1 / 35

Roger Godsmark : Forestry South Africa June 2007

An Economic Analysis of the Impact of Sirex on the South African Forestry and Forest Products Industry Summary. Roger Godsmark : Forestry South Africa June 2007. Presentation Outline. Background Data Used Methodology Assumptions Scenarios Preliminary Results Areas involved

holly-case
Download Presentation

Roger Godsmark : Forestry South Africa June 2007

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. An Economic Analysis of the Impact of Sirex on the South African Forestry and Forest Products IndustrySummary Roger Godsmark : Forestry South Africa June 2007

  2. Presentation Outline • Background • Data Used • Methodology • Assumptions • Scenarios • Preliminary Results • Areas involved • Potential impact on growers • Potential impact on Processors • Conclusion

  3. Section 1 Background

  4. Data Used

  5. Data Used 1 Areas (based on Forestry Zones) • Planted areas per product :FES 2005/06 • Age class distribution per product :FES 2005/06 • Sirex affected area :Sirex Co-ordinator Roundwood Volume (based on Forestry Zones) • Rotation ages per product :FES 2005/06 • MAI’s :FSA Roundwood Prices (based on Forestry Zones) • Sawlogs (at roadside):LP Index, Crickmay – March 2007 • Pulpwood (delivered mill): NCT – June 2007 • Poles (at roadside):SAWPA - June 2007

  6. Data Used 2 Volume of Processed Product (recovery rates) • Sawlogs 47% :Crickmay & Associates • Pulpwood 33% :FSA, Industry • Poles 95% : SAWPA Product Prices (current) • Sawn timber :LPI,Crickmay & Assocs • Pulp :FSA, Industry • Poles : SAWPA Inoculation & Thinning Costs (current) • Sirex infection rates : Sirex Co-ordinator • Inoculation costs : Sirex Co-ordinator • Thinning costs :FSA, Industry

  7. Methodology Used

  8. Basic Premises Upon Which Analysis Made First Premise The loss of any volume NOW through Sirex damage or thinnings will result in a foregone loss in volume in the future. Second Premise This loss in volume will result in a foregone loss in income in the future to both the Forestry Industry AND the Forest Products Industry

  9. Methodology - Sirex Damage Determination of Foregone Volume and its Value Area affected / at risk (ha) Age classes Infection level (%) Equivalent area lost (ha) x MAI x Rot Age = m3/ha Future volume lost (m3) x roundwood prices x recovery rates Future product volume lost (m3) x processed product prices Future income foregone

  10. Methodology - Thinnings Determination of Foregone Volume and its Value Age classes Area affected / at risk (ha) Thinning regime used 5%, 10% & 15% Equivalent area lost (ha) x MAI x Rot Age = m3/ha Future volume lost (m3) x roundwood prices x recovery rates Future product volume lost (m3) x processed product prices Future income foregone

  11. Methodology - Thinnings Determination of Cost of Operations Age classes Area affected / at risk (ha) Thinning regime used 5%, 10% & 15% Area thinned (ha) x cost per hectare Total operational cost

  12. Methodology - Inoculations Determination of Cost of Operations Age classes Area affected / at risk (ha) Infection level (%) 1-3% (33% inoculated) 3%+ (20% inoculated) Area inoculated (ha) x cost per hectare Total inoculation cost

  13. Assumptions Made

  14. Assumptions Made in Analysis 1 Areas at Risk • Sawlog stands: 15 yrs and older • Pulpwood stands : 10 yrs and older • Other stands: 13 yrs and older Areas Affected • W, S & E Cape (sawlogs/poles) : 50% of area at risk • W, S & E Cape (pulpwood) : 100% of area at risk • S KZN & KZN Midlands (all crops) : 100% of area at risk Infection Rates • W & S Cape (all crops) : 0.1% • E Cape, S KZN & KZN Mid (sawlogs) : 0.5% • E Cape, S KZN & KZN Mid (pulpwood) : 5.0%

  15. Assumptions Made in Analysis 2 Thinnings • Only pulpwood stands thinned (5%, 10% & 15% volume) • Eventual loss in volume 80% (i.e. 4%, 8% & 12% loss) • Thinnings occur between 4 & 7 years – all to waste • Cost based on R30 per m3 Recovery Rates • Sawlogs to sawn timber : 47% • Pulpwood to pulp : 33% • Poles to treated poles : 95% Inoculations • Cost per hectare (from Mondi Shanduka & Sappi) R1 100 • Infection levels of 1-3% - 33% of area inoculated • Infections levels of over 3% - 20% of area inoculated

  16. Scenarios Used

  17. Area Demarcation & Characteristics 1 1. Forestry Areas Divided into 3 Zones ZONE 1 Western & Southern Cape • Winter rainfall area • 91% sawlogs – balance poles • Stable & low levels of infestation ZONE 2 Eastern Cape, Southern KZN and KZN Midlands • Summer rainfall area • 60% sawlogs – balance pulpwood • Low to medium levels of infestation & increasing ZONE 3 Balance of KZN, Mpumalanga & Limpopo • Summer rainfall area • 69% sawlogs – balance pulpwood • Currently Sirex free

  18. Area Demarcation & Characteristics 2 2. Zones Divided into 2 Regions ZONE 1 Currently Affected Total Currently Affected & Unaffected ZONE 2 Currently Unaffected ZONE 3

  19. Scenarios 3. Basic scenarios developed ZONES 1 & 2 1. Based on Currently Affected Areas • Current cost / losses on areas affected • Plus cost of thinnings (5%, 10% & 15%) & inoculations • Potential cost / losses if all “area at risk” affected • Plus cost of thinnings (5%, 10% & 15%) & inoculations 2. Based on Currently Unaffected Areas ZONE 3 • Cost / losses if same infection levels as affected areas • Plus cost of thinnings (5%, 10% & 15%) & inoculations • Potential cost / losses if all “area at risk” affected • Plus cost of thinnings (5%, 10% & 15%) & inoculations 3. Consolidated ZONES 1, 2 & 3

  20. Section 2 Summary of Preliminary Results

  21. Areas Involved – Current Situation Hectares Total = 688 313 ha: At risk = 279 732 ha : Affected = 90 921 ha

  22. Areas Involved – RSA Hectares Total = 688 313 ha: At risk = 279 732 ha : Potential Affected = 199 432 ha

  23. Estimated Volume Losses – RSA (ex Sirex Damage - Growers) M3 Ex affected = 1 315 000 m3 : Ex at risk = 1 417 000 m3

  24. Estimated Volume Losses (ex Sirex Damage) M3

  25. Estimated Volume Losses – RSA (ex Sirex Damage - Processors) M3 Ex affected = 453 000 m3 : Ex at risk = 501 000 m3

  26. Estimated Foregone Income - RSA(ex Sirex Damage - Growers) Million Rand Ex affected = R346 million : Ex at risk = R383 million

  27. Estimated Foregone Income - RSA(ex Sirex Damage - Processors) Million Rand Ex affected = R1 431 million : Ex at risk = R1 527 million

  28. Estimated Foregone Income(ex Sirex Damage) Million Rand

  29. Estimated Volume Losses (ex Thinnings - Growers) M3

  30. Estimated Volume Losses (ex Thinnings - Processors) M3

  31. Estimated Foregone Income(ex Thinnings - Growers) Million Rand

  32. Estimated Foregone Income(ex Thinnings - Processors) Million Rand

  33. Estimated Inoculation Costs No inoculations undertaken Million Rand Current Affected Area = R20 m: Area at Risk = R74 m

  34. Conclusion 1 • Sirex is already causing massive losses in terms of volume and foregone income for the Industry. • Should it spread into those areas where it currently is not present, these losses will increase dramatically. • Sirex will require a large amount of resources to be used to control it.

  35. Conclusion 2 The best results can be achieved by taking action as soon as new infestations are discovered It is thus critical that an efficient and effective monitoring programme be developed and put in place ASAP

More Related