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September : Business Day Article on FSA's Presentation to DTI Portfolio Committee

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21 September, 2014

Business Day Article on FSA's Presentation to the DTI Portfolio Committee and Presentation given


Business Day article regarding the presentation that Mike Peter and Norman Dlamini gave to the Dti Portfolio Committee in Parliament.  The article makes for excellent reading and (despite two errors - those relating to genus exchange and Norman's position as Chairman), highlights the problems we are facing as an Industry.

Below is also the PowerPoint presentation that was presented to the Portfolio Committee.  Mike Peter's report on the interaction at the Portfolio Committee meeting is contained hereunder.

Download the following:

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Dear EXCO members

The meeting with the Portfolio Committee on Tuesday went very well.

Initially the PC Chair in her introduction, expressed the incorrect view that our sector is one of the worst sectors from a beneficiation perspective and that the large-scale export of logs should be reversed.  Fortunately however we had included this issue in our presentation and we were able to correct the misperception by showing figures which demonstrate the extensive beneficiation that takes place in the industry and that a very small percentage of roundwood is exported.  We also pointed out that the Chair was not alone in this misperception as two Deputy Ministers had previously expressed the same view but that we had also corrected them at the time.

Following our presentation, the entire committee (ruling party and opposition MPs) expressed their deep concern that government had failed to:

  • issue licences for the 100 000ha of new afforestation and that other regulatory challenges like genus exchange were threatening large scale beneficiation investments. One opposition MP described it as a disaster.
  • to implement the Cabinet decision to recapitalise some of the exit areas in the WC and Mpumlanga with the associated job and processing plant losses that have resulted
  • some members also expressed great concern about the previous Minister having announced the Forestry Grant and failing to fund it and they asked what effect this would have. We replied that as per our presentation, the lack of a grant limited the scope for new entrants, as the cost of capital alone for small scale growers, was prohibitive. We also pointed out that the provision of the grant and the 100 000ha of new afforestation together, could treble the size of the small grower sector in rural areas in SA and that this was the dominant ownership pattern in many other parts of the world.


They undertook to take these issues up with the relevant departments.

The PC asked about the outgrower schemes and whether these hadn't just created encumbered suppliers, as opposed to JV partnerships. We responded by referring them back to our presentation which showed that small-scale growers would make a loss without the various forms of support they enjoy from companies and that it cannot be so onerous, as 30 000 small scale growers had entered the industry over three decades using these JV models.  We also pointed out however that should DAFF meet its grant, insurance and extension services commitments, growers would indeed be free to sell timber to any market they choose.

The PC also asked about the demographics of ownership and jobs in the sector. We indicated that we are one of the leading and often unrecognised sectors from a BBBEE empowerment perspective but then also used the opportunity to mention that more empowerment was possible, if the State met its previous commitments in the Charter. We indicated that we are currently negotiating a shared scorecard for the private sector and government and there was general nodding from all members at this concept. This was quite significant because while Tuesday's engagement was aimed at beneficiation, this is the same Committee that is responsible for oversight of DTI in terms of the BBBEE charters, so we will point out to government in our upcoming bi-lateral on the Charter, that the PC of DTI has already heard of our concept of a shared scorecard and seem pleased with the idea.

The Chair at the end of the forestry session described it as having being a very good engagement. We will advise of any further follow-up engagements as several MPs asked for our details after the session and the Parliamentary Monitoring Group requested a copy of our presentation.

Regards,
Michael Peter
Executive Director
Forestry South Africa