GovernmentThe Exit Policy

A Report of the Portfolio Committee on Agriculture, Forestry and Fisheries in 2011 posted on the Parliamentary Monitoring Group’s website, best explains the policy:

“The South African Forestry Company Ltd (SAFCOL) was established in 1992 to manage state owned plantations on a fully commercial basis and to report a profit. The state’s commercial plantations were accordingly transferred to SAFCOL in 1993.

In 2001 Cabinet took a decision to exit 45 000 hectares of the 70,000 hectares of plantation forestry in the Western and Southern Cape. These areas were to be converted to agriculture, housing and conservation. The main reason for the decommissioning was that the plantations were not economically viable.

Mountain to Ocean (MTO) successfully bid for the lease in 2001 competing with over 7 other private entities that did not succeed. One of the conditions of the bidding process and purchase of MTO was that over 45 000 hectares were to be exited from forestry over time ending in 2020. This meant that the MTO asset was to reduce over time to about half its size in plantations. This necessarily meant also that the volume of logs available to saw millers in the area will reduce.

MTO as a major log supplier had inherited from SAFCOL and its predecessor what are called ever green supply contracts in favor of 2 sawmilling entities namely Steinhoff and AC Whitcher. These contracts stipulated that MTO had to supply a given annual volume to these parties.

Soon after the new owner took over the ownership and management of MTO, there were huge fires in the Tsitsikamma areas that destroyed over 16 000 hectares of plantations which reduced the volume of available timber in the MTO area by 100 000 cubic meters per annum. This meant that there was to be a huge shortage of timber in the market for many years after the fires.

The combination of the 2005 fires and the lack of planting of clear felled areas combined to create a huge log shortage in the MTO area, directly threatening all the sawmilling and timber related business in the area.

From 2005 MTO made a series of representations to the government requesting the government to reverse the exit strategy of 2001. MTO pointed out to the government that commercial plantations are economically viable in the Western Cape, that the exit strategy will destroy jobs and make smaller rural towns poorer and stifle their economic growth generally. A huge potential was being destroyed as a national asset.

The government acceded to MTO’s request and commissioned a study to assess its assertions and advise it. The VECON report that was commissioned came back and recommended that of the identified original exit areas 23 000 hectares must be replanted back into forestry and the rest be taken to conservation. Based on the VECON report the government then partially reversed some of the exit areas.”

Although many in the forestry sector see the partial reversal of the original policy as positive, six years later government still has not signed the decision off in parliament, nor given any details as to how or when some of the exited sites could be replanted. As a direct result of this lack of action they are still unplanted. This has led to a significant gap in the timber supply already.

“The partial reversal decision made in 2008 has had little effect on the gravity of the situation,” wrote Margareta Caterine de Beer in her Thesis on The Socio-economic impact of the phasing out of plantations in the Western and Southern Cape region of South Africa

“By 2011, the Government has still not given permission for any replanting to take place, although they have allowed some harvested areas to be naturally regenerated. The reality is that the hope of retaining the 22 500 ha earmarked for plantation forestry is fading away.”

Report of the Portfolio Committee on Agriculture, Forestry and Fisheries on Oversight Visit to Grabouw for engagement with forestry stakeholders | dated 19 January 2011 |