L Hendricks: Annual General Meeting of Forestry South Africa

16 March 2007

Chairperson,
Board of Forestry South Africa and members,
Ladies and gentlemen

1. Introduction

I wish to thank Forestry South Africa for inviting me to your Annual General
Meeting, I felt that it was important to attend this meeting and give
recognition to the important role of the forestry industry in our country and
in our economy. I held a very fruitful meeting with the members of the
executive of Forestry South Africa last week where we held discussions on some
of the challenges facing the industry and we reached agreement on a number of
issues, which I will touch on today.

Like most industries in our country, forestry and the downstream processing
sectors faced huge challenges when we opened up our economy to international
competition in the mid 1990s. The protection measures that were removed as a
result of trade liberalisation, lowering of tariffs and trade agreements have
forced industry to become more competitive and today issues of labour
productivity, better use of technology and improved yields are high on the
agenda; as are issues of value addition and exporting of processed and
manufactured goods.

This week I was acting Minister of Trade and Industry and had to respond to
a question in Parliament on this very issue of trade liberalisation and export
orientation. In dealing with this question it was interesting to note that last
year South Africa exported almost double the value of manufactured goods as it
did primary products, whereas in 1992 it was a different picture with primary
products being our leading export earner. It is clear that structurally the
South African economy is very different to what we found in 1994 and as we move
onto a higher growth path in line with the Accelerated and Shared Growth
Initiative for South Africa (AsgiSA), we need to ensure that we remove the
impediments to growth and we ensure that we add value to our primary goods. All
of which should take on board the principles of broad based black economic
empowerment (BBBEE) so that our growth is shared. Forestry has a critical role
to play in contributing to our higher growth path and to shifting our economy
towards export led growth.

2. Growth

Ladies and gentlemen, one of the biggest challenges for the forestry
industry, as the foundation stone on which the processing industry is based, is
quite simply afforestation. In my meeting with the FSA executive last week they
outlined the limits of this growth, which include:

* land available for afforestation
* awareness of the forestry industry
* licensing for water
* financing.

In that meeting we reached consensus on a number of areas to be addressed in
order to grow the industry. Firstly, I agreed to support the industry efforts
to raise the profile of forestry. Secondly, that we need to work with Land
Affairs to resolve the outstanding land claims issues so that we can move
forward with certainty on which the beneficiaries are for rental income,
contracting arrangements and support measures, amongst other things, which I
will discuss in more detail a bit later.

Thirdly, we need to streamline the water licence application process so that
it is shorter, consultation takes place but within a defined period and
responsibility is given to one government department to take a final decision.
And fourthly, we recognised the need to undertake a much broader and possibly
countrywide Strategic Environmental Assessment (SEA) for where afforestation
could take place.

A task team will be established to take forward these issues and the FSA
representatives at the meeting agreed to send us comments on what they feel
should be included as the terms of reference for this task team. Importantly,
the task team would need to make recommendations on whether there needs to be
any changes to legislation so that we can tighten up the water licensing
process.

I believe the outcomes from this task team will in no small measure
contribute to removing the impediments facing the industry and achieving growth
of the forestry industry. And in giving my support to the process I look
forward to seeing substantive transformation taking place in the industry - not
just tinkering at the margins but a serious commitment to transformation, and
implementing what has been agreed in the Forestry Charter. I will also be
ensuring that all the instruments available to my department are used to
encourage Broad Based Economic Empowerment; for example under the Broad-Based
Black Economic Empowerment Act, 2003 (Act No 53 of 2003), National Forests Act,
1998 (Act No 84 of 1998) and National Water Act, 1998 (Act No 36 of 1998) my
department has the responsibility to ensure that the procurement, sale,
licensing and other authorisations are applied to advance BBEE.

3. Broad Based Economic Empowerment Charter for the Forestry Industry

Programme Director, the past 18 months have been exciting and challenging
times for the Forest Sector; as industry, government, labour and civil society
stakeholders have embarked on the process of developing a Transformation
Charter for the Sector. This process was launched by my predecessor Minister
Sonjica at the Forestry Indaba held on 18 April 2005.

Since then, a Charter Steering Committee and its Working Groups have done
tremendous work in developing the Charter and a draft has now been completed.
The Steering Committee have requested a meeting with me to hand over the draft
Charter, and within the next two months we will hold an indaba, make the
document available for public comment, and hold regional consultation
workshops. I look forward to Forestry SA supporting and participating in these
processes. Once the public comments and consultation process is completed we
will finalise and publish the Charter in the Government Gazette as a Charter
and as Sector Codes.

I say the past few months have been challenging because the process has not
been easy, but if it were to have been 'smooth sailing' it would not have been
a meaningful process! It was important for the various stakeholders to put
their positions on the table in an open and frank manner and to agree on how to
achieve meaningful and lasting transformation in a sector that is historically
white and male dominated and characterised by large disparities in access to
opportunities and benefits for black people, especially black women.

The development of the charter must be viewed against the background of the
difficulties faced by the industry to increase raw material supply to sustain
growth; where many small scale, mostly black owned, operators struggle to
remain afloat and where ordinary workers have seen casualisation of jobs and
where poor employment conditions still persist. I am pleased that the draft
Charter addresses these issues in a meaningful manner.

Forestry South Africa has played a key role in developing the draft Charter
and I wish to thank the Forestry SA management and board for their contribution
and commitment to the process. I also wish to thank the Forestry SA members for
their pledge to commit funds to the work of the Charter Council that will be
established to oversee the Charter implementation. As we all know, once the
Charter has been completed the real work of implementing the various
undertakings and targets in the scorecard begins! However, a lasting house
needs a solid foundation and a good building plan and this has been achieved
for forest sector transformation by agreeing on a common vision, key principles
and a set of targets and plans for implementation.

To meet the challenge of transformation with growth in the Forest Sector, I
believe it is necessary that there are well functioning and representative
structures in place for the Forest Industry. This includes the strengthening of
organisations representing the various Forest Sub-sectors, as well a mechanism
to facilitate co-operation between the Sub-sectors. The initiatives taken by
Forestry SA to broaden its representation and ensure that it more effectively
services the needs of black emerging growers are commended. I encourage you to
be bold and innovative in taking this process forward. It may also be
worthwhile establishing sector wide co-operation structures to improve
co-ordination across the value chain, and to facilitate engagement with
government on matters of transformation and growth in the Sector.

4. Downstream industry development

Ladies and gentlemen, various implementation initiatives are already
underway to promote the development of the downstream timber industry, such as
the Eastern Cape forestry initiative that was launched last month and the
development of a sector growth strategy for the forestry, timber, pulp and
paper industries in South Africa. The meeting held in Mthatha last month, in
co-operation with the Department of Trade and Industry, was a major step
forward in promoting the development of the forestry and timber processing
sector. At that meeting I spoke about the link between the upstream and
downstream industry and "the urgent need to increase the forest base and that
the development of a raw material resource will attract greater processing
capacity in the form of sawmills, board mills, chipping plants and treatment
plants."

What came through strongly at the conference was the need for increased
local beneficiation and meaningful participation of black people, particularly
black women in downstream forestry enterprises. We cannot afford to ignore
BBBEE in the downstream industry and look back in 10-years time only to find
that empowerment has been limited to the supply of raw material.

The forestry industry needs to work with other players in the sector to roll
out a strategy that will ensure investment and participation by black people in
value adding enterprises. I am aware of the fact that Forestry SA represents
growers and not the processing industry. However, under conditions of a
shortage of raw material, Forestry SA can wield considerable influence in
shaping transformation in downstream activities. Furthermore, key members of
Forestry SA are also engaged in timber, pulp and paper industries. I,
therefore, call on Forestry SA to engage with its members and forestry
processing industries to develop a framework and commit to investing in black
owned and managed processing enterprises.

5. Land claims

Programme Director, much has been said during the Charter deliberations
about the fact that large tracks of private and State forest land are subject
to land claims and the need to deal with this process expeditiously and in a
manner that will ensure that the new land owners continue with forestry
operations. The point has also been made that new land owners cannot be forced
to continue with forestry and that forestry must be made viable and attractive
for the new owners to ensure that the land remains under forestry production. A
collective effort by all stakeholders is required to ensure that land
restitution and other forms of land reform:

* result in the creation of sustainable businesses or business opportunities
in the hands of black people along the value chain
* result in the transfer of specialised skills or productive capacity to the
new land owners.

It cannot be expected from the Department of Land Affairs and the Land
Claims Commission to deal with this alone and stakeholders in the Forest Sector
need to support the process. During the last Charter Steering Committee meeting
it was recommended that my department and other sector stakeholders must work
together with the Land Claims Commission and develop a co-ordinated strategy
for the settlement of land claims to ensure the continued and sustainable use
of existing plantation areas for timber production. This includes
post-settlement support to the new owners of such land.

I am aware of the fact that various forestry companies are following their
own strategies to deal with the settlement of land claims. However, many (if
not most) claims affect more than one land owner and the settlement of claims
on individual parcels of land cannot be handled successfully if they are not
viewed within a broader geographical context. Also, what happens in one case
has a knock-on effect for other cases. It is, therefore, important that we
approach this from a sector perspective. I therefore propose that the Task Team
we are establishing also look at the restitution issues, as unresolved this
issue creates uncertainty for communities as well as being an impediment to
growth in the forestry industry.

6. Employment Code of Conduct

Programme Director, the Charter Steering Committee has emphasised the need
to ensure equitable and sustainable contracting and employment practices in the
Forest Sector and proposed the establishment of Industry Codes of Conduct to
deal with this. And by improving employment practices we will ensure that not
only the quantity, but also the quality of black participation in the industry
is improved. I encourage sector stakeholders to produce the Codes of Conduct as
soon as possible so that there is clarity in the sector on contracting and
employment requirements. I call on Forestry SA to take the lead and talk to
other sub-sector industry representatives and labour unions about setting up a
process to develop these Codes of Conduct. My Department would like to
participate in this process but should not be the one to take the lead.

7. Conclusion

To conclude, ladies and gentlemen, in my meeting last week with the FSA
executive two other very important issues were raised; the first is the concern
that the industry has around pests and diseases that can seriously damage
plantations. I agreed with FSA that we need to re-look at the role of
government in supporting industry efforts to protect plantations from pests and
diseases; and the necessity for our efforts to include both big and small
growers.

The other issue we discussed was the need for us to have extensive greening
and tree planting programmes that extend beyond commercial forestry
plantations, and are for beautification, CO2 reduction, and providing fruit. We
need to look at township greening, trees planted in schools, clinics and other
institutions as well as indigenous forests. When I met with the President
recently he was strongly of the view that a lot more needs to be done in this
area and there needs to be greater levels of mobilisation of our people around
the planting of trees. We are putting together plans for such a programme the
details of which I will announce in due course. I hope to see the commercial
forestry sector joining hands with us in such a programme.

I thank you.

Issued by: Department of Water Affairs and Forestry
16 March 2007