Better log-to-lumber conversion rates can be achieved with appropriate equipment

http://www.stabroeknews.com/index.pl/article?id=56522417

Better log-to-lumber conversion rates can be achieved with appropriate
equipment
Stabroek News, Thursday, June 14th 2007

Dear Editor,

In your report captioned "FPA against 'indiscriminate' restrictions on
log exports" published in SN on June 11, you quote the FPA on sawn
timber and log export prices for prime species. The FPA suggests a best
domestic and export price of US$ 374 per cubic metre, and a
log-to-lumber conversion rate of 40 per cent. As Andrew Mendes of
Farfan and Mendes has shown for the Guyana Manufacturers and Services
Association, recovery rates can be improved with more appropriate
equipment (lighter, cheaper, mobile bandsaw mills) to 70 per cent or
better. Instead of the FPA rate of 2.5 cubic metres of log @ US$ 190
per m3 for 1 cubic metre of lumber, the sawmiller would need only 1.43
m3 of logs with better mills.

The miller is then using US$ 271 worth of logs instead of the FPA's US$
475 so milling is immediately a more attractive financial proposition.
In fact, the monthly statistics from the Forest Products Marketing
Council (FPMC) show that some prime timbers may obtain considerably
higher export prices as lumber, but would be more rationally converted
into higher valued finished products such as flooring and furniture.

For comparison, in Peninsular Malaysia, merbau timber comparable with
our purpleheart sells for millgate log prices of US$ 420 upwards and
the sawn timber sells at millgate for US$ 570 upwards, per cubic metre.
The low price suggested by the FPA for sawn timber exported from Guyana
is a reflection of poor quality control and weak or non-existent
marketing by locally-owned enterprises (see Lachlan Hunter's
consultancy report of 2001), and possibly some manipulation of data
provided to Customs (as Guyanese prices are lower than regional prices)
by enterprises with closely linked overseas buyers. Moreover, the FPMC
data show that some parcels can make much better prices.

It is indeed unfortunate that so many of the traditional family-owned
mills in Guyana are equipped with sash gang saws intended for
near-perfect north-temperate zone conifer logs, but quite unsuitable
for the often-defective Guyanese hardwood logs from natural rainforest.
In the national interest of maximum net social benefit, that is not an
argument for allowing those decrepit and unprofitable mills to be used
as an excuse to continue log exports. There is no national policy in
favour of log exports but four major policy statements in favour of
local processing (National Development Strategy 1996 for 2000-2010,
National Forest Policy 1997, National Forest Plan 2001, and the
Go-INVEST website declarations). In addition, the pre-election
manifesto of the PPP/C in 2006 contained no less than four statements
in support of a value-adding timber industry (page 15).

It is disappointing that the log export ban, however feeble, has not
yet been implemented, following agreement by the Ministry of
Agriculture after the February 17 consultation on log export policy.

Why should Guyana continue to export jobs and skills and national
income because some FPA members choose to landlord their concessions to
foreign loggers and will not modernise their mills?

Yours faithfully,

Mahadeo Kowlessar

Akawini wants Barama back, company says no chance

http://www.kaieteurnewsgy.com/headlines.htm
Akawini wants Barama back, company says no chance
Kaieteur News, 13 June 2007

After sending Barama Company Limited packing from their community in
dramatic fashion, the Captain and villagers of Akawini, an Amerindian
community in Region One, have indicated that they now want the logging
company to establish a direct arrangement with the village.

But it appears that the request is too late

Speaking with Kaieteur News from Miami , Chairman of Barama, Girwar
Lalaram, said that the Captain is now claiming that the village was
misled by the Amerindian Peoples' Association (APA) and now wants the
company to make alternative arrangement.

However, Lalaram pointed out that his company has already begun to
demobilise its equipment and is counting its losses.

He emphasised that in no way will he consider continuing the operations
in Akawini after the way his company was treated by the community.

Lalaram noted that the only regret he has is that the residents of St.
Monica, a nearby community, will suffer as a result of the actions of
the Akawini residents.

“We are pulling out and not looking back. We have invested some US
$500,000 in roads and infrastructural works in that area. So far we
have already completed some 20 km of road at the cost of US $8,000 per
km,” Lalaram stated.

He noted that Barama will never enter into any sub-contract with any
company that has an arrangement with Amerindian concessions in Guyana .

“I can say that within our concessions there are a few Amerindian
communities. We will certainly be working with these communities to
enhance them. But I can say that the company will not go to any other
Amerindian areas, out of our concession, to do any logging,” the Barama
Chairman stressed.

Early last week, Lalaram said that the Captain and other persons
visited his office lobbying for a direct arrangement with the company
rather than the sub-contract that Barama had with Interior Woods
Product Incorporated (IWPI).

He added that this was the very proposal he put forward to the
community when he visited about two weeks ago and they rejected it.

“I think that they now realise that after we move out they will not be
getting the four or five million dollars that the company pays them
every month. We are moving out and there is no uncertainty about that.
We will not be looking back,” Lalaram stated.

He said that the company had purchased chainsaws for villagers as means
of making their lives easier but their recent actions were very
worrisome.

“We had preferred to have a peaceful settlement but unfortunately that
did not happen,” he added.

Two weeks ago, Barama was forced to withdraw its operations from
Akawini after the residents told the management of the company that the
village does not wish to have the company there.

That position was stated during an official meeting with the community.
And during the meeting, intense lobbying was carried out for the
logging entity's removal from the area.

Barama came under fire after residents of Akawini accused the company
of logging illegally on their concession.

The Amerindian community had signed a contract with IWPI allowing
Barama to log in the area.

According to Village Captain, David Wilson, Barama began logging in
Akawini in February 2006, supposedly on a sub-contract the company
signed with IWPI.

The Village Council is claiming that it never saw the supposed
contract. As such the village was forced to terminate its contract with
IWPI, thus effectively forcing the Barama operation out.

The issue came to the international arena in May when a lawyer from the
Amerindian Peoples' Association, and Village Captain Wilson attended a
meeting in Zurich , Switzerland .

According to reports, the two informed officials of Credit Suisse and
Samling that Barama, through its purported subcontract with IWPI, was
logging the last remaining forest of the Akawini village and in so
doing, threatened the livelihood and violated the rights of the
indigenous people living in the area.

Freddie Kissoon column --- M & M Snackette, the GRA and Eric Phillips

http://www.kaieteurnewsgy.com/feature%20columnists.htm

Freddie Kissoon column

M & M Snackette, the GRA and Eric Phillips
Kaieteur News, 11 June 2007

Yesterday morning I invited my wife to an early breakfast. For no
particular reason I suggested the M & M Snackette at the front of the
Harbour Bridge. I guess the reason must have been that I had stopped
there with the family on Saturday night and the barbecue was
delectable. So at the back of my mind was the food at M &M Snackette.
While having my cassava balls, I spread the papers out to read. There
was this letter by Eric Phillips accusing me of what, I don't know.

Phillips is the new kid on the block; a combination of all that is
negative in the Channel 9 talk-show hosts and CN. Sharma. What a
combination! More on Phillips this week.

After completing my breakfast, the owner of M &M Snackette asked to
speak to me. This small businessman has complained to me that the
Guyana Revenue Authority (GRA) is pressuring him to have a computerized
receipt system because the GRA is insisting that he earns more than ten
million dollars a year.

There are so many troubling aspects of this persistent enquiry of the
GRA. As someone that finds tax evasion a horrendous moral outrage that
is one of the worst manifestations of criminal behaviour in this
country, I applaud the efforts of the GRA to go after tax cheats. I
support the implementation of VAT.

In the end however, the small business is the one that is bullied by
state institutions that are afraid of confronting the powerful forces
that they have to come up against. So they try to achieve social
respect from the nation by claiming that they are carrying out their
constitutional mandate.

This accusation of mine led the executive director of the Environmental
Protection Agency to write both independent dailies to rebut my story
that I carried in one of my columns earlier that EPA officers are going
around looking for small, bottom house entrepreneurs to bend them into
confirmation with EPA rules that are incongruous with the nature of our
economy.

You can count on your fingers the number of expansive investments
Guyana gets to keep the EPA busy. So the EPA is kept occupied by going
around to little guys who make a few chairs for a living under their
bottom house to question them about where the dust is going and if they
know that their staple machine makes a noise that affects the
neighbours.

For over a century, Georgetowners have grown up with these self-made
entrepreneurs eking out a living under the bottom house or in the yard.

The truth is, I never, and I repeat, I never bought chairs for my
former home in Hadfield Street or my present home from the store. Our
chairs were always bought from bottom house furniture-makers.

In our Hadfield Street home, our television stand was bought from two
guys who “hustle” a living up the road from us. This is the life of
small West Indian tradesmen. Up comes this European imposition, the
EPA, and now the roadside vulcanizer has to get air conditioning unit.

If the Europeans and Americans want us to have standards like their
society then they have to create the conditions that would allow for
the distribution of wealth.

To think we have an EPA but our only university did not have a fume
hood (a protective face gear) in the labs to protect science students
from gaseous inhalations. Chemistry lecturer, Dr. Anand Daljeet, had to
lead a delegation to the President (four years ago) before the
equipment was bought.

What is the EPA doing about the hazards of students working in UG labs?
Right now, the entire staff of the Faculty of Social Sciences has
refused to work in their offices because of asbestos. Their have been
four deaths over the past there years of cancer; all have been workers
in that faculty. The press was there to hear the plight of these UG
staff members but where is the EPA.

The GRA is guilty of the same bullyism. The M&M Snackette sells cassava
and potato balls, dhall puri and related items. It is a small business,
the type you find dotted all over the West Indian landscape.

Let us assume that one day the eyes of the GRA will fall upon tiny
operations like M&M Snackette but that will be years from now because
look at the monster businesses that are escaping the net of the GRA. We
can start with Barama. Have the GRA officers visited Barama with the
same frequency with which they have touched down at M&M Snackette? The
GRA cannot touch Barama.

Has the GRA found the Toolsie Persaud files? Doesn't the GRA have an
obligation to inform the citizenry on the state of the investigation
into these missing files? Funny how a society's mind can be small! We
see a plethora of letters in the newspaper protesting corporal
punishment, legalization of homosexual behaviour, shocking photographs
on the front pages of the newspapers, noise nuisance, clogged drains,
among a host of other social ills which I support.

But not one single letter-writer has written to the media to express
his concern that in the heart of the society, yes in the heart of the
society - the revenue collection system, files could go missing. Isn't
poverty-reduction based on the extent to which we collect taxes?

So the GRA wants M&M Snackette to have a computerized system so they
can check the receipts. Alright fair enough. But why the M&M outlet and
not the lawyers and the doctors? This writer knows of a law firm that
makes hundreds of millions of dollars. Here is an interesting story.

A leading member of this law firm was offered a Cabinet post. He agreed
but asked that his emoluments be close to what he makes from his legal
business. The PPP leadership got a fit when they heard his price. The
firm has no computer system. This writer is aware of a particular
prominent attorney that makes more than ten million dollars a year. Why
haven't the GRA officers visited him?

Here is another intriguing story about the bullyism of the GRA that the
Guyanese people should not put up with. Businessman AAA sold a property
to businessman BBB for two million American dollars. Yes, two million
US dollars. Businessman AAA reported to the GRA that he lost on the
sale (meaning of course that the GRA lost too, meaning that the country
lost money too).

He then built another mansion that is worth more than two million US
dollars. I saw the file of this story. Let the GRA rebut it. The GRA is
a coward. It goes about looking for importers at the wharves who are
smuggling sardines rather than pursuing the sharks that are eating up
this country.

My advice to the M&M owner was to ignore the GRA and tell the officers
to go and collect from the criminals that are robbing this country.

FPA against 'indiscriminate' restrictions on log exports

http://www.stabroeknews.com/index.pl/article?id=56522198

FPA against 'indiscriminate' restrictions on log exports
Monday, June 11th 2007

The Forest Products Association (FPA) believes that the indiscriminate
imposition of restrictions or a ban on log exports would be counter
productive and unrewarding for Guyana and it disagrees with several
findings in a recent forestry commission survey.

A release on Friday from the body said that the decision could result
in significant revenue loss to the country, disable sound environmental
practices that are being developed and rupture the confidence of
present overseas customers and future investors.

A Ministerial Committee on Forest Policy has been established and is
looking at the possibility of implementing a phased ban on the export
of logs, something the FPA is against. And amidst a flurry of
complaints from researchers and letter-writers, the Govern-ment earlier
this year imposed a ban on log exports for Chinese company Bai Shan Lin
for its delays in getting downstream processing going, and suspended
the Timber Sales Agreement for Jaling Forest Industries Inc, for that
company's failure to live up to commitments in its agreement.

The FPA pointed out that a recent survey that the Guyana Forestry
Commission (GFC) conducted on aggregate milling capacity in the
industry is inaccurate. "The survey reports an installed aggregate
milling capacity in the industry which ignores the fact that the
majority of mills are technologically outdated and many are inoperable
and beyond economic rehabilitation," the FPA said.

The FPA warned that there is currently insufficient operational milling
capacity in place to absorb the current and projected expansion of
total log production capacity of the industry. "The GFC's report to the
Government, while well intentioned, has failed to make any assessment
of labour capacity necessary to satisfy the increased demand which
would result from expanded sawmilling activities," the release said. It
reminded that both Barama Company Limited and Demerara Timbers Limited
are reporting shortages of skilled and unskilled labour needed to
satisfy the present demand.

The release said the fact that any decision to convert timber
production from the export of logs to sawn lumber would significantly
increase the demand for containers which are already in short supply,
has been overlooked. "Container availability for export is entirely
dependent on the quantum of shipments into Guyana. The cost of shipping
empty containers to facilitate substantial demand for export shipments
would be prohibitive," the press release said.

The FPA said that advocates of expanding downstream production to add
value to the industry say that there is adequate funding from income
earned in the industry for retooling milling capacity. "The claim
completely ignores the reality that producers would not commit to
substantial investment needed for restoration unless it is evident that
it would result in a commensurate return on investment," said the FPA.

"There is no adequate research or business analysis in place to support
that such an investment would be undertaken at this time by the
industry, nor have any incentives been provided to encourage the
industry to do so. In fact, the industry is now faced with significant
disincentive to expand its production and milling capacity," the
release said.

Value Added Tax (VAT), the release said, has been levied on a large
number of forest items which were not previously subject to import
duties or Consumption Tax. In addition, VAT has been imposed on the
sale and purchase of logs for local sawmilling, yet, much of the
sawmilling output serves the construction industry and housing uses for
which the sale of logs is already eligible for zero-rating.

It was also argued by the FPA that advocates of a total ban on log
exports have not taken into account that the limited availability on
the export market of species such as purpleheart and greenheart has
upped their value "and that the market would be rapidly saturated with
a resultant fall in attractive prices if all log production of these
species were to be processed for domestic and export use".

The FPA also contended that the GFC in its report has inflated the
average recovery rate for sawn timber and has significantly
underestimated processing costs leading to a miscalculation of income
projections for domestic and exported lumber.

"Using a realistic milling recovery rate of 40% and discounting the
actual average processing costs, the current best domestic and export
earnings for sawn lumber of prime species average about US$374M per
cubic meter. This compares very unfavourably with the current export
price of US$475 for the equivalent…in log form" which includes lesser
known species which are not marketable here.

The FPA welcomed the recent statement coming from Minister of
Agriculture Robert Persaud who said that over foresting by some of the
country's logging companies is a myth and that extraction in Guyana is
at a mere 20 per cent of acceptable levels. Critics have however said
that the 20% figure neglects to explain that prime species in one area
could be over-harvested.

In the press release, the FPA said that the forestry sector last year
contributed some $359 billion to Guyana's Gross Domestic Product. The
FPA said too that the sector directly employs about 22,000 people and
indirectly employs close to 100,000. The major forest producers
represent a capital investment of around $160 billion, the FPA said,
adding that the maintenance and welfare of this industry, is extremely
important to the economy of Guyana.

"The Association has repeatedly advised the GFC and Ministerial
Committee on Forestry that a national policy governing timber
production, processing and export must be based on an informed review
of the industry buttressed by credible research and the collection of
reliable data," the press release said.

The FPA said that it was firmly of the view that commercial market
forces, the implementation of sustainable forestry practices and
environmental care, the realisation of maximum revenue earning and
employment potential must drive the development of the industry and be
the criteria directing national forestry policy.

"It is essential, the FPA believes, for Government to take a balanced
approach to sustain timber production and allow the production of
primary and processed products to develop in response to export and
domestic market demand and pricing," the FPA said.

Forest Products Association urges balanced approach to industry development

http://www.kaieteurnewsgy.com/news.htm
Forest Products Association urges balanced approach to industry
development
Kaieteur News, 9 June 07


The Forest Products Association (FPA) in a release yesterday, indicated
that it welcomes the recent statement made by Agriculture Minister,
Robert Persaud, pointing out that over extraction of our forest by the
logging companies is “a myth” and that, in fact, extraction in Guyana
is a mere twenty percent (20%) of acceptable levels.

The FPA was keen to highlight that, “The Forestry sector last year
contributed some G$359 billion to Guyana 's Gross Domestic Product,
directly employs about 22,000 persons and close to 100,000 indirectly
and the major forest producers represent a capital investment in the
region of G$160 billion. The maintenance and welfare of this industry
is, therefore, extremely important to the economy of Guyana ”.

The Association noted that it has repeatedly advised the Guyana
Forestry Commission and Ministerial Committee on Forestry that a
national policy governing timber production, processing and export must
be based on an informed review of the industry buttressed by credible
research and the collection of reliable data.

The FPA says it is firmly of the view that commercial market forces,
the implementation of sustainable forestry practices and environmental
care, the realization of maximum revenue earning and employment
potential must drive the development of the industry and be the
criteria directing national forestry policy.

It is essential, the FPA asserts, for government to take a balanced
approach to sustain timber production and allow the production of
primary and processed products to develop in response to export and
domestic market demand and pricing.

The body believes that the indiscriminate imposition of restrictions
and/or a ban on exporting logs would be counterproductive and
unrewarding for Guyana . It opines that such actions would curtail
timber production, cause the loss of employment, discourage major
private investment in the industry, restrict export markets, result in
significant export revenue loss to the country, disable sound
environmental practices which are being developed and rupture the
confidence of present overseas customers and future investors.

The FPA added that it has pointed out that a recent survey conducted by
the GFC on aggregate milling capacity in the industry is inaccurate.
The survey reports an installed aggregate milling capacity in the
industry which ignores the fact that the majority of mills are
technologically outdated and many are inoperable and beyond economic
rehabilitation.

According to the release, the FPA said it has provided ample warning
“that there is currently insufficient operational milling capacity in
place to absorb the current and projected expansion of total log
production capacity of the industry”. It was also noted that the GFC's
report to the government, while well intentioned, has failed to make
any assessment of the labour capacity necessary to satisfy the
increased demand which would result from expanded sawmilling
activities.

“Both Barama and DTL and other companies, for instance, are reporting
shortages of skilled and unskilled labour needed to satisfy even
present demand.

The fact that any decision to convert timber production from the export
of logs to sawn lumber would significantly increase the demand for
containers which are already in short supply, has been completely
overlooked. Container availability for export is entirely dependent on
the quantum of shipments into Guyana . The cost of shipping empty
containers to facilitate a substantial demand for export shipments
would be prohibitive,” the release informed.

It continues, “Advocates of expanding downstream production to add
value to the industry claim that there is “adequate funding from income
earned in the industry for retooling milling capacity”. The claim
completely ignores the reality that producers would not commit to the
substantial investment needed for restoration unless it is evident that
it would result in a commensurate return on the investment.

There is no adequate research or business analysis in place to support
that such an investment would be undertaken at this time by the
industry, nor have any incentives been provided to encourage the
industry to do so. In fact, the industry is now faced with significant
disincentive to expand its production and milling capacity”.

The entity notes that, “VAT, for instance, has been levied on a large
number of forestry items that were not previously subject to import
duties or Consumption Tax. In addition, VAT has been imposed on the
sale and purchase of logs for local sawmilling, yet, much of the
sawmilling output serves the construction industry and housing uses for
which the sale of logs is already eligible for zero rating.

Adding value to the industry by restricting the export of logs for
processing into sawn lumber and for downstream processing is valid only
when it can be established that there is sufficient milling capacity
and processing demand to absorb current and expanded production of all
grades. Also, value is added only when market availability and price
for the processed product is consistently superior to that which is
obtainable by exporting the primary product. This is not now the case”.

The FPA points out that advocates of imposing a total ban on log
exports “have not considered the fact that the limited availability of
specific species on the export market such as purpleheart, greenheart,
walaba and mora, has increased their value and that the market would be
rapidly saturated with a resultant fall in attractive prices if all log
production of these species were to be processed for domestic and
export use.

The GFC, in its report to the government, has inflated the average
recovery rates for sawn lumber and has seriously underestimated
processing costs, particularly for the larger mills, resulting in a
miscalculation of its income projections for domestic and exported sawn
lumber”.

The release adds that using a realistic milling recovery rate of 40%
and discounting the actual average processing costs, the current best
domestic and export earnings for sawn lumber of prime species average
about US$374 per cubic metre. This compares very unfavourably with the
current export price of US$475 for the equivalent of 2.5m³ in log form
that includes lesser known species which are not saleable on the local
market.

Guyana shows significant growth in productive sectors - CDB Annual Economic Review 2006

http://www.guyanachronicle.com/news.html
Guyana shows significant growth in productive sectors
- CDB Annual Economic Review 2006
Guyana Chronicle, 9 June 2007

Growth in the productive sectors last year was significant when
compared to 2005 while mining and quarrying was the only sub-sector
estimated to have registered a decline. This is according to the 2006
Annual Economic Review of the Caribbean Development Bank (CDB).

The Review stated that real GDP growth was estimated at 4.7% in 2006
compared with revised growth of -1.9% in 2005. The turn-around in the
performance was credited to both the agriculture and non-agriculture
sectors rebounding.

In the Sugar sector, the production grew by 5.5 percent to 259,588
tonnes last year as compared to 246,050 tonnes in 2005. This was due to
severe flooding at the estates. However, the Review stated that this
was still below the five-year production average of 297,858 tonnes as
well as the record high of 331,067 tonnes produced in 2002.

“This notwithstanding, the ongoing modernisation project in the sector
led to higher levels of mechanisation with an associated reduction in
average production cost. In many respects, 2006 can also be considered
a watershed year for sugar as it marked the commencement of the new
price structure governing the EU sugar regime,” the Review noted.

The Review further explained that exports to that crucially important
market were subjected to the first price cut of 5% from July 1, 2006.
This reduction is expected to be applied until October 2008 when an
additional 20% reduction will be in force.

It was stated that a stronger output performance was thwarted by above
average rainfall levels which adversely affected both planting and
reaping conditions, and also served to reduce the sucrose content in
harvested canes thereby limiting sugar yields.

Rice production recorded a growth of 12.4 percent when compared with a
14.1 percent contraction in 2005. Production in 2006 was recorded at
307,041 tonnes, an increase from 277,531 tonnes in 2005. This was due
to more favourable weather conditions in addition to improvements in
husbandry practices, seed quality, and better drainage and irrigation.

“The improved performance was also buttressed by greater public sector
support over the review period particularly through the ongoing
implementation of the EU-funded rice competitiveness project as well as
the agricultural support services project. Among other things, the
interventions were designed to enhance production and boost
productivity by increasing research and extension services, and
infrastructure development, and by providing farmers improved access to
credit,” the Review stated.

The turn-around in the sector was also evident in rice exports as
buoyant prices and further market penetration particularly in Haiti,
led to a 25.8% increase in export volume. The robust export growth was
supported by strong demand in the European market following the
mid-year ban on European imports of genetically engineered rice
products, which affected supplies from the US.

The Review stated, “Output performance in the mining and quarrying
sub-sector continued to be adversely affected by structural changes
ongoing in the sector, involving the closure of large operations.
Output of gold and bauxite continued to contract.”

The closure of the Omai goldmine in the second half of 2005,
contributed significantly to the drop in gold production which
contracted by 25.3% to 200,000 ounces in 2006, compared with 267,556
ounces in 2005. This primarily reflected the past dominance of the Omai
operation.

However, declarations from small and medium-sized operators over the
same period grew by some 23.1% as record high gold prices served to
sustain significant investment in the sector.

In addition, two new medium- to large-scale exploratory operations
which commenced during the year served to boost expectations of higher
production levels in the future. Diamond declarations declined by 7.5
percent to 330,000 carats.

Despite some consolidation in bauxite operations during the year,
including the commencement of operations by a large foreign entity
which purchased the former state-owned bauxite company as a going
concern during the last quarter of 2005, the year 2006 proved very
challenging for production. It contracted by 9.8% compared with growth
of 6% in 2005.

Production of all grades of bauxite fell. In the case of calcined
bauxite, depressed prices forced the temporary closure of one of two
major operations during the year.

“Preliminary estimates indicate a creditable performance by other
sectors and industries in 2006. Significant growth was recorded in
forestry operations (11%), distribution (10%) and engineering and
construction (12%),” the Review noted.

Increased activity in forestry was credited to the strong export
demand, while the growth impetus in distribution and construction was
precipitated by strong domestic demand, particularly in relation to CWC
2007 preparations.

Real output in the manufacturing sector, in transport and
communications, as well as in financial services grew by 4%, 10%, and
8%, respectively, in 2006 compared with growth rates of 2%, 9.5%, and
6.5%, respectively, in 2005.

The increased output in the manufacturing sector partially reflected
further market penetration in both the Caribbean and North America for
value-added products.

“Growth in the telecommunications operations continued to benefit
primarily from liberalisation in the wireless segment of the market,”
the Review stated.(GINA)

FPA argues against imposing restrictions on logs export

http://www.guyanachronicle.com/news.html

FPA argues against imposing restrictions on logs export
Guyana Chronicle, 9 June 2007

THE Forest Products Association (FPA) yesterday welcomed the recent
statement by Minister of Agriculture, Mr. Robert Persaud, that over
extraction by logging companies “is a myth” and that extraction in
Guyana is a mere 20 per cent of acceptable levels.

In a press release advancing proposals for development of the industry,
through Public Communications Consultants Limited (PCCL), the FPA said
the local forestry sector, last year, contributed some $359 billion to
the Gross Domestic Product (GDP).

The FPA said the sector directly employs about 22,000 people and close
to 100,000 indirectly while the major forest producers represent a
capital investment in the region of $160 billion.

?The maintenance and welfare of this industry is, therefore, extremely
important to the economy of Guyana,” the FPA said.

The release said the FPA has repeatedly advised the Guyana Forestry
Commission (GFC) and the Ministerial Committee on Forestry that a
national policy, governing timber production, processing and export,
must be based on an informed review of the industry buttressed by
credible research and the collection of reliable data.

“The FPA is firmly of the view that commercial market forces, the
implementation of sustainable forestry practices and environmental
care, the realisation of maximum revenue earning and employment
potential must drive the development of the industry and be the
criteria directing national forestry policy,” the release posited.

It said the FPA believes it is essential for Government to take a
balanced approach to sustain timber production and allow the producing
of primary and processed products to develop in response to export and
domestic market demand and pricing.

The FPA is also of the belief that indiscriminate imposition of
restrictions and/or a ban on exporting logs would be counterproductive
and unrewarding to Guyana and curtail timber production, cause loss of
employment, discourage major private investment in the industry,
restrict export markets, result in significant export revenue loss to
the country, disable sound environmental practices which are being
developed and rupture the confidence of present overseas customers and
future investors.

According to the release:”The FPA has pointed out that a recent survey
conducted by GFC, on aggregate milling capacity in the industry, is
inaccurate. The survey reports on installed aggregate milling capacity
in the industry which ignores the fact that the majority of mills are
technologically outdated and many are inoperable and beyond economic
rehabilitation.

“The FPA has warned that there is currently insufficient operational
milling capacity in place to absorb the current and projected expansion
of total log production capacity of the industry.

“The GFC’s report to the Government, while well intentioned, has failed
to make any assessment of the labour capacity necessary to satisfy the
increased demand which would result from expanded sawmilling
activities.

Both Barama and DTL (Demerara Timbers Limited) and other companies, for
instance, are reporting shortages of skilled and unskilled labour
needed to satisfy even present demand.

“The fact that any decision to convert timber production from the
export of logs to sawn lumber would significantly increase the demand
for containers, which are already in short supply, has been completely
overlooked.

“Container availability for export is entirely dependent on the quantum
of shipments into Guyana. The cost of shipping empty containers to
facilitate a substantial demand for export shipment would be
prohibitive,” the FPA contended.

It said:”Advocates of expanding downstream production to add value to
the industry claim that there is adequate funding from income earned in
the industry for retooling milling capacity.

The claim completely ignores the reality that producers would not
commit to the substantial investment needed for restoration unless it
is evident that it would result in a commensurate return on the
investment.”

The FPA said there is no adequate research or business analysis in
place to support the proposition that such an investment would be
undertaken at this time by the industry nor have any incentives been
provided to encourage the industry to do so.

In fact, the industry is now faced with significant disincentive to
expand its production and milling capacity.

“Value added tax (VAT), for instance, has been levied on a large number
of forestry items that were not previously subject to import duties or
Consumption Tax. In addition, VAT has been imposed on the sale and
purchase of logs for local sawmilling, yet much of the sawmilling
output serves the construction industry and housing uses, for which the
sale of logs is already eligible for zero rating.

&#x201cadding value to the industry by restricting the export of logs
for processing into sawn lumber and for downstream processing is valid
only when it can be established that there is sufficient milling
capacity and processing demand to absorb current and expanded
production of all grades.

“Also the value is added only when market availability and price for
the processed product is consistently superior to that which is
obtainable by exporting the primary product. This is not now the case,”
the statement said.

It continued:”Advocates of imposing a total ban on log exports have not
considered the fact that the limited availability of specific species
on the export market, such as purpleheart, greenheart, wallaba and mora
has increased their value and that the market would be rapidly
saturated with a resultant fall in attractive prices if all log
production of these species were to be processed for domestic and
export use.”

The statement went on:”In its report to the Government, the GFC has
inflated the average recovery rates for sawn lumber and has seriously
underestimated processing costs particularly for the larger mills,
resulting in a miscalculation of its income projections for domestic
and exported sawn lumber.

“Using a realistic milling recovery rate of 40 per cent and discounting
the actual average processing costs, the current best domestic and
export earnings for sawn lumber of prime species average abut US$374
per cubic metre. This compares very unfavourably with the current
export price of US$475 for the equivalent of 2.5M3 in log form that
includes lesser known species which are not saleable on the local
market,” the statement concluded.