Tuesday, May 4, 2010

Logging Ban Cuts Off Revenues


Posted Monday, April 19 2010 at 20:00
The ban on logging in government forests is forcing saw millers to consolidate their businesses to survive the thinning supplies of raw materials.
For Gursharn Singh Brar, the drop in wood supply meant his Kinale Saw Mills, once money-minter worth Sh100 million, was no longer profitable.
“Business was low,” he says. “Things were hard and we could nothing about it. We had loans to pay.”
Instead of sinking, he forged an alliance with Muringa Holdings, a local company that invests in energy businesses. Now as managing director of Muringa, Mr Brar says the government can save the timber industry by adopting a sustainable forest management model hinged on harvesting mature and over mature trees.
The presidential logging ban was imposed in 1999 to save Kenya’s forest cover, and payers say they are buying timber from neighbouring countries. This has also fuelled a booming illegal logging business.
Private sector players say the ban is killing the local timber industry as revenues shrink and jobs evaporate.
Despite the ban, gazetted forests are still under threat of human encroachment and illegal logging, often facilitated by government officials and influential politicians.
The Kenya Forest Service (KFS) is carrying out an inventory on the forest cover to determine whether the quality and quantity of mature trees can justify lifting the ban. Government figures put the value of mature trees in forests at Sh56 billion, slightly higher than timber industry estimates of Sh47 billion.
Mr George Gitonga, a former chairman of the Timber Manufacturers Association (TMA), says wood businessmen is facing challenges in sourcing timber to meet local demand. The cost of timber has increased almost six times, he says, which has led to closing down of hundreds of sawmills.
Before the ban one tonne of timber cost Sh,7500, but that had risen to Sh40,000 by March.
“More than 300 saw millers have closed down their businesses,” says Mr Gitonga. “Only three companies are surviving which is by far a small number of players for a competitive market like Kenya.”
The survivors are Tim Sale Ltd, Rai Ply Ltd and Comply Limited, mostly helped by imports from DRC, Malawi, Uganda and Tanzania as well as local private forests. The companies are said to own concessioned forests in Malawi and Tanzania.
“Trees worth billions of shillings and which have reached the maturity age of over 25 years especially the plantation tress pine and cypress are wasting in the forest,” Mr Gitonga says. “The government should adopt sustainable management styles to expand the forest cover and make the timber industry more competitive.”
This has hoisted the cost of furniture as most of the hardwood species can only be imported. Gazetted forests are endowed with indigenous trees and many hardwood. Soft wood is sourced from private farms like Kakuzi Ltd.
In some of countries, forests are concessioned, such as Malawi and in southern Tanzania near Usambara mountains. Kenya has yet to take this route even though it is provided in the Forest Act 2005. The ban has opened a huge market for middle Eastern countries like Turkey, which have flooded the market with low-priced furniture.

KFS director David Mbugua says the government-run organisation is working to expand the country’s forest cover. Kenya’s gazetted forest cover is approximately 1.7 million hectares in 258 blocks of which plantation forest represents 6 per cent or an equivalent of 110,000 hectares.
Some 684,000 hectares are outside the protected areas under trust land which are within the jurisdiction of local authorities.
Mr Mbugua says the sector contributes about Sh7 billion to the economy and employs directly 50,000 and indirectly another 300,000 people. The last comprehensive national forest inventory was conducted between 1989 and 1993l.
“The project which started in 2008 is almost in the final stages as several regions Central Province, Rift Valley and parts of Western province have been covered,” he says.
Mr Brar, who owns Kanel Saw Mills, says the ban should be lifted to save the timber industry.
“Forests should be privatised to enhance competitiveness,” he says. “In countries like Malawi and Tanzania, forests have been concessioned where even some Kenyans are known to own huge chunks of land and pay those governments concession fees.”
Courtesy Daily Nation April 20th 2010

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