The high investment required to properly establish and manage forest plantations calls for their management on business principles. The active and direct participation of the private sector - as indicated in the Forest Development Master Plan (1996 - 2020) - is the best indicator of the application of business principles to forest plantation establishment.
In order to achieve this “business principles” objective, incentives are required to encourage the necessary private investment. These incentives should be related to providing long-term land tenure, and reducing the cost of land and funds needed to establish and maintain the plantation over a period of time during the gestation period.
There is a rich world of experience on systems of incentives for forest plantations: fiscal incentives, capital incentives, interest and capital subsidies, loan guarantees, soft loans, special loans, duty exemptions for tools and equipment, etc. The incentives and business framework must be aimed at providing the investor with at least the same, if not even better, returns than provided by other applications of his fund. In the short term, this may require subsidy (direct or indirect). In the longer term, as the plantation mature, there should be greater overall benefits.
The recommended activities, which are required to promote tree commercial tree plantation formation, are discussed below.
Favourable investment policy environment requires to be created to promote private commercial plantation formation. Currently, long and medium term investments for schemes such as forest plantations are not available. The commercial lending rates are also very high.
The MLF has initiated support to plantation formation and plans to create a Forest Plantations Development Fund (FPDF) from the export levy on air-dried lumber to stimulate input of grant funds from the donor community. The decision on the utilization of these funds by the MLF would, however, require Cabinet approval and possible legislation. The Ministry of Finance has, however, already approved the deposit of donor funds in commercial banks (MLF 1998).
The fund is meant to provide subsidies to improve financial returns to investors who may be interested in tree plantation formation. These include investment companies, organised groups/communities and individuals.
The modalities for the administration of the FPDF are under preparation. Its success would depend on security over the assets being created and some authority over the quality of the adopted technical packages as well as the effectiveness with which they are implemented. Systems that could be employed to ensure this include those being practiced by GREL and BOPP (see Chapter 5.2.3) under the smallholder and out-grower schemes.
Other measures to be considered with respect to funding of forest plantations are:
Improved genetic planting material
The importance of using reliable and proven seed sources for any plantation development programme cannot be over-emphasized. The cost of raising seedlings, planting and maintaining plantations are basically “fixed”, while the volume and value of the final crop can vary by more than 100%, depending on the source of seed and the planting materials used. This is particularly important for industrial timber production.
The establishment of seed bank and the development of a private decentralized seeds distribution system is therefore very crucial. It is therefore recommended that:
Tree nurseries
Due to the lack of adequate capacity for the production of improved seedlings for commercial plantation formation, appropriate assistance and support (e.g. credit facilities at favourable terms) should be given to private commercial nurseries to produce seedlings. Private plantation owners such as SMS, BVFL in addition to experienced FD staff who may be retrenched through the restructuring exercise could be candidates in this regard after an appropriate training in the field.
For the recommended species, the services of an experienced specialist would required to undertake practical nursery trials in sowing systems, fertilization requirements, growing media, containers and protection measures to select a commercial scale nursery system for the species to suit prevailing conditions.
The work of the specialist should also include the practical training of prospective private nursery operators in the developed systems as well as assistance to the FORIG to perfect its technique on the vegetative propagation of especially Triplochiton scleroxylon. The FORIG should be contracted to continue the training of the selected private nursery operators including vegetative propagation of other species.
Silvicultural prescriptions
In order to minimize the risks associated with tree plantations in Ghana, it would be necessary that proven silvicultural prescriptions and management systems are adopted from similar areas in the tropical world as has been done in the case of rubber and oil palm plantations in the country. It is also essential that identification of plantation locations are based on climatic and soil/site factors of the species of interest when such data is available.
Considerations for the Investment Code
Incentives for tree plantations should be incorporated within the framework of the National Investment Code as accorded to rubber/oil palm/coconut (see section 6.3: Income tax Decree 1975).
Security of land tenure
The security of tenure of land on which trees are planted is of prime importance if investments in tree plantations are to be encouraged. The establishment of the proposed “Land Bank” is therefore welcomed. It is, however, recommended that:
Security of tree tenure
The uncertainty surrounding tree tenure should be removed. Issues that must be resolved include:
Environmental considerations
A system of environmental and land use guidelines should be developed by the EPA and the MLF for application to forestall the necessity for EIAs for individual plantations. The draft guidelines produced by the EPA in June, 1998, could form the basis.
Control of marketing
The following measures are recommended to make the marketing of plantation timber attractive:
Retooling of industry would be required to efficiently convert saw small diameter plantation wood. In the case of sawlogs this can be done in two ways:
The provision of selective technical assistance and training for all stakeholders is essential for the success of any plantation programme due to existing limited experience with respect to large scale plantation formation in the country.
Local capacity building should include managerial and technical support to existing organised tree growers to sustain the interest in tree growing and the profitability of such ventures. The support should include:
It is also necessary to assess how the skill requirements in forest plantation formation, management, harvesting and utilization of commercially valuable forest plantation timber is met by the existing forestry training institutions so as to recommend the necessary remedial actions to support the current and future forest plantations.
The School of Forestry, Sunyani - which is in a good position to train field technical staff - will require strengthening of its teaching staff and teaching aids to facilitate training in the relevant disciplines at the school.
A summary of most popular incentives according to a recent FAO 1998 study is as indicated below:
These are generally covered by the earlier analysis of the situation and the recommendations which ensued.
In order to support the proposed forest plantation effort, the promotion of adaptive research would be necessary. These include:
