A Cabinet decision – taken in 2008 – to restore 22 000 hectares of state owned forestry plantations in the Western Cape to active forestry, has moved a step closer to realisation much to the delight of industry stakeholders who have been stressing over dwindling round log resources in the region for years.
The good news came in December last year when the Department issued a call for proposals from suitable investors to lease, develop, operate, plan and control forestry operations in the Western Cape recommissioned plantations for a maximum period of 50 years.
A voluntary briefing session held on 20 January was attended by around 28 interested parties, and the deadline for submission of bids closed on 3 February 2023.
Thus potential forestry investors had a little over one month to prepare their bids for what is an extremely complex business proposal that could change the face of forestry in the Western Cape, and spark a resurgence in downstream wood processing business that will give the struggling regional economy a massive boost.
The 22 000 hectares of 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.
This land was earmarked for conservation and other land uses, but due to budget constraints and/or a lack of confidence in the way forward, much of this land has been left in limbo without consistent management, creating huge fire risks and sliding back into a jungle of fynbos, alien invasive plants and pine regeneration left over from the forestry days. Infrastructure and plantation roads are also in a sad state of disrepair.
However according to forestry consultant, Braam du Preez, who is based in the Southern Cape, there are pockets of utilisable trees – both planted and naturally regenerated and thinned - that will provide incoming land managers with a head start in bringing these former plantations back into production.
But in most cases the land will have to be cleared, the slash burnt or mulched, plantation roads rebuilt or rehabilitated, before re-planting can commence. This is going to require significant investment in money, resources, expertise and time. Considering it takes 20 to 25 years to grow a high value pine sawlog in the Western Cape, the new plantation operators are going to need very deep pockets before they can expect a decent return on their investment. They are also going to need to hit the ground running as at best they will have two sawlog rotations – or three rotations for the pole market - before their lease expires after 50 years.
In terms of the bid document, the plantations may only be used for intended purpose – i.e. forestry - and may not be sub-let without the consent of the Department; and the prospective investors will not have the option to buy the land during or at the end of the lease period.
If you throw in the requirements of B-BBEE compliance and the need for investors to partner with local communities, plus the variables of weather, politics, load-shedding and the ever-present threat of wildfires, only the most well-resourced, experienced and tenacious companies would consider taking on the task.
However such is the widening gap between supply and demand of good quality sawlogs and poles in the region, that interest in these ‘abandoned’ state plantations is extremely high. Moreso since the opportunities for new afforestation in the region are close to zero.
The 22 000 hectares available for recommissioning have been broken into five economically viable packages as follows:-
• Package 1 – Boland plantations – total 7 053 ha, comprising La motte, Hawequa, Kluitjiekraal and Grabouw plantations.
• Package 2 - Jonkersberg – 4 106 ha
• Package 3 – Bergplaas – 4 868 ha
• Package 4 – Homtini – 757 ha
• Package 5 – Buffelsnek – 4 507 ha
Surprisingly Witfontein plantation, located adjacent to George, has not been included in any of the five packages although it was earmarked to be returned to forestry in the Vecon study.
According to the bid document, the strategic investor is expected to form a partnership with tenure beneficiaries in each one of the business packages of the Western Cape to ensure that the communities organise themselves into a Special Purpose Vehicle that will hold an agreed equity percentage of the business.
Investors are also expected to implement targeted capacity building and transformation programmes to ensure coping skills and resilience of communities, youth, women and people living with disability. These initiatives should promote employability, transfer of life skills, and overall participation in the forestry value chain. Furthermore, they will need to contribute to transformation by providing contractual work and opportunities to SMMEs, thus promoting B-BBEE.
So why the flip-flop of converting the 22 000 ha out of forestry to other land usage in the first place – and then a few years later deciding to bring it back into forestry? And why did it take so long (14 years) for the Department to take the step of inviting potential investors to submit bids for recommissioning the 22 000 ha following a Cabinet decision taken in 2008?
It’s a very long story. Suffice to say that in 2001 Cabinet approved the conversion of all plantation areas in the Western Cape (45 000 ha) to other land uses as the land was considered marginal for forestry. In terms of an Exit Lease signed in 2005, MTO was required to hand over clear felled compartments to the receiving agents systematically over the period of the lease, completing the process in 2020.
The exit decision was later reviewed due to pressure from stakeholders who highlighted the negative impacts on the regional economy, including job losses and a growing shortage of timber for processing, which inevitably led to the closure of sawmills, pole manufacturers and other processors. Government subsequently appointed the Vecon Commission in 2006 to re-assess the viability of the exit areas. The Commission recommended that roughly half of the 45 000 hectares should be brought back into forestry. In 2008 Cabinet recommended that the area be declared sustainable area for forestry again. The actual implementation of this decision was the responsibility of the Department of Forestry.
In 2014 the Department commissioned a study through IDC to do a situational analysis of commercial forestry and downstream processing in the Western Cape. The study recommended replanting of VECON areas (approximately 22 000 ha) sooner rather than later, in order to address the inevitable shortage of round log supply that was looming. The study suggested that the exit areas be divided into five business packages to promote participation by local forestry businesses and to avoid over-concentration and dominance of big, established forestry businesses.
As the years rolled by MTO, as the incumbent managers of the state plantations in the Cape, tried various approaches to persuade government to allow it to re-establish or manage the re-growth after clear felling the exit reversal areas, pending their recommissioning back into forestry. But to no avail. Thus clear felling and handing over to receiving agents of the exit reversal areas continued and was completed in 2020
Meanwhile the massive wildfires in the Southern Cape in 2017 and 2018 further exacerbated the shortage of timber available for processing in the region, negatively impacting the business of almost every sawmill, pole plant and furniture manufacturer, both big and small.
Setting the ball rolling
The news that the Department has at last set the ball in motion to find suitable operators for the 22 000 hectares has been welcomed across the board. It is going to provide tons of work for forestry practitioners, contractors, and services and equipment suppliers going forward. It’s also going to increase the timber resources available for downstream processing all the way down the value chain. In the process – if all goes according to plan – it will also provide a golden opportunity to advance the implementation of B-BBEE in the forest and related sectors.
Forestry consultant Braam du Preez, who has many years of experience in forestry in the Cape and knows most of these plantations well, says that the successful bidders are going to take on a mixed bag. They will have to plan carefully to prioritize the best, most productive areas for rehabilitation and re-planting as soon as possible, leaving the poorer sites for later. They will also have to decide where it’s feasible to maintain and rehabilitate the natural regen that has occurred, where to plant shorter rotation trees for the pole market, and where to plant long rotation structural saw timber.
Braam said the MAIs vary from seven or eight cubic meters per hectare per year on the poorer sites, to others with good MAIs of 15 and even higher. The main species that will be planted will be Pinus Radiata, which he says is the most versatile species as it can serve a number of markets.
Some of the plantations are located adjacent to or close to growing peri-urban populations and/or poorly managed land rife with alien vegetation, creating fire risks and other problems. Some of the land has even been invaded by people building informal shelters.
“It would have made sense to invite bids from interested parties for these plantations immediately after the 2017 wildfires, as the new operators could have managed the regrowth flush that occurred in the months that followed,” commented Braam. “But now it’s overgrown and turned back into a jungle.”
Apparently no afforestation permits are required for these plantations, so the successful bidders would be in a position to start work immediately after their appointment.
According to Cyril Ndou of DFFE, the process of evaluating the bids by the adjudication committee is due to begin shortly, and is expected to be completed by May.
Forestry South Africa’s Ronald Heath welcomed the progress being made on recommissioning of the Western Cape plantations, but cautioned that the process of evaluating the bids should be “transparent and properly considered”.
Transfer of remaining B & C state plantations
He said that FSA would like to see the momentum created by the progress made on the recommissioning of the W Cape plantations carried over by DFFE into efforts to implement the transfer of the remaining B and C category state plantations in Eastern Cape, KZN, Mpumalanga and Limpopo. He said that it had been agreed between DFFE and FSA that three models would be used for the transfer of these plantations, namely: Community Forestry Agreements, Lease agreements and Partnerships. Furthermore, it was agreed that no CFAs would be concluded unless a strategic partner had been identified.
Ronald said that these plantations had been divided up into four phases based on their readiness for transfer. The first phase, involving 32579 ha of plantations is scheduled for transfer in October this year; the second phase in June 2024, the third and fourth phases in June 2025.