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During the course of this study, the International Consultant (Forest Economist), local consultants and LBB counterparts met with many stakeholders in the forestry sector in Suriname, including: six staff of the Ministry of Natural Resources; three industry association and NGO representatives; nine sawmillers; five loggers; six members of local communities; and one representative of an international agency. These interviews did not follow a set question and answer format, but attempted to gain an insight into the current economic condition of the forestry sector in Suriname through general discussion. Cost and price data was also, of course, collected when respondents freely offered this information. By carefully steering the discussions, the interviews attempted to collect the information about the following aspects of the forestry sector in Suriname:

the basic size and structure of the logging and sawmilling industry;

the physical and economic condition (i.e. profitability) of the industry;

relations between the industry, government and local communities;

cost and location of log supply;

timber markets and marketing;

industry productivity and costs;

current and planned investment; and

the major challenges facing the forestry sector.

The following text presents a record of these discussions.

Discussions with LBB Planning Division staff - 1 October 1998

Shortly after arriving, the International Consultant (Forest Economist) discussed the current structure and status of the sawmilling industry and logging sector with counterparts from the Planning Division of LBB.

The sawmilling industry

The last survey of the sawmilling industry in Suriname indicated that there were about 45 sawmills in operation, most of which are in the major towns near the coast (i.e. Paramaribo, Nickerie, Albina, Paranam and Moengo). There are also an unknown number of sawnwood producers who manufacture sawnwood in or near the forest using only a chainsaw (locally referred to as "Stihl mills"). Since the survey was carried-out in 1990, a number of larger, more modern mills have been built with the aim of producing sawnwood for export. Foreign investors have mostly built these (including: MUSA and Tacoba).

With the exception of the new mills, most of the sawmilling capacity in Suriname is quite old. Much of it was installed before the 1970's, often with second-hand equipment imported from Europe. The results of the survey indicated that many sawmills use gangsaws originally built before 1940. Because much of the sawmilling machinery is so old, it was considered that normal economic measures of performance, such as return on capital, are not really applicable to the situation in Suriname (i.e. most of this machinery was completely depreciated or written-off many years ago). It was felt therefore, that most sawmillers and (and loggers) in the industry look for a profit margin or mark-up on top of their current expenditure. It was suggested that the expected profit margin is currently around 20%.

Installed capacity in the sawmilling industry is several times the level of current production and capacity utilisation is as low as 5-10% in some mills. Nearly all mills work only one shift so, technically, capacity utilisation is even worse than this. Historically, the sawmilling industry has managed to survive under these conditions, in part, because of the very low domestic roundwood price. However, the current economic downturn in Asia has reduced the demand for exports from many of the newer, larger mills and these mills have turned to supplying the domestic market with sawnwood at very low prices. Consequently, many of the older mills are now finding it particularly difficult to stay in business under current circumstances.

A major concern of sawmillers at the moment was believed to be security of supply. Since the 1992 Forest Management Act was passed, most old concessions have come to an end and very few new concessions have been issued. Consequently, most sawmills are not currently properly integrated with forest concessions and sawmillers are having to rely on a variety of sources (including some, such as former concessions, which are technically illegal) for their roundwood supplies.

It was considered that the sawmilling industry has shown little desire or capacity in the past to expand or modernise. It was generally felt that there is a strong need to rationalise and modernise the industry, particularly in light of the newer more competitive mills operating in the sector. However, given their past performance and current economic conditions, it was felt that this would be difficult to achieve.

The logging sector

As well as the sawmillers with their own logging operations, there is a small independent logging sector in Suriname. With the exception of Bruynzeel and the newer sawmills, most sawmills and independent loggers have very small forest operations. Most operations typically consist of 1-3 chainsaw crews (of two people each), a skidder and possibly a D6 bulldozer and a log loader. Some operations have their own trucks, but most use contractors for transporting roundwood. As with the sawmilling sector, much of this machinery is very old (typically 5-10 years old and often much older than this).

There is little planning in the logging sector and most operators are often re-logging previously harvested areas. There is also currently very little infrastructure development in the sector. Bruynzeel and the forest operations of the newer sawmills have permanent forest camps and are building some roads. However, most loggers are using existing roads (often built by Bruynzeel or LBB in the 1970's and 1980's) and skidding timber for distances of up to 2 km. This reluctance to invest in the sector may be due to the insecurity of current forest operations. However, it is may also be a sensible economic decision, in that it is probably cheaper to extract logs in this way rather than incur the cost of new road building, as long as loggers are allowed to constantly re-enter previously logged stands.

Field visit to sawmills in Paramaribo - 2 October 1998

In order to get an idea of the profitability and current challenges facing sawmills operating in Paramaribo, the Chief Technical Advisor, International Consultant (Forest Economist) and LBB counterparts visited two typical sawmills located on the outskirts of Paramaribo.

Sawmill number 1

The first sawmill visited was a medium-sized sawmill, supplying both the export and domestic sawnwood markets. The mill was established in the 1950's and is part of a group of two mills (the other produces furniture and higher value-added products). The mill is equipped with one horizontal bandsaw (used for primary log breakdown), three old gangsaws, a small crane, an edger and a planer. The mill also has a loader, a forklift and a couple of trucks, but most log transport is by barge. Current roundwood intake is about 5,000 m3/year, which is estimated to be about 50% capacity utilisation (based on one shift working). The mill employs 50 workers, including a couple of expatriate workers who are training the local staff in modern sawmilling techniques.

Roundwood supply is from three former concessions in the Moengo area, which the sawmiller has been allowed to continue working in (although part of one has been re-issued as an ICL). The forest operation (supplying both mills) employs 15 workers and comprises: five loaders; four bulldozers; four skidders; two tugboats; and two barges. This equipment is all old and in various states of repair.

The mill owner has expansion plans and has already installed a US$ 300,000 sawdoctoring shop and bought a one-year old US$50,000 horizontal bandsaw. It was estimated that it would cost a further US$50,000 to install this as a second line and that sawing with the gangsaws would gradually move over to sawing with the two bandsaws. Working on a two-shift system, it is expected that roundwood intake would expand to 12,500 m3/year or about 65% capacity utilisation (two shift working). The mill owner is also in the process of erecting some more drying sheds and plans to build a kiln to increase the marketability of the sawnwood produced.

Sawnwood recovery is currently 25% of export quality sawnwood, plus 7% second quality sawnwood, to give a total of 32% recovery. All sawnwood production is air-dried sawnwood of a mixture of grades. With the new production line, kiln drying, some production of small mouldings and other quality improvements, it is anticipated that the sawnwood recovery rate will increase to 40% export quality plus 10% second quality. The considerable volume or residues produced in the mill are currently sold for fuelwood or mostly burned on site.

The mill owner had two significant things to say about the current challenges facing the sector. The first was the highly detrimental effect of the current exchange rate policy, whereby foreign exchange from exports must be converted back into Suriname Guilders at far below the market rate (he also commented that there were ways around this and that maybe 40% of his export revenues never come back into the country). The second point raised was a feeling of discontent with the way forest concessions and ICLs are currently being awarded. The importance of family and political connections was stressed as being a major source of discontent.

Sawmill number 2

The second sawmill visited was of a similar size to the first, but operating in an entirely different manner. The mill was also established in the 1950's and was equipped with a circular saw for primary log breakdown, four old gangsaws (only one of which is currently used), a crane, an edger and a planer (hardly ever used). The sawmill also has a loader, a forklift and a truck, a large storage/drying shed plus some accommodation buildings for its workers. The sawmiller indicated that log input was maybe 10-15 logs per day (which would be roughly equal to 5,000 m3/year to 7,500 m3/year), but then went on to state that total input was probably only 1,500 m3/year (the sawmiller seemed quite unclear as to what the true rate of log input actually was). Given the current level of working, the latter figure is probably closer to the truth. Comparing this with the total capacity estimated in the 1990 sawmill survey, this would indicate that the sawmill is probably working at between 5-10% of installed capacity (based on one shift working). The mill employs 10 full-time workers and 10 part-time workers and is currently working for one shift, four days per week.

Roundwood is supplied from HKVs and an ICL in the Moengo area. The sawmiller pays Sf 3,000/m3 to the village captain for logs taken from the HKV. The sawmiller also has a former concession in the same area, but can only use this during the dry season. He also said that it was more expensive to work in his former concession area. The forest operation employs four workers (in two crews of two) plus contract tree fellers (local villagers) and comprises: two skidders, a barge and a bulldozer for road construction. The bulldozer is hardly ever used.

Production from this sawmill is mostly air-dried rough sawnwood, all for the domestic market. The sawmill had a very large stock of unsold products of a wide variety of sizes, grades and species. The only current investment in the mill was replacement of part of the roof of the sawmill. The sawmill manager stated that the main problem facing his operation was the wide range of species present in Suriname and the currently low prices in the domestic market (due to the supply from the large, newer mills).

Discussions with Minister's advisors - 6 October 1998

On 6 October, the International Consultant (Forest Economist) and Chief Technical Advisor met with the two senior advisors to the Minister of Natural Resources, to discuss the consultant's preliminary assessment of the economics of the sector and present a proposed list of outputs from the assignment.

It was explained that a major factor, which will affect the scope for increasing forest levies, will be the extent to which the government will be prepared to accept a restructuring of the current industry. Given the size and types of mills currently operating in the sector, there is massive overcapacity, which will have to be closed or modernised to meet export quality requirements, if forest levies are increased. Much will also depend on the government's attitude to macroeconomic reforms to tackle issues such as the divergence between official and market exchange rates and access to investment funds.

The Minister's advisors showed great interest in these issues and agreed to a broadening of the consultant's terms of reference to look at issues such as: the structure and profitability of the current forestry sector; investment and marketing requirements for the development of the sector; macroeconomic issues such as exchange rate and investment policy; and a stakeholder analysis of who will gain and who will lose from increases in forest levies.

Visit to sawmill number 3 in Paramaribo - 7 October 1998

On 7 October, the International Consultant (Forest Economist) and LBB counterpart made a very short visit to a large sawmill in Paramaribo that supplies both the domestic and export markets. The LBB counterpart accompanying the consultant had already made arrangements to visit the mill to collect some data. The logging operations manager was very helpful and supplied detailed product price and operating cost data for all machinery working in the forest (this data is presented in the main section of this report). He also agreed to arrange a field-visit to the company's largest forest concession.

The logging manager reported that machine utilisation was very low, which was why some of the cost data (e.g. fuel consumption) looked very low. The data supplied provided all the information necessary to calculate machine-operating costs except the depreciated value of the equipment. When asked about depreciation, the logging manager reported that the company fully depreciated the value of all machinery over four years using a straight-line depreciation method, then revalued each asset and fully depreciated it again over another four years. This must lead to some overestimation of depreciation costs.

Discussions with head of the Loggers Association - 12 October 1998

The Suriname Loggers Association (Associatie van Boxexploitanten or ABE) was founded in 1977 and currently has 38 members. The independent logging sector is one of the three sectors of the forest industry, which harvest timber. The other two are sawmillers with their own forestry operations and some of the forest concession holders (none of whom are members of the loggers association). Currently none of the independent loggers have their own concessions and they mostly work in HKVs and ICLs. A few work in former forest concessions which have been abandoned or never been worked.

The average size of ABE members operations is 1-2 skidders, possibly with a bulldozer as well, plus 5-6 workers. The average age of harvesting machinery used by ABE members is about 20-25 years old.

The head of the ABE is also a logger and estimated that typical production costs in Suriname might be as follows:

Payment to village captain to harvest standing timber in HKV: Sf 2,500/m3

Harvesting and extraction cost: Sf 7,500/m3

Transport cost: Sf 5,000/m3 - Sf 8,000/m3

This would give a total delivered cost (to Paramaribo) of: Sf 15,000/m3 - Sf 18,000/m3

He confirmed the view of LBB that the loggers are generally looking for a 20% mark-up or profit on the delivered wood cost. He also stated that selling prices are currently around the following levels:

1st grade logs for the domestic market: Sf 25,000/m3

2nd grade logs for the domestic market: Sf 20,000/m3 - Sf 22,000/m3

3rd grade logs for the domestic market: Sf 15,000/m3

Logs for export: US$ 90-100/m3

The head of the ABE had two main things to say about the current state of the industry. The first was that it was unfortunate that, in his opinion, political influence was being used too much to determine the development of the sector. It was felt that the forestry sector in Suriname has traditionally had very good consultation between the industry and the government. The Minister of Natural Resources has, for example, a Timber Council where all interested parties can be consulted and express their opinions about forestry policies. However, the current Minister has not used this very much.

The second point raised was that there is some conflict between the sawmillers in the sector and the independent loggers. The sawmillers tend to want to restrict roundwood exports so that they can have access to supplies, while the independent loggers want to get the best price they can for their roundwood, which often means exporting a proportion of it. It was also claimed that part of this problem is that many sawmillers built mills in the 1950's and made large profits due to low logging costs and little domestic competition. Very little of these profits were re-invested in the industry and the sawmillers have become used t o earning large profits. Now, however, they can no longer compete with the newer mills being built in Suriname and are reluctant to make the investments necessary to compete on world markets.

From the independent loggers point of view, the head of the ABE suggested that four measures would help their development. Firstly, the loggers feel that they should be allowed to apply for forest concessions on an equal basis with other stakeholders. Secondly, the current exchange rate policy and access to investment funds makes it very difficult for them to invest in the development of the sector. The third point raised was that there was a feeling that a lack of port facilities was making it difficult for them to get the best prices for their export-grade roundwood. In particular, a lack of storage facilities means that most small loggers have to sell their timber to traders, who have better access to port facilities and can extract a proportion of the selling price in the process of exporting the timber. The last point raised was that it was felt that there is considerable need for training in improved forest management, machinery operation and harvesting techniques within the sector. The head of ABE noted that there had been discussions of holding workshops with major machinery manufacturers such as Stihl and Caterpillar, but that these had mostly come to nothing.

Field trip - 14 October 1998

On 14 October, the International Consultant (Forest Economist) and International Consultant (Forest Concessions) visited a small sawmill and forest logging operation to the east of Paramaribo. The purpose of the visit was to discuss the way in which concessions are issued with the sawmiller and local communities and collect cost and price data. The sawmiller also discussed the hewn square and pole production side of his business (including the wharf used to load the hewn squares and poles) and the opportunity was taken to collect a little socio-economic information about local communities in the area.

Sawmill number 4

The sawmill visited was formed from the merger of two former sawmills, which were partly destroyed during the civil war. The mill is equipped with: an old horizontal bandsaw; two edgers (one single-sided and one double-sided); a loader; and a truck. Current roundwood intake is about 8,000 m3/year, which is estimated to be about 80% capacity utilisation (one shift working). The mill used to employ 30 workers, but this has just been reduced to 18 due to poor current market conditions.

The mill owner has plans to expand into the export market and is currently constructing a rest house above the sawmill office and rebuilding various pieces of old machinery, including a second skidder and a more efficient vertical bandsaw with sliding log carriage. The mill owner is also building a separate factory, which will produce higher value-added products, with a loan from a foreign bank. This factory (located elsewhere) will use the sawnwood produced by the sawmill. The mill owner wanted to get a loan of US$ 150,000 to upgrade the sawmill, but couldn't get the financing for this locally, so all current capital investments are funded from profits.

Sawmill recovery was estimated to be 30% (around 2,400 m3 product volume per year), of which about 15% is second grade sawnwood which cannot be sold on the domestic market under current market conditions. All sawnwood production is undried rough sawnwood of a mixture of grades and species, none of which is stored under cover. It was estimated that 60% of production goes to Paramaribo; 10% to Moengo; and 30% to Albina. A local bakery takes some of the sawmill residues to use as firewood, for a small fee.

Logging operation number 1

Roundwood supply for the sawmill, hewn square and pole production comes from two HKVs and one ICL in the Moengo area. The forest operation comprises one skidder operating on a 12-hour shift system (two skidding crews each work for 12 hours per day for three days per week and perform cleaning and maintenance of the skidder on Sundays). By doing this, the skidder is utilised for roughly twice the amount of time that would be normal elsewhere. Contractors are used to load and haul timber to supplement the sawmiller's own equipment. The sawmill manager acts as exploitation manager and, besides him, the operation employs four people (two skidding crews) and contract tree fellers (some local villagers, plus villagers from elsewhere).

The logging operation produces three species used for hewn square and pole production (Basralocus, Groenhart and Walaba) and about 12 other commercial species that are used in the sawmill.

Felling costs are as follows:

Payment to village captain to harvest standing timber in HKV: Sf 3,000/m3

Contract felling cost (contractor with own chainsaw): Sf 2,000/m3

This would give a total felled at stump cost of Sf 5,000/m3. For comparison, the sawmiller also said he could buy logs felled at roadside for between Sf 8,000/m3 and Sf 18,000/m3, depending on the quality of the log and species.

Contract loading and transport costs quoted by the sawmiller were as follows:

In forest loading: Sf 3,250/m3 (US$ 5/m3)

Transport to the sawmill or wharf (35km): Sf 6,500/m3 (US$ 10/m3)

Unloading: Sf 2,000/m3 (US$ 3/m3)

The same prices are charged for logs and hewn squares but, if the load is hewn squares (i.e. for export), the contractors expect to be paid in US$.

Other cost information collected from the sawmiller was that the charge for a fully loaded timber lorry to use the ferry across the Suriname River was Sf 125,000 (or about Sf 9,000/m3 to Sf 12,500/m3, depending on the size of the load) and that he had just replaced the four tyres on his skidder (after two years use) at a cost of US$ 3,200 each.

In discussions about issuing new concessions, the sawmiller noted that, if he could get a new concession close to his sawmill, he would no longer be interested in working in the HKVs. The sawmiller already had in mind an area that he wished to enter.

Production of hewn squares and poles

A second company owned by the sawmiller and his partners produces hewn squares and poles for the domestic market and export. Hewn squares made from Basralocus are produced for export (mostly to the Netherlands), while Groenhart and Walaba utility poles are sold on the domestic market. All of this production is transported by barge from the area to Paramaribo (to avoid the high cost of road transport and the ferry charge). Production of hewn squares is roughly one container load (26 m3) of 12 m lengths every two weeks, plus one 200 m3 load of longer lengths every four months. Total production of hewn squares can, therefore, be calculated as roughly 1,300 m3/year. (Based on an average form factor of 0.7, recovery can be estimated at around 30%). Loading 200 m3 of hewn squares takes roughly 5-6 hours, while loading a similar volume of logs takes around 4-5 hours.

Local villagers are used to produce the hewn squares by hand. On average, it takes one villager three days to produce a hewn square (but the really fast workers can produce one in around a day). Based on this information, the total employment from hewn square production can be calculated as roughly 10 full-time jobs. In addition to the costs given above, hewn square production costs are as follows:

Hewn square cutting: Sf 10,000/m3

Loading at the wharf: US$ 5/m3

Water transport to Paramaribo: US$ 20/m3

Unloading in Paramaribo: US$ 10/m3

Current containerised freight charge to the Netherlands: US$ 65/m3

As noted above, because hewn squares are produced for export, all the contractors (except the villagers cutting the hewn squares) want payment in US$. Another interesting comment the sawmiller made was that if he transported logs or poles for the domestic market to Paramaribo, then the barge operator and crane-owner in Paramaribo only charged him about 60% of the usual fee (Sf 10,000/m3 for water transport and Sf 4,000/m3 for unloading) and were happy to take payment in Suriname Guilders.



Socio-economic information

A small amount of socio-economic information was also collected as part of this field trip. Discussions with villagers indicated that they had two main interests in the way in which forest concessions are awarded in the future. The first was to ensure that the areas they needed for their agriculture and other purposes was clearly identified and respected. The second was that they wanted to get some employment in forest concessions. In this particular area, forestry is the main source of cash income for local communities. A small amount of cash income is also generated from the sale of surplus crops, but this income is relatively small and unreliable.

Villagers currently use a fairly short 5-year shifting cultivation cycle. Land is cleared by burning, then the land is intensively cropped for 12 - 18 months. Crops grown in this area are: melon (for three months), then cassava (for six months) and finally pineapple (for 6-9 months). It was noted that the villagers are increasingly turning to planting permanent crops (e.g. fruit and nut trees) on their agricultural areas once they have cropped them. It was not possible to estimate the total area under cultivation, but it was said that the main local village (200 inhabitants) had cultivated areas along the riverbank, up to 15km away.

Field trip - 15 and 16 October 1998

Over the following two days, the International Consultant (Forest Economist) and International Consultant (Forest Concessions) made further visits to the interior of Suriname (to the south of Paramaribo) to discuss the way in which concessions are issued with loggers and local communities and collect cost and price data. During this trip, discussions were held with representatives of two local communities (one with a logging operation and one with a new forest concession), a small independent logger and one of the large foreign-owned logging companies.

Logging operation number 2

The first logger interviewed during this trip was a very small independent logger, who had been working in the area for 5 years. The logger employed an assistant, but didn't own any capital machinery except for his chainsaw. All other forest operations were contracted-out.

The logger is working in a 200 ha block of savannah forest, for which he has an agricultural clearance licence issued by the District Commissioner in Brokopondo. The logger also has a licence for gravel extraction from the same area. The logger is working in this area because he can not get permission to log on the HKV around his own village (further into the interior) from the village captain. It became clear that the logger had no intention of really clearing this area for agriculture, but was simply using this licence as a way to get permission to cut the trees. For example, the logger said he would apply for another licence when this area had been logged-out. It was also unclear as to whether he was still operating in his licensed area or had already moved beyond its boundaries. When asked why he didn't apply for a concession in the area, he said he couldn't raise the Sf 400,000 needed to carry-out the survey required for an application.

The logger claimed that he produced 1,000 logs per month. However, based on the scale of his operation, it was thought likely that this was a vast overestimate of production (1,000 logs per year seemed more likely). The logger sells most of his logs to Bruynzeel and had paperwork showing that LBB have collected levies from him and cleared the transportation of logs produced from the area.

The logger quoted the following contracting costs:

Skidding (long distances but over easy terrain): Sf 8,000/m3

In forest loading: Sf 1,500/m3

Transport to the sawmill or wharf (80km): Sf 4,000/m3

This would give a total production cost (excluding the loggers own felling expenses) of Sf 13,500/m3. Given the loggers position in the market, he seemed to have to produce a fairly high quality product. For example, he had a long list of log specifications, which he had to meet in order to sell to Bruynzeel. It is likely, therefore, that he is only producing a small volume of high quality logs (and, consequently, high-grading or creaming the forest he is operating in).

The logger also quoted the following delivered log prices:

Plywood species (1): Sf 18,000/m3

Sawnwood species (22): Sf 22,000/m3

Export species: US$ 45/m3 - US$ 60/m3

It is worth noting that the price paid for plywood species is less than the price paid for sawnwood species. This is generally the opposite of what would be expected, but might reflect the fact that there is only one buyer in the market for plywood species (Bruynzeel).

By subtracting the loggers contracting costs from delivered wood prices, it can be calculated that he is currently earning a surplus of Sf 4,500/m3 - Sf 8,500/m3 (and maybe up to Sf 25,000/m3 for export quality logs) to cover his profit and felling expenses.

Logging operation number 3

The next logging operation visited was a group of villagers (mostly relatives and friends of the local village captain) logging in the village's HKV. The operation has two crews of seven people working on felling and extraction. The villagers are paid Sf 13,000/m3 for logs at roadside and have to pay Sf 8,000/m3 for hiring the skidder. The skidder owner buys the logs, so he is effectively paying them Sf 5,000/m3 felled at stump. They claimed that a proportion of this is paid into a village fund. Currently, bruinhart is being taken from the area for making utility poles.

The villagers noted that the HKV is almost logged-out and that they have to skid 2 km or more to extract logs. They want a larger HKV and have taken steps to unilaterally extend their HKV into a neighbouring concession. Although the villagers appeared to be quite militant about expanding their HKV, they stated that their main concern was earning a cash income. However, when asked how many people wanted to work in the forest, they claimed that most villagers were not interested in such work and that they were the only ones with the necessary skills and experience for this sort of work. They said that they would be interested in applying for a forest concession if they were given the opportunity to apply for one.


Logging operation number 4

The last logging operation visited was a large foreign-controlled operation working in an area where they had been given an exploratory licence for 150,000 ha. The operation employs 30 workers (11 local people and 19 foreigners). Monthly production from the area is currently between 2,000 m3 and 3,000 m3 (equal to about 24,000 m3/year to 36,000 m3/year). The operation has 11 log trucks (proper log trucks, rather than the homemade variety which is more common in Suriname), 20 bulldozers (only five of which are currently working), three skidders and a grader. The manager said he used the grader to grade parts of the main road to Paramaribo as well as his forest roads. He claimed to have built 40 km of roads since starting operations just over a year ago.

The manager said he gave local villagers chainsaws and fuel and paid them Sf 700/m3 for tree felling. There are no villages within the boundary of the exploration licence area and the manager claimed that he didn't have any problems with surrounding villages. LBB currently come to inspect his operations every four months.

Discussions with leaders of a local community

On the second day of the field trip, a village far to the South of Paramaribo was visited and discussions were held with three Bashas or under-captains of the village about their plans for development and their opinions about the existing situation regarding forest concessions in their area.

The village originally had a population of about 800-900 but, being so far into the interior, was badly affected by the civil war, when most of the village's inhabitants fled to Paramaribo. The village now has about 300 inhabitants and retains strong links with former villagers who have settled in Paramaribo.

At the time that many villages in Suriname were granted HKVs, most forestry activities were only taking place in the forest belt. Consequently, potential conflicts between villages and forest concessionaires were not considered to be an important issue in villages that were far into the interior. Thus, villages such as this one, were never issued HKVs. The village captain has applied for an economic zone (covering rights to timber, agriculture, hunting and mining in the area) and recently applied for a HKV. The application for an economic zone has not been resolved, but the application for a HKV was rejected.

Following this rejection, the villagers set-up a foundation, in the hope that if a foundation applied for a concession on behalf of the village they might be more successful. (This idea came from former villagers now living in Paramaribo, who helped to set-up the foundation along with the NGO Forum). They were correct in their assumption and the village has just been awarded a concession covering the land around their village.

The villagers had two main concerns about the current situation regarding forest concessions in the area. Firstly, they were worried about concessions interfering with their hunting and agricultural activities and taking timber which they needed to build houses. The second concern, was that they were disappointed that the concessions (mostly foreign-owned) didn't consult them about their activities or offer any income or employment to local villagers. (Now that they have their own concession, some of these concerns may be lessened, but the villagers were still generally unhappy about the way things have been implemented). They also expressed the view that, in their opinion, a lot of these companies were recklessly destroying the forest and that, in a few years, there would be very little timber left. They have no current plans to try to stop these concessions from operating, but said that they would make sure that they didn't encroach on the concession that the village had been given.

With respect to their own concession, the villagers are at a very early stage of planning. They had plans to mark the boundary in the field and were looking to potential donors or LBB for technical assistance with this.

Field trip - 18 October 1998

On 18 October, the International Consultant (Forest Economist) and LBB counterpart visited a large forest logging operation to the west of Paramaribo.

Logging operation number 5

The logging operation was one of the best-organised operations visited in Suriname. The operation was following some sort of exploitation plan, was building roads into new areas of forest and seemed to keep quite good records of machinery-use, other inputs and production. However, even this operation was suffering from problems such as low productivity and underinvestment.

The forest area is divided-up into annual working blocks and further subdivided into inventory units of 12.5 ha (500m x 250m). Before felling, the forest inventory crew walks through each inventory unit, marks every commercial tree and produces a simple plan showing the location of each tree. (Stocking is about 8-10 trees per ha or 16 m3/ha to 20 m3/ha). The inventory crew is expected to cover two inventory units or 25 ha per day. (Thus, the inventory crew can produce these plans much faster than the felling crews can log the area - see below). These plans are then given to the felling crews, so that they can locate all the commercial trees in each unit.

The operation has five felling crews, each of which is expected to fell 21 trees per day (they are paid a monthly salary rather than piece rates). However, the logging operation only has four working chainsaws and, with other maintenance problems, generally only 3-4 crews are working at any one time. The logging manager also stated that the crews often did not meet their targets and generally, only cut about 17 trees per day. Assuming an average tree volume of 2 m3 and five days holiday every three weeks, this would give a daily production rate of about 80 m3 (equal to around 5 ha) or an average annual production of around 30,000 m3 in total.

The operation has three skidders (plus two broken skidders) and one bulldozer for skid trail construction (plus one broken skidder). These skid logs to the landing where they are loaded by one in-forest loader (which loads about 80 m3 per day). The skid trails were not particularly long, but didn't seem to be planned very well.

Logs are hauled by three trucks to the logyard. The company owns one log truck and two belong to contractors. The contractors charge US$ 1.50/m3 for the 30 km haul to the logyard. Logs are graded at the logyard and loaded by the company's other loader onto barges for the journey to Paramaribo.

The company used to run its own barges, but now water transport to Paramaribo is contracted-out, at a cost of Sf 45,000/day for rental of the barge plus Sf 17,500/hour operating cost. This gives a total water transport cost of around Sf 3,000/m3 to Paramaribo.

The company has one bulldozer for road building and one grader. This is inadequate and, with maintenance problems, the road building programme in the forest is about one year behind schedule. The logging manager would like to build better roads with a gravel surface, but the company's dump truck and bucket loader are both broken-down.

Overall, the logging operation employs 60 people in this area, plus 50 people in other forest areas and 30 in the factory at Paramaribo (140 out of a total of 900 employees for the whole of the company). Wages are currently very low (about Sf 100,000/month), which may account for some of the productivity problems. However, the logging operation is overstaffed. This is partly due to the history of the company. The company had to take on a lot of workers as a condition of the peace agreement, but this has led to overmanning and low labour productivity. Many of the employees are villagers (but not from within the forest area, which does not have any villages within its boundary) and it would be politically difficult to reduce the size of the workforce.

Visit to sawmill number 5 in Paramaribo - 29 October 1998

On 29 October, the International Consultant (Forest Economist) and LBB counterpart visited a medium-sized sawmill on the outskirts of Paramaribo. The sawmill has currently stopped operations (since April) due to poor market conditions, but the manager was still able to provide some information about the operation.

The sawmill was established in 1975 with mostly new equipment, but none of the equipment in the sawmill has been replaced since that time. The mill is equipped with one crane, one bandsaw (for primary log breakdown), two gangsaws, two edgers and a planer. The mill also has two loaders and a D4 bulldozer for moving logs around, a saw-doctoring shop and extensive storage sheds. The capacity of the mill is estimated to be 8,000 m3/year to 10,000 m3/year log input (based on one shift working). In the last few years, the mill has been processing about 2,000 m3/year to 4,000 m3/year (or working at around 30-50% capacity). The product recovery rate was about 40-45% and the mill employed 30 people when it was working.

The mill obtained its timber from its own former forest concessions: one of 30,000 ha in western Suriname and another of 30,000 ha in central Suriname, and the mill used 8-10 species from these areas. The mill produced a wide range of products for the domestic market, including: rough sawnwood; planed sawnwood; squared utility poles; shingles; flooring and mouldings (as elsewhere, none of the products were systematically dried). The mill also worked to try to introduce less well known species to the market and examined in-forest processing (which, in the managers opinion, was not a success and was far more expensive than operating in Paramaribo). The mill is currently not working because the domestic market is so depressed. For example, it took two months to sell the very limited stocks the sawmill had after it stopped production. There are no immediate plans to re-start production.

Apart from the current state of the domestic market, the sawmill manager had other opinions about why the current situation for sawmills was so bad in Suriname. He had drawn-up investment plans to try to attract foreign investors, but had been unsuccessful in attracting anyone because investment law in Suriname is so weak. He suggested that partnerships with foreign companies (rather than loans) were the best way forward, because the industry needed more than just capital. It also needed access to new technology, modern management methods and marketing skills. He also said that it was difficult to develop a better sawmill in Suriname because it was difficult to get information about the requirements in foreign markets and advances in sawmilling elsewhere.

Visit to sawmill number 6 in Paramaribo - 30 October 1998

On 30 October, the International Consultant (Forest Economist) and LBB counterpart visited a small sawmill on the outskirts of Paramaribo. The sawmill uses a Woodmizer portable bandsaw to cut relatively small logs (average volume 1.5 m3) and has an edger and planer. Total input capacity of the mill is 1,300 m3/year (based on one 8-hour shift and five day working), but current log input is about 550 m3/year (about 40% capacity utilisation). The sawmill manager had detailed log input and product output statistics, which showed that the current product recovery rate is about 55%.

The sawmill obtains all its wood supplies from its own forests. The company had tried sawmilling with the portable bandsaw in the forest, but had decided that this was not efficient. To put it bluntly, the sawmill manager complained that the villagers he had worked with did not want regular employment and always wanted too much money. Current sawing costs in Paramaribo are estimated to be: US$ 45/m3 (single-cut) to US$ 70/m3 (double cut). Edging costs are US$ 40/m3 (single-sided) to US$ 60/m3 (double-sided). In addition to the direct production costs, the manager estimated that his overhead costs were about a further 30% (which he considered to be far too high).

The sawmill produces a variety of sawnwood products, mouldings and utility poles. The sawnwood currently sells for around US$ 180/m3 and the poles sell for US$ 215/m3. The sawmill has exported a very small amount of sawnwood in the past, but is not currently exporting because of the exchange rate differential. All products from the sawmill are air-dried and the sawmill is currently moving into prefabricated wooden house production.

Field trip - 9 November 1998

On 9 November, the International Consultant (Forest Economist) and LBB counterparts visited three sawmills to the west of Paramaribo.

Sawmill number 7

The first sawmill visited was a medium-sized sawmill with an annual log input capacity of 10,000 m3. The mill employs 31 people (working one 8 hour shift, five days per week) and is currently running at about 50% capacity. All the equipment in the mill was quite old (around 20 years at least) and included one vertical bandsaw (for primary log breakdown), two gangsaws, an edger and a planer. Other equipment included a crane and a winch (for dragging logs from the logyard), a bulldozer and loader and a machine for making broom handles. The edger is not currently used (the second gangsaw is used to double-cut all the sawnwood produced). Overall, the mill was one of the most carefully laid-out mills seen in Suriname. The sawmill also has a sales depot in the town and all sawnwood produced is immediately transported there after production. The sawmill manager was fairly new to the job and wasn't sure about the product recovery rate, but estimated that it might be around 50 - 60%.

The sawmill has its some former forest concessions, but part of these had recently been given to local villagers (and the sawmill manager wasn't very happy about this). The sawmill uses about five species and produces a range of products for the domestic market, including: rough and planed sawnwood; mouldings; flooring and broom handles. Only the flooring and mouldings are air-dried. The sawmill has never exported sawnwood, but the manager said that local traders had exported some of his sawnwood in the past. The list of product prices for this mill is presented in the main text of this report.

The manager was facing two main problems at the moment. The first was that the local economy in this area was very depressed and people were not buying as much sawnwood as they had in the past. The second was the deterioration in the exchange rate, which was increasing his operating costs (and also contributing to the depression in the local market). The manager said that he believed that developing export markets was the only way forward, but that the current exchange rate ruled-out any possibility of this.

Sawmill number 8

The next sawmill operation visited consisted of two small sawmills adjacent to one another. The mills were first established in 1930 and the current owner had bought them in 1963. Each sawmill has an annual log input capacity of 6,000 m3. One of the sawmills has not been operating since April and the other is only using about 30 m3/week (giving a capacity utilisation figure of around 8% for the combined operation). The manager estimated that product recovery rates were about 70% for Basralocus and 60% for other species (which seemed rather high compared with estimates obtained elsewhere). Sixteen people are employed at the operating sawmill and another four are performing maintenance operations at the sawmill that is temporarily closed. The manager hoped to restart operations at the closed mill next April. Each mill was equipped with the following (very old) equipment: a circular saw (for primary log breakdown); two gangsaws; and a planer.

Roundwood is supplied from two former forest concessions and local HKVs. Roundwood is also purchased from other former concessions and the manager reported paying US$ 11/m3 for such material (this price seems very low - perhaps these were prices for felled and extracted roundwood). All roundwood is transported by barge to the mill.

The mill produces a range of products for the local market, including: rough and planed sawnwood; mouldings and flooring. None of these products are dried or stored very carefully (they are just piled-up in the yard until somebody comes and buys them). The mill has exported sawnwood in the past to the USA and Caribbean markets, but not for a long time. The manager believed that developing export markets is the only way forward for the industry.

The sawmill manager was very critical of the current government's economic record. Problems he mentioned included: the currently depressed local market; the exchange rate problem; and a perception that favouritism was creating unfair advantages to particular sectors of the economy. He also believed that the government was not particularly concerned about the local economies of areas outside Paramaribo.

Sawmill number 9

The last sawmill operation visited consisted of another two sawmills adjacent to one another. One mill was established in 1949 and the second in 1980. The larger sawmill has an annual log input capacity of 18,000 m3 and the smaller sawmill has a capacity of about half of this. Only the large sawmill is working at the moment and uses around 3,600 m3/year of roundwood (giving a total capacity utilisation rate of 13% for the whole operation). The sawmill manager estimated the following product recovery rates: 60% for Gronfolo; 50% for Kopie; and 35% for Mora and Rode Locus.

The sawmill is supplied by several former concessions, totalling around 80,000 ha. In addition to this, the sawmill manager has applied for a further 35,000 ha of new concessions and gets some logs from HKVs. The logging operation had about 10,000 m3 of felled timber in stock in the forest, but much of this was taken by local villagers during the civil war (along with a lot of the sawmillers other forest equipment). They now want to sell this roundwood back to him. The villagers also want employment in the logging operation. The sawmill manager has a couple of villages in his former concession and has worked with one of them (but not the village that stole his equipment and stock). He allows them to use his truck at weekends to take their agricultural products to market.

The sawmiller is just starting to rebuild his logging operation and has cleared some channels through swamp areas and is building a road. He has also marked-out a much longer road, which he plans to build to give him access to other parts of his former concessions and access to his current operations during the wet season. The manager seemed to be following some sort of exploitation plan. Felling costs are Sf 2,000/m3 - Sf 2,500/m3 in his former concessions. In HKVs, he pays Sf 4,000/m3 - Sf 5,000/m3 for felling and has to supply all the equipment and materials to villagers. He also has to pay Sf 1,000/m3 to the village development fund.

The larger mill has one bandsaw to split very large logs in half and a circular saw for primary breakdown. The mill also has two gangsaws and a planer. The newest piece of equipment was installed in 1978. The sawmill manager plans to install a third gangsaw and a second planer plus two edgers to produce sawnwood for export. He estimated that each of these pieces of machinery would cost him about 60,000 DM to 100,000 DM to purchase and roughly the same cost again to install. His current cutting costs are Sf 25,000/m3 - Sf 30,000/m3.

The mill currently produces a full range of sawnwood products and mouldings, none of which are dried. As in many other mills visited, these are just piled-up in the yard until somebody comes to buy them. The sawmiller isn't exporting at the moment, but has exported in the past.

The sawmill manager quoted the same problems facing other sawmillers in the area: depressed local markets; the exchange rate differential; and a difficulty to attract foreign investment. This sawmiller can get loans because he has a good relationship with his local bank and they can see from his bank statements that he has made money in the past. At 38% interest however, he is not interested in borrowing to finance his expansion and is currently financing everything out of his operating profits and capital reserves.





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