Timber producers operating inefficiently

Our timber producers have been operating inefficiently for years
Saturday, February 17th 2007

Dear Editor,

I find the report in which the Forest Producers Association (FPA) complained about job losses to be incurred by a proposed log export ban extremely misleading ("Timber harvesting practices of forest producers under unfair attack" -Stabroek Business, February 9, 2007). When in their haste to turn to, as they pointed out quite categorically in meetings between the FPA, Guyana Manufacturers and Services Association (GMSA) and the Office of the Prime Minister, the more profitable activity of wholesale log exports, they never even considered all the people that they themselves laid off from the now silent sawmills, or the fact that they decimated the local value added sector to the extent that it is running at less than 50% of its capacity with the concurrent loss of jobs that entailed. What about those workers who numbered in the thousands and why the concern now! Methinks it is about profit and not sudden piety. They said in discussions about a Purpleheart log ban in 2004 that they needed to export logs to be able to recapitalize their mills - here again we hear the same drumroll over 3 years later. We were told that they needed to export the prime Purpleheart logs as a means to sell lesser used species, yet Purpleheart, which represents less than 1 % of our commercially harvested species in the forests represented 30.4% of log exports in 2005 and the known species 93% of all log exports - whither the lesser known species!!

As to the labelling of chainsaw operators as all being "illegal" and raiding concessions, this is as a direct result of the exponential growth in log exports that has crippled the local value added sector. Most of the chainsaw operators are consigned to small State Forest Permissions that have either been worked out already or are in areas of low stocking density, certainly not in the prime forests in Essequibo occupied by the large concessionaires. As a consequence they have very little of the prime species in their areas. As to questions of illegality, the cost of being legal for a chainsaw operator represents less than 5% of their cost of production, so clearly the question of illegal operations has more to do with equitable access to forest resources than with trying to avoid paying the low royalties and acreage fees. As to following the Code of Practice, most chainsaw operators are given lands in forest already worked out or in conversion forest areas - in the Makouria area during the FRP chainsaw logging Conversion study we were only able to find seven trees in a 5 hectare area and that of species I had never even heard of. In addition the two year tenure for SFP's actively encourages unsustainable practices as the concessionaire doesn't know if their concession will be renewed, so they try to get the "mostest the fastest." I know personally of many instances of illegality by large concessionaires who have jumped boundaries of other concessions - there is the present illegality of subletting of TSAs, WCLs and SFPs that is in breach of clause 13 of the 1953 Forests Act and the terms of the award of these Concessions. Also, there have been many instances of large concessionaires jumping boundaries (I personally know of one that required the intervention of the late President Dr. Cheddi Jagan to seek resolution for an SFP holder against a TSA holder) - the only difference is that the small chainsaw loggers have no contacts or voice on the GFC board for these issues to be dealt with. The "big boys" have their own issues quietly dealt with, but just because you don't hear about it don't feel it isn't happening.

In addition in a study done in early 2006 it was found that the chainsaws were actually achieving higher recovery rates than two of the better (bandmill operations) sawmills operating in Guyana - 44% vs 36% cutting 1 and 2 inch thick material. For any sawmill to operate at that level is absolute madness and for them to complain of high extraction, sawing and operational costs whilst maintaining such atrocious cutting standards that would be unacceptable in the international market is nothing short of abject negligence. To have maintained this for decades makes their position of asking for more time even more untenable.

For them to expect the GMSA members to subsidise such wanton inefficiency by paying the so called "market" price for the logs or lumber is to expose the membership of the GMSA to economic suicde.

The same vilified chainsaw operators are the ones that pay nearly half the revenues of the GFC on 21% of the allocated forested lands (and from the least productive lands), receive no outside fiscal, tax or concessionary developmental aid, and are the largest employers in the forestry sector -they employ in excess of 70% of the workers in the forestry sector and all Guyanese. They are also not allowed to be in arrears to the GFC as removal permits and tags are withheld - large concessionaires are still indebted to the GFC for over US$1 million and are still allowed to work.

In addition their contribution to rural livelihoods, especially to the most depressed and exposed interior communities has been proven in the recently concluded FRP Socio-economic study where it was found that at a minimum 70% of the sale price of the lumber returns to the source community. When that is calculated against declared chainsaw lumber production it exceeds G$1 billion. In addition it is the chainsaw logger that wants to upgrade and improve productivity, recovery and quality by moving to portable mills, adding value and improving quality, but the conditions are stacked against them as they have no collateral (SFPs are only for two years and are therefore not acceptable as collateral by banks) and limited access to financing. They therefore tend to be stuck in a cycle that it is difficult to break out of given the limited profit margins available on the species they have in their concessions. On the other hand if they had well stocked concessions with the prime species the story would be a different one. Given their lower costs of production due to the portability of their technology (costs are ½ to 1/3 that of traditional log extraction static mill methods) they would have been able to generate considerable profits to finance themselves from their own cash flow. As it is they are forced to eke out an existence on marginal species on poorly stocked lands, whilst others ship out our prime logs at an exponential rate exporting what is a non renewable resource, our jobs and our future with wilful abandon.

Log exports-

2004 - 61,000 metre cube = 24,000 trees

2005 - 115,000 metre cube = 46,000 trees

2006 - 190,000 metre cube = 76,000 trees

Average log size per tree = 2.5 metre cube.

I leave you the general public to draw your own opinion who is worthy of your vote.

For those who suggested to me that I have written or been writing under different names over the past few months in the letter columns on log exports please note whose name stands below here - the facts of the matter speak for themselves so there is no need to hide behind pen names.

Yours faithfully,

Andrew Mendes

Stabroek News