world news - 15.06.2007
FPA against 'indiscriminate' restrictions on log exports
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outdated and many are inoperable and beyond economic rehabilitation," the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.
See also:
- — Greenpeace Hails B&Q China for Hardwood Curbs
- — New species of tree discovered
- — More wood than ever growing in Swedish forests
- — County's timber harvest declines
- — Rainforest furniture
