No shortage of logs for plywood, Barama underutilizing concession
- Ministry of Agriculture
Stabroek News, Thursday, December 6th 2007
The Ministry of Agriculture yesterday affirmed that a substantial
number felled peeler logs are available to Barama Company Limited
(BCL), dismissing its claims on Tuesday that it was forced to close its
Land of Canaan, East Bank Demerara plywood mill because of a lack of
these.
The ministry also urged the timber firm to significantly increase the
magnitude of operations in its concession area from next year, since it
is only at 20% of its allocated extraction level at present.
In a statement issued yesterday, the ministry said the Malaysian timber
firm had harvested peeler logs on at least two concessions, committing
additional breaches of procedures. As a result, the Guyana Forestry
Commission (GFC) has since indicated to Barama that if it utilized the
timber it would have to pay the required compensation in accordance
with the GFC procedures. The company has not responded to the GFC to
date.
The timber company, which was recently fined $96 million by the GFC
for underreporting its harvest of trees, said in a media statement on
Tuesday that it would have to close the factory for a few months to
allow time to accumulate and build up stock of Baromalli, the main
species of peeler logs used for plywood processing.
The company also said that it would offer staff the option of
transferring to the company's new sawmill at Buck Hall, Essequibo River
where it was planning a substantial increase in production. "This is in
line with our corporate strategy to increase value-added production in
Guyana and to reduce log exports correspondingly. The company will
comply with all the existing laws on worker severance and compensate
employees accordingly," BCL said in the statement.
The Ministry of Agriculture said in a statement that subsequent to
Barama's disclosure, Minister of Agriculture Robert Persaud, officials
of the GFC and top management of BCL and a representative of the Guyana
Labour Union met yesterday.
At that meeting, Persaud reported that the GFC had advised all
stakeholders, especially the affected employees of BCL, that in October
this year BCL was a given a cease order regarding harvesting in some
third-party concessions because of breaches of the GFC's procedures.
Shortly afterward, the Ministry of Agriculture indicated in a press
statement "that in the interest of the workers, it is prepared to
facilitate access to raw materials for the plywood factory, but only as
part of a transition process that will eliminate any approved
sub-contractual arrangement by December 31".
He further noted, according to the statement, that the GFC then
requested BCL to send appropriate staff members to meet with the GFC in
an effort to work out the conditions and logistics of such an
arrangement. To date the GFC has had no positive response to this
request. It added that Persaud noted at the meeting that as part of
government's social commitment, the GFC was still willing to facilitate
such a process, but in accordance with very clearly defined conditions,
which could only be arrived at on the basis of meetings with technical
staff of GFC and BCL. The minister pointed out that it was later
verified that BCL had committed additional breaches of procedure in the
forest concession leased to Guyana Sawmills Inc (GSM). The GFC then
indicated that it would allow the company to remove and utilize the
peeler species already harvested in GSM, on condition that it will
formally communicate its commitment to pay the required compensation in
accordance with the GFC procedures. "This stipulation was necessary
because once the logs were utilized, GFC would have no evidence in the
event that BCL refused to pay the necessary compensation."
Persaud said despite repeated requests by the GFC, Barama has sent no
formal commitment. Further, Persaud told the officials at the meeting
yesterday that the GFC had held several meetings with senior staff of
the company to express concern that the forest concession of 1,612,000
hectares was being significantly under-utilized.
"The GFC mandated BCL to pursue increased beneficial utilization of the
forest concession within the GFC allowable limits," the ministry's
statement said. According to the Agriculture Ministry, currently BCL's
utilization of its concession is about 20% of its allowable harvest.
Further, the minister noted that for the period 1998-2006, the total
cumulative allowable production was 3,382,470 cubic metres, or an
annual allowable cut of 375,830 cubic metres. The actual production of
the company for the period 1998-2006 was 676,372 cubic metres or an
annual average of 75,152 cubic metres.
This, the ministry said, corresponds to a level of utilization that is
approximately 20%. The minister asserted that the figures illustrate
the point that BCL was underutilizing its concessions, even though it
gave a commitment last year to improve productivity in accordance with
the limits established by the GFC. "As a consequence, a substantial
number of felled peeler logs are on the ground in the concession leased
to GSM."
The ministry added that another quantity of felled peeler logs are also
currently on the ground in the concession leased to Toolsie Persaud
Limited, which the GFC said the BCL could access, providing that
certain requirements are met. "The stated 'severe' supply shortfall of
peeler logs is therefore as a direct consequence of inaction on BCL's
part," the ministry said, adding that this was not disputed by the
managers of the company who attended the meeting.
Barama said on Tuesday that it had started discussions and negotiations
with various forestry companies to purchase peeler logs and that these
parties would require some time to plan and harvest such logs. "The
decision to temporarily close the plywood facility reflects the severe
supply shortfall of peeler logs. Our stock of peeler logs has depleted
and we will try our best to resume plywood production as soon as we are
able to establish sufficient stock. It is very difficult to sustain our
business at such low production levels coupled with high operating
costs," the company's Chief Executive Peter Ho said.
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