Forestry South Africa held its 21st AGM in the KZN midlands in May, attended by a record number of members and invited guests who were treated to two blockbuster keynote presentations that helped to put the crises facing South Africa into perspective …
What a year 2022 turned out to be for the South African forestry sector! After surviving the Covid pandemic in 2020 and the failed insurrection and looting spree that took place in KZN and Gauteng in 2021, forestry stakeholders were hoping for a more stable and prosperous 2022. But the crises just shifted … to energy (or the lack of it) with load shedding ramping ever upwards; and to logistics where a strike by Transnet workers brought freight rail – that was already in a state of decline – to a standstill in October, costing the battered SA economy R1 billion per day in lost opportunities.
Meanwhile the impacts of Russia’s invasion of Ukraine disrupted international markets, creating logistics bottlenecks and causing prices of commodities like fuel, coal, tyres and fertilizer to skyrocket.
In between all of that, the resilient forest sector survived – even thrived in many instances – aided and abetted by the Forestry South Africa team which muscled its way closer to the levers of power to help find solutions for a number of pressing national issues.
Here is a brief highlights package of FSA activities during the year 2022 that were covered by outgoing FSA chairperson Themba Vilane during his address at the recent FSA AGM, and were elaborated upon in his Foreword in the recently published FSA Annual Report.
Ports and rail
The FSA team established regular meetings with the CEO of Transnet and her top management team, and task teams working on ports and rail met throughout the year, playing a hand in bringing the Transnet strike to an end. As a result of this involvement, Executive Director Michael Peter was asked to serve in a President-led task team working on the reforms needed to address the use and recapitalisation of rail and ports in South Africa.
FSA is also serving on a Presidency-led energy committee which is playing a key role in addressing the energy crisis.
“Having our association at the forefront of these national crises interventions is a great testimony to the regard in which our sector is held,” said Themba.
Research and innovation
Forestry’s growing partnerships with government also bore fruit with FSA securing Sector Innovation Funding of R35.2 million from the Department of Science and Innovation. This funding serves to increase forestry’s research capacity in crucial areas.
Furthermore, the signing of an MoU between FSA and the Department of Forestry, Fisheries and the Environment (DFFE) will bring an additional R9 million per year for forest protection.
Recommissioning of state plantations
Perhaps the biggest news of the year came just before Christmas when the DFFE called for expressions of interest from the private sector for the operation of 22 000 ha of state-owned forestry plantations in the Western Cape. These former pine plantations have been lying dormant for anything between five to 20 years, as they were handed over to the receiving agents after clear-felling at rotation end by the previous lease holder, MTO Forestry. They were originally part of government’s forestry exit strategy in the Western Cape, but following an outcry from industry stakeholders and further research, Cabinet decided in 2008 to recommission these plantations.
“We hope that this signals the start of the process for the rest of the Category B and C state plantations which have been overrun by timber thieves and criminal syndicates …” said Themba.
On the land reform front, the FSA Land Committee has come up with concrete proposals to bolster support for communities who have come into forestry through land reform initiatives, in an effort to ensure that a sustainable fibre supply from these plantations is maintained. These include a feasibility study stage in the land restitution process to better inform settlement negotiations; a suite of appropriate settlement models; a crop ownership transfer model and the provision of appropriate post-settlement support for land reform beneficiaries.
Timber volumes up
Finally, Themba applauded the fact that timber sales recorded by FSA members during 2022 were the highest since 2018 at 13.970 million tons (6.2% higher than 2021 volumes). Gum sales were the best performer at 7 million tons (18.5% higher than 2021 volumes), wattle was second best at 1.4 million tons (up 15.5% on 2021 volumes) and pine at 5.5 million tons (down by 7.8% vs 2021 volumes).
These timber sales volumes would have been much higher had it not been for the devastating floods that occurred in KZN in April and the impacts of the rail and port strike in October, the consequences of which are still being felt across all sectors of the economy.
“Should the country succeed in addressing the two biggest challenges we are facing in logistics and energy, this bodes very well for the future of timber growers, especially with the major investments which have been made by our sector in pulp and paper, particle board, sawmilling and renewable energy,” said Themba.
The FSA team paid tribute to two stalwarts of the Forestry Sector, Brian Aitken and Murray Mason, both of whom have put in multiple stints as FSA office bearers over the years, and who have contributed enormously to the success of the sector.
FSA Executive Committee for 2023/24
Ex Large Growers Group
Duane Roothman (SAPPI) Themba Vilane (Mondi) Sean Brown (Merensky) Itumeleng Langeni (MTO) Tsepo Monaheng (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) (FSA Chairperson) Murray Mason - KZN / S Cape Heiner Hinze - Mpumalanga / Limpopo Graeme Freese - Past MGG Chairman Danny Knoesen - NCT
Ex Small Growers Group Buhle Msweli KZN Provincial Chairperson (FSA Vice-Chairperson) Musa Mcwensa KZN Deputy Chairperson Fhatuwani Netsianda Limpopo Provincial Chairperson
THE CLIMATE CRUNCH
More red tape, more taxes, more climate challenges, more opportunities for forestry …
“We are already in trouble … climate change will just make it worse.” These sobering words from Prof Eugene Cloete, microbiologist, water expert and recently-retired Vice Rector Research & Innovation at Stellenbosch University, set the tone for the opening of the Forestry & Climate Symposium held at the Department of Forest & Wood Science at Stellenbosch University in October.
Prof Cloete said that urbanisation across the world is continuing at an unsustainable rate, outstripping our capacity to provide the essential infrastructure. Pollution and poverty are on the rise. He says the world can support 1.2 billion people – not the 8 billion people we have now.
“We are exceeding the carrying capacity of our planet by 25%,” he said.
One of the consequences of this scenario is that the migration of people is accelerating. “It’s a natural phenomenon – people move to where there are more available resources,” he said.
But this only creates more problems. Borders are closing, nationalism is on the rise, social instability is increasing.
It’s an “ecological principle”. Increasing competition for resources leads to war.
We have to drastically reduce our consumption to get a shot at surviving, says the Prof. That’s what Covid did – it pushed us back into the carrying capacity of our planet, but it’s not sustainable.
He says that the ecosystem regulates the carrying capacity of the world. He predicts that there will be a shortage of water going forward, and we will have to re-look at how we manage this precious resource.
We also need to develop clean energy for the future. “Technology alone is not the solution – behaviour change is necessary.”
“We are on a non-sustainable path that could lead to disaster and even extinction. This is either our last century – or the century that marks a big change in our behaviour to ensure our future.”
Forestry perspective Executive Director of Forestry South Africa, Mike Peter, provided some context on where the forestry industry stands in relation to climate change.
He said climate adaption at a business level is essential. The climate in regions where we grow trees in South Africa is already changing, and stakeholders are planting different species that are better adapted to the climate reality, he said.
The Carbon Tax has its origin in the non-binding Kyoto protocol of 1997, then in 2013 came the rise of RED and RED+ following the realisation of the impact of deforestation, but RED was not a “silver bullet” that would stop the build-up of emissions in the atmosphere. You can’t have a RED+ project in an area where we would have established forests anyway.
Then at COP 15 the then SA President Zuma committed South Africa to reduce emissions by 34% by 2020, and 40% by 2050. Why did he make this commitment? Because he was pro a nuclear build that would have netted him and his cronies millions, said Mike.
Then our government proposes a carbon tax, but they wouldn’t open up the market for renewable energy. It took President Cyril Ramaphosa until 2022 to open up the playing field for the generation of renewable energy at scale.
The carbon tax came into effect in 2020 – in the middle of a pandemic! Land-based sectors like forestry and agriculture were granted five years’ grace and will have to commence paying the carbon tax in 2025.
Mike said that the forestry sector is a very small emitter of greenhouse gases, and anyway it would cost the government more to collect the tax than the carbon tax revenue would be worth.
“We are locking up CO2 in our plantations. We want government to accept that biomass is carbon neutral. We don’t want plantations to be regarded as a carbon sink. We are carbon scrubbers,” he concluded.
Carbon tax is coming However forestry companies that are involved in manufacturing are already reporting their emissions and paying carbon taxes. Jacob Crous of Sappi provided some insights into the complexities of carbon accounting and the challenges it brings. This is something that all businesses engaged in forestry work – including growers and contractors – will have to come to terms with after 2025.
SA signed the Paris Agreement (COP15) which committed the country to mandatory reporting of GHG emissions to the United Nations Framework Convention on Climate Change. The relevant legislation governing the reporting of emissions and carbon tax inside South Africa are the Air Quality Act 39 of 2004, and the Carbon Tax Act 15 of 2019.
Forestry companies will have to take into account all emissions and removals, above ground, below ground and in harvested wood products. They will have to calculate forest carbon pools vs carbon flows and the annual change in mass balance.
By way of example, Sappi’s Scope 1 GHG emissions in 2021 (cradle to mill gate) excluding biogenic C emissions/removals were made up as follows:-
Transport – 19.8% Harvesting – 15.1% Fire (non CO2) Harvest residue – 24.7% Non CO2 residue decomposition – 16.7% Land use change – 9.8% Fire (non-CO2) grassland – 8.1% Fire protection – 0.2% Management – 1.5% Roading 1.9% Establishment – 1.4%
Some useful pointers from Jacob:-
• Change in carbon stocks is calculated as the difference between the starting stock and ending stock. • The actual carbon stocks (storage in tree crops) are not taken into consideration - only the change. • Managed land proxy: all emissions from any management action must be reported (harvest residue decomposition, natural disturbance losses, management of conservation areas) – baseline natural emission from grassland burning is not recognised. • Natural disturbance losses reduce standing carbon stocks, and add to non-CO2 emissions. • Carbon is deemed to be emitted to the atmosphere when trees are harvested. • Conversion from forest land to grassland (delineation) results in large carbon losses as CO2 loss also included in land use change (not measured against original natural vegetation). • Land use change removals normally discounted over 20 years. • Corporate accounting: obtain Scope 3 emissions/removals from external suppliers (upstream) and products (downstream). • Adapt management systems to facilitate GHG reporting. • Standardise accounting across the industry.
According to Jacob, the ‘rule of thumb’ is that around 90% of the carbon stored in wood as it enters the mill gate is the positive carbon balance after taking into account the emissions generated through the planting, tending, harvesting and transporting of the logs to the mill. This puts forestry squarely on the front foot in the climate debate and creates a world of opportunities going forward.
However the calculation for processed products like packaging, fabrics or bio-plastics gets a lot more complicated.
Value of woody biomass Johann Gorgens, Professor in Chemical Engineering at SU, said that woody biomass will become way more valuable going forward. This creates a new paradigm for growth, global investments. He said every plastic produced by fossil fuels can be produced from bio-based sources.
“Sustainable carbon will become a scarce commodity in future.”
According to Associate Professor Ben du Toit, preliminary studies show that the carbon content of soils usually increases after commercial afforestation of grasslands. Minimum tillage and below-ground carbon allocation in trees appear to contribute to this result.
Forestry consultant Martin Herbert provided info on how York Timbers are adapting to climate change by breeding trees better suited to a warming climate for their pine plantations along the Mpumalanga escarpment. He said back in the 1970s the climate in the region was significantly cooler, and warmer temperatures are already a reality. “It’s a rapidly moving situation, and the temperature change is evident throughout the seasons.”
He said when it became evident that Pinus patula wasn’t thriving, York started exploring different pine species and hybrids that would be better suited to the changing climatic conditions.
In 1975, MAT on the escarpment was 16.820 C. In 2020 it was 18.080 C. In 2050 it is projected to be in the region of 19.360 C.
In order to be prepared for the changing climate, he said tree breeders need to know 15 or 20 years in advance what the climate will be doing. “It’s not just temperature – it’s a whole spectrum of climatic conditions,” he said.
Ecological networks Rene Gaigher of the Mondi Ecological Networks Programme provided useful insights into the benefits of incorporating ecological networks into plantations. She said these networks of unplanted, natural conservation areas should link areas of high biodiversity such as wetlands, grasslands and natural forest across the landscape.
She said a mosaic of ecological networks are essential to develop resilient ecosystems and are an effective mitigation measure against climate change. These networks allow species to move and are critical for their survival.
The key principle is to conserve large amounts of high-quality habitat that is functionally connected across the landscape.
Also of importance – create artificial ponds or dams (they support 75% of aquatic beetle, bug and dragonfly species found in natural ponds). Ponds increase population resilience against drought.
Grazing and fire regimes that mimic natural conditions are best for biodiversity – mosaic burning and grazing patterns are ideal. Invasive alien plant control helps to conserve ecosystem functioning.
Complex areas support significantly higher plant and anthropod diversity (i.e. areas with complex topography, elevation, different vegetation types etc). Narrow unplanted corridors, while not ideal, have value as movement conduits that increase connectivity in the landscape.
Wood buildings vs concrete & steel According to Brand Wessels, Associate Professor in the Department of Forest & Wood Science at SU, using wood building materials instead of energy intensive bricks, concrete and steel, can make a massive contribution to a reduction of carbon emissions. This creates a great opportunity for the forestry industry to collaborate with stakeholders to promote the construction of wooden buildings and provide the raw material resources.
Buildings are currently responsible for the biggest slice of energy-related carbon emissions at 39%. By comparison industry is responsible for 31% and transport 23%.
Considering that demand for saw timber in South Africa is already outstripping the supply, it is critical that plantation resources are maximised in order to support the construction of ‘green’ buildings.
Carbon 0 – money talks Prof Guy Midgley, Acting Director of the School fort Climate Studies, provided a different perspective on the science of climate change and forestry.
For the last 450 000 years, the world was a much colder place than it is now, he said. Trees almost become extinct in cold periods, because trees need carbon to grow. In the ice age trees and forests were carbon-starved.
As we gradually increase C02 we push the planet back to more forests, it becomes more tree-friendly.
There is a lack of research around carbon pools and carbon flows – particularly in Africa, he said. We need to know more about how different African landscapes sequester carbon, how Eucalyptus plantations affect the carbon balance etc.
“We don’t have the research – we have not invested,” said the Prof.
“We need to get to carbon 0 by the end of the century – it’s a very difficult thing to do.”
He demonstrated a fascinating climate solutions simulator developed by a group of leading scientists that allows users to explore the impact of key policies on future climate scenarios. The En-Roads Climate Solutions Simulator is freely available on the internet at www.enroads.org.
It comes up with some surprising results.
On our current trajectory the world’s average temperature will increase by 3.60 C by 2100. That will make the world a much more difficult place to live in … for humans.
If we could stop deforestation completely throughout the world and plant 3 trillion trees, it would only make a miniscule difference to this global warming trajectory, reducing the projected temperature increase by a mere - .0110 C by 2100.
Clearly this alone is not enough to make a significant impact. What is required are major changes in policy and consumption patterns that are unlikely to be made voluntarily.
However if you increase the carbon tax price on the dashboard, there is a big step change in the projected temperature increase. Money obviously talks the loudest!
“Our single most effective tool (to reduce harmful emissions and mitigate climate change) is to make carbon taxes very high,” said the Prof.
This would force through the changes required to reduce the projected temperature increase by -2.60 C by 2100.
“If we don’t succeed we condemn our children to a much worse future.”
He said that centralised political and economic power is built around centralised energy production, so regionalising energy production with renewables would break centralised power blocks, raising the possibility that we could create a different, more sustainable, world.
Pursuing opportunities in a struggling economy – Notes from FSA’s 20th AGM
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.”