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Forestry South Africa – Annual Report 2014

Foreword by the ChairMurray Mason

In writing the foreword of last year’s Annual Report, our then Chairperson alluded to a more positive outlook than what our Industry had been used to for the previous five years. This sentiment appears to have been correct when one looks at the various statistics which give us an indication of the state of our Forestry Industry. Roundwood volumes increased by 9% compared to 2013 across all products with improved sales being experienced by both our pulpwood and sawmilling members. This, coupled with a weakening Rand, brought much needed foreign exchange to our exporters and our country.

While this was all going on, Forestry South Africa was tirelessly working on a multitude of fronts in the interests of its diverse membership. One only needs to read this Report to understand the level of involvement and effort from our small staff complement as well as dedicated members from various sectors of our Industry.

One of the most exciting developments of 2014 was the huge boost to our Research and Development efforts by the support from DST’s Sector Innovation Fund. This allowed our Industry’s Research Advisory Committee to kick up a few gears and also resulted in the appointment of Dr Ronald Heath as FSA’s Research Director. Under Ronald’s leadership, our R&D efforts have taken great strides forward and it is a pleasure to have him on board.

With transformation and BBBEE a very important topic for any business in South Africa, I would like to commend the efforts of Michael Peter in particular, as well as Industry representatives Viv, Themba and Watson in the process of aligning our sector codes to the Dti’s generic codes, as well as their involvement in the overall management of the Forest Sector Charter Council. Due to their positive engagements with Government, all indications are that our Industry is amongst the front-runners in this department.

When I wrote the foreword for this Annual Report three years ago I stated that, in my opinion, the massive decrease in volumes of timber transported by rail was one of the greatest disasters of the last decade. At that

stage, FSA representatives were striving to bring the situation back from a point of no return. This having been said back then, how satisfying it is to report that the last two years has seen substantial increases in volumes of timber railed on the Thut’ ithlati branch lines. Congratulations and many thanks must go to Roger Godsmark and other Industry representatives on the FSA Transport Committee as well as senior management of Transnet Freight Rail for this success. Most believe that even more successes can be achieved on this front, however, and we as FSA will continue to strive to achieve these.

2014 saw two new members join our organisation. We welcome these companies into our fold and hope that more players in our Industry will see the benefits of full participation in the future. To the existing members – many thanks for your continued support of FSA, both financial and in kind by your representative’s participation in our various structures.

I have already mentioned some staff member’s names but I would like to also thank Norman and Nathi for their outstanding efforts on the Business Development front, as well as Muriel, Judy, Precious and Bethuel for the vital roles they play in the administration of FSA. My sincere thanks also to the members of the Executive Committee and the General Committee of FSA for their support. And lastly, to all our members, enjoy this Report: it is a really great read. All the best for 2015.

Murray Mason

Chairperson

Forestry South Africa

Forestry South Africa – Annual Report 2014Page 2

List of Office BearersAs at 31st December 2014

Executive CommitteeMr Murray Mason (MGG) (Chairperson)Mr Watson Nxumalo (SGG) (Vice-Chairperson) Mr Sisa Damoyi (SGG)Mr Philip Day (MGG)Dr Johan de Graaf (Merensky)Mr Graeme Freese (MGG)Mr Goodman Gcaba (SAFCOL / KLF)Mr Irvine Kanyemba (Cape Pine)Mr Hilton Loring (Masonite) Mr Andrew Mason (MGG)Ms Viv McMenamin (Mondi) Mr Andre Myburgh (TWK)Mr Fhatuwani Netsianda (SGG) Dr Terry Stanger (Sappi)Mr Themba Siyolo (PG Bison)

Medium Growers GroupMr Graeme Freese (Chairperson)Mr Philip Day (Vice-Chairperson)Mr Andrew Mason (Vice-Chairperson) Mr Murray Mason (Immediate Past Chairperson)Dr Pat ColebyMr Vusi DladlaMr Ralph DobeynMr Ant FosterMr Hans GeversMr Mark GallagherMr Ian HillMr Heiner HinzeMr Tony Hulett Mr Patrick KimeMr Vaughan LascellesMr Jack MasonMr Colin MorganMr Harald NiebuhrMr Micheon NgubaneMr Neville SchefermannMr Malcolm StainbankMr Shaun WestcottMr Hendrik Ziervogel

Large Growers GroupMr Theunis Bester (Reatile Timrite)Mr Ferdie Brauckmann (TWK)Mr Pieter de Wet (PG Bison)Mr Goodman Gcaba (KLF)Mr Leander Jarvel (Sappi)Mr Herald Ponoyi (Cape Pine)Mr John Rance (Amathole)Mr Erik Söderlund (Masonite)Mr Louis Terblanche (MTO Forestry Lowveld)Mr Pieter van der Merwe (York)Mr Louis van Zyl (Merensky)Mr Themba Vilane (Mondi)

Small-Scale Growers Group (KwaZulu-Natal)Mr Sisa Damoyi (Chairperson)Mr Watson Nxumalo (Vice-Chairperson)Mr Simeon CeleMrs Ntokozo DladlaMr Vusumuzi MfekaMs Busi MnguniMr Elliot NkomoMr Mangisi Sindane

Small-Scale Growers Group (Limpopo)Mr Fhatuwani Netsianda (Chairperson)Mr Solomon Thagwana (Vice-Chairperson)Mr Gerson MudzungaMs Judith MuthalaMr Samuel NetshiavhaMr Elias Netshitongwe

Honorary Life MembersDr Doug Crowe Friedel KlippDavid Earl John MoreMike Edwards Vernon SchefermannJohn Henderson Spatz SperlingFriedel Johannes Werner WeberFred Keyser


FSA 2014 Annual ReportForeword by the Chairperson ................................................................................................................................................................1

Internal Forestry South Africa Matters .............................................................................................................................................4

FSA Membership ..................................................................................................................................................................................4

FSA Committees ...................................................................................................................................................................................6

Other Industry Committees ...........................................................................................................................................................7

Non-Industry Affiliated Committees ........................................................................................................................................7

Co-operation with Other Industry Organisations..............................................................................................................7

Co-operation with Government Departments, Agencies and Programmes .......................................................8

World Forestry Congress ..................................................................................................................................................................9

FSA 2014 Annual General Meeting ............................................................................................................................................9

FSA Staff Matters ............................................................................................................................................................................... 10

Sale of Woodmead Offices and New Head Office .......................................................................................................... 10

Forestry Industry Matters ..................................................................................................................................................................... 11

Forest Protection ............................................................................................................................................................................... 11

Forestry Research ............................................................................................................................................................................... 15

Afforestation Issues .......................................................................................................................................................................... 17

Water Issues .......................................................................................................................................................................................... 18

Environmental Issues ....................................................................................................................................................................... 20

Land Reform ......................................................................................................................................................................................... 23

Labour Issues ........................................................................................................................................................................................ 25

Business Development Unit ........................................................................................................................................................ 26

Transport Issues .................................................................................................................................................................................. 29

Bio-Energy Working Group .......................................................................................................................................................... 32

Transformation and the Forest Sector Charter Council ............................................................................................... 32

Education and Training .................................................................................................................................................................. 33

Industry Promotion .......................................................................................................................................................................... 36

Appreciation ................................................................................................................................................................................................. 38

FSA Finances ................................................................................................................................................................................................. 39


Internal Forestry South Africa Matters

FSA MembershipThe work that FSA does in all spheres of its operations, whether related to research, forest protection, the environment, land, labour, transport and so on, benefits the Industry (i.e. all growers) as a whole. It is therefore important that we strive to ensure that as many growers as possible are members of FSA in order that the cost of undertaking our activities is shared fairly across all growers. Although it is encouraging to note that our coverage is high – around 95%, we are aware that there are growers who are still not yet members of FSA. Because we are a voluntary Association, we obviously cannot force growers to become members. As such we have and will continue to engage with these growers to show them the benefits of what we do and by so doing, encourage them to become members. We would also like to ask members who sell timber farms to non-FSA members, to encourage the new owners to become members. Through these actions we hope to not only preserve but increase the levy base of the Association as this will be in all our interests.

On a positive note, it is pleasing to report that two new members joined the Association during 2014 – Lion Match and Mokobulaan.

FSA would, as always, like to sincerely thank all our members for their continued support in both financial terms as well as through the time which many of them give to the business of the Association. Without such meaningful support, the Association would not be able to do the work that it does do on behalf of members and the Industry at large.

Large Grower Representation on FSA Executive CommitteeFollowing a recommendation made by the Large Grower Group (LGG) Caucus and adopted at the Executive Committee held in May 2014, in the interests of inclusivity and due to the fact that all decisions were taken based on consensus, LGG representation

on the Executive Committee was increased from 5 to a maximum of 8 representatives with MGG and SGG membership increasing to 5 members each, if considered necessary by the relevant Groups. In terms of the nominations received, 3 additional LGG members (Cape Pine – Irvine Kanyemba, Masonite – Hilton Loring and PG Bison – Themba Siyolo) were elected onto the Executive as was an additional MGG member (Andrew Mason). SGG representation remained at three members. The size of the Executive Committee has, as a result, increased from 11 to 15 members.

Benefits Derived from FSA MembershipEspecially during times of depressed trading conditions, as has been experienced since 2008, it has become increasingly important to stress the value that not only current members of FSA gain from their membership of FSA but, in a sense and more importantly, to stress the need for those players in the Industry who are currently not members, to join. In essence, FSA benefits members and non-members alike through:

• Giving the Industry a Lobbying Platform Government has, over the years, insisted that when

dealing with the Forestry Industry (or any other Industry), they want to deal with one “contact point” – in the Forestry Industry’s case – FSA. FSA thus gives members a platform through which their collective voices can be heard when lobbying Government and other bodies on issues of importance to the Industry. Through these activities, FSA is able to represent the best interests of its members and through these activities, either leverage additional funding or fend off potentially damaging legislation and or regulations that may impact negatively on the Industry. Individual companies or organisations would either not be able to do this on their own or find it very difficult to do so.


• Industry Based Funding Of the total FSA budget in 2014 of R29.9 million,

R5.7 million (or 19%) was allocated to FSA’s operational expenses – the rest, R24.2 million, was dedicated to Industry-based projects, all of which are aimed at benefitting the Industry as a whole. Most of these funds were allocated to either research (R12.9 million) and forest protection (R8.4 million) – both of which are of immense importance and benefit all timber growers through increasing productivity levels (through research) and saving costs (through forest protection research and other initiatives). FSA is not able to accurately quantify the monetary value of the savings that the Industry gained from forest protection initiatives nor the value of the benefit of research conducted to improve productivity. However, given that the value of the plantation asset is estimated to be in the order of R28 billion, every Rand spent on protecting and enhancing this value is money well spent.

• Leveraging of Funding from External Sources In terms of the above, it is easy to determine the

money that FSA has managed to leverage as these are quantifiable. During the course of 2014 these were as follows:

DST: R25 million over a three year period. The first tranche of R10 million was received in 2014.

DAFF: An MoU was signed for R23.5 million over a five year period for Sirex funding. The first tranche of almost R4.2 million was received in 2014.

FP&M SETA: The SETA committed over R3 million to forestry related bursaries for 2014. An additional R300 000 was obtained for the training of small-scale growers on the Eucalyptus “Toolkit”. FSA was also instrumental in assisting Saasveld to get extra funding to pay for students who could not afford to do so, to undertake driving lessons. FSA has also secured R7.8 million of funding from the SETA to develop 7 new qualifications. In total, this adds

Photo courtesy of ICFR


up to some R11.2 million of leveraged funding for 2014 alone.

THRIP: By paying money to FABI “upfront”, the Industry once again benefited from the THRIP fund which significantly augments what the Industry spends on certain research projects, thus saving the Industry many millions of Rands per year. In 2014 Industry managed to leverage an additional R4.3 million of funding for these research programmes.

• Deferring or Stopping Potential Costs Before They Occur

Saving operational costs through FSA’s activities to inhibit the imposition of overly high operating costs, particularly with regards to, amongst others, labour costs, water charges, port charges, rail transport costs etc. are not immediately recognised by the Industry as they are “headed off at the pass” before they are even incurred by the Industry. Some of these cost savings can be “once-off” and some recurring. These savings run into millions of Rand per annum. By way of example, and as mentioned later in this Report, FSA managed to save the Industry during the course of 2014 an estimated R10 million (and the Agricultural Sector R90 million) in terms of labour costs alone.

As mentioned, it isn’t always possible, to quantify in monetary terms, the total value that FSA members derive from being members of the Association. There are, however, two things that need to be mentioned. Firstly, the interests of the Industry would not be better served without having such an Association and secondly, and more importantly, the benefits derived for the Industry through the efforts of your Association, far outweigh the costs of funding it. An investment in FSA through contributions is thus “good value for money”.

FSA CommitteesExecutive CommitteeThree scheduled Executive Committee meetings were held during the course of the year under review.

Various changes to the Committee occurred during the year. These were as follows:

• Dr Johan de Graaf replaced Mr Chris du Toit as Merensky’s representative.

• Mr Goodman Gcaba replaced Ms Nomkhita Mona as SAFCOL’s representative.

• Mr Hilton Loring replaced Mr Ian Henderson as Masonite’s representative.

• Mr Irvine Kanyemba of Cape Pine was elected as a new member.

• Mr Murray Mason replaced Ms Viv McMenamin as Chairperson and Mr Watson Nxumalo replaced Mr Mason as Vice-Chairperson.

Group CommitteesAs in previous years, nine Annual Regional Meetings of the Group Committees were held in various forestry regions across the country during February 2014. These meetings not only give members an opportunity to learn about what FSA has been doing on their behalf but also for them to raise issues of concern that they would like FSA to take up on their behalf. It is thus encouraging to note that attendance at these meetings continues to grow from year to year as members, both corporate, commercial timber farmers and small-scale growers are becoming increasingly aware of the importance of being informed of the many issues being dealt with by the Association on their behalf.

In addition to the abovementioned meetings, three “General Committee” meetings, comprising representatives from corporate, commercial farmer and small-scale growers were held in Pietermaritzburg during May, August and November 2014.

A list of members of each of the respective Group Committees is given at the front of this Annual Report.

Working CommitteesIn order for the FSA Executive Committee to make informed decisions, information and recommendations are fed into it by the FSA’s General Committee, Regional Committees as well as its various Working Committees. The latter includes Committees dealing with Environmental Management, Transport, Human Resources, Land and, during the course of 2014, the newly formed Research Advisory Committee and the Bio-Energy Working Group. Work was also undertaken to develop the terms of reference for the establishment of a “Forest Pests and Diseases Committee” which had its inaugural meeting in November and is chaired by Dr Johan de Graaf. The work undertaken by these Working Committees is reported on later in this Annual Report.


Other Industry CommitteesIn its overall objective of promoting the interests of its members, FSA members and staff are represented on numerous collaborative structures which serve our members’ interests. Although by no means an exhaustive list, the most important ones are listed below:

INSTITUTE/ CONVENOR

COMMITTEE/STRUCTURES

(i): ICFR Board of Control Remuneration CommitteeAudit and Risk CommitteeResearch Advisory CommitteeSirex Control Programme Steering Committee

(ii): FABI TPCP Board of ControlTPCP Finance CommitteeCTHB Board of Control

(iii): NMMU (Saasveld) Forestry Advisory Committee(iv): Stellenbosch University

Forestry Advisory Committee

(v): FP&M SETA BoardAudit CommitteeGovernance and Strategy Committee

(vi): Provincial LAACs Members(vii): DAFF Minister’s Advisory Council

(NFAC)CEO’s Steering CommitteeCEO’s ForumCommercial Forestry Liaison CommitteeKabelo Trust

(viii): DAFF-DWEA-FSA National Afforestation Technical Task TeamForest Sector Raw Water Tariff Committee

(ix): Forest Sector Charter Council

Charter CouncilInterim Joint Management CommitteeFinance CommitteeLand Task TeamForest Enterprise Development Task TeamCouncil Review Task Team

(x): The Wood Foundation

Executive Committee

(xi): Forest Industries Training Providers Association (FITPA)

Member

Non-Industry Affiliated CommitteesThere are several other collaborative structures which operate outside of the Forestry Industry and yet have significant impact on the Industry. It is thus important that FSA is represented either by staff or by our members in those structures to ensure that its members’ interests are promoted. Amongst the most important of these are Business Unity South Africa, the Agricultural Business Chamber, Agri SA’s Commodity Chamber, Kwanalu, Mpumalanga Agriculture, Working for Water, Working for Wetlands and Working on Fire Programmes and the SANBI Grasslands Biodiversity Forum.

Co-operation with Other Industry OrganisationsEfficiency and greater leverage are achieved when FSA’s members collaborate on issues of common interest. The same is true of the Forestry and Forest Products value chain, where it is important that FSA works closely with other Associations to ensure an integrated view of the issues affecting the entire Industry.

FSA once again worked closely with the Paper Manufacturers’ Association of South Africa (PAMSA) on a number of issues this year including continuing the work to best position Industry, should the controversial Carbon Tax materialise (see Climate Change and Carbon Tax under Environmental Issues). We also collaborated with PAMSA and Sawmilling South Africa ahead of the presentation that FSA made to the Dti Portfolio Committee, which had such a large impact, that a full report on it appeared on the front page of the Business Day. Such presentations and reports carry more impact when they deal with the entire Forestry and Forest Products value chain. Other areas of strong collaboration include transformation, sector promotion, media interaction, responding to environmental legislation and in skills development, through the FP&M SETA, where PAMSA are also represented with FSA. Details on these activities are found elsewhere in this Report.

Following the sale of FSA’s Woodmead premises, where PAMSA shared offices with FSA, efforts will need to be made to ensure the continuity of collaboration between the two Associations, which up until now, has been very effective.


Similarly, FSA’s collaboration with Sawmilling South Africa (SSA) during 2014 was also very effective, not just in areas such as the Dti Portfolio Committee presentation and DAFF CEO Steering Committee meetings but also in other areas, such as transformation, Industry promotion and in exploring more efficient and effective sector wide collaborative structures (see section on Umbrella Association).

We also spent much time in discussion with the Institute for Timber Construction (ITC) and other Associations on ways to develop the solid wood sub-sector, which has lost significant market share to light-gauge steel in recent years. The proposal, which should serve before FSA for consideration in 2015, could, with the right interventions, reclaim this lost market share and moreover achieve a much greater uptake of solid wood and related products in other areas in the built environment.

During the year under review, FSA, PAMSA, SSA, SAWPA investigated the concept of establishing an Umbrella Association, which had been proposed 13 years ago.

A detailed proposal, including the enabling conditions required for such collaboration across the value-chain was subsequently presented to the Executive Committee but was not approved.

Unfortunately, The Wood Foundation has yet to gain further traction, mainly as a result of the lack of funding and human resources. A value-chain wide strategy, which all subsectors support, is required in order to achieve the desired level of effectiveness and we are in advanced discussion with TWF on how to go about the recapitalisation of this key sector promotion structure. Again, a proposal should serve before FSA and other Associations during 2015.

Co-operation with Government Departments, Agencies and ProgrammesDepartment of Agriculture, Forestry and Fisheries (DAFF)FSA had a number of interactions with the newly appointed leadership in DAFF, including the Minister, Deputy Minister and Director-General. We attended the Minister’s budget speech and a round table discussion with the new Director-General. We were able to ask the Minister on live national television

during a separate business briefing, what he was planning to do to reverse the decline of our R42bn per year Industry and were pleased with his response (see paragraph below on DAFF Agricultural Policy Action Plan).

It was with great disappointment that FSA had to bid farewell to the DDG: Forestry and Natural Resource Management, Dr Nthabiseng Motete. Dr Motete, who had only held the position for about 18 months, demonstrated tremendous insight and resolve for the challenges faced by the Sector and its positive role in the development of the country, especially in terms of the rural landscape. FSA remains committed, however, to continue to build the partnerships it has with all Government Departments and with DAFF in particular, considering the important role of DAFF as the Sector’s lead Department.

Among the most positive interactions we had with DAFF in 2014 were those on the development of the Agricultural Policy Action Plan which is to serve as DAFF’s Industrial Policy for the next term of Government and which will significantly influence the DST-led Bio-economy Strategy for South Africa, in which development, FSA was again invited to play a leading role. It is sincerely hoped that the key challenges and proposed solutions captured in the APAP, remain in the final document once it is approved by Cabinet. These challenges, many of which have not been overcome, are also central to the greater effectiveness of the BBBEE Forest Sector Charter and include the recapitalisation of the forestry areas in the Western Cape, Mpumalanga and DAFF’s Category B and C plantations, forestry SMME development and funding, afforestation, R&D and Forest Protection. Should they remain in APAP, there is every possibility that DAFF will, for the first time, be able to secure the requisite funding and political will to help the Sector to overcome these barriers to growth and transformation. APAP goes beyond the primary sector and seeks to provide targeted support for infrastructure and R&D in agro-processing, under the Strategic Investment Programmes of the Presidential Infrastructure Commission.

FSA and DAFF have already signed a new five year MoU (was previously 3 years) to continue the fight against the Sirex woodwasp and related integrated forest protection efforts. While the quantum of this funding is low, relative to what DAFF has committed to in the approved R&D and Forest Protection Strategies, it nonetheless has a massive impact in limiting the losses of Industry to this priority pest. We


are most grateful to DAFF for this support and we are optimistic that should the APAP be approved, this will enable DAFF to commit more funding to jointly, with Industry, address the myriad other pests and diseases, which impact on our Industry and to funding broader research, development and innovation.

From FSA’s interactions with the Minister, Deputy Minister and Director-General, they seem to be acutely aware of the limitations which have plagued the Sector for years and prevented it from playing an even greater role in the socio-economic transformation of South Africa. The Director-General has invited FSA to give the same presentation to the CEO’s Steering Committee that we gave to the Dti Portfolio Committee, so that she and her senior management team can be fully informed of the scope of challenges and benefits in the Sector.

We remain committed to working with DAFF and other role players, in ensuring that we continue to turn the tide on the last 20 years of decline in forestry and we are encouraged by the activities and progress in 2014, that this will indeed materialise.

DAFF – Department of Water and Environment Affairs (DWEA) – FSA Task TeamFollowing the disastrous impasse that occurred in 2013, when the Department of Water and Sanitation (DWS), previously DWA, made extensive and unilateral changes to both the standard and specific conditions of forestry water use licences, DAFF showed great leadership in intervening to rectify this situation. The actions of DWS had led several of our larger members to indicate that they could no longer provide financial, technical and market support for new afforestation by communities under these onerous conditions, as the beneficiary communities would not be able to meet the conditions.

We have had two more interactions with the Task Team and there has been some positive movement on the part of the DWS, but Cabinet must take note that this sort of unilateral and anti-developmental action on the part of bureaucrats, can scupper the efforts of Industry, DAFF and other Departments in trying to increase the level of participation of previously disadvantaged people in South Africa’s economy and that this in turn threatens the potential for further beneficiation and investment in down-stream processing sub-sectors. Without an increase

in feedstock, it is unlikely that we will see more investment in processing and manufacturing.

On a positive note and following high level media exposure through FSA, DWS issued a record number of afforestation licences in the Eastern Cape. We will continue to work to ensure that the same trend develops in KwaZulu-Natal and other Provinces, where the old mantra that “there is no water available for forestry”, is being exposed through proper research, which is showing that much larger areas could be sustainably afforested than previously thought.

World Forestry CongressPreparations during 2014 for the WFC have gone much slower than we believe is necessary for South Africa to successfully host this premier international Congress which only takes place every six years. On a positive note, through FSA’s involvement as a member of the World Forestry Congress Steering Committee, we managed to imbed the concept of investment into the Congress theme, to start to focus the Congress on the commercial benefits of forests, which are all too often forgotten by policy makers, when discussing the world’s forests.

While this Annual Report concerns itself with the 2014 financial year, it is important to note that at the time of writing, DAFF have made massive strides in readying the country to host the WFC in September, including securing almost all of the requisite budget, appointing a professional conference organiser and replacing the Secretary General of the Congress, following the sudden resignation of the previous SG.

For further information on the Congress and to participate in this momentous event, please visit the Congress website at http://www.wfc2015.org.za

FSA 2014 Annual General MeetingFSA’s 12th AGM was held on 15th May 2014 at the Fern Hill Hotel & Conference Centre near Howick in the KwaZulu-Natal Midlands and drew a record number of attendees. In many senses, the FSA AGM is the highlight of the Association’s year and the 2014 AGM did not disappoint, as those attending were treated to hearing three talented speakers talking on three equally interesting topics, namely:


• Keynote Speaker: Dr JP Landman “A Political and Economic Update – Looking Back

and Looking Forward”

• Guest Speaker: Mr Imraan Patel, DDG – Socio-Economic Innovation, DST

“Encouraging Private Sector Investment into Research and Development”

• Guest Speaker: Prof Mike Wingfield, Director (FABI)

“Three Stories: Three Forestry Lessons”

Running the AGM is a costly exercise, especially as the number of members attending keeps growing from year to year. It would thus be remiss of us not to sincerely thank our existing sponsors (NCT, Sunshine Seedlings and Safire) and two new ones – PAMSA and ABSA Bank. Mr Deon van Wyk of ABSA, needs special mention as he arranged for ABSA to provide R30 000 of sponsorship per year for three years. This is by far the largest sponsorship that we have received and is gratefully accepted.

FSA would like to thank the abovementioned speakers for their contributions, the many members who attended the AGM and, last but certainly not least, the very generous sponsors.

FSA Staff MattersThere was only one change in staff during the year under review, that being the appointment of Dr Ronald Heath as FSA’s new Research Director. Dr Heath, who had previously worked for DAFF, commenced his duties on 1st June 2014 and is now looking after all aspects of the research work funded by FSA, both existing and new. Of particular importance is his role of managing the research projects funded through the R25 million Sector Innovation Fund (SIF) funding provided over a three year period to FSA by the Department of Science and Technology (DST) which was approved in 2014. This new position, which is on an initial 3 year contract basis, had been a prerequisite for obtaining the abovementioned SIF funding and is to be funded through an administration fee of 10% that FSA will charge on all SIF funding received. As such, it will not have an adverse impact on FSA’s overall cost structure.

FSA views Ronald’s appointment as an extremely positive development and one which will considerably bolster the Association’s capacity to effectively manage the research needs of the Industry.

Although outside the reporting period, mention must be made of the retirement of Mr Bethuel Maubane in January 2015 following the sale of the FSA’s Woodmead offices. Mr Maubane, who performed his duties as caretaker and gardener at the property for thirty four years must be thanked for his dedicated service and we wish him well in his retirement.

Sale of Woodmead Offices and New Head OfficeA decision was taken at the Executive Committee meeting held in November 2013 to sell the Woodmead Offices – the reason being that the running cost of the offices, originally built in 1982, were becoming exorbitant. It had been hoped to sell the building by June 2014. Although auctioned for a better price than anticipated, this only occurred at the end of the year, thereby not realising the cost savings originally budgeted for.

Following its disposal, FSA moved into rented office accommodation in Illovo. Aside from representing a massive cost savings to members, they are also much more conveniently located for meeting with key stakeholders, being just a couple of minutes from the Rosebank Gautrain station. FSA will not only save money in respect of the running costs on the old offices but also negotiated a 10% lower rental and 25% lower annual escalation in rent which will collectively save the Association R98 000 over the three year lease period.



Forestry Industry Matters

Forest ProtectionPests and diseases remain some of the most serious threats to the Industry. 2014 saw a small increase in funding allocated towards forest protection from R9.05 million to R9.5 million (3.8% increase). There was, however, a significant increase of direct Industry funding from our members towards combating pests and diseases. This was mainly aimed at increasing capacity in the field of biological control and management of the impact of the newly introduced Wattle Rust disease. Although there are positives to report on, we still face new pest introductions into the country which negatively affect our plantations and as an Industry we need to be vigilant to these threats as well as possible new threats. The tremendous work

being done at both FABI and the ICFR in helping to combat these threats, under the leadership of Professors Mike Wingfield and Colin Dyer as well as their respective Research teams needs to be greatly acknowledged. A considerable amount of work occurred during the year in this field, some of the more important developments being the following.

• FSA Research Advisory Committee (RAC) This Committee raised concerns regarding the

current structures to co-ordinate pest and disease research and management within in the Sector during the year under review and as a result, the FSA Executive Committee supported their proposal to establish a dedicated “Pests and Diseases” Committee. In terms of this decision,



an initial meeting was convened comprising a wide range of stakeholders involved in the current operational side of pest and disease management in South Africa – including representatives from Industry, Government, Academia and Researchers at which Terms of Reference for the Committee and an implementation plan were drafted. After further discussions, the ToRs were refined and circulated for comments before being approved. This is seen as a very positive development as the Committee will co-ordinate Industry and Government efforts to prevent, combat and manage our efforts to mitigate the impact of pests and diseases on the Sector.

• Biological Control of Eucalyptus Pests Research Alliance (BiCep) Programme

Another positive development has been the Biological Control of Eucalyptus Pests Research Alliance (BiCep) collaborative Programme between the South African Forest Sector, the University of the Sunshine Coast, Australia and the Instituto de Pesquisas e Estudos Florestais (IPEF), Brazil, which has been signed and funded by FSA and the other respective partners to the agreement. Work is progressing well and a Management Committee was convened, consisting of representatives of each signatory to the agreement. The Management Committee recently met in Salt Lake City at the International Union of Forest Research Organisation Conference (IUFRO) at which specific pests have been prioritised to receive attention through collaborative research. These include Thaumastocoris, Leptocybe, Ophelimus and Glycaspis. Some of the positive progress made within the Programme is that the team is looking for new control organisms in the native range of Thaumastocoris. Work is also progressing in climate/population matching of the biological control agent of Thaumastocoris, Cleruchoides noackae, to improve the selection and implementation of the biological control Programme.

• Leptocybe invasa The biological control agent for Leptocybe,

Selitrichodes neseri, has been released at nearly 400 sites across the distribution of the pest. Intensive monitoring shows that it has established at most of these sites and that it is spreading well, including through some major “jumps” in some cases (e.g. found in Kimberley). Releases continued from September 2014 focusing on areas of new

infestation in southern KwaZulu-Natal and the Eastern Cape where high infestations have been reported and releases have not yet been made. Research and management activities are now being co-ordinated through the newly established Leptocybe Working Group in which affected companies are represented. More information on Leptocybe can be found at: http://www.fabinet.up.ac.za/index.php/tpcp

• Thaumastocoris peregrinus Cleruchoides noacke, the biological control agent

for Thaumastocoris has been released at 25 sites, including releases in KwaZulu-Natal, Mpumalanga, Limpopo and Pretoria. Some re-collections have been made from the release sites, suggesting that it has established itself in these sites. Monitoring for establishment at other sites will continue depending on infestations of T. peregrinus.

New imports of C. noacke from Australia for breeding and release will be made depending on availability and capacity to deal with the additional material. More information on Thaumastocoris can be found at: http://www.fabinet.up.ac.za/index.php/tpcp

• Glycaspis brimblecombei This pest continues to spread and high infestations

have been recorded in various areas. Identification and development of a biological control agent, using the parasitoid Psyllaephagous bliteus has been expedited. The parasitoid has been imported from both Brazil and native Australian populations. Progress has been made to breed the pest and parasitoid in captivity in order to continue with host specificity testing on native insects. Susceptibility trials for Glycaspis, using representative suites of clones and seedling material from different companies has been started and will continue. More information on Glycaspis can be found at: http://www.fabinet.up.ac.za/index.php/tpcp

• Spondyliaspis sp. One of the new pest introductions, Spondyliaspis,

was first observed in the Pretoria area in March 2014. It now appears to be widespread in the Gauteng province. Initial identification suggested that this might be S. plicatuloides. It is not an insect that has been previously detected outside its native range (Australia) and even in Australia very little is known about this insect. Thus far it has only been observed on Eucalyptus spp. that are not of


commercial importance. Pilot screening trials on commercial Eucalyptus species have been initiated. More information on Spondyliaspis can be found at: http://www.fabinet.up.ac.za/index.php/tpcp

• Ophelimus maskelli Another new insect pest of Eucalyptus to be

detected was Ophelimus spp. in Gauteng, which is a known pest of Eucalyptus in the Middle East, Europe, North Africa, Mauritius and New Zealand and is native to Australia. On a positive note, Closterocerus chamaeleon, a known larval parasitoid wasp of O. maskelli, from the galls was also found with the wasp. This suggests that the biological control agent might have entered the country with the pest. Work by the TPCP is on-going to confirm the identity of this new pest, understand the threat it poses to Eucalyptus forestry and to investigate possible responses including other biological control agents. More information on Ophelimus can be found at: http://www.fabinet.up.ac.za/index.php/tpcp

• South African Pitch Canker Control Programme The collaborative South African Pitch Canker

Control Programme has been running since 2010. Progress on this research has been reported as presentations at ICFR field days, meetings of the Seedling Growers’ Association of South Africa and the Tree Protection Co-operative Programme’s AGM. Anecdotal evidence suggests a reduction in incidence of post-planting mortality experienced operationally with P. patula during the 2012/13 planting season, which suggests active technology transfer has occurred from this research into commercial seedling production. Forestry companies with pine tree improvement programmes are now deploying rooted cuttings of the P. patula x P. tecunumanii hybrid, which has superior tolerance to F. circinatum, as an alternative to P. patula. The funding of this Programme by Forestry South Africa has been concluded and most projects are reaching completion. More details on Fusarium and the work of FSA’s partners can be found by accessing the following web sites:

http://www.icfr.ukzn.ac.za/collaboration/fusarium/managing-fusarium-in-south-africa/ http://www.fabinet.up.ac.za/index.php/tpcp

• Wattle Rust Initiative With the emergence of Wattle Rust in 2013, wattle

growers formed a Working Group to focus efforts in dealing with this threat to growing Black Wattle.

The ICFR, FABI and NMMU are closely involved with wattle growers in an attempt to find short- and long-term solutions to the threat. Research and management strategies include studying the pathogen’s biology, epidemiology and life cycle, developing an inoculation and rapid screening protocol, use of special technology through the development of remote sensing based systems, breeding of resistant planting material and performing impact assessment and quantification work through exclusion trials. Lastly, possible chemical control measures have been tested and preliminary results are positive. The availability of resources and collective effort by Industry and its partners were invaluable in ensuring rapid responsiveness to combatting this new disease.

• South African Sirex Control Programme Work on the South African Sirex Control

Programme continues to produce excellent results. Mass rearing and releases of Deladenus siricidicola biological control nematodes for the year has been completed successfully. Long-term storage of selected strains is receiving focused attention at the moment. An inoculation trial using multiple strains from SA and abroad has been established in the Eastern Cape and will be assessed. There has been continued success in the operational deployment of biological control agents to manage the threat from Sirex. Research support continues at FABI, with the first sourcing of native strains of nematodes from a European source (Spain), which will allow greater assessment of diversity. Research at the ICFR to support the Programme includes a trial series looking at the impact of mid-rotation mortality on pulpwood pine stands, focussing on both severity and type of damage. The work will, inter alia, show the losses in productivity relative to the costs associated with prevention and remedial treatment. A review of the Programme is underway to determine whether all of the objectives have been met and to guide the next phase of the SASCP. This will be completed in 2015.

Detailed information on the South African Sirex Control Programme can be found at: http://www.icfr.ukzn.ac.za/collaboration/sirex/managing-sirex-in-south-africa/

http://www.fabinet.up.ac.za/index.php/sirex-home

• Puccinia psidii (Myrtle Rust) Since the first report of this pathogen on a non-

native shrub in a garden in KwaZulu-Natal, Myrtle


Rust has been reported from a native Eugenia sp. growing in the Wolkberg Wilderness area, just outside Haenertsburg, near Tzaneen. The most recent report would suggest that the pathogen is already well established in South Africa, although clearly at a low level. On a positive note, this pathogen has not yet been reported on Eucalyptus species. The importance of controlling this disease is highlighted by the fact that the Australian Forestry Industry has listed this pathogen as its most dreaded potential plant disease and are putting in massive effort to ensure that it does not enter Australia. Members are encouraged to remain watchful for this pathogen on Eucalyptus species.

Further information can be found at: http://www.fabinet.up.ac.za/index.php/tpcp

Damage Causing AnimalsThis was the third year of an initial three year Project, which is run under the auspices of the FSA Environmental Committee’s Baboon Damage Working Group and the University of Cape Town Baboon Research Unit with the funding being managed by the ICFR. The Project is providing sound scientific insights into this important aspect of forest protection and will inform current and future management approaches. For example, it has been established that baboon numbers in plantations are in the region of four times (± 8 baboons per square kilometre) as high as in the adjoining natural habitat (± 2) baboons per square kilometre. The reduction of baboons in the study area to a density marginally above the density in the natural habitat showed a corresponding reduction in damage to the trees. Continued research is planned to enable managers to make informed decisions as to the density of baboons in a plantation that can be tolerated before removal has to be initiated, to minimise the extensive damage and financial losses currently being incurred.

Because of the importance of this Project, it has been agreed that it should run for a further year to enable the completion of the Project. Furthermore, the problem of damage causing baboons must be addressed in an integrated manner with other agricultural sectors, who also incur financial losses.

Forest FiresInitiatives to combat forest fires remain a high priority for the Industry, as fires are the greatest cause of

damage to plantations (after pests and diseases) in South Africa. Good progress was made in 2013 regarding the amendments to the National Veld and Forest Fire Act and the National Forests Act (the former making it compulsory for Municipalities to become paid up members of their local FPAs). However, regarding this former piece of amended legislation, the Industry is concerned that many Municipalities are still not abiding by the new law.

During the course of 2014, the following can, in brief, be reported on:

• Saasveld Fire Symposium: Another very successful Saasveld Fire Symposium was held in George on 9th and 10th September 2014.

• Integrated National Forest Protection Strategy: FSA was asked, during the course of the year under review, to raise the issue of DAFF’s capacity to implement their fire management mandates and executive responsibilities, as set out in the Integrated National Forest Protection Strategy. Without strong leadership by DAFF in this key area of forest protection, potentially devastating and otherwise avoidable damage could result. FSA raised the matter with DAFF in the Commercial Forestry Liaison Forum, on behalf of our members and a meeting is planned for early in 2015.

• Firebreak Preparation: It is pleasing to report that through the efforts of the Pesticide Working Group (TIPWG), the FSC eventually reversed an earlier decision and approved a “once-off” derogation for the use of Paraquat during the 2014 burning season under certain conditions. Further interventions by FSA are underway to extend this derogation as, in the SA Forestry Industry’s case, the use of Paraquat is not only very limited but also preferable to the use of alternative chemicals.

Timber TheftThe theft of timber and equipment is an ongoing problem and one which costs the Industry many millions of Rands per year. Since the establishment of “Timber Theft Forums” in Mpumalanga (Lowveld), Piet Retief / Vryheid, Richards Bay and Greytown, the problem is being addressed and it would appear from reports received from these Forums that gradual progress is being made in reducing the problem.

From its side, FSA has made all members aware of the importance of marking their equipment and machinery (so as to facilitate the recovery of stolen items and the prosecution of perpetrators) and has


distributed “generic” forms approved by the SAPS for the reporting of theft and the laying of charges.

FSA would like to thank all members involved in these Forums for the excellent work that they do to combat this scourge, which affects so many of our members.

Forestry ResearchThe past year has been an extremely positive year for forest research and development and even more so for Forestry South Africa. After being awarded the Forest Sector Innovation Fund (FSIF) of R25 million over three years, 2014 saw the appointment of a Research Director in the form of Dr Ronald Heath. Although this post was established mainly to co-ordinate the FSIF, the Research Director will also be responsible for the co-ordination of FSA’s research portfolio and funding.

The FSA Research Advisory Committee (RAC), which was established in 2013, helped greatly in the development and securing of the FSIF. It is, however, also expected to carry our several other functions

for FSA. These include the review, co-ordination and direction of the research portfolio within FSA and serving on the FSIF Steering Committee to consider, approve and manage the various FSIF projects. Since the appointment of the Research Director, the RAC has been able to perform more of these wider functions, including, for the first time in FSA’s history, receiving and making recommendations on the research budget requests made to FSA for the 2015 budget. The inputs and contributions of the RAC members and from member Companies has been invaluable and the members of the RAC and their Companies are sincerely thanked for this.

Since the inception of the FSIF, there has been significant progress on the Programme. The first step was the establishment of a Steering Committee, comprising representatives from the Department of Science and Technology (Mr Imraan Patel), Department of Agriculture, Forestry and Fisheries (Dr Nthabiseng Motete) and Industry representatives (Messrs Michael Peter, Norman Dlamini, Ben Pienaar, Giovanni Sale, Philip Day and Drs Johan de Graaf and Ronald Heath). The Committee’s first action was to



call for Expressions of Interest (EoIs) from the forest research community i.t.o. research project proposals. A total of 35 EoIs were received from 9 Institutions, requesting a total of R65 million in funding – way above the funding available.

After an initial adjudication process, the Steering Committee shortlisted 15 applications to proceed to the next adjudication round. Successful applicants were requested to submit detailed “Applications for Funding” by 26th October 2014. The Applications for Funding were again reviewed by the Steering Committee, where-after four applications were declined and the remaining 11 applications were requested to revise their budgets and resubmit adjusted applications. The adjudication process will be completed early in 2015.

In addition to potentially funding 14 postgraduate students, the FSIF funding will also potentially leverage approximately R10 million from member Companies. The Steering Committee believes that the selected

projects will furthermore help to address several innovation constraints faced by the Sector and satisfy the additional criteria set by DST.

Institute for Commercial Forestry Research (ICFR)The wellbeing of the ICFR is intricately tied up with that of FSA as the Institute’s main source of income is derived from FSA – almost R11.5 million in 2014 or 47% of FSA’s total Industry funding budget. It is thus pleasing to note that the ICFR continued in 2014 to develop alternative funding models for the Institute into the future so that they would not be so reliant on FSA to provide the majority of their funding. In terms of this, they put in four submissions to the Forest Sector Innovation Fund, as well as a collaborative submission along with the Spatial Technologies application from the CSIR, the Forestry Enterprise Development proposal from the University



of Stellenbosch and the Biological Control Facility proposal from the University of Pretoria. The ICFR has also secured research work commissioned by the Department of Environmental Affairs (DEA) relating to carbon storage and stocks in plantations and a possible second phase of work for DEA in this area of research is very possible.

Locally, the ICFR once again hosted an excellent 6th Forest Science Symposium in collaboration with DAFF. The event was a great success with the highest attendance since the inception of the event boasting a number of world-class international presenters and keynote addresses. The Symposium, driven by the ICFR, was well supported by Industry through participation, sponsorship and overall support.

The eight core funded projects aimed at building appropriate skills and expertise within the ICFR, developing enabling research and technology products, to support a sound scientific foundation and ensuring its ability to respond to current and future research needs of the Industry, are all progressing well with one (Spatial modelling for the siting of cold tolerant eucalypt orchards) having been completed.

It was very positive to observe the advancement of ICFR staff during the year. A number of ICFR staff members have successfully furthered their studies and graduated during the year. These include Dr Tammy Swain (PhD), Adewale Adejumo (MSc), Xolani Colvelle (BTech) and Michael Buthelezi (BTech). Five more staff members registered for further studies. We wish Enos Ngubo (Diploma Agric Management), Philip Croft (MSc), Joel Cele (MSc), Nkosinathi Kaptein (MSc) and Robin Gardner (PhD) the best of luck for their studies. FSA would also like to welcome Thobile Mbatha to the ICFR as the newly appointed Research Scientist – Forest Protection. Four other exciting appointments to take note of were the appointments of Prof Colin Dyer, Dr Louis Titshall, Dr Marnie Light and Dr Ilaria Germishuizen as Honorary appointments at the University of KwaZulu-Natal.

As ever, the ICFR continues to serves the Industry well. It has, over the year under review, continued to serve the research needs of the Industry in an exceptional way and for this we must extend our thanks to the Director of the Institute, Professor Colin Dyer and his dedicated Researchers and staff. For more information on the Institute’s activities, please visit their website: www.icfr.ukzn.ac.za.

Forest Engineering South Africa (FESA)At a Special General Meeting of Forest Engineering South Africa (FESA) held on 1st October 2014, it was unanimously decided to dissolve FESA in its current format, effective 31st December 2014. As an interim measure, the ICFR has established a new research area, Forestry Operations Research, which will focus on research aspects relating to the forestry supply chain, including aspects of forest engineering. The ICFR will ensure that the current FESA projects are completed and delivered to the stakeholders over the next three years.

A Task Team was convened, under the auspices of FSA’s Research Advisory Committee, to evaluate the FESA operational model and focus areas and to ensure appropriate forest engineering research in South Africa, with systems and structures to achieve optimal impact. The Task Team performed a SWOT analysis on forest engineering (applied operations research) and community of practice. Possible options for future implementing structures and activities to co-ordinate and optimise applied forest operations research as well as community of practice with an Industry-wide perspective in mind were proposed. A Report is to be drafted and once approved by the Task Team, will be distributed to all relevant stakeholders for comment. Once stakeholder inputs had been incorporated, a Report will be presented to FSA’s General and Executive Committees for consideration.

Afforestation IssuesAs reported in the last FSA Annual Report, DAFF, the Dti and Industry have been working closely alongside other key roleplayers, including the Eastern Cape Rural Development Agency, Industrial Development Corporation and others to establish the 100 000 ha of new afforestation, as committed to by DAFF in terms of their Charter commitments. Unfortunately, the Department of Water and Sanitation (DWS) has made it almost impossible to meet this target in the agreed time frame stipulated in the BBBEE Forest Sector Charter and the Dti’s IPAP, by including conditions in new licences that would seriously impact on the ability of licence holders to meet. Further, these licence conditions were not discussed with the multilateral National Afforestation Task Team that was established some years ago to assist in getting the areas planted.


The BBBEE target set in 2008 was to establish 10 000 ha per year, whereas less than 2 000 ha have been established in the last five years combined. Brazil, by comparison for the last 5 years, has been planting our ten year target of 100 000 ha, every 37 days. The target for South Africa now stands at 20 000 ha per year if we are to meet the commitments in the BBBEE Charter and unless the political intervention sought by FSA occurs, we will fail to reach anything near that target. Fortunately, DAFF has intervened to try to get the process back on track and a meeting was held with the other Departments and some improvements made to address some of the more ridiculous changes made by DWS.

The net effect of this is that communities, who have long been frustrated by the slow pace of delivery on water use licences, may well plant timber without the required licences to do so. FSA does not condone illegal activities and would far prefer a proactive and pro-forestry approach by the officials in DWS but unfortunately this has rarely been demonstrated. It is ironic and legally problematic for DWS that they invest effort in trying to pursue small growers who have planted timber in desperation to sustain their businesses and livelihoods and yet other sectors, such as mining, carry on with large-scale environmentally impactful activities without having first obtained the requisite water use licences. We do not believe that should the principles of administrative justice be tested in a court of law that growers who have been waiting for so long to participate in the economy through forestry, would actually be required to remove trees planted without licences, especially when other sectors, carry on with impunity.

FSA remains committed, with DAFF’s sector leading support, to ensuring sustainable, equitable and economically beneficial outcomes in the current and future allocations of water.

Water IssuesRaw Water ChargesThe 2014/15 Tariffs: The 2014/2015 water tariffs came into effect on 1st April 2014 with the increase averaging 12% across the 19 Water Management Areas. FSA again lobbied DWS for a PPI linked increase and again offered to administer the collection of the charges on behalf of the DWS, subject to an agreement that the increase would be based on PPI. Again, DWS expressed interest and promised to follow up with us but no feedback

has, at the time of writing, been received. While the increases were higher than PPI, they were nonetheless, for the third consecutive year, far more reasonable than the 300-400% increases we faced several years ago.

The 2015/2016 Tariffs: FSA attended the Sector Specific and National Consultation meetings. However, a complication arose, as a result of the reduction in the number of Water Management Areas from 19 to 9, as projected increases for the 2015/2016 year in the respective consolidated WMAs would both increase and decrease. At the time of writing it is understood that the increases will be based on the 2007 Water Tariff Policy, since the proposed revised Water Pricing Strategy has still not been finally approved and gazetted for public comment.

Water Pricing StrategyFSA, amongst others, has been involved with DWS in developing a new Water Pricing Strategy. FSA made inputs into the Strategy during 2012, 2013 and 2014, the most important aspects of which are that:

• FSA indicated that should the principle of inflation-indexed increases for forestry be adopted in the Strategy, FSA would be willing to help collect the water charges with the proviso that any savings in this process would be passed onto our members in the form of discounted future tariff increases.

• FSA expressed its opposition to the idea of a standard tariff for all users, as Forestry could not, under any circumstances, be expected to pay for the cost of dams, infrastructure and personnel, as none of those costs are incurred in the provision of water to the primary side of the Forestry Industry.

• DWS should consider the relative social and economic returns to the country of forestry in relation to other water users, as this dialogue would become increasingly important in future considerations around water use.

The revised Strategy remains in draft form at the time of writing, although expectations are that it will be published for comment during 2015.

FSA has lobbied DAFF for support in ensuring that the Strategy is not implemented in its current form and DAFF in turn have shown strong leadership in engaging with DWS on this. They have indicated that our concerns, as well as those of the rest of organised agriculture, would have to be addressed comprehensively before DAFF could consider supporting the Strategy.


National Water Resources Strategy 2The final NWR2 was rolled out during the year and further interactions with the Forestry Industry were proposed by FSA. This has resulted in consultation meetings being initiated with the first one to be held in January 2015.

Water Management AreasWater Management Areas have now been reduced from 19 to 9 which may make it less costly to manage water.

Compulsory Water Use LicencingThe Umhlatuze Catchment was selected as a pilot catchment on which to test the implementation of compulsory licencing. The Project is now complete

and final water allocations were gazetted during 2014. It is interesting to note that almost all users who registered their water use were granted it, as it became clear that so much water that had, for example, been allocated for irrigation had not been taken up. It is sincerely hoped that DWS completes this process for other catchments, especially those previously thought to be closed, as it is likely that the same result may be found in which case, new afforestation could be authorised in such catchments.

Unlawful Water UseFSA, through our Environmental Consultant, has been busy attempting to conclude the somewhat vexed question of what constitutes unlawful afforestation. There appears to be different interpretations of the Act in this regard and legal consultation is on-going. We are of the view that the National Water Act sought to regularise all existing plantations at the time immediately preceding the NWA but this must be confirmed.



Environmental IssuesOver the years, environmental issues have become an increasing focus of the Industry’s attention. We are thus appreciative as an Association to not only have an extremely active Environmental Management Committee, chaired by Dr David Everard, but also to have our own FSA Environmental Consultant, Dr John Scotcher, to handle these issues on our behalf. In brief, some of the more important developments during the year under review were as follows:

Forest Stewardship Council • FSC South African National Standard: The South

African FSC Standard for plantations in excess of 1 000 hectares was accepted by the FSC in January 2014 and the Standard for plantations less than 1 000 hectares, the following month. However, the South African Standards Development Group made the decision to defer the implementation of the standards as approval of the FSC International

Generic Indicators was imminent and it made sense to rather revise the approved standard to align it with the Version 5 Principles and Criteria, than to implement a standard based on Principles and Criteria which would shortly become obsolete.

• FSC Principles and Criteria Version 5: The FSC International Generic Indicators went through another round of stakeholder consultation in August 2014, with extensive input being provided by two members of the FSA Environmental Committee. A final comment period was initiated in December 2014, along with a guideline document that addresses Scale, Intensity and Risk. It is envisaged that the IGIs will be approved during the first half of 2015. The South African FSC Standards Development Group has submitted a plan to revise our local South African FSC standards to meet the new FSC’s Principles & Criteria during 2015. The revision process will begin in March 2015 which will involve a public participation process as well as the drafting of a revised standard.



• Establishment of an FSC National Office in South Africa: The FSC thought it would be beneficial that such an office be established locally in order to increase the FSC’s profile in SA and to facilitate the provision of support (including financial) to certificate holders. An investigation was completed in 2014 and it is unlikely that such an office will be established any time soon, as this possibility has been overtaken by events in Africa. Specifically, the FSA Africa Region Director and the FSC in Bonn agreed to rather strengthen the Africa Region with the appointment of a Business Development Officer (based in Johannesburg) and a Policy and Standards Officer (based in the DRC).

• FSC Smallholders Sub-Committee: During the course of the year, the FSA Environmental Management Committee appointed a sub-committee to research the options available for small-growers in South Africa to pursue FSC certification. FSA welcomes this development and made another R200 000 provision in its 2015 budget to help fund this initiative. Substantial funding from the FSC itself has also been secured. Mr Steve Germishuizen has been appointed to undertake the work, with good progress being made in the review of existing FSC options and the testing of such options in the field.

• Lobbying of FSC by FSA: FSA’s Executive Director, working closely with his counterparts in Brazil, New Zealand and the United States, began a process during 2013 to lobby the FSC on their stance against the use of GMOs as well as various pesticides and herbicides used in plantations in their respective countries. It is our view that the FSC must take a far more informed and pragmatic view on both these issues, particularly for plantation forestry.

Other Environmental Matters • Environmental Impact Assessment and

Management System: A Department of Environmental Affairs Policy Steering Committee completed its work on the creation of an environmental impact and assessment management system that comprised both voluntary and regulated instruments and which was envisaged to be implemented within the next 5 years. Much of the recommendations have already been included and published in the Government Gazette, with the new EIA regulations published for implementation at the end of 2014.

FSA, through its Environmental Consultant, served on the Steering Committee from inception.

• Environmental Guidelines: The Environmental Management Committee appointed an Editorial Committee, chaired by the FSA Environmental Consultant, to revise the guidelines and a first draft is expected in the middle of 2015.

• Timber Industry Pesticide Working Group (TIPWG): A detailed submission on the use of Paraquat for firebreak tracers was submitted to the FSC in Bonn and discussed with the FSC at a meeting held in February 2014 in Pietermaritzburg attended by the FSC Head of Policy and Standards. The submission was successful and Paraquat was permitted for use in 2014 only. Certificate holders will need to apply for the normal 5 year derogation for 2015 onwards. However, FSA is again following up with the FSC in Bonn to emphasise that the use of Paraquat is as a desiccant and not for pest and disease control. It has been established that the South African FSC certified forests use only between 2 000 and 3 000 litres of Paraquat annually which amounts to 0.0018 litres per hectare.

• NEM Biodiversity Act - Alien and Invasive Plant Regulations: The Department of Environment Affairs published a list of alien and invasive plants gazetted in July 2013 which exempted commercial forestry species from the regulations. As previous drafts had included all the Industry’s tree species in the regulations (which would have had serious practical and cost implications for the Industry), our relief was considerable. As such, they would remain regulated in terms of the Conservation of Agricultural Resources Act. FSA was thus extremely concerned when subsequent new regulations were published in February 2014 which contradicted the 2013 regulations in that commercial forestry species were again included in the draft regulations. This would have the same ridiculous impact where any person carrying out a restricted activity would require authorisation for growing, propagating, transporting, having in possession, selling, donating etc. any commercial forestry species.

Considerable communications subsequently took place between FSA’s Environmental Consultant and the DEA, and some relief was achieved in that existing commercial forest plantations would be exempt, except in the Western Cape. All new plantations established after 1st October 2014 would require a risk assessment and authorisation from


DEA for undertaking a restricted activity with an alien and invasive species, in addition to the requirement for an environmental impact assessment, a water use licence, authority for breaking virgin ground and permission from the National Heritage Resources Agency. The implication for forest plantations in the Western Cape is that all existing plantations would need to apply for permission in terms of a restricted activity. This, in spite of the fact that they are already an existing lawful land use, as well as an existing lawful water user. Once again, FSA is of the view that this is irregular at best and will not stand up to legal scrutiny, should action be taken against any of our members in the Western Cape under these regulations and we are seeking legal opinion on this matter.

• SANBI Grasslands Programme: A long-term sustainability plan has been produced which will be addressed in the future by the FSA Environmental Management Committee. The Programme received the highest rating possible conferred by its funding agency, the Global Environmental Fund. Mr Steve Germishuizen, the Programme Manager, must be thanked for his sterling efforts in enhancing the standing of the Industry in terms of its management of grassland areas. At the closing ceremony, much praise was given to the Forestry Industry, not just for the excellent management and conditions of our grasslands and other associated natural vegetation, but also for the open and transparent manner in which the Industry participated in the Programme. FSA asked DEA to consider using the outcomes of the Programme to guide the more effective and efficient use of State resources in regulating industries, as the Programme demonstrated that there seems to be an excessive focus on our Industry, which has such a minimal impact on the water resources and such a positive impact on bio-diversity conservation and management.

• Climate Change Issues: FSA, through BUSA, made extensive input into the Green Paper on both how plantations could mitigate climate change and the proposed carbon tax. FSA also made a submission on a draft climate change sector plan for agriculture, forestry and fisheries which was published for comment during the year. FSA also chaired a panel discussion at the DEA’s National Climate Change Dialogue which revealed encouraging prospects for our Industry from a climate change mitigation perspective.

• Carbon Tax: BUSA (Business Unity South Africa) and FSA continue to oppose the introduction of a “carbon tax” which would be in the form of an emissions tax. While National Treasury is still pursuing the proposed tax, after inputs from FSA, they had, encouragingly, formally acknowledged their recognition of the role that plantations played in South Africa in offsetting emissions, provided these were verifiable. While the Direct Emissions Reduction Objectives for Forestry will not yet be implemented for our sub-sector for the next five years, this is not so for the forest products sub-sectors which will be allocated a Carbon Budget and be expected to implement measures to stay within this budget or face paying carbon tax on their emissions. Fortunately, those vertically integrated Companies in forestry, will as a result of several years of lobbying by FSA and PAMSA, likely be able to offset most, if not all of their emissions against the carbon sequestration that takes place in their plantations.

The ICFR, under the leadership of Dr Stephen Dovey, is currently researching an appropriate method that can be used to both calculate and verify the carbon stocks available in the South African plantation Forestry Industry to support the Industry in avoiding the planned carbon tax.

Notwithstanding this, it is still the view of FSA and our sister organisation, PAMSA, that the proposed tax will not change behaviour but will simply add to the cost of doing business, as most energy efficiency gains have already been achieved during the last few years through radical increases in electricity costs anyway. Although the Treasury has again postponed the introduction of the carbon tax, its introduction appears inevitable and FSA will continue to both oppose its introduction and ensure that the Industry is well placed to minimise or avoid the potentially devastating impacts of it, should it materialise.

• Genus Exchange: FSA’s views remain unaltered, despite the contrary view held by the DWS. DWS did prepare draft regulations for genus exchange which were distributed to the National Afforestation Task Team, but with the condition that they not be distributed further. This, therefore, did not allow FSA to consult with its members but we remain in dialogue with DWS and DAFF on this long-standing issue which again will likely be resolved through being tested in a court of law.


• PEFC and FSC Comparison. FSA’s Environmental Consultant undertook an analysis of the two principal international certification systems: the Programme for Endorsement of Forest Certification (PEFC) and the Forest Stewardship Council (FSC). This was not an analysis that would provide recommendations but rather to highlight some of the issues that would need to be taken into account should South Africa decide to proceed with an additional forest certification system. A detailed Report was prepared in which it was concluded that market forces would ultimately decide whether members would like to pursue an additional system. The Report did caution against having two certification systems but also agreed that two such systems might be healthy from a competitive point of view.

• Review of the Principles and Criteria Contained in the National Forests Act: The FSA Environmental Management Committee has formed a small sub-committee to evaluate the potential to review the current but as yet unpublished Principles, Criteria and Indicators, developed under the National Forests Act. The objective is to use the revised PC&Is to develop a SFM standard for South Africa which may be able to be used for further development of a certification system under, for example, the PEFC. Such an approach may be more appropriate for all growers but with particular focus on small and medium sized growers. An invitation to review the PC&Is was extended to interested parties at the end of 2014.

The role that the Environmental Management Committee played during the year in helping to advance the Industry’s environmental credibility on the one hand and on the other, preventing potentially damaging regulations coming into effect, cannot be underestimated. All members of the Committee must be thanked for their efforts in this regard. Although difficult to single out individuals, our special thanks must go to the Chair of the Committee, Dr Dave Everard and our own FSA Environmental Consultant, Dr John Scotcher.

Land Reform 2014 saw the introduction of several new Bills by the Minister of Rural Development and Land Reform, namely, the Electronic Deeds Registration Bill,

Regulation of Land Holdings Bill, Extension of Security of Tenure Amendment Bill, Communal Property Associations Amendment Bill and the Communal Land Tenure Bill. The Extension of Security of Tenure Amendment Bill was greatly influenced by FSA and was tabled as an alternative to the highly contentious Land Tenure Security Bill which DRDLR had tried to introduce two years ago.

2014 also saw Parliament passing the Restitution of Land Rights Amendment Bill as an Act. FSA stands by its previous assessment that while couched as a radical and progressive move to re-open the land claims window for those who were denied the right under the previous processes, the effect of this Act would be to halt the processing of existing claims. This prediction was very quickly realised when the Zulu monarch, within two weeks of the Act being passed, reportedly claimed the entire Province of KwaZulu-Natal, as well as parts of the Eastern Cape. Whether or not the DRDLR intended the Act to slow down the settlement of existing land claims and thereby to halt the transfer of further agricultural land out of production, is a moot point, as just this first high profile claim in KwaZulu-Natal, will have precisely that effect. It will take decades of research to investigate this claim alone, let alone the many others which will likely arise in the five year window. Moreover, if the DRDLR’s declining budget allocation is an indicator of any sort, a leading land reform academic recently estimated that it will take 140 years to settle the existing land claims, let alone new ones that will be lodged in the new five year window.

The spectacular failure of land restitution in most of agriculture, with the notable exception of our Industry, has led the DRDLR to take a more pragmatic approach to the question, in which maintaining productivity, establishing strategic partnerships between established and new participants (such as happens in our Sector) and protecting rural jobs, has been the order of the day.

The strategic partnership approach, which was pioneered by FSA and resulted in forestry land claim models which were approved by the then Minister, was previously frowned upon by political extremists, but is now a requirement in DRDLR’s new approaches to land reform.

Further examples of this pragmatism were seen in 2014, where following presentations given by FSA and Agri SA, the Minister initially undertook to scrap the Strengthening the Relative Rights of People Working the Land policy in favour of our proposals, which


were centered on using the existing frameworks for transformation in the Sector to make a greater contribution to the objectives of tenure reform, than the Minister’s so-called 50/50 model.

It is our firm belief that in spite of political utterances, Government is becoming aware that most people realise that the land in itself, is not an easy vehicle to wealth. If this had ever been true, we would not see the very high rate of encumberment of the land by financial institutions and the massive failure that has characterised land restitution and redistribution to date. Furthermore, we believe that Government realises that in contrast to being an asset, unproductive land becomes a massive liability in social and economic terms, when jobs are lost, Local Government is threatened by insolvent land owners, land owners face damages claims arising from their inability to properly manage risks like fire and ultimately in political terms, threaten the State in terms of food price inflation, food insecurity and failed livelihoods.

This has caused at least Minister Nkwinti and others in Government, to try to change the conversation from one which focussed narrowly on land ownership, using simple racial metrics, to one of inclusive economic transformation of the rural economy, while stemming its accelerating decline. Many of these factors were also catalytic in the development and prioritisation by Cabinet of the Agricultural Policy Action Plan reported on elsewhere in this Report.

While Minister Nkwinti has consistently both stated his intention and demonstrated commitment to resolving the land question in ways which will result in the de-racialisation and growth of the rural economy, some political statements in recent times made by other politicians, such as those about limitations on foreign ownership of land and limitations on farm sizes, are perplexing. Neither of these issues have had the slightest effect on the failure of the land reform programme to date, whereas the lack of financial and technical support have been the main obstacles to successful land reform.



There may well be legitimate reasons for wanting to place limitations on some forms of foreign land ownership, such as to prevent large-scale acquisitions by foreign States using sovereign wealth funds, or to prevent land from potentially being used as a means of money laundering but then this should be stated. There is, however, no sense in placing any sort of arbitrary cap on bone fide agricultural land holding ownership when globally, agriculture is increasingly scale driven. Furthermore, the argument advanced in support of land caps is one of ensuring food security, but neither national nor household food security are achieved by having smaller farm sizes but rather through economic growth and employment, neither of which are advanced by reducing the size of agricultural enterprises.

There is no doubt that many in Government know this, as these concepts were previously raised (and dismissed) in our engagements with the DRDLR. Again, when recently re-introduced by none other than the State President, the Ministers of Rural Development and Land Reform and Agriculture, Forestry and Fisheries, were quick to do damage control, saying (a) that a one-size fits all policy regarding land caps would not work, (b) they would not act irresponsibly with the economy (although little could be more irresponsible than having the State President make such pronouncements in a State of the Nation Address) and (c) that the Government’s standpoint was merely a “negotiating tactic”.

These sorts of contradictory statements between the ruling party, the President and Ministers are not unique to the land question and are a likely function of the contradictory policies and ideologies of the ruling alliance partners. This was also seen recently in the Communications sector on the issue of technology for the global migration to digital broadcasting. Whilst divisive, idealistic populism will always persist in some remote corners (and even some prominent ones) of the political landscape, we do not believe that this reflects the aspirations, nor the views of most of the communities who live and work in the rural landscape, nor of far-sighted politicians and officials in Government.

FSA will continue to work with Agri SA, with whom we have a close working relationship, as well as other key stakeholders, through our engagements with Government and the media, to ensure that the land question is answered in ways which advance the interests of all of our members and of the country as a whole.

Labour Issues Although FSA’s Human Resources Committee did not meet during the year under review, a lot of work was done “behind the scenes”. Some of the more important issues dealt with during the year, as well as developments that need to be noted, are summarised below.

Forestry Sectoral Determination – 2014/15In terms of the Forestry Sectoral Determination, from 2014 the minimum wage paid to forestry workers became the same as those paid to agricultural workers.

DoL duly published the new agricultural minimum wage (for implementation on 1st March 2014) in January 2014. However, following FSA picking up a mistake in DoL’s calculations, DoL corrected the error which resulted in the minimum wage increasing by 6.4% rather than the 7.0% originally Gazetted. Through this intervention, it is conservatively estimated that FSA saved the Forestry Industry at least R10m and the Agricultural Industry R90m in 2014/15 alone. The current minimum wage now stands at R2 606.78 per month.

Progress with Draft Labour Amendment BillsAs reported in last year’s Annual Report, four daft labour amendment bills, originally published in December 2010, were taking an inordinate amount of time to become law, primarily due to their contentious nature and thus extended discussions in Nedlac. FSA, along with other stakeholders, such as Agri SA and BUSA, made extensive comments on all four Bills, all four of which have now been promulgated – the Basic Conditions of Employment Amendment Bill and Employment Equity Amendment Bill on 1st August 2014 and the Labour Relations Amendment Bill and Employment Services Bill on 1st January 2015.

Although our collective inputs resulted in the tempering of some of the more contentious issues contained in the original Bills, the new Acts still contain problematic provisions which members need to note. These are as follows:

• Labour Relations Amendment Act: The most contentious provisions relate to temporary employment being limited to 3 (originally 6) months; the Minister having the power to set


general wage increases, not just minimum wages; and the Minister being able to set union recognition thresholds.

• Basic Conditions of Employment Amendment Act: Non-compliance will now to be a criminal offence.

• Employment Equity Amendment Act: As well as non-compliance being a criminal offence, fines will range from 2% to 10% of turnover. On a positive note, however, sense prevailed and compliance will now be based on Regional demographics and not on National demographics, as originally proposed.

• Employment Services Act: This will increase the administrative burden on employers as they must now give notification of vacancies and filling them within 14 days respectively.

What is highly concerning about these new Acts is they will make the labour regulatory environment, which is already inflexible, more so – thereby acting directly against the Government’s stated job creation goals. They are inevitably likely to lead to further job losses in not only our Industry but in other Industries as well. In our view, this is not in the country’s interest.

National Minimum WageFollowing the inclusion in the ANC’s 2014 election manifesto that they would investigate the possibility of introducing a national minimum wage, (at the behest of Cosatu), the issue was discussed by the Labour Portfolio Committee in September 2014. Although not directly involved in the Portfolio Committee hearings, FSA made a submission to Agri SA for inclusion in their oral presentation to the Committee – our view being that any excessive minimum wage would lead to extensive job losses in the Industry. Public hearings for various sectors were subsequently held throughout the country. Although it seems likely that a universal minimum wage covering all sectors will not be introduced, it is likely that that some kind of minimum wage dispensation will, based on broad economic sectors, be introduced. In FSA’s opinion, this is another potential development that will not in any way assist with the urgent need to create jobs in the economy and could, in fact, very well destroy them.

Foreign Worker Work PermitsAs reported in last year’s Annual Report, the difficulty in getting work permits for foreign workers has been an

ongoing problem for a number of years, particularly in Mpumalanga. Nedlac thus tasked the Department of Home Affairs to draft regulations that would make it easier to hire foreign workers. It is thus disappointing to report that the new regulations, published in February 2014, actually do the opposite. Although FSA, in conjunction with Agri SA, undertook to try and rectify the situation, no progress has been made to date.

Workmens’ CompensationDuring 2013, efforts were made through BUSA, on behalf of FSA, Agri SA and other Industry Associations, to try and put pressure on the authorities to rectify the dysfunctionality of the Workmens’ Compensation Commission. Its functioning had reached such a low point that those injured on duty were not being paid their claims and medical practitioners were refusing to handle Workmen’s Compensation cases due to lack of payment. Despite BUSA’s best efforts, it is disappointing to report that the situation at the Commission has not changed since last year.

Provision of in-field Ablution FacilitiesDuring the course of 2014 FSA was alerted to the fact that one of our members had been found guilty of contravening the provisions of the Occupational Health and Safety Act by not providing in-field ablution facilities for his workers and consequently fined R15 000. A legal opinion was sought by FSA which indicated that the Act was ambiguous when it came to defining what constituted a “workplace”. As this could have serious implications for the entire Forestry and Agricultural sectors, Agri SA agreed to take the matter further – one option being to have the regulations amended to explicitly exclude agriculture and forestry from the provisions. Work in this regard was still on-going at the time of writing.

Business Development UnitBusiness Development CommitteeThe Business Development Committee continued to further its objectives of promoting greater business and development opportunities between FSA’s larger


and small-scale growers in the areas of enterprise development and transformation. This year the mandate was extended to a few external stakeholders who were very keen to partner with FSA in advancing grower development. A brief report on the activities of the Business Development Unit appears below.

• Grower Development Programme This Programme was endorsed by the Business

Development Committee in August 2014 and subsequently ratified by the FSA Executive Committee. The Programme, which was carefully designed by the members of the Committee, led by the Business Development Director, saw a number of stakeholders working together to deal with pertinent issues that affect small-scale timber growers including, inter alia, land tenure, business, organisational, extension and financial issues. One of the key partners in the Programme, Productivity SA, freely offered a “Productivity Workshop” to a group of growers, foremen and supervisors from community-based contractors in the Richmond/ Ixopo area in September 2014. The workshop covered elements of planning, eliminating waste and innovation as a means to achieve better productivity.

Funding is obviously critical to the success of the Programme and in this regard, a number of funding sources are being followed, including the Jobs Fund, the DEDT Local Competitiveness Fund, Dti Incentive Schemes, NEF Black Entrepreneurs Fund and the KZN DARD funds. The importance of this Programme can be highlighted by the fact that the FSA Executive Committee approved R250 000 to fund a component of this Programme in FSA’s 2015 budget.

• Other Collaborations The Business Development Unit continues

collaborations with the Industry’s Forest Engineering Working Group, now known as the Forest Operations Research Unit of ICFR, through the work of Simon Ackerman, which assisted in simplifying a timber transport costing model for growers and transporters to easily identify and manage the major cost factors of their operations. Several workshops were held at which growers and transporters interacted and which proved very helpful in assisting the growers to eliminate operational inefficiencies so as to reduce transport costs. A lot more can be done to further lower

Photo courtesy of saforestryonline.co.za


the cost of transporting timber, especially in cases where growers use unscrupulous middlemen who charge exorbitant rates to arrange the sale of their timber into the major markets.

In another interesting development, the Forest Operations Research Unit of the ICFR, in collaboration with FSA, recently commissioned a research project where two Agricultural Engineering students at the University of KwaZulu-Natal will design a low cost timber winch. The winch will assist growers to ease the extraction of timber harvested from steep slopes.

The importance of the interventions being proposed by the FSA Grower Development Programme were highlighted by an FSA Executive Committee member who mentioned that in the Ixopo area, productive plantations that had been handed over to communities were rapidly deteriorating into a non-productive state because of a lack of support and extension services and that the initiatives being spearheaded by the FSA Grower Development Programme would assist in preventing this from happening.

• Skills Development: Training on Grower Technical Toolkits

63 Growers (33 in KZN and 30 in Limpopo) were trained on the Emerging Grower Technical Toolkit on Eucalyptus species. The training, which was funded by the FP&M SETA in the amount of R300 000 was concluded in June 2014. Following the successful training, another proposal for funding has been submitted to the FP&M SETA to fund the training of 120 chainsaw operators (10 in each of the 12 district municipalities where FSA has a footprint) and 300 growers on basic forest fire-fighting skills.

The chainsaw operators’ training course will be aligned with the activities of some of the Grower Development Programme’s partners (SEDA, Productivity SA and the South African Institute of Entrepreneurship) in order to assist the trainees (who would be growers anyway) to graduate as successful entrepreneurs and establish community based contracting businesses so as to offer their services to other small-scale growers in the same vicinity.



FSA funded three growers to attend a course on “Productivity Standards and Machine Costing Training” conducted by FESA, ICFR and Stellenbosch University in February 2015. The attendees are expected to share the information with other small-scale growers which should go a long way in helping them to understand costs associated with the transport of timber amongst other things. Training of wattle growers on the Emerging Grower Technical Toolkit for wattle species will be next in line once the ICFR concludes the development of the “Wattle” toolkit which should be sometime in 2015.

• Capacity Building of Representatives of Small-Scale Growers

A two-fold training programme was developed to capacitate representatives of small-scale growers to effectively participate in the FSA Executive Committee. Part 1 of the programme dealt with an understanding of the Industry and the role that FSA plays therein. The representatives on the first part of the programme were subjected to an orientation course which consisted of a series of meetings and field visits involving FSA, the ICFR, Sappi’s GIS Department, Sappi’s Shaw Research Station, Timber 24 Transport and Logistics, NCT’s silvicultural, harvesting and chipping operations, UCL’s wattle bark operations and the Nseleni nursery over two days in November 2014. Part 2 of the programme will deal with the roles and responsibilities of FSA Executive Committee members and what members thereon needed to know in order to fully participate in meetings (e.g. responsibilities of various office bearers, ability to read and analyse financial statements, etc.)

• Funding for Small Scale Grower Development Despite extensive lobbying by FSA, no funding for

the Forestry Grant Scheme was made available by DAFF during 2014. It is also disappointing to note that very little progress has been made by the Task Team constituted to design, establish and operationalise the Forest Enterprise Development Fund. Only a concept document of the fund, outlining the eligibility criteria, resourcing of the fund and models to be used, has thus far been drafted.

FSA, however, lobbied hard to include the fund in DAFF’s APAP (reported elsewhere in this Report) and should Cabinet approve APAP, this should

strengthen DAFF’s ability to secure the required funding.

• Forest Governance Learning Group – South Africa (FGLG-SA)

FSA decided to fund the continuation of the Forest Governance Learning Programme in South Africa after the funds from the International Institute for Environment and Development (IIED) had dried up. The group meets at least twice a year and has made a meaningful contribution to the Governance of the Tenure Technical Guide – a practical guide on improving governance of forest tenure that has recently been jointly published by the Food and Agricultural Organisation of the United Nations (UN FAO) and the (IIED). This past year, the Group has been investigating how it can meaningfully participate in the District Land Committees that have been proposed by the Department of Rural Development and Land Reform.

The work undertaken by the Business Development Unit is extremely important in the sense that its primary objective is to ensure that small-scale timber growers develop into thriving businesses in order that they fully participate in the forestry economy. Our thanks must go to both the Business Development Director, Mr Norman Dlamini and the Development Manager, Mr Nathi Ndlela, for the sterling work that they have both done during the course of the past year in helping to achieve this goal.

Most importantly, all our members who continue to provide such strong support to our Business Development Programme are sincerely thanked for their financial and human capital investment into the Programme. FSA is fortunate to be able to represent all scales of forestry. Providing the platform for such partnerships and support between our members is therefore immensely valuable.

Transport IssuesThe FSA Transport Committee only meets if and when deemed necessary. During the year under review, although it only met three times, work on transport related issues continued in the background throughout the year through the efforts of various members of the Committee. A brief summary of the issues of importance that members should be made aware of appears below.


Railage Matters A lot of the focus on railage matters centred on the initiative started in 2013 to revitalise the Thut’ Ihlathi Project. This was reported on extensively in last year’s Annual Report. In summary, the following rail matters can be reported on.

Revival of Thut’ Ihlathi ProjectFollowing agreement between the FSA Transport Committee and senior Transnet Freight Rail (TFR) executives – reached after a number of high level discussions, the revitalisation of the Thut’ Ihlathi Project began during the course of 2013. This is a major Project aimed at substantially increasing the volume of timber transported by rail on the Pietermaritzburg Cluster of branch lines, thereby reducing volumes being transported by road. The benefits derived include savings in transport costs, damage to road infrastructure and improving road safety.

Following the introduction of competitive tariffs (now lower than road haulage rates), the volume of timber on these lines steadily increased during 2014. Indeed, FSA has estimated that those using these lines could, if all available volumes were transported by rail (rather than road), save themselves collectively approximately R50 million per year. This is a huge incentive to use rail.

However, for the Project to work well, two things need to happen; (a) TFR has to provide a reliable service (particularly with regards to wagon allocations) and (b) on the basis of this, the Industry needs to commit more tonnage to TFR. Unfortunately, experience to date has been that because the allocation of resources (wagons, locomotives and drivers) dedicated by TFR to the Project (which were meant to be ring-fenced) have not been fully committed, we, as an Industry, have not been able to take full advantage to the benefits offered by the Project. However, we would like to regard these as teething problems and we are sure that between ourselves and TFR management, the operational problems that we are currently experiencing can be resolved.

On a very positive note, FSA would like to acknowledge the tremendous change in attitude that TFR has shown in its dealings in recent years with the Forestry Industry. This change in attitude has resulted in TFR senior management taking our concerns seriously. FSA regards this improved relationship as essential to developing a win-win situation. Not only

can we give TFR more business but on the other hand, it will reduce transport costs for the Industry and at the same time, have a positive impact on lessening the cost of road damage and improving road safety

Swazi Rail LinkIn order to take rail traffic pressure off the main coal line between the Highveld and Richards Bay, TFR are planning to build a new railway line through Swaziland, the “Swazi Rail Link”. FSA had discussions about the proposed line with the TFR Project Managers in April 2014. Following the report given by TFR, the Industry highlighted two issues of major concern. These were that:

• TFR should make adequate provision for the building of sidings to facilitate the loading of timber trucks on the new line; and

• timber traffic currently using the main coal line to Richards Bay should not be adversely affected.

Road Matters Amendments to National Road Traffic RegulationsFSA, working together with the Sugar Industry, have made various submissions on and had numerous interactions with the Department of Transport since these Amendments were initially Gazetted in June 2012 for public comment. The third iteration of the Amendments, finally Gazetted in December 2014, became effective on 1st February 2015. Although these Amendments are better than the previous versions, FSA is disappointed that certain problem areas remain – the main ones being related to (a) the consignee / consignor provisions and (b) the operational difficulty in complying with the requirement to accurately weigh timber trucks before they leave a loading point.

Given the serious implications that these new regulations will have on the Industry and the short time period given between being Gazetted and implemented, a hastily convened meeting of the FSA Transport Committee was held in January 2015 to discuss the full implications of the new regulations and to come up with standardised documentation to cater for the new consignee / consignor regulations. This process is still ongoing and it is sincerely hoped that a solution will be found which will minimise the potential negative cost implications and operational challenges for the Industry.


Toll RoadsFollowing the introduction of tolls on Gauteng’s Highway Improvement System, it had been the intention of SANRAL to toll more roads nationally using the same system and funding model. Due to massive public resistance and the resultant political pressure, this policy may not now go ahead in its current form. One of the roads identified for tolling is the N2 from the South of Durban and into the Transkei. Due to the geographic location of Sappi Saiccor on this route, the tolling of the road would have huge transport cost implications for the Industry. It is thus pleasing to report that no progress has been made regarding the tolling of this particular road, thereby saving the Industry many millions of Rands per annum.

Other Road Transport Issues • Administrative Adjudication of Road Traffic

Offences (AARTO): Should the Department of Transport implement these regulations, which

they have been toying with for some time, the cost implications for the Industry (and the economy) would be substantial. It is therefore pleasing to report that the authorities have, for the umpteenth time, postponed their implementation, thereby saving the Industry huge compliance costs for at least another year. It is hoped that the authorities will see sense and scrap the whole idea of implementing it completely.

• Diesel Rebate: During the year under review, it came to our attention that the concession granted by SARS i.r.o. claiming diesel rebates between 1st November 2009 and 31st March 2013 did not apply to forestry operations but only to agricultural operations. On investigation, we found that Agri SA, who had reached the concession agreement with SARS, had done this on purpose because, at the time, only agricultural (and not forestry) operations were being audited. As forestry operations are now being audited as well, FSA has requested Agri SA to re-negotiate their agreement with SARS to extend it to cover forestry operations.



Port Matters Some successes can be reported on regarding port matters, these following submissions made by FSA and other cargo owners. In brief, they are as follows:

• 2014/15 Tariffs: The National Ports Authority (NPA) applied for a 14.39% increase in tariffs. The Ports Regulator of SA, after having studied the NPA’s application, finally approved a more modest 5.9% increase. Given that the NPA had been awarded a zero percentage increase the previous year (they had applied for a 5.4% increase), this 5.9% increase, which became effective 1st April 2014, is considered to be more than reasonable.

• 2015/16 Tariffs: Further good news is that the National Ports Authority’s initial application for a 9.47% increase in tariffs for the 2015/16 year was rejected by the Ports Regulator of SA who granted them a much lower weighted average 4.8%. However, more beneficial for the Industry is that the tariff increase related to forest products will, from 1st April 2015, be an even lower 3.55%. This is obviously well below inflation and is to be more than welcomed.

• Tariffs for 2016/17 and 2017/18: In its latest submission to the Ports Regulator, FSA proposed that until finality had been reached on the NPA’s “revenue requirement” funding model, annual increases be limited to no more than either the CPI or PPI. Not only was this recommendation exceeded for the 2015/16 year, it is pleasing to report that in terms of its new multi-year agreement with the NPA, the Ports Regulator of SA indicated that tariff increases for 2016/17 and 2017/18 would be in line with inflation. This is another success for the Industry and one which, in part, through its interventions, can claim credit for.

Once again, interaction between FSA (and other cargo owners) with the Ports Regulator of SA has resulted in cost savings of many millions of Rands in this and previous years.

Bio-Energy Working GroupThe whole issue of bio-energy and bio-fuel has become a hot topic of late and given this, the FSA Executive Committee felt that FSA needed to have a platform in which to formulate Industry’s positions thereon. It was thus decided to establish a “Bio-Energy Working Group” under the auspices of FSA to perform this role.

The interest shown in this subject can be highlighted by the fact that the response to a call for “expressions of interest” to participate in the Working Group was extremely good, responses being received from a wide range of stakeholders, including timber growers, academia, researchers and Government.

The inaugural meeting of the Working Group was held on 17th September 2014. The meeting, which was well attended, set the terms of reference for the Working Group and established a sub-committee to look into various issues deemed to be important, one of the most important being how to interact with regulatory authorities regarding the use of woody biomass as a source of energy generation. Although it is envisaged that participation in the Working Group will be broadened in due course, it was decided that for the time being, membership be confined to timber growers.

Transformation and the Forest Sector Charter Council2014 presented some new challenges and opportunities for Broad-Based Black Economic Empowerment in the country generally and specifically in the Forestry Industry following the introduction of the BBBEE Amendment Act.

FSA moved quickly to (a) understand the changes which had been introduced by the BBBEE Amendment Act and the revised codes published by the Dti and (b) to bring about the mandatory alignment of our Forest Sector Code with the new generic codes.

In terms of this, FSA established a Task Team of representatives from the Forestry and the Forest Products Industries represented on the Charter Council and appointed professional service providers to advise us in the process. We had many multi-lateral discussions with Government, organised labour and community representatives and, following exhaustive negotiations, the revised Sector Code was approved by the Forest Sector Charter Council in November 2014, prior to its submission to the Ministers of DAFF and Dti. FSA regards this development as a major breakthrough for BBBEE in the Forestry Sector for a number of reasons and we believe that should the Dti publish the codes, it will set the standard for other Sectors.


The reason for FSA’s view, as mentioned above is that, through negotiation, the Charter Council agreed to a radical change in how Government accounts for its own commitments made in terms of the Charter. The bottom line is that the Sector’s ability to advance transformation in the Sector is, in part, influenced by Government meeting its Charter commitments.

In terms of the above, we have as a Sector, for years, bemoaned the fact that Government’s failure to provide funding to SMMEs, transfer remaining State plantations to communities, re-capitalising areas which were withdrawn from forestry, issue water use licences for afforestation, settle land claims and several other key undertakings, have hampered the Sector’s ability to further transform. We therefore proposed that, consistent with the principles that transformation is a shared imperative between principally the State and the Industry, that there should be a shared scorecard (Private Sector and State) for transformation. In this way, should the State meet its commitments to supporting transformation, it will make a quantifiable difference to the transformation of the entire Sector.

Outside of the formal negotiating process which we ran during 2014, FSA further tested this concept in engagements with the Dti Portfolio Committee, the DAFF DG and several bi-laterals, held with Government and Labour and all seemed to appreciate the value of such an approach. This is unprecedented in any Sector Charter and in simple terms, means that incremental targets for Industry have been proposed for several elements of the scorecard, subject to the extent that the State meets its own commitments. We have also been led to believe that ours is the first Sector to submit their aligned Charter under the new codes which is crucial, as it is unlikely that the deadline for alignment will be extended once again by the Dti.

We are grateful to our Executive Committee and other FSA members who provided the necessary support to the process. It is also important to make special mention of the roles played by Mr Themba Siyolo and Ms Viv McMenamin who led the Task Team during the important principle and target setting stages of the process, which provided a crucial negotiating framework for the subsequent rounds of negotiations, which we held with Government and Labour. On a separate note, we are delighted to note the continued improvement in Mr Siyolo’s health, following his severe temporary incapacitation in 2014.

We are also grateful to our colleagues in PAMSA, SSA and the other Industry Associations who assisted in and co-funded the process and again, special

mention must be made here of Messrs Dinga Mncube and Tyrone Hawks who were instrumental throughout in the process.

FSA, through its Executive Director, continued throughout 2014 to co-manage the Council with DAFF, in the absence of an Executive Director for the Council. Fortunately, the process of appointing a new Executive Director for the Council was at an advanced stage at year end.

The Council suffered further major financial management challenges during the year, arising from the resignations of Council members, a key Council staff member (who went on maternity leave) and the Chairperson of the Financial Committee, the latter being severely incapacitated for several months. During this time Mr Dinga Mncube, who himself was convalescing following surgery, managed to carry the entire Financial Committee’s functions, which normally would have been done by six people. He did this with aplomb and the Council received an unqualified audit. Mr Mncube is sincerely thanked for this extraordinary service to Industry and the Sector at large during this tumultuous year.

It is also appropriate to note the excellent service that we received from Alternative Prosperity (APROS) who were our service providers during the process. Beyond helping us to develop coherent positions for Industry, they also, in conjunction with the Council’s own service providers, corrected the hundreds of drafting and formulae errors in the generic codes which were published by the Minister of Dti. These were also captured in our submission to the Minister.

Education and TrainingFSA continued to directly support education and training through the provision of financial support to both the University of Stellenbosch and the Nelson Mandela Metropolitan University (Saasveld) during 2014. It also supported these Institutions through its participation in their respective Advisory Boards together with Industry representatives.

In addition to the above, FSA staff and members, plus other Industry representatives from the SA Forestry Contractors’ Association (SAFCA) and the Forest Industries Training Providers’ Association (FITPA) continued to work together to assist in initiatives aimed at uplifting educational and training skills in the Industry. A brief summary of these activities appears below.


Tertiary Educational Institutions: Stellenbosch and NMMU (Saasveld) UniversitiesSupport RenderedFSA is proud to be associated with both these Institutions as they continue to provide graduates and diplomates needed to service the needs of the Industry. As such, FSA continues to support them both from a financial perspective and in terms of actively participating in their respective Advisory Boards – represented on both by the Operations Director from FSA’s side (who is Chair of the Saasveld Advisory Board) and various other important FSA stakeholders.

During 2014 FSA provided total funding to both institutions of R170 000 - R130 000 to the University of Stellenbosch (R120 000 for three bursaries and R10 000 for the IFSS Project) and R40 000 to Saasveld (R25 000 for travel funds and R10 000 for the IFSS Project). Although the above funding seems fairly minimal, it should be noted that over the years, the need for Industry support has reduced dramatically, specifically regarding the provision of bursaries, as the FP&M SETA has provided huge resources for this purpose. Nevertheless, Industry is still highly committed to supporting both Institutions as they are highly valued by the Industry in terms of their importance in providing the graduates and diplomates with the requisite forestry skills that the Industry needs. The FP&M SETA must be thanked for their ongoing support.

Experiential (Practical) Learning The placing of students in Industry for practical training is becoming more and more difficult, primarily due to the continuing depressed economic climate and thus the costs associated therewith for the employer. The demand for placements used to come only from Saasveld - now it comes from Stellenbosch as well. The latter students tend to be catered for adequately as their numbers are relatively small (12 – 20 students per year) and the placements are short (3 weeks). The placement of Saasveld students on the other hand is becoming a problem as the number needing placement is significant (60 – 70 per year) and they need to be placed in Industry for 9 months.

Regarding Saasveld, it is pleasing to note that the FP&M SETA, through the joint intervention of Saasveld and FSA, agreed to:

• fund the 3 month practical training done at Saasveld prior to students being placed in Industry;

• pay a monthly stipend (R3 000) to students during their 9 month placement with employers; and

• pay for those who needed them, driving lessons.

All of these interventions have assisted greatly in the placement of students during their 2nd year at Saasveld (their practical year in Industry). The efforts of Saasveld staff in arranging these placements, the employers who take the students on and the FP&M SETA for providing funding, must be gratefully acknowledged.

Curriculum Development It is pleasing to note that both Stellenbosch and Saasveld are developing new courses and amending their respective curricula in order to meet the needs of the Industry. These changes have not been done in isolation but with the input of FSA and the Industry at large.

South Africa is fortunate in having such excellent Institutions which provide forestry education. Although difficult to mention all those involved in providing such education, we would like to thank, in particular, Dr Pierre Ackerman of Stellenbosch University and Prof Jos Louw at Saasveld.

Other Matters • Fort Cox College of Agriculture and Forestry:

As mentioned in last year’s Annual Report, FSA, along with Stellenbosch University and Saasveld, assisted Fort Cox in developing a curriculum for a new course in forestry which was subsequently registered with the South African Qualification Authority. This new qualification is to be welcomed as it will fill a niche market in terms of the provision of forestry education in South Africa. In recognition of this, FSA has, for the first time, provided some funding to Fort Cox in its 2015 budget.

• Timbermech: As mentioned in last year’s Annual Report, the Timbermech Executive Committee, on its winding up, agreed that FSA receive approximately R100 000 of funds left in its accounts. In terms of the agreement entered into, R10 000 was donated to the Forest Industries Training Providers Association (FITPA). The balance of R90 000 has been ring-fenced for the provision of Forest Engineering related bursaries. FSA is


currently looking at augmenting this amount with interest income earned on the SIF funds in order to establish a meaningful bursary fund.

Fibre Processing and Manufacturing Sector Education and Training Authority (FP&M SETA)It has now been three years since the amalgamation of the erstwhile FIETA, CTFL and parts of MAPP SETA into the new FP&M SETA – a SETA representing 13 various sub-sectors. Initially, FSA was concerned that its voice would not be heard but it is pleasing to note that FSA, through its staff and members, are represented on the Board, Audit and Governance and Strategy Committee, whilst SAFCA has direct representation on the Quality Assurance Committee. Another positive development is that the new CEO, Ms Felleng Yende, who was appointed in the middle of 2013, has managed to do sterling work in improving service delivery at the SETA. FSA needs to thank her and her new Executive Team on work well done. In brief, some of the more important issues that need reporting on appear hereunder.

Internal Issues: • Staff Restructuring: Following a forensic audit,

it was found that three staff members had been implicated in fraudulent activity – the first time this had ever happened. Following a disciplinary process, the three staff left the SETA and as a result thereof, an extensive staff restructuring exercise was undertaken in order to improve operational efficiencies.

• Management Information System (MIS): The Deloitte Management Information System (MIS) became operational during the year. Although teething problems are still being experienced with this web-based system it has, nevertheless, improved operational management and importantly, made it easier for levy paying employers to submit the documentation needed to access mandatory and discretionary grants.

• Stakeholder Information Sessions / Workshops: As in previous years, the SETA continued to communicate with its stakeholders through the holding of a number of stakeholder information sessions and workshops. These were well attended and provided stakeholders with important information regarding developments in the field



of training and the SETA itself. From FSA’s side we regard these interactions as being important and would encourage members to attend when invited to do so.

• SETA Performance 2013/14: At the SETA AGM held on 30th October 2014, it was reported that performance over the last three years had progressively improved both in terms of meeting NSDS III targets as well as key operational targets, such as the disbursement of grants etc. A “Perception Survey” was also conducted during the year under review which revealed that stakeholders had noticed a marked improvement in service delivery and had registered a generally positive attitude towards the SETA. Although there is certainly room for improvement, especially with regards to administrative functions, it is clear that the efficiency of the SETA has improved since Ms Felleng Yende took over as the CEO in mid-2013.

• Possible Change in SETA Landscape: During the year under review, the Board was made aware that DHET was looking at the possibility of amalgamating the 21 current SETAs into five “Super SETAs” when the life-span of the current SETAs expires in mid-2016. Although it is not known exactly how such massive SETAs would operate, it is inevitable that such a move would dilute the ability of the Forestry Industry to influence its training needs (as already experienced when the FP&M SETA was formed from the merger of three SETAs). As such, FSA is opposed to the creation of the proposed huge “Super SETAs”.

Operational Issues: • Re-direction of SETA Discretionary Funds:

As reported in last year’s Report, a concerning trend started whereby DHET was increasingly “requesting” funding from SETAs which, in the Board’s view should be either funded by the National Skills Fund or directly out of the Department’s own budget. Last year the FP&M SETA was requested to contribute R29 million to help fund the refurbishment of FET Colleges. This was followed this year by further requests for R50 million as a result of a cap being put on what the SETA could spend on discretionary grants and almost R31 million as a result of “roll-over” restrictions. This is most concerning as this impacts negatively on the discretionary funding available to the SETA to fund training initiatives within the 13 sub-sectors that it serves.

• Conversion of Qualifications onto QCTO System: FSA, SAFCA and FITPA staff and members fully participated in the process of developing OFO codes needed for the conversion of qualifications onto the new QCTO system. It is pleasing to report that the FP&M SETA has set aside R7.8 million to develop seven qualifications that the Industry highlighted as being priorities.

• Skills Development Strategy for the Forestry Sector: The SETA has contracted Wits University to undertake the drafting of a Skills Development Strategy for each of the 13 sub-sectors covered by the SETA. In terms of this, FSA has been allocated a discretionary grant of R2 million to fund this process. At the time of writing, the work had not commenced but as an initial step, FSA and SAFCA staff and members have already provided the SETA with relevant skills planning information for the Forestry Industry which will form the basis of the Strategy.

Industry PromotionThe Wood FoundationAlthough various Associations along the entire forestry value-chain, including FSA, remain members of the Wood Foundation, once again, its effectiveness remains hampered by lack of human and particularly, financial resources. As a consequence, the Foundation was not able to achieve much in terms of its promotion mandate during 2014.

Regarding fund raising, although efforts were made to address this problem during the year, nothing concrete materialised. Efforts to obtain funding from DAFF, as part of their Charter Commitments to funding Industry promotion, again proved fruitless and a commitment to support an innovative scheme to fund the Foundation’s promotional activities, being spearheaded by the Institute for Timber Construction, had still not been given by member Associations by year end.

• Woodex for Africa Exhibition 2014: Despite the above, FSA along with some other Association members, participated in the third Woodex Exhibition under the auspices of the Wood Foundation at Gallagher Estate between the 5th and 7th June 2014. It was encouraging to note that the Wood Foundation stand did generate quite a lot of interest from members of the public, trade and fellow exhibitors. Woodex will, henceforth, be held every second year and it is anticipated that


the Wood Foundation will continue (at no cost to itself) to participate at the event.

• Annual General Meeting: At its AGM held in August 2014, Mr Roy Southey, the Executive Director of Sawmilling South Africa, was again re-elected as the Wood Foundation’s Chairperson. Given that the normal term of office is 2 years, Mr Southey’s commitment to the Foundation is greatly appreciated, especially given the Foundation’s current difficulties.

Other Promotional Activities • Media Interaction: Once again, the official

spokesperson of the Association, the Executive Director, Mr Michael Peter, had numerous interactions with the media during the course of the year. The scale of such interactions is a direct result of the media’s attention being drawn to a seemingly ever increasing number of issues affecting the Industry which are obviously regarded by the media as being of public interest and newsworthy.

Two high level interactions were the front page spread in the Business Day following FSA’s presentation to the Dti Portfolio Committee and FSA asking the new Minister of DAFF, live on national television, what he was proposing to do

to reverse the decline of the R42 billion Forestry and Forest Products Industry.

FSA continues to enjoy excellent working relationships with those publications serving the needs of the Industry, namely SA Forestry, Wood SA and Timber Times and the Farmers Weekly, all of whom greatly assist the Association in disseminating topical stories about the Industry. For this we must extend to all of them our sincere thanks.

• Annual Abstract of Forestry Facts: As mentioned in previous Annual Reports, this Pamphlet, produced by FSA and paid for by DAFF, is an extremely cost effective way of publicising and promoting the economic benefits of the SA Forestry Industry to both local and international audiences. Following a hiccup the previous year in the publication of the DAFF statistics, upon which most (but not all) of the information contained in the pamphlet is based, it is pleasing to report that FSA was able to publish the pamphlet containing the 2011/12 data in September 2014 – a case of “better late than never”.

• KZN Agri Expo 2014 Involvement: FSA was able to get excellent promotional exposure (at no cost to itself) for its involvement in this show which was held at the Royal Show Grounds in Pietermaritzburg during October 2014.


AppreciationMichael Peter

While FSA is grateful for the financial relief that 2014 brought, through improved timber volumes, we remain ever-conscious of the continued difficulties which our members experience. We see this both in the issues which we tackle on behalf of our members and through our engagements with them.

We remain committed to further reducing the costs of serving our members by looking for new ways to reduce overhead costs, leveraging new sources of funding and maintaining and growing our membership base.

Our small staff also means that we have to further depend on our members for in-kind support, the most valuable of which being the investment of their time to serve on the many FSA committees and processes which FSA leads. These structures and members are listed in this Report and we extend our sincerest thanks to all our members for their continued support of the Industry, as together we are stronger.

We would also like to express our sincere thanks once again to those partners in Government, who, through their support, contribute to the attainment of our vision of a vibrant, transformed Forestry Industry.

To our key partners in research, environmental management, tertiary institutions, education and

training and other Sector Associations, we also express our sincere gratitude for your continued support. The specialised focus that is achieved through having such dedicated structures staffed with such competent people, achieves levels of efficiency and effectiveness which are rarely achieved in larger organisations which attempt to do everything in-house.

Lastly, we would like to express our sincere thanks to our Chairperson, Mr Murray Mason, who kindly took it upon himself to Chair the Association for one more year, following his untimely withdrawal from the Executive Committee. His leadership once again, as has been the case for many years in Industry, has enabled us to put in place the new structures and people to ensure the continued effective guidance of FSA.

Michael Peter

Executive Director

Forestry South Africa

April 2015



FSA Finances

FSA Timber Sales Tonnage in 2014

Tonnage sales started to increase substantially from the second half of 2013. It is encouraging to note that this trend continued throughout the course of 2014, indicating that the Industry seems to have finally “turned the corner”. Having said that, tonnage sales in 2014 of 15.7mt, although 800 000 tons more than budget, were, nevertheless, some 1 million tons less than those achieved in 2008 – the year that the global economic crisis started. In summary, details of tonnage sales in 2014 are as follows:

• Tonnage sales of 15.713 mt were 1 239 000 t (+8.6%) higher than in 2013 and 813 000 t (+5.5%) more than the 14.9 mt budgeted for 2014.

• In comparison to 2013, all species showed increases in sales. Eucalyptus sales saw the biggest

increase – up 990 000 t (+13.7%). This was mainly due to a big increase in Eucalyptus pulpwood sales. Wattle sales were up 225 000 t (+16.0%), whilst softwood sales increased marginally by 25 000 t (+0.4%).

• All product categories, with the exception of poles, showed improved sales over those recorded in 2013. Of particular importance to note is that pulpwood sales recovered considerably from the previous year, showing a 895 000 ton (9.3%) increase. Sawlog sales have shown a steady increase over several years and in 2014 were some 337 000 tons (8.2%) higher than those recorded in 2013.

Details of sales comparisons between 2013 and 2014 appear in the Table below.

FSA Timber Sales Analysis – 2014 compared to 2013Product Sales 2013 Sales 2014 Change (tons) Change (percent) Sawlogs 4 100 920 4 438 001 337 081 8.2% Pulpwood 9 601 825 10 497 191 895 366 9.3% Poles 470 510 427 920 -42 590 -9.1% Mining Timber 258 853 271 290 12 437 4.8% Other 42 015 78 958 36 943 87.9%Total 14 474 122 15 713 360 1 239 237 8.6%

• Income generated from these sales of almost R26.5 million was up R704 000 (+2.7%) on the budgeted amount of R25 777 000.

This was a direct result of increased tonnage sales as compared to the previous year. Sales in 2014 consequently generated an income

of almost R3.0 million (+12.6%) more than in 2013.

As mentioned above, from the figures recorded, it looks like the Industry has “turned the corner” regarding tonnage sales. It is hoped that this positive trend will continue into 2015 and beyond.

FSA Finances 2014Due to space and cost considerations, the Audited Financial Statements for the year ended 31st December 2014 have not been printed within

the body of this Report but are available on the Association’s website (www.forestry.co.za) and in hard copy form on request.


FSA Budgets and Funding for 2015At its meeting held on 19th November 2014 and following recommendations received from the General Committee, the Executive Committee approved the 2015 budget, a summary of which appears below.

• FSA’s Operational Budget: Was increased by 28.6% to R7 378 269.

• Industry Activity Budget: Was increased by 5.8% to R25 560 479.

• Overall Combined Budget: The overall budget was thus increased by R3 037 721 (or by 10.2%) to R32 938 748.

• Budget Funding Tonnage Base: Given the sales estimates supplied to FSA by members in October 2014 for the 2015 calendar year

(15.9mt), a figure of 15.5mt was approved for use as the base for the 2015 Budget – 600 000 tons higher than the 14.9mt used the previous year, although 213 000 tons lower than that actually achieved in 2014.

• 2015 Levy: Taking into account the above, as well as attributable income of almost R4.7m, the levies were set at 182 cents/ ton (173c in 2014) for those making a contribution to the ICFR and 107 cents/ ton (100c in 2014) who did not. In comparison to 2014, these levies represented increases of 5.2% and 7.0% respectively.

A summary of these budgets is shown in the Table below.

FSA Operational and Industry Budgets: 2015Allocation Approved 2014 Approved 2015 R Change % Change(1): FSA Operations 5 737 881 7 378 269 1 640 388 28.6%(1)

(2): Industry support Forestry Research 13 423 455 14 057 234 633 779 4.7% Forest Protection 8 556 238 9 189 270 663 032 7.4%(2)

Environment & Water 1 133 425 1 190 795 57 370 5.1% Charter Council 545 028 583 180 38 152 0.0% Education 220 000 195 000 -25 000 2.3%(3)

Promotion 45 000 45 000 0 0.0% World Forestry Congress 0 50 000 50 000 n/a(4)

Small Grower Project 240 000 250 000 10 000 4.2%Industry total 24 163 146 25 560 479 1 397 333 5.8%TOTAL 29 901 027 32 938 748 3 037 721 10.2%

To be noted from above:(1): Increase largely due to increased costs associated with SIF Programme and the fact that the 2014 budget

was lower than it should have been due to the delay in the sale of the Woodmead office, thereby not resulting in anticipated savings.

(2): Includes new funding for wattle rust and bio-control technicians for FABI.(3): Includes new funding support for Fort Cox.(4): New request to assist ICFR with helping to organise World Forestry Congress.

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