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Land Use in South Africa

Presentation to the Portfolio Committee on Trade and Industry Colloquium 2 September 2014 Messrs Michael Peter and Norman Dlamini. Land Use in South Africa. 1 273 357 ha. Total RSA land area – 122.3 million ha. Commercial Plantations. Value of Roundwood Production. Total – R6.7 billion.

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Land Use in South Africa

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  1. Presentation to the Portfolio Committee on Trade and Industry Colloquium2 September 2014Messrs Michael Peter and Norman Dlamini

  2. Land Use in South Africa 1 273 357 ha Total RSA land area – 122.3 million ha

  3. Commercial Plantations

  4. Value of Roundwood Production Total – R6.7 billion

  5. Value of Sales from Primary Processing Plants Total – R20.4 billion

  6. Value of Sales from Paper and Paper Packaging • R 17.4 billion (STATSSA 2012 PAMSA 2013)

  7. Total Contribution to GDP R41.9 billion Manufacturing GDP 7.7% (excludes roundwood sales) Contribution to Agricultural GDP 25.5%  65.1% (incl. pulp and paper) Employment in Agriculture 22.5% (146 000 jobs out of 650 000 in total) (DAFF 2009, FSA 2011, STATSSA, 2012)

  8. Beneficiation potential • Limited beneficiation in the primary sub-sector but provides the raw material for beneficiation in other subsectors which are largely vertically integrated • 1 : 5.25 multiplier ratio • Pulp and Paper • Sawmilling • Particle board • Mining timber • Poles • Myth surrounding roundwood exports • Unresolved challenges for timber growers directly impact the potential for further beneficiation

  9. What are these challenges? • Shrinkage in plantations • Voluntary withdrawal 80 000ha – water and environment • Government exit from WC and Mpumalanga – Cabinet Memo not implemented – job losses and mill closures • Unproductive government plantations - failure to transfer these to communities as per Charter • Failure to meet even 2 000ha of the 100 000ha new afforestation target in IPAP I and II and Forest Sector BBBEE Charter – National industrial policy being sabotaged by junior bureaucrats • Increased regulatory burden when changing to more economical tree genera – directly threatens multi-billion Rand beneficiation investments

  10. What are these challenges? • No support for SMMEs • Private sector introduced over 30 000 new growers • Forest Sector BBBEE Charter committed DAFF to a dedicated Forestry Grant to overcome the investment hurdle and increase new entrants • Minister finally announced the grant in September 2012 but no fiscal commitment yet

  11. What are these challenges? • Forest protection • Rising impact of pests, diseases and fires • Government (DAFF) have been excellent recently in supporting the development and release of bio-logical control agents • DAFF have an approved forest protection strategy but again they have not been given fiscal support for implementation

  12. International competitiveness • SA was in bottom 25 percentile of global costs • Now in middle 50 percentile and rising • Competitors have been providing direct and indirect subsidies for three decades – Brazil, Chile, NZ, Australia • Tariffs and non-tariff barriers internationally • SA competitiveness has been based on • World leading clonal breeding • Excellent understanding of site productivity • Global leaders in pests and diseases

  13. Plantation Area Comparisons2011

  14. Illustrative Costs Adapted and modified from Wood and Timber Times August 2014

  15. Small-scale grower challenges • Much the same as large scale growers but more acutely felt and greater risk • Cost of capital – DAFF grant never materialised • Fire, pests and diseases = total crop/cash flow loss • Insurance – premium not subsidised by DAFF • Limited potential for economies of scale as widely dispersed in landscapes • Limited access to rail and PBS vehicle alternatives • Insecure tenure over crop • Vexatious water regulators pursuing unlicensed plantations - mining and agric carry on with impunity • In spite of these over 30 000 SSG in KZN and Mpumalanga

  16. Small-scale grower challenges • Soaring administered pricing increases • Labour – with limited opportunity for mechanisation due to dispersed nature of SSG plantations • Fuel = transport costs • Need for more business management skills

  17. Private Sector • Provide capital and jobs • 30 000 self employed SSGs through JVs in last 30 years • Promotion and education • Research and forest protection • Transformation (a leading sector in Land Reform and BBBEE)

  18. Government • Meet previous commitments • New afforestation • Forestry Grant for SMMEs • Transfer of state plantations back into productivity • Recapitalisation of exit areas • State procurement to have mandatory levels of SA forest products • Paper and paper packaging • Timber and particle board in the built environment and furniture industries

  19. Thank you

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