We are opening our newsletter with the closing statement made by FSA’s Executive Director, Michael Peter, at this year’s digital AGM. This may seem an odd opening piece, but the statement powerfully summarises where we currently are as an industry and how, despite the challenges, setbacks and hurdles the Sector has been faced with during 2020, Forestry has shown great resilience, strength and determination which has enabled the Industry to keep growing through it all.
“We were most fortunate that we were able to insert ourselves into the PPGI process in 2018 as it was only supposed to be focused on NDP-listed sectors. This had the added benefit that Forestry now has its own Forestry Sector Masterplan to which the President referred in his address to the Joint Sitting of Parliament two weeks ago and again during the 3rd International Investment Conference held this week.
These two instruments have ensured that Forestry is firmly on the Presidential and national radar and have already assisted to overcome some long-standing challenges like the Water Use Licence conditions.
We are most pleased to see that timber volumes continue to increase significantly, and we sincerely hope for our members that this continues into 2021 and beyond. The year-on-year decline in volumes was 25% in July, narrowed to 19% by the end of September and may end up somewhere between 12%-15% by year-end, which, considering what has happened in other sectors, is a massively positive outcome.
We must, however, not become complacent as the worst may yet still be to come. TERS funding as well as other relief measures like those from the banking sector, landlords, etc, are coming to an end, so there may be a lot more financial and economic distress to come, especially for consumers. This will affect our domestic markets. Internationally we have seen many other countries going into repeated lockdowns, so this will also affect our export markets.
On a positive note, however, interest rates are likely to remain low which bodes well for domestic-led investment and highly-geared businesses.
SA is likely to continue to be a prime investment destination as we saw in this week’s 3rd Investment Conference. President Ramaphosa’s term in office has raised R760bn in just two years. This is a remarkable testament to the improvement in investor confidence in the economy and the President, noting that the additional R110bn, which has just been pledged, has come during the worst global pandemic in living memory. We were delighted to report the increased investment of R2bn by PG Bison, which puts Forestry investment pledges at R36bn or nearly 5% of all the PPGI and Investment Conference pledges. This sort of mega-project, along with the existing ones of Sappi, Mondi and York, raises the profile of our sector and helps clear the inhibitors which affect all businesses in the Sector.
As Dawie Roodt predicted at our AGM last year, the Rand has strengthened steadily. We expect this to continue in SA and other emerging markets, as the world emerges from the pandemic. A strong Rand, however, isn’t all good news for our entire sector. It doesn’t help our export competitiveness for dollar-denominated forestry goods but on the positive side, it reduces our imported input costs on things like fuel and capital goods. It also provides relief to domestic consumers, since SA is still a majority import-based economy.
We have thankfully seen the divisive and bloody-minded political rhetoric, which characterised the Zuma era, being replaced with more cohesive and inclusive messaging from the Presidency and his administration, more visible action on corruption and an increasingly positive sentiment in society. The NPA has been extremely diligent in building their cases, before rushing to charge high-profile people. This is the correct approach and requires patience from all of us, as we cannot afford to see any of these crooks being let off on technicalities. We have witnessed the clean-up of many SOEs, charges brought against high-profile individuals, people’s assets being seized and others serving jail time.
I would like to add my thanks to those expressed by our Chairperson in thanking our members for both your financial support to FSA and for the investment of your time to serve on our many critical structures. As we note every year in our Annual Report, through this latter contribution, we can access the brightest minds in Forestry in the country, at no additional cost to the Industry and for the benefit of the entire Sector, so thank you most sincerely for this.
I would also like to particularly thank our Chairperson, Mr Andy Mason, who was only supposed to have taken up the cudgels from today’s AGM but who had to do so when Dr Terry Stanger retired in August. I have been copying Andy in on all the high-level correspondence and he never fails to respond and provide guidance on all these issues, so thank you, Andy, for your unwavering support to FSA and the Industry.
I also want the thank the FSA staff. As many of you know, I was in meetings seven days a week for the first few months of lockdown, while we were trying to keep Forestry and as many of our value chains as possible, open. Our FSA staff, much like teachers across the world, quietly stepped in to take all the other more normal things off my hands and they along with our service providers like Drs Johnson and Scotcher, kept FSA going and did the most remarkable job of communicating with the entire Sector on progress. This included using our Telegram Channel and website to get the messages across and both our members and others in other Sectors, expressed their appreciation for the outstanding communication which came from FSA during the worst of the crisis.
I would finally like to wish every one of our members and partners a Covid-free, safe and enjoyable festive season and we hope that we will start 2021 with the same positive sentiment that we are ending on in 2020.”