting a ‘live’ event attended by around 70 members and guests (numbers were limited due to COVID regulations) and many more who attended the virtual event.
Despite the fact that forestry in South Africa has been rocked by a string of disruptive events in the past few years, including the COVID pandemic and lockdown, riots and looting in KZN, freight rail and port disruptions, then floods in KZN again, the general mood at the AGM was positive and upbeat as stakeholders focused on tackling the challenges and finding solutions.
In his opening address FSA Executive Director Michael Peter said that the FSA team is working well with their Public Private Growth Initiative (PPGI) partners and making progress in addressing the major challenges confronting the forestry sector.
Likewise guest speakers Dr Azar Jammine of Econometrix and logistics consultant Ian Bird unpacked the problems we face across South Africa’s social, political and economic landscape, but pointed out the many opportunities that exist to turn it around, as well as some concrete steps being taken to do just that.
Themba Vilane, head of Mondi Forests in SA, is taking over from Busisiwe Mnguni as FSA Chairperson, while his deputy is well known KZN tree farmer Andrew Mason.
In her address, outgoing chairperson Busi Mnguni of the KZN Small Grower Group, revealed that the failed insurrection and looting spree that spread across KZN and parts of Gauteng in mid-2021 cost the Forest Sector around R656 million in physical damages and lost production. Before this unfortunate event the forestry industry was on track to record its best year since 2018 in terms of timber sales, which says a lot for the resilience of the sector.
Despite these disruptions, the industry recorded total timber sales of 13 153 million tons in 2021 – some 13% up on the volumes achieved in 2019.
Other noteworthy achievements notched up by the hard-working FSA team include:-
• Positive changes to the diesel rebate system
• Increasing FSA membership to well over 95% of timber growers in SA
• Securing access to state funding to support black participants in forestry
• Securing high court judgements in industry’s favour on Genus-exchange and the protection of water use rights.
Incoming FSA chairperson Themba Vilane revealed that the Department of Science and Innovation (DSI) has approved FSA’s third round application for Sector Innovation Funding, in the amount of R 35,2m over four years. This success is due in no small part to the efforts of FSA’s Research and Protection Director, Dr Ronald Heath, with the support of the Research Advisory Committee, as well as the efforts of FSA’s partners in the PPGI.
Coupled with the R24m secured from the DSI in the first round of SIF funding and R11m in the second round, this means that FSA has secured R 70m from DSI over the past seven years!
The funding will be utilised in line with FSA’s funding framework which focuses on forest protection and sustainability.
Dr Azar Jammine, Director and Chief Economist at Econometrix, spelled out the dire state of the South African economy, which has a projected growth rate for 2022 of 1.9% - one of the lowest in the world. 35%-46% unemployment, a growing chasm between the haves and the have nots and a deepening technological divide, has led to a huge reliance on social relief. Capital investment has dropped to 13% of GDP (from 19% in 2014), and the lack of infrastructure development has had a crippling effect on the economy, he said.
Notwithstanding the fact that we have a ‘challenging’ economy, Dr Jammine said a lot can still be achieved if government can make the right moves.
“Hopefully President Ramaphosa will get a second term in office and have more freedom to implement the necessary structural reforms to spark an economic recovery, which would take a few years to manifest,” he said.
Ian Bird, Logistics Executive of Smartvest Investment, outlined the poor levels of service on the country’s freight rail lines as well as the ports, which is of critical importance for the competitiveness of the forestry industry. Problems on the ‘Wood Owl’ line which hauls timber from Mpumalanga and northern KZN to Richards Bay, as well as the branch lines serving the forest sector, have resulted in rail usage declining steadily over the past few years, and road usage increasing.
This has had the effect of increasing the costs of logistics while negatively impacting the road infrastructure.
Meanwhile he said that Transnet’s rail network is hugely under-utilised and ripe for private sector investment.
Transnet Freight Rail has eventually come around to this way of thinking, he says, and has offered two-year slots to the private sector to supply locomotives and wagons on the main Jhb to Durban container line. However he believes that these slots are too short-term to be viable in their present form.
He says that FSA is putting together a Rail Committee that will pursue opportunities for private sector participation in the coal line that is used by the Wood Owl train that hauls timber from the central forestry regions to the Richards Bay mills. Transnet has been receptive to the initiative for 3rd party access, and the operational head of Transnet’s rail line will be part of that committee. The initiative has been well received by stakeholders and he is optimistic that solutions will be forthcoming.
He says the forest sector has 4.5 million tons of timber a year available for train freight, which constitutes 7% to 8% of Transnet’s general freight cargo, which shows that we are not an insignificant stakeholder. Current timber volumes being transported on rail are 1.9 million tons a year.
The immediate plan is for the private sector to provide locomotives to pull Transnet wagons on the Wood Owl. This would overcome the problem of unavailability of locomotives which has been at the heart of the recent freight train service disruptions on the coal line.
The longer term solution would be for private operators to supply locomotives, drivers and wagons, while leasing the rail line from Transnet.
Private sector participation in freight rail and port handling will happen, there’s no turning back, said Ian.
“An exciting new era in structural reforms beckons.”