An Economic Analysis of the An Economic Analysis of the Impact of Sirex on the Impact of Sirex on the South African Forestry and South African Forestry and Forest Products Industry Forest Products Industry Summary Summary Roger Godsmark : Forestry South Africa Roger Godsmark : Forestry South Africa June 2007 June 2007
An Economic Analysis of the Impact of Sirex on the South African Forestry and Forest Products Industry Summary. Roger Godsmark : Forestry South Africa June 2007. Presentation Outline. Background Data Used Methodology Assumptions Scenarios Preliminary Results Areas involved - PowerPoint PPT Presentation
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An Economic Analysis of the An Economic Analysis of the Impact of Sirex on the South Impact of Sirex on the South African Forestry and Forest African Forestry and Forest
Products IndustryProducts IndustrySummarySummary
Roger Godsmark : Forestry South AfricaRoger Godsmark : Forestry South AfricaJune 2007June 2007
Presentation OutlinePresentation Outline
BackgroundBackground Data UsedData Used MethodologyMethodology AssumptionsAssumptions ScenariosScenarios
Preliminary ResultsPreliminary Results Areas involvedAreas involved Potential impact on growersPotential impact on growers Potential impact on ProcessorsPotential impact on Processors
ConclusionConclusion
Section 1 Section 1 BackgroundBackground
Data Used Data Used
Data Used 1Data Used 1
Areas (based on Forestry Zones)Areas (based on Forestry Zones)
Roundwood Volume (based on Forestry Zones)Roundwood Volume (based on Forestry Zones)
Planted areas per product :FES 2005/06Age class distribution per product :FES 2005/06Sirex affected area :Sirex Co-ordinator
Roundwood Prices (based on Forestry Zones)Roundwood Prices (based on Forestry Zones)
Rotation ages per product :FES 2005/06MAI’s :FSA
Sawlogs (at roadside): LP Index, Crickmay – March 2007Pulpwood (delivered mill): NCT – June 2007Poles (at roadside): SAWPA - June 2007
Data Used 2Data Used 2
Volume of Processed Product (recovery rates)Volume of Processed Product (recovery rates)
Basic Premises Upon Which Analysis MadeBasic Premises Upon Which Analysis Made
The loss of any volume NOW through Sirex The loss of any volume NOW through Sirex damage or thinnings will result in a foregone damage or thinnings will result in a foregone loss in volume in the future.loss in volume in the future.
First Premise
This loss in volume will result in a foregone This loss in volume will result in a foregone loss in income in the future to both the loss in income in the future to both the Forestry Industry AND the Forest Products Forestry Industry AND the Forest Products IndustryIndustry
Second Premise
Methodology - Sirex Damage Methodology - Sirex Damage Determination of Foregone Volume and its ValueDetermination of Foregone Volume and its Value
Area affected / at risk (ha)Area affected / at risk (ha)
Infection level (%)Infection level (%)
Equivalent area lost (ha)Equivalent area lost (ha) x MAI x Rot Age = mx MAI x Rot Age = m33/ha/ha
Future volume lost (mFuture volume lost (m33)) x roundwood pricesx roundwood prices
Future income foregoneFuture income foregone
Future product Future product volume lost (mvolume lost (m33))
x recovery ratesx recovery rates
x processed product x processed product pricesprices
Age classesAge classes
Methodology - Thinnings Methodology - Thinnings Determination of Foregone Volume and its ValueDetermination of Foregone Volume and its Value
Area affected / at risk (ha)Area affected / at risk (ha)
Thinning regime used Thinning regime used 5%, 10% & 15%5%, 10% & 15%
Equivalent area lost (ha)Equivalent area lost (ha) x MAI x Rot Age = mx MAI x Rot Age = m33/ha/ha
Future volume lost (mFuture volume lost (m33)) x roundwood pricesx roundwood prices
Future income foregoneFuture income foregone
Future product Future product volume lost (mvolume lost (m33))
x recovery ratesx recovery rates
x processed product x processed product pricesprices
Age classesAge classes
Methodology - Thinnings Methodology - Thinnings Determination of Cost of OperationsDetermination of Cost of Operations
Area affected / at risk (ha)Area affected / at risk (ha)
Thinning regime used Thinning regime used 5%, 10% & 15%5%, 10% & 15%
Area thinned (ha)Area thinned (ha) x cost per hectarex cost per hectare
Total operational costTotal operational cost
Age classesAge classes
Methodology - Inoculations Methodology - Inoculations Determination of Cost of OperationsDetermination of Cost of Operations
Area affected / at risk (ha)Area affected / at risk (ha)
Infection level (%) Infection level (%)
1-3% (33% inoculated)1-3% (33% inoculated)
3%+ (20% inoculated) 3%+ (20% inoculated) Area inoculated (ha)Area inoculated (ha) x cost per hectarex cost per hectare
Total inoculation costTotal inoculation cost
Age classesAge classes
Assumptions Made Assumptions Made
Assumptions Made in Analysis 1Assumptions Made in Analysis 1
Areas at RiskAreas at Risk
Areas AffectedAreas Affected
Sawlog stands : 15 yrs and olderPulpwood stands : 10 yrs and olderOther stands : 13 yrs and older
Infection RatesInfection Rates
W & S Cape (all crops) : 0.1%E Cape, S KZN & KZN Mid (sawlogs) : 0.5%E Cape, S KZN & KZN Mid (pulpwood) : 5.0%
W, S & E Cape (sawlogs/poles) : 50% of area at riskW, S & E Cape (pulpwood) : 100% of area at riskS KZN & KZN Midlands (all crops) : 100% of area at risk
Assumptions Made in Analysis 2Assumptions Made in Analysis 2
ThinningsThinnings
Recovery RatesRecovery Rates
Only pulpwood stands thinned (5%, 10% & 15% volume)Eventual loss in volume 80% (i.e. 4%, 8% & 12% loss)Thinnings occur between 4 & 7 years – all to wasteCost based on R30 per m3
InoculationsInoculationsCost per hectare (from Mondi Shanduka & Sappi) R1 100 Infection levels of 1-3% - 33% of area inoculatedInfections levels of over 3% - 20% of area inoculated
Sawlogs to sawn timber : 47%Pulpwood to pulp : 33%Poles to treated poles : 95%
Scenarios Used Scenarios Used
Area Demarcation & Characteristics 1Area Demarcation & Characteristics 1
Western & Southern CapeWestern & Southern Cape
Eastern Cape, Southern KZN and KZN MidlandsEastern Cape, Southern KZN and KZN Midlands
Current Affected AreaCurrent Affected Area = R20 m: Area at Risk = R74 m = R20 m: Area at Risk = R74 m
Conclusion 1 Conclusion 1
Sirex is already causing massive losses in terms Sirex is already causing massive losses in terms of volume and foregone income for the Industry.of volume and foregone income for the Industry.
Should it spread into those areas where it Should it spread into those areas where it currently is not present, these losses will increase currently is not present, these losses will increase dramatically.dramatically.
Sirex will require a large amount of resources to Sirex will require a large amount of resources to be used to control it.be used to control it.
Conclusion 2 Conclusion 2
The best results can be achieved by The best results can be achieved by taking action as soon as new taking action as soon as new infestations are discoveredinfestations are discovered
It is thus critical that an efficient and It is thus critical that an efficient and effective monitoring programme be effective monitoring programme be developed and put in place ASAPdeveloped and put in place ASAP