Lumber shortage delays several govt. contracts

Aug 23, 2011 News

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– Exports by middlemen halted; little-used concessions to be seized

 By Leonard Gildarie

A key meeting between logging companies and government to address high lumber prices and shortages on the local market has seen the administration yesterday announcing temporary measures that will restrict middlemen from exporting.
It was a meeting that stakeholders, some worried about the fallout from a possible export ban, also called for contractors and project designers to start reducing their dependency on the popular greenheart and purpleheart, and increase use of the lesser known species of wood.
Amidst growing complaints of shortages of lumber and high consumer prices, the Guyana Forestry Commission (GFC) last week, while denying it has placed a temporary ban on the exports log and lumber, warned that action will have to be taken.
The meeting yesterday at the offices of the Ministry of Agriculture included several large scale logging companies, the Private Sector Commission (PSC), GFC, the Forest Products Association of Guyana and other key stakeholders.
According to Minister Robert Persaud, production figures indicate an alarmingly low 16% output for the first six months of the year. This was way below the annual allowable cuts that concession holders could have maximised on.
Sixty-one percent (61%) of this production was exported, with 89% being logs, further eroding the local market.

NO BANNING
While stressing that government is not banning log exports, the Minister made it clear that ways must be found for producers to meet local market demands.
But the situation may not be as easy as it seems at first glance. Of the 30-plus companies that have large concessions, less than 10 were at the meeting yesterday.
According to Persaud, several government contracts are on hold because of shortages on the local market. While stressing that government is not advocating price fixing to stabilise the market, the issue is clearly one of availability with even the booming housing sector under threat from limited supplies.
He rejected arguments that the current Low Carbon Development Strategy (LCDS) was restricting harvesting of logs.
According to GFC’s senior official, Pradeepa Bholanauth, government’s regulatory agency has been actively encouraging more interest in the lesser used species of wood. Currently, the concentration is on 15 or so of these species, although there are other types of wood that can do the same job.
The problem is that hardwood has risen steadily over the past few months from $160 to over $250 per BM. Greenheart has risen to over $300, up from around $200. In addition to the price, consumers are finding it harder to find lumber yards or sawmills with ready stocks – a strange situation compared to a few years ago.

 

FUEL PRICES
According to the PSC’s Vice-Chairman, Yog Mahadeo, loggers are complaining that rising fuel prices and distance to the actual worksite are driving prices upward. In addition, many logging companies are tied to contracts with overseas buyers.
Kim Kissoon, a logger with concessions up the Berbice River, made it clear that with bad weather affecting that area, it may take a year for his operations to normalise. He also questioned government’s figures, noting that some contractors would put in higher price quotes than what the market is offering.
Kissoon noted that wood prices are driven up with transportation costs by at least $100 per BM.
The businessman too called for more attention to be paid to the other species and warned that it would be useless for a total ban of logs exported since a number of them are just not being used in Guyana.
Among the loggers present at the meeting were Barama Company Limited, Toolsie Persaud Limited, Guyana Timber Products, Jialing, and Monty Niamatalli.
A number of loggers who also have sawmills committed to immediately making lumber available to the local market were also in attendance.
There was resistance to some suggestions of price control to help stabilise the price.

 

STANDARD SIZE, GRADING
According to Andrew Mendes, another logger, price costs are driven up with contractors and others ordering specific sizes. He asserted that a process to introduce standard sizes of lumber – for example in 10, 20 or 30-ft. lengths – should be in place, and opined that a stringent grading system to allow consumers more choices could also lead to better prices and quality.
Minister Persaud admitted that his departments too were finding it difficult to change the mindset of using certain species of wood against others. One such example is a running battle with the Guyana Power and Light Inc. to continue using wallaba posts to connect power lines.
The Ministry will be moving to meet with government architects and designers and other players to explore the possibility of using other lesser known species, he promised.
Immediately, government will seek to reduce log exports of the middlemen who are not concession holders of timber grants. While there are instances that these middlemen use the legitimate concession holders as a cover to export, the Minister said that GFC is aware of these players and will be addressing it.
Additionally, four large concessions not in use will be re-allocated to be placed into immediate use.  Several other smaller ones, numbering more than 100, will also be taken away and re-allocated. A number of exploratory permits will soon be given permission for operations and these will help ease the demand.
Regarding complaints of poor infrastructure, the minister disclosed that government will be meeting with the stakeholders to find a way forward.
He also indicated that another meeting to include contractors and designers and other stakeholders is to be held.
The loggers also called for information that will indicate the amount of lumber that is in demand by the local market.

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