1. NCT FORESTRY CO-OPERATIVE LIMITED
Submission to the Portfolio Committee for Trade and Industry – Co-operatives Bill 15 March Vusi C Dladla

2. A Forestry Co-operative
NCT Forestry Co-operative
Established in 1949
Asset base: R 0.5 billion as at 1 October 2001
Annual turnover: R 1.4 billion
Today has 2045 members of which 24% are Black
The Small Timber Growers have enjoyed benefits of Co-op membership:
Access to international market
Direct benefits from exchange rate
Mission: NCT Assist members to achieve their full forestry potential and thereby optimise financial result on a sustainable basis

3. Our sphere of influence

4. Characteristic of NCT
Because of strong first economy, second economy benefits from such strong base
Making profits at farm level

5. Evidence of working together
NCT DWC plant
Big suppliers secured the market, small suppliers get full access to the market
talk
Maximum patronage benefit to all members

6. Where is NCT coming from?
NCT Forestry Co-operative
Supports the objectives and principles of Co-operatives Bill
BUT
Does have two serious concerns

7. Proposed Co-operative Bill Concern # 1 Voting
We cannot underestimate the role of democracy in running organisations
Section 14(1)(e) = 1 member: a vote
Amount of business ≠ amount of say
Members participation differs by size and so is the financial risk they carry

8. Challenges to NCT Should the bill be approved in its current form:
Members who are the backbone of the co-op might resign & form own marketing companies
The co-operative will weaken and lose market share
Small timber growers will suffer as they are to a large degree dependent on big growers for market access
The profitability of tree farming will plunge since companies will offer low prices for suddenly available timber
Up to job losses possible
Sub bullet 1, add DWC example: Funding and market security
Example 2: A members who does not do business through the co-op with unlimited right to vote.

9. Solution To conserve our member base, we propose:
Make s14(1)e an optional provision for co-ops
Allow patronage voting for co-ops that are either:
Above x member base or
Above y turnover or
Have an existing constitution that allows for patronage voting
General issues of the co-op be decided on head count bases and financial/investment issues on patronage

10. Proposed Co-operative Bill Concern # 2 Access to information
We accept the need to have access to information
Section 22 (i) gives members access to minutes of the board meetings & other sensitive information.
Members can make copies of this for their own use
Now we have both timber farmers and corporates (such as paper companies) as our members
IPPC = International Pulp and Paper Companies.
This provision is not even allowed in the companies act and it poses a serious strategic risk to the co-operatives

11. Challenges to NCT Should the bill be approved in its current form,
International pulp & paper companies who compete with the co-op can access information to use it against us
Marketing strategies
Co-ops members plantation information
Market prices
Disclosure of sensitive information can do serious harm or disadvantage the business

12. Solution
We propose:
Expand section 22 subsection 2 to capture restricted access to confidential information as determined by the board of directors
Mirror Companies Act: “Any minute book of a company kept under section 204 shall be open to inspection during business hours by any member of the company, without charge, at the registered office of the company or the office where it is made up, subject to such restrictions as may be provided for in the articles or imposed by the company in general meeting, but so that not less than two hours in each day shall be allowed for inspection ”
Access to information is captured in PAIA

13. Summary
The objectives and principles of the bill are supported by NCT Forestry Co-operative
Two important concerns of large marketing co-operatives should be considered
The experience gained to date by the bigger co-operatives will be valuable in mentoring the emerging co-operatives.
Closure or conversion of these co-operatives will be a loss in the economic system of South Africa

14. Conclusion We need a win-win situation Where
Co-operatives are equally benefiting their members without any fear of prejudice
But
Managed in the manner that is both economically viable and sustainable
Do not spoil this successful recipe. It works well now

15. Thank You