GUYANA FORESTRY COMMISSION DISCUSSION PAPER DISCUSSION PAPER Ministerial Committee Addressing the Issue of Log Export February, 2007

GUYANA FORESTRY COMMISSIONGUYANA FORESTRY COMMISSION

DISCUSSION PAPERDISCUSSION PAPER

Ministerial Committee Addressing the Issue of Ministerial Committee Addressing the Issue of Log ExportLog Export

February, 2007February, 2007

BACKGROUNDBACKGROUND

The National Forest Plan, The National Forest Plan, National Forest Policy Statement, National Forest Policy Statement, National Competitiveness Strategy,National Competitiveness Strategy, the International Tropical Timber Organisation (ITTO) the International Tropical Timber Organisation (ITTO)

Diagnostic Mission Study of 2001, Diagnostic Mission Study of 2001, and the DFID Country Report for Guyana, and the DFID Country Report for Guyana,

These documents all emphasize the need for These documents all emphasize the need for sustainable forest management and the development of sustainable forest management and the development of added value forest production as imperatives for forest added value forest production as imperatives for forest sector growth. sector growth.

BACKGROUND CONT’DBACKGROUND CONT’D Discussion at Governmental LevelDiscussion at Governmental Level Several Ministerial meetings with the forestry Several Ministerial meetings with the forestry

sub sectorssub sectors GFC Board GFC Board Position papers by stakeholdersPosition papers by stakeholders

This paper has a national focus aimed at This paper has a national focus aimed at increasing Sustainable Forest Management and increasing Sustainable Forest Management and added value activities. added value activities.

It’s principle aim is to address the national initiative It’s principle aim is to address the national initiative of forest sector growth and development. of forest sector growth and development.

Current State of the SectorCurrent State of the SectorAnnual Production and Export Volumes of Timber and Plywood for Years 2000 - 2006

(x 1000 cu. metres)

Year 2000 2001 2002 2003 2004 2005 2006

Product

Production 288.5 311.9 297.5 236.2 366.0 323.9 380.0

Logs Export 44.3 35.1 47.9 48.0 60.3 115.8 185.0

Chainsawn Lumber Production 28.8 29.5 31.0 38.2 36.1 57.8 60.0

Sawnwood* Export 18.8 18.8 32.7 27.4 37.5 42.0 46.0

Roundwood Production 26.9 19.3 14.6 14.7 18.0 19.6 16.5

(Piles, Poles, Posts, Spars) Export 3.4 1.9 6.4 9.2 14.5 9.0 12.5

Others** Production 26.3 17.2 21.7 19.7 20 21 25.4

Export 0.7 0.9 2.1 1.1 3.9 3.9 6.4

Total Timber Production 370.5 377.9 364.8 308.8 440.1 422.3 481.9

Export 67.2 56.7 89.1 87.5 116.2 170.7 249.9

Plywood Production 91.9 70.6 51.3 74.7 54.2 37.1 35.0

Export 87.0 69.9 46.8 52.6 49.5 36.6 24.5

Total Timber Production 462.4 448.5 416.1 383.5 494.3 459.4 516.9

& Plywood Export 154.2 126.6 135.9 140.1 165.7 207.3 274.4

% of Logs Export to Total Export - Volume 28.7% 27.7% 35.2% 34.3% 36.4% 55.9% 67.4%

N.B. * Sawnwood exports derived from both Chainsawn (Primary) production quoted and Millsawn lumber

** Others – include Splitwood and Fuelwood

Current State of the SectorCurrent State of the Sector

Annual Export Values of Forest Products for Years 2000 - 2006

(US$M)

Year 2000 2001 2002 2003 2004 2005 2006

Product

Logs 2.8 3.2 4.6 8.5 5.8 12.0 21.6

Sawnwood* 6.2 7.6 10.7 9.2 13.8 17.7 20.7

Roundwood 0.7 0.4 1.1 3.8 2.5 1.8 2.1

Splitwood 0.2 0.3 0.4 0.5 1.2 1.1 1.2

Total Timber 9.9 11.5 16.8 22.0 23.3 32.6 45.6

Plywood 23.6 16.7 12.3 12.4 15.5 11.3 8.9

Total Timber & Plywood 33.5 28.2 29.1 34.4 38.8 43.9 54.5

Other Value - Added Products …

2.5

3.0 3.5 4.3 4.5 4.1

(Furniture, Building Components)

Other Products ** 2.2 2.4 0.1 0.1 0.3 0.2 0.1

Total Export Value 35.7 33.1 32.2 38.0 43.4 48.6 58.7

% of Logs Export to Total Export – Value 7.8% 9.7% 14.3% 22.4% 13.4% 24.7% 36.8%

N.B. * Sawnwood exports derive from both Chainsawn (Primary) production quoted and Millsawn lumber

** Includes Fuelwood exports for which total export values are minimal

FOREST RESOURCE ALLOCATIONFOREST RESOURCE ALLOCATION

TypeType Total Area Total Area

Timber Sales Agreement (31)Timber Sales Agreement (31) 4, 560,631 ha4, 560,631 ha

11, 269, 319 ac11, 269, 319 ac

Wood Cutting Lease (5)Wood Cutting Lease (5) 322, 401 ha322, 401 ha

796, 654 ac796, 654 ac

State Forest Exploratory State Forest Exploratory Permit (4)Permit (4)

375, 632 ha375, 632 ha

928, 204 ac928, 204 ac

SFEPs Advertised (6)SFEPs Advertised (6) 827, 912 ha827, 912 ha

2, 045, 754 ac2, 045, 754 ac

State Forest Permission State Forest Permission (236)(236)

1, 083, 166 ha1, 083, 166 ha

2, 676, 504 ac2, 676, 504 ac

TypeType HectaresHectares AcresAcres %age%ageTSATSA 4, 560, 6314, 560, 631 11, 269, 31911, 269, 319 33.6533.65

WCLWCL 322, 401322, 401 796, 654796, 654 2.342.34

SFEPSFEP 375, 632375, 632 928, 204928, 204 2.722.72

SFPSFP 1, 083, 1661, 083, 166 2, 676, 5042, 676, 504 7.857.85

IWOKRAMAIWOKRAMA 371, 592371, 592 918, 219918, 219 2.692.69

GFC ReservesGFC Reserves 15, 69415, 694 38, 71238, 712 0.110.11

Allocated Allocated State ForestState Forest

6, 729, 1176, 729, 117 16, 627, 61216, 627, 612 48.7648.76

Un-Allocated Un-Allocated State ForestState Forest

7, 070,8837, 070,883 17, 472, 18817, 472, 188 51.2451.24

Total State Total State ForestForest

13, 800, 00013, 800, 000 34, 099, 80034, 099, 800 100100

Status Summary

AssumptionsAssumptionsTypeType HectaresHectares AcresAcres %age%ageRoadsRoads 138, 000138, 000 340, 998340, 998 11

Conversion Forest (Agri Conversion Forest (Agri Leases, Mining etc.)Leases, Mining etc.)

1, 104, 0001, 104, 000 2, 727, 9842, 727, 984 88

Amerindian lands & Amerindian lands & ExtensionsExtensions

1, 380, 0001, 380, 000 3, 409, 9803, 409, 980 1010

Degraded Forest (Fire, Flood Degraded Forest (Fire, Flood etc.)etc.)

69, 00069, 000 170, 499170, 499 0.50.5

Secondary Forest ( over-Secondary Forest ( over-harvesting, Recovering forest harvesting, Recovering forest etc.)etc.)

138, 000138, 000 340, 998340, 998 11

Proposed Reserves & Proposed Reserves & protected areasprotected areas

1, 380, 0001, 380, 000 3, 409, 9803, 409, 980 1010

TotalTotal 4, 209, 0004, 209, 000 10, 400, 43910, 400, 439 30.530.5

Net Un-Allocated State Net Un-Allocated State ForestForest

2, 861, 8832, 861, 883 7, 071, 7497, 071, 749 20.720.7

Guyana’s State Forest allocation percentages Guyana’s State Forest allocation percentages reveal that most of the easily accessible parts of reveal that most of the easily accessible parts of the State Forest have already been allocated the State Forest have already been allocated into forest concessions. into forest concessions.

The majority of these concessions are under-The majority of these concessions are under-utilized, and some concessionaires enter into utilized, and some concessionaires enter into sub-contractual operations. sub-contractual operations.

Recognizing this, there needs to be optimal Recognizing this, there needs to be optimal utilization of existing concessions, to boost the utilization of existing concessions, to boost the contribution that the forest sector makes to contribution that the forest sector makes to Guyana’s economy and to increase value. Guyana’s economy and to increase value.

The Importance of Optimal The Importance of Optimal UtilizationUtilization

Optimal utilization refers to increasing the Optimal utilization refers to increasing the value of each cubic meter of log extracted value of each cubic meter of log extracted from our forests. from our forests.

This is essential to substantially increase This is essential to substantially increase forest sector contribution to the economy.forest sector contribution to the economy.

The focus is on value creation per unit The focus is on value creation per unit extracted.extracted.

Overview of Primary Sub Sector Overview of Primary Sub Sector

In 2000 – 2003 the market for tropical timber In 2000 – 2003 the market for tropical timber products was developing owing primarily to products was developing owing primarily to emerging markets in India and China. (Re: Asian emerging markets in India and China. (Re: Asian Crisis – prices were low, markets were scarce) Crisis – prices were low, markets were scarce)

Prices were only then beginning to increase. Prices were only then beginning to increase.

Guyana species were in their embryonic stage of Guyana species were in their embryonic stage of gaining market acceptance. gaining market acceptance.

Primary forest operations have contributed Primary forest operations have contributed significantly to employment, social significantly to employment, social services (health, education), and services (health, education), and infrastructure.infrastructure.

Forest operators have demonstrated Forest operators have demonstrated efforts to comply with GFC’s policies and efforts to comply with GFC’s policies and procedures within the ambits of SFM. procedures within the ambits of SFM.

Overview of Manufacturing Sub SectorOverview of Manufacturing Sub Sector

Forest added-value manufacturing Forest added-value manufacturing capacity has increased over the years. capacity has increased over the years. Some manufacturers have indicated that Some manufacturers have indicated that they have been facing a lack of adequate they have been facing a lack of adequate supply of raw materials.supply of raw materials.

This sub sector has contributed This sub sector has contributed significantly to employment, technology significantly to employment, technology transfer, and social services.transfer, and social services.

The economic returns of this sector are The economic returns of this sector are significant compared to primary production.significant compared to primary production.

Some manufacturers have been able to gain Some manufacturers have been able to gain access to niche markets. access to niche markets.

Domestic employment totals increase Domestic employment totals increase significantly, as the value chain extends.significantly, as the value chain extends.

Technological advancements in added value Technological advancements in added value manufacturing have been made, including kiln manufacturing have been made, including kiln drying, high-end doors and furniture drying, high-end doors and furniture manufacturing, among other products. manufacturing, among other products.

Forest manufacturers have diversified to Forest manufacturers have diversified to new areas including niche-market new areas including niche-market furniture, household components - doors, furniture, household components - doors, and kiln dried lumber.and kiln dried lumber.

These manufacturers have been able to These manufacturers have been able to successfully penetrate quality sensitive, successfully penetrate quality sensitive, environmentally conscious markets. environmentally conscious markets.

Current Status of International Current Status of International Tropical Timber TradeTropical Timber Trade

Over the past three (3) years it has been noted that Over the past three (3) years it has been noted that a tremendous potential exists in the international a tremendous potential exists in the international and regional markets for processed timber and regional markets for processed timber products, especially sawnwood. products, especially sawnwood.

This is supported by attractive prices and a growing This is supported by attractive prices and a growing demand for Guyana’s timber and timber products. demand for Guyana’s timber and timber products.

Countries Guyana Export

Total Imports of Comparable Processed

Wood products (US$)

% of Market Share (US$), 2005

Trinidad 2,131,712 65,951,127 3%

Grenada 1,763,165 18,385,344 10%

Jamaica 1,442,402 121,944,391 1%

St. Lucia 906,655 23,399,735 4%

Antigua 615,577 19,354,181 3%

Barbados 6,825,104 49,299,207 14%

Regional DemandRegional Demand

International DemandInternational DemandCountries Guyana

Export Total Imports of

Comparable Processed Wood products (US$)

% of Market Share (US$), 2005

United State of America

9,044,000

2,120,780,000 0.43

United Kingdom

6,655,971 882,300,000 0.75

China

2,000,000

1,400,000,000 0.14

Holland

1,799,000 287,500,000 0.63

Vietnam 40,000

502,000,000 0.01

Denmark -

368,000,000 0.00

The global demand for tropical wood products is The global demand for tropical wood products is at a peak and Guyana is well positioned to at a peak and Guyana is well positioned to capitalize on this demand. capitalize on this demand.

China, UK, Denmark, Netherlands, and Vietnam China, UK, Denmark, Netherlands, and Vietnam etc. all have very high demand for sawn and etc. all have very high demand for sawn and tropical wood products which are similar to tropical wood products which are similar to Guyana’s species.Guyana’s species.

For example, in China, many of Guyana’s wood For example, in China, many of Guyana’s wood species are in high demand for use in flooring species are in high demand for use in flooring production and other value added end uses.production and other value added end uses.

Assessment of Local Demand & SupplyAssessment of Local Demand & Supply

An assessment was done in 2006 to An assessment was done in 2006 to determine the local requirement for determine the local requirement for lumber, in the processing sub-sector (per lumber, in the processing sub-sector (per month).month).

Current supply, to local value added Current supply, to local value added industry was analyzed, relative to demand. industry was analyzed, relative to demand.


Potential supply in the form of logs exports, Potential supply in the form of logs exports, converted to lumber, (at current level of recovery converted to lumber, (at current level of recovery – 40%), was also analyzed.– 40%), was also analyzed.

This assessment covered an 18 month period, This assessment covered an 18 month period, by geographic location, size of operation, and by geographic location, size of operation, and filtered for any over/under estimation of demandfiltered for any over/under estimation of demand

Summaries of total potential supply and demand Summaries of total potential supply and demand survey are presented.survey are presented.

Species Estimated Total Local

Demand (m3 of lumber)

Current Total Local Supply (m3 of lumber

per month)

Difference (m3 of lumber

per month)

Log Export converted to Lumber (m3

of lumber per month)

Special Category

Greenheart 1,636 753 (883.00) 1024

Brown Silverballi 5 - (5.00) 9.6

Purpleheart 3,764 994 (2770.00) 1,068.80*

Red Cedar 183 31 (152.00) -*

Letterwood 250 10 (240.00) 176*

Bulletwood 350 20 (330.00) 176*

Demand Survey SummaryDemand Survey Summary

Species Estimated Total Local Demand (m3 of lumber)

Current Total Local Supply (m3

of lumber per month)

Difference (m3 of lumber per

month)

Log Export converted to

Lumber (m3 of lumber per

month)

Class 1

Cow Wood 100 - (100.00) 1.6*

Crabwood 653 242 (411.00) -*

Itikiboroballi 50 10 (40.00) -*

Locust 1,498 313 (1185.00) -*

Tatabu 250 25 (225.00) 75.2*

Determa 150 50 (100.00) -*

Wamara 100 50 (50.00) 104

Kabukalli 850 288 (562.00) 120*

Shibadan 200 85 (115.00) 74.4*

Tauroniro 271 108 (163.00) 16*

Washiba 500 5 (495.00) 24*

Hakia 100 5 (95.00) -*

Hububalli 54 27 (27.00) 1.6*

Mora 800 238 (562.00) 803.2

Species Estimated Total Local Demand (m3 of lumber)

Current Total Local Supply (m3 of lumber

per month)

Difference (m3 of lumber per

month)

Log Export converted to

Lumber (m3 of lumber per

month)

Class 11

Dukali 50 5 (45.00) 0*

Kereti Silverballi 50 10 (40.00) -*

Wallaba 848 500 (348.00) 96*

Class 111

Fukadi 50 5 (45.00) 16.8*

Futui 100 20 (80.00) -*

Tonka Bean 500 20 (480.00) 52.8*

Darina 500 50 (450.00) 104.8*


There is existing localThere is existing local added value demand for added value demand for identified species. identified species.

There is, in some caseThere is, in some case, an identified surplus after , an identified surplus after having satisfied the local added value demand – having satisfied the local added value demand – e.g Greenheart.e.g Greenheart.

There is, in some casesThere is, in some cases, an identified deficit in , an identified deficit in supply even if all logs exported were converted supply even if all logs exported were converted into lumber – e.g Purpleheartinto lumber – e.g Purpleheart

Situational AnalysesSituational Analyses

The guiding documents for the forest The guiding documents for the forest sector have recommended the sector have recommended the development of the sector through value development of the sector through value added production.added production.

These documents also talk about These documents also talk about providing incentives for those who engage providing incentives for those who engage in added value forest activities. in added value forest activities.

These documents further emphasize the These documents further emphasize the need to reduce log export and engage in need to reduce log export and engage in added value activities.added value activities.

There has however, been a marked There has however, been a marked deviation from this, as shown by a deviation from this, as shown by a significant increase in log export from significant increase in log export from 2003 – 2006. 2003 – 2006.

Most of these species are Prime Species:Most of these species are Prime Species:

56% of log export in 2005 and 57% of log export 56% of log export in 2005 and 57% of log export in 2006 were from the Special Category.in 2006 were from the Special Category.

31% in 2005 and 29% in 2006 were from Class 31% in 2005 and 29% in 2006 were from Class 1. 1.

The remaining 13 - 14% for both years were The remaining 13 - 14% for both years were from Class 2 and 3 togetherfrom Class 2 and 3 together

Little evidence that the Prime Species are Little evidence that the Prime Species are carrying the LUScarrying the LUS

Most of the easily accessible forest areas Most of the easily accessible forest areas have already been allocated.have already been allocated.

Based on the clear benefits, there is a Based on the clear benefits, there is a need for optimal utilization of logs need for optimal utilization of logs extracted.extracted.

Recognizing that the primary forest producing Recognizing that the primary forest producing sub-sector has experienced initial difficulties, sub-sector has experienced initial difficulties, there has been noticeable change in this there has been noticeable change in this situation: situation: market has expanded and grown, huge local, regional market has expanded and grown, huge local, regional

and international demand and high prices currently and international demand and high prices currently prevail in the market.prevail in the market.

There is an unsatisfied demand in the local There is an unsatisfied demand in the local market for sawn lumber.market for sawn lumber.

A huge unsatisfied export market also exists in A huge unsatisfied export market also exists in the Caribbean, North America, Europe, and the Caribbean, North America, Europe, and Asia. Asia.

For the following species, demand exceeds supply of sawn wood. Logs For the following species, demand exceeds supply of sawn wood. Logs exported, when converted to lumber still leaves a margin of unsatisfied exported, when converted to lumber still leaves a margin of unsatisfied demand. In addition, international demand in terms of end use application demand. In addition, international demand in terms of end use application is high. is high.

PurpleheartPurpleheart Red CedarRed Cedar LetterwoodLetterwood BulletwoodBulletwood Cow WoodCow Wood Crab WoodCrab Wood LocustLocust TatabuTatabu KabukalliKabukalli ShibadanShibadan TauroniroTauroniro WashibaWashiba HububalliHububalli Tonka BeanTonka Bean DarinaDarina

Prime species identified as having tremendous potential for added value

Special Category

Purpleheart

Red Cedar

Letterwood

Class 1

Crabwood

Locust

Kabukalli

Shibadan

Washiba

Hububalli

Class 111

Tonka Bean

For the following species demand exceeds supply of sawn wood but For the following species demand exceeds supply of sawn wood but in most cases, logs exported when converted to lumber, can cover in most cases, logs exported when converted to lumber, can cover this gap, leaving a surplus for export. this gap, leaving a surplus for export.

GreenheartGreenheart Brown SilverballiBrown Silverballi ItikiboroballiItikiboroballi DetermaDeterma WamaraWamara HakiaHakia MoraMora DukaliDukali Kereti SilverballiKereti Silverballi WallabaWallaba FukadiFukadi FutuiFutui

For Itikiboroballi, Hakia, Dukali, Keriti Silverballi, Fukadi and Futui, these For Itikiboroballi, Hakia, Dukali, Keriti Silverballi, Fukadi and Futui, these species showed an existing unsatisfied demand. However, for these species showed an existing unsatisfied demand. However, for these species the end use application, and demand are not as significant as those species the end use application, and demand are not as significant as those identified before. identified before.

International SituationInternational Situation

International forest trends, focused on promoting International forest trends, focused on promoting and ensuring sustainable forest management, and ensuring sustainable forest management, indicate growing occurrences of restriction on indicate growing occurrences of restriction on export of logs, especially in tropical timber export of logs, especially in tropical timber producing countries, and in some cases, producing countries, and in some cases, restriction of harvesting entirely, of natural restriction of harvesting entirely, of natural forests. Below is a list of countries which have forests. Below is a list of countries which have so far, taken steps to restrict the exportation of so far, taken steps to restrict the exportation of

logs, and harvesting of logs from natural forests.logs, and harvesting of logs from natural forests.

Country International Status of Log Harvesting and Log Exports

Brazil Banned the export of all logs since 1969

Cameroon Banned export of logs

Central African Republic

Restriction on log export

Colombia Regulations that restrict the exportation of logs from natural forests. Been in force for over 10 years. Only round wood coming from planted forests can be exported.

Cote d’Ivoire Banned export in log form

Ghana Export of round logs banned since 1997. Levies imposed on export of air dried timber for 9 important species.

India Banned logging in natural forests.

Indonesia Local logging bans – particularly in East Kalimantan

Myanmar Working on a restriction of log export.

Philippines Banned logging in primary forests since 1990. Similar situation in Thailand.

Thailand Banned logging in natural forests

Vanuatu Policy gives firm legal effect to a log export ban. Banned in 1993. This operated intermittently to assist the domestic processing industry.

Venezuela Banned 5 main species for 6 years starting 2001:1.Caoba2.Cedro3.Mijao4.Pardillo5.Pau d’arco

Peninsula Malaysia commenced the restriction of export of logs in Peninsula Malaysia commenced the restriction of export of logs in 1972. In 1985, Peninsula Malaysia instituted a complete ban on log 1972. In 1985, Peninsula Malaysia instituted a complete ban on log export. In Sarawak, a quota on log export was instituted in 1985. In export. In Sarawak, a quota on log export was instituted in 1985. In Sabah, there was a complete ban of log export from 1993. Sabah, there was a complete ban of log export from 1993.

Similarly, Gabon from 1Similarly, Gabon from 1stst January, 2007, instituted a log export January, 2007, instituted a log export quota system to restrict log export and has increased its export levy quota system to restrict log export and has increased its export levy to 20% of FOB export value on logs. to 20% of FOB export value on logs.

Congo is currently moving towards log export restriction. Congo is currently moving towards log export restriction.

In Papua New Guinea, certain species of logs are banned. In Papua New Guinea, certain species of logs are banned.

In addition, the Untied States, Canada, New Zealand, Bolivia, and In addition, the Untied States, Canada, New Zealand, Bolivia, and Costa Rica have taken similar initiatives to restrict the export of logs. Costa Rica have taken similar initiatives to restrict the export of logs.

OptionsOptions Recognize that added value forest production is Recognize that added value forest production is

essential for forest sector development, supported by essential for forest sector development, supported by favourable market, government investment regime and favourable market, government investment regime and industry conditions. industry conditions.

An outcome of the Ministerial Committee established to An outcome of the Ministerial Committee established to address the issue of log export, has pinpointed a address the issue of log export, has pinpointed a possible ban and/or restriction of the exportation of logs possible ban and/or restriction of the exportation of logs as an imperative for added value forest production. as an imperative for added value forest production.

Several options were discussed at the level of the Several options were discussed at the level of the Committee and the two extreme options will be Committee and the two extreme options will be presented. presented.

RECOMMENDATIONSRECOMMENDATIONSOption 1Option 1

AA Full Ban of these 15 Full Ban of these 15

species from March 1, species from March 1, 20072007

PurpleheartPurpleheart LocustLocust Crab WoodCrab Wood Red CedarRed Cedar WashibaWashiba Tonka BeanTonka Bean LetterwoodLetterwood

BulletwoodBulletwood Cow WoodCow Wood TatabuTatabu KabukalliKabukalli ShibadanShibadan TauroniroTauroniro HububalliHububalli DarinaDarina

BB..The following species to have a ban of squares (dimension The following species to have a ban of squares (dimension

8” X 8” and greater) commencing January 2008:8” X 8” and greater) commencing January 2008:

PurpleheartPurpleheart Red CedarRed Cedar LetterwoodLetterwood CrabwoodCrabwood LocustLocust KabukalliKabukalli ShibadanShibadan WashibaWashiba HububalliHububalli Tonka BeanTonka Bean

C.C. The following species to have a 50% ban of logs in The following species to have a 50% ban of logs in 2008, a 75% ban of logs in 2009 and 100% ban of logs 2008, a 75% ban of logs in 2009 and 100% ban of logs in 2010:in 2010:


RECOMMENDATIONSRECOMMENDATIONSOption 2Option 2

A.A. The following species to be banned in the export of logs from January, 2008: The following species to be banned in the export of logs from January, 2008:

PurpleheartPurpleheart LocustLocust Crab WoodCrab Wood Red CedarRed Cedar WashibaWashiba Tonka BeanTonka Bean LetterwoodLetterwood BulletwoodBulletwood Cow WoodCow Wood TatabuTatabu KabukalliKabukalli ShibadanShibadan TauroniroTauroniro HububalliHububalli DarinaDarina

B.B. The following species to have a ban of squares The following species to have a ban of squares (dimension 8” X 8” and greater) commencing 2009:(dimension 8” X 8” and greater) commencing 2009:

PurpleheartPurpleheart Red CedarRed Cedar LetterwoodLetterwood CrabwoodCrabwood LocustLocust KabukalliKabukalli ShibadanShibadan WashibaWashiba HububalliHububalli Tonka BeanTonka Bean

C.C. The following species to have a 50% ban of logs in 2008, The following species to have a 50% ban of logs in 2008, a 75% ban of logs in 2009 and 100% ban of logs in a 75% ban of logs in 2009 and 100% ban of logs in 2010:2010:


The options presented are extreme The options presented are extreme options for consideration. options for consideration.

Other options can be considered, but must Other options can be considered, but must be in keeping with the general thrust of the be in keeping with the general thrust of the two options presented. two options presented.

Implementing MechanismImplementing Mechanism The mechanism of the phased ban in log export The mechanism of the phased ban in log export

will be set and monitored by the GFC. will be set and monitored by the GFC.

Monthly lumber price publication, distributed free Monthly lumber price publication, distributed free of cost to the sector. of cost to the sector.

Close monitoring by the GFC to ensure that Close monitoring by the GFC to ensure that system is working effectively, recommending system is working effectively, recommending adjustments and making adjustments where adjustments and making adjustments where necessary (as appropriate).necessary (as appropriate).

Implementing Mechanism cont’dImplementing Mechanism cont’d

Only holders of Timber Sales Only holders of Timber Sales Agreements, Wood Cutting Leases and Agreements, Wood Cutting Leases and State Forest Permissions will be allowed State Forest Permissions will be allowed to export logs. These logs must originate to export logs. These logs must originate from their own concession.from their own concession.

A complete revision of this system by A complete revision of this system by 2012. 2012.

Implications of Log Export Ban/Restriction – Implications of Log Export Ban/Restriction – Advantages & DisadvantagesAdvantages & Disadvantages

Option 1Option 1

Advantage:Advantage:Boost in added value in 2007Boost in added value in 2007

Disadvantage:Disadvantage:Limited time for transition by Forest Limited time for transition by Forest

ProducersProducers

Implications of Log Export Ban/Restriction – Implications of Log Export Ban/Restriction – Advantages & DisadvantagesAdvantages & Disadvantages

Option 2Option 2

Advantage:Advantage:A transition time of at least 8 months would A transition time of at least 8 months would

be available for forest producersbe available for forest producers

Disadvantage:Disadvantage:The trend of log export may continue in 2007 The trend of log export may continue in 2007

especially for the prime species. especially for the prime species.

Other Implication of a Log Export Other Implication of a Log Export Ban/restriction – Past ExampleBan/restriction – Past Example

Positive impact on export revenue, forest sector Positive impact on export revenue, forest sector GDP and added value forest production. GDP and added value forest production.

In 2000, Locust and Crabwood were restricted in In 2000, Locust and Crabwood were restricted in the export of log form. Following this restriction, the export of log form. Following this restriction, there has been a steady growth from 2000 to there has been a steady growth from 2000 to 2006 in both volume and value of sawn wood 2006 in both volume and value of sawn wood exported. Volume increased by approximately exported. Volume increased by approximately 719% and value increased by 929%. 719% and value increased by 929%.

This is illustrated below:This is illustrated below:

Impact of the Restriction of Locust and Crabwood

Year Volume Exported in Sawnwood (m3)

Value of Export in US$

2000 323 130,487

2001 441 191,531

2002 715 283,609

2003 683 261,165

2004 1465 695,507

2005 1495 732,400

2006 2325 1,212,394

Other Implication of a Log Export Other Implication of a Log Export Ban/restriction – Current AnalysesBan/restriction – Current Analyses

Positive impact on export revenue, forest sector Positive impact on export revenue, forest sector GDP and added value forest production. GDP and added value forest production.

Creation of more job opportunities in the forest Creation of more job opportunities in the forest sector.sector.

An additional US$9M (G$1.8B) in export earnings An additional US$9M (G$1.8B) in export earnings could have been realized, had the logs exported in could have been realized, had the logs exported in 2006 alone, been converted into lumber. 2006 alone, been converted into lumber.

Species

Volume Exported

(m3)

Lumber @ 50%

(m3)

Potential Revenue

(US$)

Log Export

Revenue (US$)

Additional Revenue

(US$)

Sawmill Cost (US$

80/m3)

Additional Net

Revenue (US$)

Purpleheart 45,728 22,864 13,718,400 7,148,154 6,570,246 1,829,120 4,741,126

Tonka Bean 1,866 933

559,800 160,018

399,782 74,640

325,142

Bulletwood 8,027 4,014 2,408,100 843,426 2,318,519 321,080 1,997,439

Tatabu 2,928 1,464 732,000 301,083

430,917 117,120

313,797

Kabukalli 5,730 2,865 1,214,760 604,108 610,652 229,200

381,452

Shibadan 4,476 2,238 1,119,000 490,064 628,936 179,040

449,896

Darina 4,888 2,444 1,036,256 460,184 576,072 195,520

380,552

Species

Volume Exported

(m3)

Lumber @ 50%

(m3)

Potential Revenue

(US$)

Log Export

Revenue (US$)

Additional Revenue

(US$)

Sawmill Cost (US$

80/m3)

Additional Net

Revenue (US$)

Locust 221

111

66,300

22,102

44,198

8,840

35,358

Red Cedar

22

11

8,800

1,994

6,806

880

5,926

Washiba 919

460

459,500

89,581

369,919

36,760

333,159

Cow Wood

114

57

28,500

9,728

18,772

4,560

14,212

Tauroniro 521

261

104,200

50,945

53,255

20,840

32,415

Hububalli 44

22

11,000

3,981

7,019

1,760

5,259

Crabwood - -

-

-

-

-

-

Letterwood

- -

-

-

-

-

-

Total 75,484

37,742

21,466,616

10,185,368

12,035,093

3,019,360

9,015,733

Mill CapacityMill Capacity

Having examined the possible implications of a Having examined the possible implications of a log export ban on Guyana’s timber industry, one log export ban on Guyana’s timber industry, one area that needed to be examined is the existing area that needed to be examined is the existing installed milling capacity. installed milling capacity.

The Guyana Forestry Commission conducted a The Guyana Forestry Commission conducted a

survey of existing mill capacity. survey of existing mill capacity.

Based on the findings, the following were Based on the findings, the following were observed:observed:

Aggregate Existing Sawmill capacityAggregate Existing Sawmill capacity: : 42,000m3 per month (504,000m3 per 42,000m3 per month (504,000m3 per year) of logs can be processedyear) of logs can be processed

Aggregate Existing Plywood capacityAggregate Existing Plywood capacity: : 15,000 m3 of logs per month15,000 m3 of logs per month

Aggregate milling capacityAggregate milling capacity amounts to amounts to 42,000m3 + 15,000m3 per month= 42,000m3 + 15,000m3 per month= 684,000 m3 p.a.684,000 m3 p.a.

Total log production in 2006 was 380,000 Total log production in 2006 was 380,000 m3. Aggregate existing processing m3. Aggregate existing processing capacity is 684,000 m3 (inclusive of capacity is 684,000 m3 (inclusive of plywood processing). plywood processing).

This represents only 55% of total installed This represents only 55% of total installed capacity. capacity.

With the aggregated existing processing With the aggregated existing processing capability, the impact of the log export capability, the impact of the log export restriction ban will not have a detrimental restriction ban will not have a detrimental effect in terms of stifling the processing effect in terms of stifling the processing sub-industry in the forest sector. sub-industry in the forest sector.

The processing industry can therefore The processing industry can therefore consume the additional sawn wood consume the additional sawn wood processing requirement which would processing requirement which would become available.become available.

Currently, there is a restriction on Locust Currently, there is a restriction on Locust and Crabwood, in the exportation of logsand Crabwood, in the exportation of logs

There is currently, no restriction or ban on There is currently, no restriction or ban on the exportation of species in the form of the exportation of species in the form of squares. squares.

Documents

GUYANA FORESTRY COMMISSION DISCUSSION PAPER DISCUSSION PAPER Ministerial Committee Addressing the Issue of Log Export February, 2007