1. The South African Forestry Industry Trends Challenges and Opportunities SAFCOL INDUSTRIALISATION CONFERENCE 4 October 2017
Michael Peter
Forestry South Africa

2. Land Use in South Africa
Total RSA land area – million ha

3. Plantation Area by Species 2016
Total – ha

4. Plantation Area by Province and Genera 2016
Total – ha (softwood) less feedstock
Total – ha (hardwood) more

5. Plantation Area by Ownership 2016
Total – ha

6. Intake of Roundwood into Processing Plants 2016
Total – 16.4 million m3
Value – R9bn

7. Value of Sales from Primary Processing Plants 2016
Recovery
Total – R25.5 billion

8. Total Contribution in 2016 Paper and Paper Packaging – R23.68bn
Total Forestry Contribution:
R58.2 billion (1.53% of GDP)
Total Agric GDP in 2016 was R83.8bn
Excluding P+PP = 41.2% of Agric GDP
Almost all in rural areas of SA

9. 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%

10. 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
Timber Board
6,000
n/a
Mining Timber
2,200
Other
10,000
Total
111, 600
46,800
22% of jobs in Agric

11. Exports of Forest Products 2015 vs. 2016
Exports in 2016 R3.322 bn or 13% up on 2015

14. No KPMG report on country performance for 2014-2015
Forestry measured in relative terms KPMG report
Above the country’s BBBEE average on almost every element
In R7,74 billion in black ownership of a single MLE
Roughly extrapolated for all MLEs (73.6% of industry) = R17.6 billion in black ownership of MLEs
Ownership is only 1 out of 7 elements of empowerment
Revised sector code approved by DTI - will hopefully empower DAFF, other departments and the private sector to further advance Transformation

15. Constraints Water Competing land uses Hertzberg’s hygiene factors
Lack of State support for new entrants and R+D
Lack of organised labour
Long rotation
Perceptions about food security
Conflicting and investor unfriendly policies
Land – RALHB, Expropriation, Tenure security
Water – GE, Water Use Licences
Environment - AIS
Tax – Land, Property, Wealth.

16. Trends Increased investments in efficiency esp. in processing
Decline in feedstock will continue
Conversion (macadamia avocado)
Exit areas (S Cape facing collapse)
Land reform (conversion or failure)
Will lead to increase in prices
May drive some new afforestation but not likely
Further competition from alternates (LGS ) and imports
Further capital migration to lower cost countries – 25%tile
Further consolidation in processing sub-sectors
Not good for SMME programmes
Increased investments in efficiency esp. in processing
Average recovery of sawntimber < 50% (CLT,OSB,etc)
Bio-based products (MCC, NCC, Polymers, Green Chem)

17. Political maturation
May lead to more certainty esp. around land
Land prices set to rise for next years
Banks optimistic about forestry
Carbon Tax if ever implemented will drive move
towards timber
SAFCOL- led timber promotion initiative
Doesn’t crowd out private sector (ITC-FSA-SSA)
Massive potential for transformation
Massive potential for GDP and jobs
Massive potential to increase timber demand
Requires better collaboration among sawmillers

18. Michael Peter
Executive Director
FORESTRY SOUTH AFRICA
Members