Kaieteur News news item, Sunday 10 February 2008
Discord in timber industry continues...
FPA lashes out at GFC over new regulations
- says production will drop by 50%; jobs threatened
The Forest Products Association (FPA) has accused the Guyana Forestry
Commission (GFC) of unduly implementing punitive measures on an industry
already over-regulated, rather than working to encourage development in the
industry.
In a strongly worded press statement, the FPA, which represents several
major logging companies, said that production is expected to drop by 50%
with substantial job and huge revenue losses.
According to FPA, the government, through the GFC, has now issued an
ultimatum to the industry demanding that concessionaries submit "complete
pre-harvest inventory (100% commercial species) for all blocks to be
harvested in 2008" and that "formal written approval must be obtained from
the GFC before harvesting commences in any block, during the year 2008,
commencing January 2008".
"This is an arbitrary and capricious decision. It is a complete departure
from established practice. If this policy is enforced, it will result in the
shutdown of all major forestry production and the consequential
unavailability of downstream materials for manufacturing."
Already, as 2008 begins, the majority of the major companies have been
unable to commence operations and export their produce while being forced to
wait on the GFC to approve licences and Annual Operational Plans (AOPs),
said FPA.
"The result will be a dramatic reduction in production and in the exports of
both primary and downstream product and a significant loss of international
market share for Guyana."
The FPA noted that the statement was in response to a letter from James
Singh, Commissioner of Forests, published in the Guyana Chronicle on January
31, 2008, which makes a number of assertions with regard to the performance
of the forestry sector in 2007 and in regard to the granting of licences to
foresters for 2008.
"The Association is surprised and disappointed at the Commissioner resorting
to the use of highly intemperate language inappropriate for a professional
public servant. The FPA wishes to point out that the forestry sector is now
a significant contributor to the national economy, earning in excess of
US$60 million annually and employing over 20,000 persons, exceeding even the
contribution of the rice and fisheries sectors."
According to the Association, exports have increased from US$42 million in
2004 to US$62 million in 2007.
"This growth and viability of the industry is mainly as a result of the
investment of the private sector with little or no Government financial
support. The industry's survival, however, is dependent on the government's,
through the Guyana Forestry Commission, commitment to work in collaboration
with the industry and to give due consideration, attention and effect to the
needs and concerns of the industry's stakeholders."
Instead, the FPA stressed, GFC is unduly focused on implementing punitive
measures on an already over regulated industry, rather than working in
partnership with the industry to foster, encourage and facilitate the growth
and development of the industry.
The body explained that at a special FPA meeting in November last year,
attended by a wide cross section of the industry, ranging from major
producers operating Timber Sale Agreements (TSAs) to small producers,
sawmillers and timber dealers, there was a review of outstanding issues
between the industry and the GFC. The meeting was unanimous in its call to
the Commission to consult more closely with the Association.
"The meeting registered its concern with regard to a host of proposed
changes being rushed into implementation without adequate consultation. The
meeting noted the GFC's determination to enforce wholly impractical
standards and conditions for wood processing without due consultation which
would result in significant harm to small producers and sawmillers
especially."
The FPA said that the Commission had agreed to meet with the FPA's Technical
Sub-Committee on this matter but has chosen to virtually ignore the
recommendations of the Committee and has now issued a warning of closure by
January 31st to all timber dealers and sawmillers who are unable to conform
to these standards.
"This will result in small producers and sawmillers shutting down," FPA
asserted in its statement.
The FPA says it has written to the Commission pointing out that, in fact,
the submission of inventories as a requirement of harvesting has always, as
a practical matter, been implemented and accepted by the Commission in
conjunction with harvesting taking place on a block by block basis, usually
covering a period of 2 to 3 months production at a time.
"The Commissioner is well aware that the granting of AOPs has never been
conditioned by the advance submission of timber inventories. It has always
been the accepted practice to conduct timber enumeration progressively in
batches of blocks, which are endorsed by the Commission for harvesting on
submission of a "notice of intention" by the concessionaire."
FPA said that the Commissioner is also aware that actual on-site inspection
by the GFC of inventorised blocks has been performed on an ad hoc basis by
the GFC and not as a pre-harvest requirement.
"The likelihood of the Commission being able to deliver timely inspection of
all the concessions to meet the pre-harvest inventory requirement is
extremely remote.
"The Association must seriously question whether the Commission has
professionally advised the Minister on this matter."
FPA used as an example, larger concessions which are divided into as many as
300 blocks of 100 hectares each, spread over an area of 30,000 hectares of
virgin forests to be harvested within the year.
"A network of main and secondary roads must, therefore, first be constructed
to provide access for inventorising. In practice, in order to sustain
production, these roads are built in consonance with inventory surveys being
progressively conducted in batches of blocks as we have outlined above. If
these new requirements are to be enforced from now on, the 300 blocks will
increase to 600 blocks to satisfy next year's AOP requirements."
The Association said that it has been the norm and accepted standard
practice in the industry to employ a highly trained team of 7 to 12 persons
in order to complete a 100% species enumeration of 10 blocks in one month at
a cost of $300,000 per block.
"To complete an advanced inventory of a large concession with some 300
blocks would, therefore, take at least 30 months. To shorten this period
would mean employing many more survey teams at a substantial increase in
cost and would make accurate supervision practically unworkable."
According to the FPA, against this background, the government's demands that
all of this must be done prior to harvesting in 2008 and each year
thereafter, requiring that enumeration for 2008 and 2009 would, in fact,
have to be done consecutively, an impossible task, given the availability of
trained personnel, the financial cost and the time involved.
"The GFC has further directed that the Commission must give "formal written
approval...before harvesting commences."
What this means in practical terms is anyone's guess. The process, the
format, the timelines for receiving this approval are yet to be explicitly
set out by the Commission. In any event, the process of inspection by the
Commission would take many more months before the concessionaire can
commence harvesting," FPA said in its statement.
The association said it is worried since already it is the second month of
the year.
"A number of companies have not yet received renewal of their TSAs. These
companies cannot be expected to make the huge investment of conducting an
advance inventory in order to be granted their AOPs without first having the
renewal of their TSAs confirmed."
The FPA pointed out that even if it were possible for the industry to triple
its capacity to complete pre-harvest inventories, harvesting for many
companies could not begin for another four months, as they must now complete
their FMPs and AOPs.
"For those companies still without TSAs, the year would be all but lost. As
we have stated, the number of trained personnel available and the cost of
financing precludes such an undertaking."
FPA claimed that the insistence by the government on imposing these punitive
requirements has already resulted in a virtual shutdown of the timber
industry.
"Two months production and revenue to the country have been lost. The
industry has been presented with an ultimatum, which is completely
impossible to implement in practice."
In 2007, 33 Timber Sales Agreements (TSAs) were granted, of which 12 were
not operating.
"It is probable, that with the increasingly thoughtless and impractical
regulations being imposed on the industry, perhaps 15 companies will survive
in 2008. The high annual production of over 380,000 cubic metres is likely
to fall by as much as 50% in 2008 with a huge loss of revenue to the country
and substantial loss of employment."
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