Log exporters, timber products manufacturers reach 'general consensus' on way forward
Stabroek News
February 18, 2007
Log exporters and makers of value-added timber products yesterday took a step closer to unanimity, arriving at a "general consensus" on one of the recommendations put forward by the Guyana Forestry Commission (GFC), this newspaper has learned.
According to one of the stakeholders at the meeting, in a month's time the details for consensus, based on the consultations yesterday, will be presented to Cabinet for its consideration.
The recommendation which found favour was the first of two contained in a GFC discussion paper, presented yesterday by GFC Commissioner James Singh.
Recommendation One lists three options: A - A full ban of the export of 15 species of logs with two already having restrictions placed on them namely Locust and Crabwood from March 1, 2007. (The 15 species would be Purpleheart, Locust, Crabwood, Red Cedar, Washiba, Tonika Bean, Letterwood, Bulletwood, Cow wood, Tatabu, Kabukalli, Shibadan, Tauroniro, Hububalli, Darina). B - The banning of ten species of logs under square dimensions (dimension 8"x 8" and greater) commencing January 2008. (These species would be Purpleheart, Red Cedar, Letterwood, Crabwood, Locust, Kabukalli, Shibaban, Washiba, Hububalli, Tonka Bean). C - A 50% ban on 12 species of logs in 2008; a 75% ban in 2009 and a 100% ban in 2010. (The species here would be Greenheart, Brown Silverballi, Itikiboroballi, Determa, Wamara, Hakia, Mora, Dukali, Kereti Silverballi, Wallaba, Fukadi, Futui).
Recommendation Two puts forward the banning of exports of the 15 species in Option A, Recommendation One from January 2008 or that the ten species under Option B (describing the dimensions that should not be exported) should commence from 2009 instead of January 2008. The third part of Recommendation Two is the same is Option C in Recommendation One.
The discussion paper was agreed upon by stakeholders as a basis for the discussions, since over a month of meetings under a Ministerial Committee, chaired by the GFC Board of Directors and participated by the Forest Products Association (FPA) and the Guyana Manufacturers' Services Association (GMSA) last year, failed to bring a common consensus.
Yesterday's discussions came after years of dissatisfaction by the manufacturers of value-added timber products, in relation to adequate supply of logs, while log exporters contend that local manufacturers are not willing to pay the price for logs.
But even as the debate raged the contribution of the forest sector to the national economy was growing. Agriculture Minister Robert Persaud, in his opening remarks, said the sector continued to grow despite the challenges, both internally and externally. He said that in 2006, export sales from forestry were US$58.7 million compared to US$48.6 million in 2005, an increase of 20.8%.
"The government of Guyana remains committed to enhancing economic, social and ecological benefits through increased operational efficiency," the minister said, including, "improved quality and volume of value-added and non-timber forest products and better environmental stewardship.
"Clearly, there is a need to articulate a policy position based on sustaining growth while at the same time arriving at a consensus position on short-, medium- and long-term actions to expand the benefit stream from forest industries."
Prime Minister Samuel Hinds stressed that Guyana could not sell its timber among the 745,000 people here, but must have linkages with Guyanese and foreigners to develop overseas markets.
Hinds lauded as a great achievement the fact that the stakeholders could gather peacefully to discuss the formation of a log export policy.
"We will not get anywhere with just selling our wood products here in Guyana." Hinds also pointed out that he has learnt that when changes are taking place anxieties develop and this may explain the friction that log exports have created.
Hinds said he certainly wanted a maximizing and utilization of logs in Guyana, but it must be profitable for everyone.
"I think that persons will come toward a middle ground," Singh said in an interview during a break in the discussions at Regency Suites, Hadfield Street.
A ban or restriction Singh said would have positive impacts on export revenue and the forest sector's Gross Domestic Product (GDP).
A case in support of this was also noted, where in 2000, locust and crabwood were restricted in export of log form. Following this restriction, there has been a steady growth from 2000 to 2006 in both volume and value of sawn wood exported. Volume increased by approximately 719% and value increased by 929%. Based on last year figures it was estimated that an additional US$9 million ($1.8 billion) would have been earned, if exported logs were converted into lumber.
In Singh's presentation it was also noted that the shipping agencies have the capacity to export this additional lumber. Information from the shipping agencies suggest that they can ship 10,000m3 of sawn lumber monthly using 500 containers to destinations like, Asia, Europe and North America.
FPA President David Persaud was not optimistic about an agreement yesterday, since his association did not support the two recommendations and had its own recommendation, which is to restrict the volume of log exports to 50% effective 2009 and increase this by 10% for each year thereafter.
Persaud told Stabroek News in an interview before the consensus that there was not enough capacity to process the excess logs if they are not exported. During his presentation of the recommendations Singh had said that the milling capacity was adequate to process the extra logs if a ban was instituted.
Persaud noted that of the logs produced 50% were used here and the remaining 50% exported.
"FPA after reviewing the GFC's Option One and Option Two does not accept the position taken by the GFC, since the presentation is flawed with errors and impinge on the terms and conditions of the Timber Licenses and Foreign Direct Investment," Persaud said.
The consequences of implementing either of the two options Persaud said would be a sharp fall in primary production, increased production cost, retrenchment, closure and possible bankruptcy of companies and revenue loss to the economy.
In 2006, the FPA noted that the situation showed that 119,000 m3 of logs was processed into sawn lumber. "It then cannot be expected that in 2007/2008 and subsequent few years, the milling capability and capacity can increase to 504,000m3 of logs input," Persaud said.
"The other issue beyond the capacities of the stakeholders to comprehend is the question of logistical movements to handle the surge of volume of processed lumber as it is expected that most of these shall be shipped in containers."
George Robinson, president of the GMSA, in his opening presentation said the paper satisfactorily addressed the concerns raised by the GMSA in a letter to President Bharrat Jagdeo late last year. In that letter Robinson said the association told the President that the shortage of sawn lumber had reached crisis level affecting producers of value-added timber products; that the prices of sawn lumber did not seemed justified and that log exports were increasing.