Deputy Minister on Forestry progress and challenges; Forestry Sector Charter Council update

Agriculture, Land Reform and Rural Development

23 June 2015
Chairperson: Ms M Semenya (ANC)
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Meeting Summary

In his introductory remarks, the Deputy Minister of Agriculture, Forestry and Fisheries stated that transformation in the forest sector is zero. There are those who are willing to push for transformation in this sector and those who are resisting it. He said his Department would through all available means push for transformation. The potential for growth in this sector is huge. The major problem is in water licensing and availability of land as land claims are causing uncertainty in the industry.

The Department stated that the forestry sector is a major contributor to the South African economy through its well developed and diversified forest products industry. According to Forestry South Africa, currently, forestry contributes 25, 5% to agriculture Gross Domestic Product (2013).  Forestry supports manufacturing sub-sectors such as saw-milling, paper and pulp production, mining and construction.

DAFF informed the Committee that forest coverage in South Africa is quite minimal compared to other countries but the output is high when compared with other land use types. In 2012 the sector created 165 300 jobs across the value chain. The forest products industry ranks among the top exporting industries in the country and this means it is maintaining a positive trade balance.

The Department has made strategic interventions on a number of issues. It has facilitated afforestation licences by paying for the costly Environmental Impact Assessments (EIAs). It would engage in the following initiatives with the Department of Health, Human Settlement, Education, Safety and security, Labour and Water and Sanitation in order to resolve the conditions, health, housing and sanitation issues of Forestry workers. DAFF has met with the Department of Water and Sanitation regarding measures to avoid the lengthy period that it takes to issue afforestation licences and the exemption of small growers from paying water tariffs in the years of establishment.

The Forest Sector Charter Council (FSCC) briefed the Committee about progress and performance towards the implementation of Broad Based Black Economic Empowerment (B-BBEE) in the Forestry sector and also noted the challenges in the implementation of B-BBEE in this sector and related industries.

The main objective of the Forest Sector Charter is to extend the economic opportunities and benefits of the Forest sector to the previously disadvantaged black groups. It targets growers and the fibre, saw-milling, pole and charcoal industries.

On challenges facing the B-BBEE transformation status, the FSCC reported that the verification process that is using the generic scorecard would be addressed through the Joint Technical Committee of the Department of Trade and Industry and New Codes. All enterprises falling within a sector that has a sector code must be verified under that Sector Code. The database is inaccurate and this would be addressed through organised sub-sector associations and updated database.

The FSCC indicated that the number of reporting entities has improved from 26 in 2010 to 77 in 2014. Ownership in the sector is achieving an average performance. The sector is performing well in Enterprise Development, Socio-Economic Development and Preferential Procurement though the sector specific guidelines still need to be developed. More improvement is required in Employment Equity and Management Control. The delivery on industry and government undertakings is necessary to enhance transformation in the Forest sector. Lastly, the mandate of the Council needs to strengthened through actual visits to enterprises, monitoring and audits.

Members remarked they did not hear the mention of ‘radical transformation’ in the presentation; that the forestry sector is in decline and it was pointless to transform a sector that is dying; that DAFF was presenting to the Committee 2012 job creation figures so why was DAFF not presenting new statistics. They asked why certification of plantation and water licensing processes were cumbersome; what the agro-forestry investigation was about; why the ageing workforce could not be granted pensions so youthful employees can take over; if DAFF had plans to address skills development as this was missing in rural areas, especially in forestry; and how much do our forests provide for traditional medicine.
 

Meeting report

Deputy Minister of Agriculture, Forestry and Fisheries introductory remarks
Gen Bheki Cele stated that transformation in the forest sector is zero. There are those who are willing to push for transformation in this sector and those who are resisting it. He said his Department would through all available means try to push for transformation.

He indicated that for a long time the Forestry branch of the Department has been an orphan. It was brought to the Department in 2009. Forestry has been given to the Deputy Minister because the Presidential instructions indicated that the Minister and Deputy Minister should share the responsibilities.

He informed the Committee that the potential for growth in this sector is huge. The major problem is in water licensing and availability of land. Land claims are causing uncertainty in the industry because some forests are on lands that are being claimed.

The Deputy Minister reported that recently the Department invited Grade 11 and 12 learners including undergraduate and PhD students to a workshop to encourage them to follow a career path in forestry.

Department of Agriculture, Forestry and Fisheries (DAFF) presentation on Forestry
Dr Mmaphaka Tau, Deputy Director-General: Forestry and Natural Resources Management, DAFF, informed the Committee that forest coverage in South Africa is quite minimal compared to other countries but the output is high when compared with other land use types. In 2012 the sector created 165 300 jobs across the value chain. The forest products industry ranks among the top exporting industries in the country and this means it is maintaining a positive trade balance.

The forestry sector is a major contributor to the South African economy through its well developed and diversified forest products industry. According to Forestry South Africa, forestry currently contributes 25, 5% to agriculture Gross Domestic Product (2013). The Forestry sector supports manufacturing sub-sectors such as saw-milling, paper and pulp production, mining and construction.

DAFF manages 60 200 hectares of planted plantations. Of the total land area 122,3 ha, only 1% is used for forestry plantations. The area of land under plantation has declined from 1, 5 million ha in 1997/98 to 1, 2 million ha in 2012/13. DAFF is involved with Forestry Enterprise Development (FED) by supplying technical and marketing assistance to small growers.

Since 2014, DAFF is investigating the role of Agro-Forestry in local household food security. The Department is working towards certification of three plantations by 2018 with the first one in 2016. The plantations are Hlokozi in KwaZulu-natal, Katberg in the Eastern Cape and Voorspoed in Limpopo.

With regard to indigenous forests and woodlands, Dr Tau indicated that DAFF manages about 189 696 ha of indigenous forests across the country. Indigenous forests cover about 492 700 ha. Woodlands cover between 29 and 39 mil hectares. The main role of DAFF is conservation planning and compliance promotion.

About 80% of rural household use fuel wood as their primary source of energy. About 28 million people use traditional plant medicine. Approximately 1/3 of medicinal plant material is tree bark. The rural poor are more dependent on forest resources for survival.

Dr Tau noted that the Forestry sector is facing several challenges which revolve around:
- low afforestation rate due to cumbersome licensing processes
- under-investment in long-rotation timber such as saw-logs
- risks associated with climate change and variability manifesting through fires, pests and diseases
- slow pace of transformation since the gazetting of the Transformation Charter
- climate change that results in varying temperatures and unreliable rainfall
- heavy dependence of rural communities who live adjacent to forests is putting pressure on indigenous forests and woodlands.

Concerning policy and legislative framework, he highlighted that the White Paper on Sustainable Forest Development states that the government should withdraw from direct management of state plantations. It states that the state should reposition itself as a forestry sector leader and regulator.

While the White Paper highlights the role of the state as a regulator, the National Development Plan provides space for it to being an enabler for economic growth, rural development and employment creation. Forestry interventions such as afforestation and rehabilitation of plantations feature in the agricultural policy action plan and seek to address economic development and job creation.

The Department has gazetted the Preservation and Development of Agricultural Land Framework (PDALF) and Forestry Laws Amendment Bills in order to enhance forestry and natural resources management. The purpose of the PDALF is to efficiently and effectively preserve and develop agricultural land to ensure sustainable long-term food security and job creation.

Challenges related to the management of State forests are as follows:
- ageing and fragile workforce
- deteriorating working and living conditions
- budget limitations for operations
- ageing infrastructure
- illegal clearing of forests and trees
- afforestation licences take a long time before they are issued.

Dr Tau indicated that the process of finalising land claims takes a long time and this has unintended consequences because communities end up not receiving the rental money they are entitled to and end up being in conflict with the company that is operating state forest land. This results in the increase in the number of fires in the plantations and poses a risk to the investment.

On transformation, the Department is in the process of transferring the Mbazwana State plantations to the Mabaso, Mbila and Manzengwenya communities. The transfer is at an advanced stage. DAFF has assisted with the application for funding from the Jobs Fund. The Department is contributing towards the ‘own contribution’ required from applicants by the Jobs Fund. The leasing of the Category A plantations has resulted in the accumulation of lease rental money that the Department has kept in a public investment account.

DAFF has established the Kabelo Land and Restitution Trust that is responsible for the collection, investment and disbursement of rental money to the rightful land reform beneficiaries. The first disbursement of R86, 4 million was given to eight communities in the Eastern Cape during 2011.

Regarding support to community plantations, DAFF has developed the afforestation strategy in order to support new entrants and participants in the market. The strategy is aimed at addressing the expansion of forestry plantations in order to address the demands of the country for timber. The support is focused on two areas:
- growers needing support to establish plantations (afforestation)
- existing growers (Post Settlement Support).

Other issues faced by communities and individuals include affordability to pay for the costly Environmental Impact Assessment (EIA). To address these challenges, DAFF conducted studies to assess the afforestation potential in the whole country.  After the afforestation studies were concluded, DAFF funded the EIAs for the Eastern Cape for an area of 13000 ha. This resulted in Records of Decision issued for an area of 10 500 ha. A sum of R4, 2 million was spent.

In the current financial year, DAFF would fund and conduct EIAs in KwaZulu-Natal for an area of 5000 ha. Once the Records of Decision are issued, this would pave the way for afforestation licences and subsequent plantings.

On water licensing and water rights, the Department has established an Intergovernmental Committee to deal with water licensing. Currently, the Committee comprises DAFF, Departments of Water and Sanitation, Trade and Industry, the Forestry Industry and Industrial Development Corporation as a development finance institution. When the need arises, other crucial Departments like Rural Development and Land Reform are invited to the Committee to deal with community resolutions and other land related matters.

About the resolution of land claims on state forest land, DAFF has established the Kabelo Land and Restitution Trust that is responsible for the collection, investment and disbursement of rental money to the rightful land reform beneficiaries. The rental money is currently invested in the Public Investment Corporation (PIC) with a balance of R304 168 493 (30 March 2015). The resolution of land claims is the responsibility of the Regional Land Claims Commissioner (RLCC). DAFF is having quarterly engagements with the RLCC to track down progress on forestry land claims and to assist with information where necessary.

The Department has made strategic interventions on a number of issues. It has facilitated afforestation licences by paying for the costly EIAs. It would engage in the following initiatives with the Departments of Health, Human Settlement, Education, Safety and Security, Labour and Water and Sanitation in order to resolve the health, housing and sanitation conditions of Forestry workers. DAFF has met with the Department of Water and Sanitation regarding measures to avoid the lengthy period that it takes to issue afforestation licences and the exemption of small growers from paying water tariffs in the years of establishment.

In his conclusion, Dr Tau stated that the Department, through the National Afforestation Technical Task Team, has requested the Department of Water and Sanitation to set standards for the time required to process a licence. Through the Task Team of the Forest Sector Transformation Charter, DAFF is exploring options to establish funding mechanisms for small growers and other small producers in the Forestry sector. Lastly, DAFF would continue to engage with the Department of Rural Development and Land Reform and the Land Claims Commission to streamline the finalisation of outstanding land claims.

Forest Sector Charter Council (FSCC): BBBEE Progress Report
Mr Simangaliso Mkhwanazi, Executive Director: Forest Sector Charter Council, provided information on the progress and performance towards the implementation of Broad Based Black Economic Empowerment (B-BBEE) in the Forestry sector and outlined the challenges faced in the implementation of B-BBEE in this sector and related industries.

The main objective of the Forest Sector Charter is to extend the economic opportunities and benefits of the Forest sector to the previously disadvantaged Black groups. It targets growers and the fibre, saw-milling, pole and charcoal industries.

The FSCC participates in government, industry and council forums and is a member of the Joint Technical Team, an initiative of the Department of Trade and Industry. Its main responsibilities are to facilitate, oversee and encourage the implementation of the Charter; monitor and report on the Charter undertakings; monitor and report on the transformation status; and to publicise the Charter. It holds four quarterly meetings a year.

The FSCC reports to the B-BBEE Advisory Council of the President, Minister of Trade and Industry and Minister of Agriculture, Forestry and Fisheries. The objective of the B-BBEE status report is to assess the status of transformation in the Forest sector. The scorecard has seven elements: Ownership, Management Control, Employment Equity, Skills Development, Preferential Procurement, Enterprise Development and Socio-Economic Development. Measured entities are:
- Medium and Large Enterprises (MLE)
- Qualifying Small Enterprises (QSE)
- Exempted Micro Enterprises (EME).

The Fifth Transformation status report has been completed. Gathered information has been analysed. The analysis is based on the size of the enterprise. The sector achieved a Level Four status (a level increase from previous year, Level 5). Four of the seven scorecard elements recorded an improvement: Ownership (61%), Employment Equity (40%), Skills Development (51%) and Enterprise Development (98%). The Management Control and Employment Equity are struggling to move beyond the 50% target. There is consistent and excellent performance in Enterprise Development (98%), Preferential Procurement (77%) and Socio-Economic Development (156%) but there is a limited representation of black women in director and executive positions of companies.

Qualifying Small Enterprises have achieved 80% of target except in Skills Development. The QSEs have maintained Level 3 status. EMEs have maintained Level 4 status (65% of EMEs are White-managed).

On challenges facing the B-BBEE transformation status, the verification process that is using the generic scorecard needs to be addressed through the Joint Technical Committee of the dti and New Codes. All enterprises falling within a sector that has sector code must be verified under that Sector Code. The database is inaccurate and this would be addressed through organised sub-sector associations and updating the database.
An intensified awareness programme is to be undertaken. Entities without B-BBEE certificates would be addressed through the New Codes, and all enterprises falling within a sector that has a sector code must be verified under a Sector Code.

(Graphs were shown to illustrate the B-BBEE transformation status in the performance of the seven elements of the scorecard)

In his concluding remarks, Mr Mkhwanazi indicated that the number of reporting entities has improved from 26 in 2010 to 77 in 2014. Ownership in the sector is achieving an average performance. The sector is performing well in Enterprise Development, Socio-Economic Development and Preferential Procurement though the sector specific guidelines still need to be developed. More improvement is required in Employment Equity and Management Control. More efforts are to be channelled to under-represented sub-sectors, QSEs and EMEs, through better enforcement measures. The delivery on industry and government undertakings is necessary to enhance transformation in the Forest sector. Lastly, the mandate of the Council would be strengthened through actual visits to enterprises, monitoring and audits.

Discussion
The Chairperson remarked she did not hear the presentation mention ‘radical transformation’ as had been called for by the Deputy Minister through the media.

The Deputy Director-General, Dr Tau, replied that the Radical Transformation Programme would be discussed in the next meeting when the Department is going to have a meeting with the Committee and it would provide the baseline. He, however, pointed out that forestry does contribute to socio-economic transformation. The Department is busy fast-tracking water licensing and implementing the Forest Charter. The Forestry Sector Value Chain Roundtable has been established to fast-track all outstanding issues raises in the Industrial Policy Action Plan  (IPAP).

Ms A Steyn remarked that DAFF was presenting to the Committee 2012 job creation figures and she could not understand why DAFF was not presenting new statistics. She stated that the forestry sector is in decline and it was pointless to transform a sector that is dying. She asked if the Department has any plans to grow the sector. She wanted to know why the certification of plantation and water licensing processes were cumbersome.

Dr Tau replied, regarding the decline of the sector, that this requires support from all stakeholders so that the goals of Forestry can be achieved. He agreed that the reduction in plantations was affecting job creation. For each plantation that takes place, many jobs get created. Concerning cumbersome processes of plantation certification and water licensing, he reported that certification applies to an existing forest and looks at things like viability while afforestation licensing applies to where you want to plant and it has to go through the Departments of Water and Sanitation and Rural Development and Land Reform.

Ms Z Jongbloed (DA) asked how long does the cumbersome afforestation licensing process takes; and what the agro-forestry investigation was about.

On how long it takes to process water licences, Dr Tau reported that there have been backlogs. Now the responsibilities of processing the licences have been given to a more senior director. It is hoped this move is going to speed up the process. The agro-forestry investigation is to be done during the course of this year and DAFF is busy finalising the appointment of a service provider who would be conducting the investigation. DAFF is investigating the role of agro-forestry in local household food security.

Mr L Ntshayisa (AIC) wanted to know why the ageing workforce in the Forestry sector could not be granted pension so that the youthful ones can take over. He asked if DAFF had any plans in place to address skills development because he does not see any skills development programmes in rural areas, especially where forestry is happening.

A Department official replied about the ailing workforce, pointing out that forestry is labour intensive. The conditions they work under is taking a toll on them, and the human resources division is assisting with the implementation of the policy on ill-health.

Dr Tau added that 54 undergraduate and graduate students are being funded for forestry studies. There are also learnership programmes that are being undertaken with the Sector Education and Training Authorities (SETAs). This is done in the name of addressing the ageing workforce.

Mr Mkhwanazi, replying to the question on skills development, reported that the previous codes did not provide targets. Now that the new codes have set targets, the enterprises would have to meet them. If they do not, they get discounted and get lower points. The previous targets did not provide the Council with the teeth to make sure the enterprises were complying and meeting targets.

Dr Tau added that the locals maintain the plantation, but if a skilled person is hard to find internally, an outsider is employed.

Mr Z Mandela (ANC) wanted to know if the 100 000 ha which came out of the afforestation studies for the Eastern Cape is going to be on until the end of the Fifth Parliament.

Dr Tau replied that a certain number of hectares have been planted in the Umzimkhulu area and they include some parts of KwaZulu-Natal like Singisi.

Mr M Filtane (UDM) remarked that the Eastern Cape 100 000 ha is an old story he has heard of many years ago. It does not look like it is going to change. He asked how much do our forests provide for traditional medicine. He asked why the government is taking its time to pay people the rental money and why there is no provision for funding when forestry is contributing so much to GDP.

Dr Tau replied that traditional medicine contributes much to the GDP. The Department has learnt that most medicines are made from forest products. Cellulose is one example of a medicine produced from forest products. With regard to the rental money, he explained that it is difficult to pay the money if the land claim is not finalised. Money should be given to the rightful owner to avoid unnecessary wars. That is why the Department has established the Rental Disbursement Model. It pays the money when the Department has approved the business plans of the operating company.

Mr T Ramokhoase (ANC) asked if the 20 000 small growers that have been helped are individuals or groups. He asked the Department to clarify the 70-year contract given to companies.

Ms Makhosazana Mavimbela, Researcher: Forest Sector Charter Council, reported that support was given to individuals because people cannot be allowed not to plant. They got assisted technically, not financially.

Dr Tau replied that the 70-year contract was given to companies to give them a chance to harvest twice and replant.

Mr C Maxhegwana (ANC) asked the Department to elaborate on the funding framework regarding MAFISA.

A member of the Department indicated that MAFISA is a loan not a grant. The funding mechanism of the department does not include forestry but the matter is being reviewed.

Ms Steyn asked who looks after trust funds for communities and who does the Department answer to regarding these funds.

Deputy Minister, Gen Bheki Cele, reported that the money is invested with the Public Investment Corporation (PIC). It is a public entity. He advised the Committee to engage with it. He indicated there were communities that were given the money but that was not done properly. Money was given to individuals. Now the focus is going to be on community development programmes.

Adoption of Minutes
Minutes of the 2, 5 and 9 June 2015 committee meetings were adopted.

Meeting was adjourned.
 

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