FSA celebrates another successful year of business

*Changing of the guard (L-R) Mike Peter (Executive Director FSA), outgoing FSA Chairperson Andrew Mason and incoming FSA Chairperson Buhle Msweli. Photo: Samora Chapman*

FSA’s 22nd Annual General Meeting was held once again at the Fern Hill conference Centre in Tweedie in May, and was attended by a record number of members, forestry sector stakeholders and key office bearers from several government departments.

Andrew Mason handed over the FSA chairmanship to Buhle Msweli of the Small Growers Group as per FSA’s rotation policy, which has served the organisation well over the years. Duane Roothman of Sappi will serve as Vice-Chair for the year ahead.

In his opening address, FSA Executive Director Mike Peter, shared the good news that the Forest Sector has improved its BBBEE rating and achieved Level 3 for the first time, and that gender transformation efforts are bearing fruit in that women entering forestry programmes at tertiary education institutions in 2024 outnumbered men – also for the first time.

He also lauded the fact that the forest Sector’s engagement with stakeholders through the Public Private Growth Initiative (PPGI) is bearing fruit as the barriers impeding the progress of the Sector have been removed. However he cautioned that the hard work is not done as the sector needs to build on the opportunities thus created.

There were two excellent keynote presentations that kept attendees interested and provided fascinating perspectives on the road ahead for South Africa in general and the forest sector in particular. The meeting was held just a few days before South Africa’s general elections on May 29, and there was plenty of speculation as to what lies ahead for the economy and the country as the election results will have a massive bearing on the trajectory of our future.

*Dr John Endres, Chief Executive Director of the Institute for Race Relations, presented the keynote address. Photo: Samora Chapman*

The keynote presentation by Dr John Endres, Chief Executive Director of the Institute for Race Relations, appropriately titled ‘On the Edge’, provided a snapshot of the decline that has occurred across all South Africa’s economic indicators since 2008. This has resulted in low economic growth, fewer jobs, declining investment and the average South African is poorer as a result.

He said that the level of investment in the South African economy is way below what is required to turn the economy around because investors do not trust the direction that government policy is taking. Moreover the fact that almost half the people in South Africa are now receiving Social Grants coupled with an extremely narrow tax base, means that the South African economy is vulnerable and confidence is at an all-time low.

*Katy Johnson (FSA), Khosi Mavimbela (Executive Director Forest Sector Charter Council) and Julia Rees (Dargle Poles). Photo: Samora Chapman*

However our democratic processes still work and the looming General Election provides a glimmer of opportunity for political change. We may be entering a period of coalition politics which will be marked by volatility and an increasingly ineffective government, he said. The positive side of this coin is that it gives more space to the private sector to step in with solutions.

“The most successful political parties of the future will be the ones that manage coalitions the best,” he concluded.

Steven Ngubane of the Industrial Development Corporation provided info on the state development finance institution’s commitment to provide development finance for SMMEs engaged in the Agriculture and Agribusiness value chain, which includes forestry. He said the IDC plans to invest R1.4 billion in this sector over the next four years through their blended finance model. This model can be tailored to suite forestry which is a primary, low value and long term business.

*Incoming FSA chairperson Buhle Msweli (right) thanks the IDC’s Steven Ngubane for his presentation. Photo: Samora Chapman*

This model employs a 60:40 equity to credit ratio. This translates to an effective interest rate of 9% on finance packages up to R100 million, or 12% on packages up to R200 million.

Steven said that recipients of IDC finance packages are also required to invest their own funds in the enterprise, to ensure that they are fully committed to making it work.

After the business of adoption of the minutes from the 2023 AGM and the audited financial statements for the year ended 2023, attendees and guests were able to socialise and network at a vibrant cocktail after-party.

*L-R: Vusi Dladla of NCT, Norman Dlamini (FSA), Tebogo Mathiane (Department Forestry, Fisheries & Environment), Freddie Humphreys (Land Bank) and Steven Ngubane (IDC). Photo: Samora Chapman*

FSA Executive Committee 2024/25
Ex Large Growers Group
Duane Roothman (SAPPI) (FSA Vice-Chairperson)
Themba Vilane (Mondi)
Sean Brown (Merensky)
Itumeleng Langeni (MTO)
Sibalo Dlamini (SAFCOL)
Ferdie Brauckmann (TWK)
Penwell Lunga (PG Bison)
Gerald Stoltz (York Timbers)
Mark Armour (co-opted)

Ex Medium Growers Group
Andrew Mason - KZN MGG Chair
Murray Mason - KZN / S Cape
Heiner Hinze - Mpumalanga / Limpopo
Graeme Freese - Past MGG Chairperson
Danny Knoesen - Ordinary Member

Ex Small Growers Group
Buhle Msweli - KZN Provincial Chairperson (FSA Chairperson)
Musa Mcwensa - KZN Deputy Chairperson
Fhatuwani Netsianda - Limpopo Provincial Chairperson

*Small-scale growers attended the FSA AGM in numbers. Photo: Samora Chapman*

Dave Everard (forestry consultant and former Sappi Forests Environmental Manager), Hlengiwe Ndlovu (Sappi Forests Environmental Manager) and John Scotcher (environmental consultant for FSA). Photo: Samora Chapman

*Linda Vilakazi (Mondi) and Sandile Nkosi (Sappi Khulisa). Photo: Chris Chapman*

*FSA’s Stefan Links and Ronald Heath. Photo: Samora Chapman*

*L-R: Katy Johnson (FSA), Roger Poole (NCT) and Jacqui Meyer (Timber Pesticide Working Group). Photo: Samora Chapman*

Pursuing opportunities in a struggling economy – Notes from FSA’s 20th AGM

The ‘A’ team (L-R) Themba Vilane (Mondi, FSA Chairperson), Mike Peter (FSA Executive Director) and Andrew Mason (FSA Vice-Chair).

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.

Mike Peter, Busi Mnguni of the Small Grower Group and outgoing FSA Chair, and incoming Chair Themba Vilane, head of Mondi Forests in SA.

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.

Keynote speaker Dr Azar Jammine of Econometrix laid bare the dire state of the South African economy, but also offered a glimpse of optimism … it can be turned around!

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.

Guest speaker Ian Bird (Logistics Executive for SMARTVEST Investments) had some exciting news regarding proposals for private sector participation on the coal line that hauls timber from central forestry regions to Richards Bay.

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.”