Industry Trends Challenges and Opportunities SAFCOL INDUSTRIALISATION CONFERENCE 4 October 2017 Michael Peter Forestry South Africa Land Use in South Africa Total RSA land area 1223 million ha ID: 756664
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The South African Forestry IndustryTrends Challenges and OpportunitiesSAFCOL INDUSTRIALISATION CONFERENCE 4 October 2017
Michael Peter
Forestry South AfricaSlide2
Land Use in South Africa
Total RSA land area – 122.3 million ha
1 220 726 haSlide3
Plantation Area by Species 2016
Total – 1 220 726 haSlide4
Plantation Area by Province and Genera 2016
Total – 607 815 ha (softwood)
70 000
less
feedstock
Total – 612 911 ha (hardwood)
24 000
moreSlide5
Plantation Area by Ownership 2016
Total – 1 220 726 haSlide6
Intake of Roundwood into Processing Plants 2016
Total – 16.4 million m
3
Value – R9bnSlide7
Value of Sales from Primary Processing Plants 2016
Total – R25.5 billion
RecoverySlide8
Total Contribution in 2016Paper and Paper Packaging – R23.68bn Total Forestry Contribution:R58.2 billion (1.53% of GDP)
Total Agric GDP in 2016 was R83.8bnExcluding P+PP = 41.2% of Agric GDPAlmost all in rural areas of SASlide9
Contribution to GDP 1980 to 2016
Increase in Forestry to Ag GDP over period from 4.5% to 10.2%
Decrease in For. Prod. to Mfg GDP over period from 6.3% to 5.1%Slide10
Forest Sector Employment – RSA 2016
Sub-sector
No. of employees
Total Employment
Direct
Indirect
Forestry
60,200
28,000
88,200
Pulp and Paper
13,200
10,800
24,000
Sawmilling
20,000
8,000
28,000
Timber Board
6,000
n/a
6,000
Mining Timber
2,200
n/a
2,200
Other
10,000
n/a
10,000
Total
111, 600
46,800
158 400
22% of jobs in AgricSlide11
Exports of Forest Products2015 vs. 2016
Exports in 2016 R3.322 bn or 13% up on 2015Slide12Slide13Slide14
No KPMG report on country performance for 2014-2015Forestry measured in relative terms - 2013-14 KPMG reportAbove the country’s BBBEE average on almost every elementIn 2016 - R7,74 billion in black ownership of a single MLERoughly extrapolated for all MLEs (73.6% of industry) = R17.6 billion in black ownership of MLEsOwnership is only 1 out of 7 elements of empowermentRevised sector code approved by DTI - will hopefully empower DAFF, other departments and the private sector to further advance TransformationSlide15
Constraints WaterCompeting land usesHertzberg’s hygiene factorsLack of State support for new entrants and R+D
Lack of organised labourLong rotationPerceptions about food securityConflicting and investor unfriendly policiesLand – RALHB, Expropriation, Tenure security
Water – GE, Water Use Licences
Environment - AIS
Tax – Land, Property, Wealth. Slide16
TrendsDecline in feedstock will continueConversion (macadamia avocado)Exit areas (S Cape facing collapse)Land reform (conversion or failure)Will lead to increase in pricesMay drive some new afforestation but not likelyFurther competition from alternates (LGS ) and imports
Further capital migration to lower cost countries – 25%tileFurther consolidation in processing sub-sectorsNot good for SMME programmesIncreased investments in efficiency esp. in processingAverage recovery of
sawntimber
< 50% (
CLT,OSB,etc
)
Bio-based products (MCC, NCC, Polymers, Green
Chem)Slide17
Political maturationMay lead to more certainty esp. around landLand prices set to rise for next 25-30 yearsBanks optimistic about forestryCarbon Tax if ever implemented will drive move towards timberSAFCOL- led timber promotion initiativeDoesn’t crowd out private sector (ITC-FSA-SSA)
Massive potential for transformationMassive potential for GDP and jobsMassive potential to increase timber demandRequires better collaboration among sawmillersSlide18
Michael PeterExecutive DirectorFORESTRY SOUTH AFRICA mike@forestrysouthafrica.co.za011 268 1104Members