The government’s stringent restrictions on the issuing of forestry and planting permits have led to a timber shortage. About 70% of the sawn timber in SA is used for construction purposes. The rest is used in the furniture sector, the joinery sector and the packaging sector, with a little also going into industrial use.
Executive director of Sawmilling SA, Roy Southey, said the government introduced the restrictions about 20 years ago in light of dwindling water resources. “The development of forestry needs to be well controlled and fairly managed.
“This resulted in a marked decline in the establishment of forests in SA as the authorities tried to find the best way to balance the need for timber and the need for water and other environmental considerations.”
As the economy of the country grew, the establishment of forests lagged behind. Due to a shortage of suitable land, it is estimated SA will have to import nearly half its pine structural wood requirement within the next two decades.
“Importation is subject to many variances, not least of all the effects of currency fluctuations,” said Southey.
“If large volumes of structural lumber were to be imported, it could affect rural job creation in SA and could increase prices to the consumer. There is a lot of sawn lumber being imported into SA and there always has been but this in mainly for the higher-end furniture and joinery subsectors,” he said.
Reviving the sector
Department of Trade and Industry director of forestry-based industries, Tafadzwa Nyanzunda, said that the government wanted to develop a comprehensive wood processing strategy and introduce other initiatives that would assist in reviving the sector.
Southey said that while the government had been proactive in dealing with the situation, its processes worked slowly.
He said a lot of solutions were being explored by all parties, including the state. These include a review of the planting permit, or licensing system, efficiency improvement by the sawmilling industry, the importation of sawn lumber, the establishment of faster-growing species, and the development of more forestry areas.
York Timber is the only listed company in the space. At present, old technology in York’s sawmills results in only about 40% of a log being used effectively. Current best practice in sawmills results in a usage rate of about 90%. It is a target the company is aiming for.
In 2016, York’s share price rose 55.25%. In its results for the year to end June 2016, York reported revenue growth of 15% and a rise in operating profit of 27%. Growth in lumber and plywood sales was achieved despite a weak market. York’s shares trade at about R3.27, valuing the company at R1.1bn.
Source: Business Day