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Table 22 The estimated effect of road density, distance between skid trails, stocking level and skid-trail planning on the total roundwood production cost in Suriname in 1999

Distance between

Road

Stocking

Total roundwood production cost (Sf/m3)

skid-trails

(in m)

density

(m/ha)

level

(m3/ha)

Unplanned

skid-trails

Planned

skid-trails

Difference

   

12

36,164

30,040

-6,124

 

10.0

16

32,370

25,950

-6,420

   

20

28,870

24,180

-4,690

   

12

35,470

29,260

-6,210

100

7.5

16

31,930

25,490

-6,440

   

20

28,940

23,840

-5,100

   

12

34,210

27,120

-7,090

 

5.0

16

31,630

25,000

-6,630

   

20

28,990

23,500

-5,490

   

12

36,220

34,710

-1,510

 

10.0

16

32,430

32,490

+60

   

20

28,940

29,940

+1,000

   

12

35,490

33,850

-1,640

200

7.5

16

31,990

32,040

+50

   

20

29,340

29,710

+370

   

12

34,460

32,840

-1,620

 

5.0

16

31,650

31,600

-50

   

20

29,040

30,710

+1,670

Source: Author's own estimates (skidding model results)

Table 22 shows the results of this analysis. These can be summarised as follows:

impact on production costs

production costs are generally lower if skid trails are 100 m apart than they would be if the trails were 200 m apart;

planned skid trails result in much lower production costs compared with unplanned skid trails where skid trails are 100 m apart);

where skid trails are 200 m apart, the estimated cost difference between planned and unplanned skid trails is much smaller and can be positive or negative, depending upon the stocking level (largely, as noted above, a result of the modelís simplicity); and

the differences in total roundwood production cost at different levels of road density are small and can be positive or negative as road density is increased.

The last result of the analysis is the most interesting, because it suggests that the optimal road density in Suriname might only be 5 m/ha or even less. This would not be surprising as, for any given set of operating conditions, the optimal road density will be lower in forests that have low stocking and, compared to say Southeast Asia, the forests of Suriname are not well stocked. However, before recommending an optimal road density, other factors such as site damage (see Figure 16) should also be considered.

Table 23 shows the estimated effect of road density, distance between skid trails, stocking level and skid-trail planning on total site disturbance. In this case, site disturbance is defined as the area of the forest covered with a road or skid-trail, assuming that roads are 30 m wide and skid trails 5 m wide. With respect to the benefits of different density of roads and skid trails and skid-trail layout, similar conclusions to those summarised above can be drawn from this table.

Table 23 The estimated effect of road density, distance between skid trails, stocking level and skid-trail planning on total site disturbance

Distance

between

Road

Stocking

Total area affected by road

or skid-trail construction (%)

skid-trails

(in m)

density

(m/ha)

level

(m3/ha)

Unplanned

skid-trails

Planned

skid-trails

Difference

   

12

13.8

5.4

-8.3

 

10.0

16

15.4

6.2

-9.3

   

20

16.9

6.9

-10.0

   

12

13.1

4.7

-8.4

100

7.5

16

14.7

5.4

-9.3

   

20

16.3

6.1

-10.2

   

12

12.5

3.9

-8.7

 

5.0

16

14.1

4.6

-9.5

   

20

15.5

5.3

-10.2

   

12

13.7

12.8

-0.9

 

10.0

16

15.4

16.2

+0.8

   

20

16.7

19.4

+2.7

   

12

12.9

11.8

-1.1

200

7.5

16

14.5

15.5

+1.0

   

20

15.9

18.6

+2.7

   

12

12.1

11.2

-0.9

 

5.0

16

13.7

14.7

+1.0

   

20

15.1

20.2

+5.1

Source: Author's own estimates (skidding model results)


Figure 16 Construction of roads and skid trails can cause significant disturbance in the forest and should be considered as part of the decision about skid-trail design and optimal road density

 

Overall conclusions and recommendations regarding skid-trails and road density

Based on the results of the modelling exercise described above, the overall recommendations regarding skid-trail construction and layout and optimal road density are given below:

skid trails should be located roughly 100 metres apart along forest roads;

properly planned and designed skid trails will lead to significantly shorter skidding distances and substantial reductions in costs and site disturbance and should be encouraged in all forest operations;

use of the winch in harvesting operations should be encouraged wherever possible, because this will also result in lower costs and site damage; and

the optimal road density in forest concessions may be 5 m/ha or lower, but much will depend upon local operating conditions.

Of course, it must be stressed that these are the results of a desk-based modelling exercise. The only way in which the true magnitude of benefits from proper planning could be assessed, would be to conduct a field experiment comparing current harvesting practices with improved harvesting practices. However, these conclusions concur with the results of such field studies from many other countries around the World.

As the above analysis has suggested, better skid-trail planning and layout could reduce the average extraction distance to 600 m, with a cost saving of up to Sf 7,000/m3. The optimal road density in forest concessions should be about 5 m/ha or possibly, in some circumstances, lower than this. Many forest concessions may already have this level of road density, although some new roads may be required to open-up new areas of forest for production. Any new forest concessions granted in more remote parts of the country will certainly need some road building.

It should be noted however, that this is another area where economies of scale are crucial. For example, a D8 bulldozer has the production capacity to produce at least 25 km of forest roads per year. With a 5 m/ha target for road density, this is enough to meet all the new road building requirements (starting with no roads at all) for a 125,000 ha forest concession. In view of the total production in the forest sector in Suriname and the presence of existing infrastructure, it is quite possible therefore, that just on D8 bulldozer would be sufficient to meet all of the country's forest road building requirements for the foreseeable future!

The use of proper logging trucks. The second area where substantial cost savings might be made is in the use of proper logging trucks. The roundwood production cost estimates presented above were calculated assuming that the capacity of logging trucks typically used in Suriname is around 20 m3/trip. This is currently the case for most forest operations, where home-made logging trucks are commonly used for road transport and sometimes trucks designed for other purposes are used to transport roundwood (see, for example, Figure 17).


Figure 17 Example of a typical truck used for transporting roundwood in Suriname

 

The type of trucks currently in common use in Suriname have a low carrying capacity compared with proper logging trucks, which can carry around 35 m3/trip. Proper logging trucks also do not cost significantly more to purchase and operate than the types of trucks currently in use in the forestry sector in Suriname. Therefore, a comparison was made between the roundwood transport cost with current equipment, with a proper (i.e. high-capacity) logging truck (new or second-hand) and with a new high-capacity logging truck working for longer hours. The results of this comparison are shown in Table 24.

Table 24 Roundwood transport costs on an 85 km haul using a low-capacity timber truck (currently typical in Suriname) compared with the cost of using a high-capacity timber truck

 

Option

 

Existing low capacity timber truck and low level of log production

Second-hand high capacity timber truck and medium level of log production

New high capacity timber truck and medium level of log production

New high capacity timber truck and high level of log production

Machine type and cost

       

Truck capacity

20 m3/trip

35 m3/trip

35 m3/trip

35 m3/trip

Age of truck

10 years

10 years

New

New

Cost/depreciated value

US$ 46,000

US$ 57,000

US$ 250,000

US$ 250,000

Machine productivity parameters

       

Working days per year

170 days/year

170 days/year

170 days/year

250 days/year

Working hours per day

8 hours/day

8 hours/day

8 hours/day

10 hours/day

Average machine availability

80%

80%

80%

90%

Available working hours per year

1,090 hours/year

1,090 hours/year

1,090 hours/year

1,800 hours/year

Total production per year

3,850 m3/year

7,000 m3/year

7,000 m3/year

11,600 m3/year

Transport cost (by component)

       

Repairs and insurance

Sf 2,150/m3

Sf 1,970/m3

Sf 2,770/m3

Sf 2,090/m3

Depreciation

Sf 1,240/m3

Sf 850/m3

Sf 3,710/m3

Sf 2,240/m3

Return on Capital

Sf 2,460/m3

Sf 1,690/m3

Sf 7,360/m3

Sf 4,440/m3

Operating cost (fuel and labour etc.)

Sf 5,260/m3

Sf 3,880/m3

Sf 3,880/m3

Sf 3,750/m3

Total transport cost

Sf 11,110/m3

Sf 8,390/m3

Sf 17,720/m3

Sf 12,520/m3

Source: Author's own estimates (using roundwood production cost model)

As the table shows, increasing the productivity of timber trucks, by replacing existing trucks with second-hand high capacity trucks, would reduce transport costs and, hence, the total delivered roundwood production cost, by around Sf 3,000/m3. However, as before, economies of scale are crucial. In other words, the cost saving generated by using a higher capacity timber truck would only be achieved if roundwood production were sufficient to keep a larger capacity machine fully employed. Given that a large capacity logging truck can transport 7,000 m3/year rather than 3,850 m3/year (the productivity of a smaller truck), it would require a forest concession of at least 9,000 ha to keep such a truck fully employed.

The last two columns in Table 24 show that it is unlikely to be profitable to invest in new logging trucks in the forestry sector in Suriname, at current levels of productivity. Even with a much higher level of capacity utilisation (the last column), the increased insurance and depreciation costs and the higher amount required to give an adequate return on capital are likely to make this an unattractive investment. This should not be a hindrance to the development of the sector however, as there is a large second-hand market for logging trucks in North America. The main problem that might restrict the opportunity to use higher capacity logging trucks in Suriname is the quality of the public road system.

Increases in the price of delivered roundwood

The other way in which the profitability of forest operations in Suriname could be increased is through increased prices for delivered roundwood. The prices that forest processors are willing to pay for delivered roundwood could be increased in two main ways:

by improvements in forest processing technology and efficiency, that allow forest processors to manufacture a greater volume of products from a given volume of roundwood inputs or cut their processing costs in other ways; and

by better marketing of forest products, particularly the development of export markets for forest products, that generates higher sales revenues for forest processors.

To some extent, improvements in technology would probably also be required before forest processors could develop better markets for their products.

Processing industry development

In the same way that economic rent can be calculated by subtracting production costs from product price, a sawmill's ability to pay for delivered roundwood be calculated by subtracting its processing costs from the prices of the sawnwood it sells. A little information was collected about sawmill production costs and sawnwood prices in Suriname (Whiteman 1999b) and this has been used to calculate some rough estimates of ability to pay for delivered roundwood under a range of different circumstances (see Table 25).

Table 25 A preliminary estimate of sawmill production costs and ability to pay for delivered roundwood

Cost and price parameters

High product price

Low product price

 

High production cost

Low production cost

 

in Sf

in US$

in Sf

in US$

in Sf

in US$

Average selling price of sawnwood

405,000/m3

300/m3

405,000/m3

300/m3

337,500/m3

250/m3

Production cost

           

Labour and consumables

81,000/m3

60/m3

54,000/m3

40/m3

54,000/m3

40/m3

Capital (including 20% return)

135,000/m3

100/m3

94,500/m3

70/m3

94,500/m3

70/m3

Total production cost

216,000/m3

160/m3

148,500/m3

110/m3

148,500/m3

110/m3

Ability to pay for wood input

189,000/m3

140/m3

256,500/m3

190/m3

189,000/m3

140/m3

Product recovery rate

25%

25%

33%

Ability to pay per m3 of roundwood

47,250/m3

35/m3

64,125/m3

48/m3

62,370/m3

46/m3

Note: The figures in rows 1 to 6 are values per cubic metre of sawnwood production, the figures in the last row are values per cubic metre of roundwood input.

The above table presents three different situations. The first is where a sawmill produces a high proportion of 1st grade sawnwood for the domestic market, but has relatively high production costs. The second is where a sawmill produces a high proportion of 1st grade sawnwood, but has lower production costs. The third is where a sawmill produces a generally lower value product mix and has relatively low production costs. The quality of the sawmill's output is also reflected in its product recovery rate, with mills producing higher value products generally achieving a lower product recovery rates than those producing lower quality sawnwood. The information shown in Table 25 came from discussions with sawmill owners (except the capital cost estimates which were derived from other sources) and these three situations are believed to be representative of most of the sawmilling industry in Suriname.

Working down the table, by subtracting the total production cost from the average selling price of sawnwood, it is possible to estimate each mill's ability to pay for wood inputs, per cubic metre of sawnwood produced. This then has to be divided by the product recovery rate to obtain each mill's ability to pay for wood inputs per cubic metre of roundwood. As the table shows, this varies from Sf 47,250/m3 or US$ 35/m3 in the case of high product value and production costs, to Sf 64,125/m3 or US$ 48/m3 in the case where the average product price is high but production costs are low. These figures are all relatively low compared with domestic log prices typically achieved in many other tropical countries. The results of this analysis have two interesting implications.

Rent capture in the sawmilling sector. All three of the cases examined above seem to indicate that sawmillers could, under existing circumstances, already pay more for their roundwood inputs than they currently have to pay. In other words, there is evidence that some more economic rent from roundwood production is currently being captured in the sawmilling sector in the form of excess profits there. For example, an average delivered roundwood price of Sf 45,000/m3 was used to calculate economic rent earlier. Based on the above figures, it would seem that the economic rent from roundwood production could be from Sf 2,250/m3 to Sf 19,125/m3 higher than the figures calculated previously. This situation is not uncommon in countries with high export tariffs on roundwood which, in effect, tend to depress local roundwood prices and encourage the development of a large processing sector that is heavily dependent on this supply of cheap (i.e. underpriced) roundwood.

Product recovery rate. The other implication of these results concerns the scope for improving sawmills' ability to pay for roundwood through increases in the product recovery rate. Product recovery rates of between 25% and 33% are believed to be typically achieved across much of the forest processing sector in Suriname. However, in comparison with other tropical countries, these product recovery rates would be considered very low. Recovery rates of around 40% and sometimes up to 50% and above are achieved in some tropical countries with significant wood processing industries.

 

Figure 18 The effect of improved product recovery rates on sawmillersí ability to pay for roundwood inputs


The effect of improved product recovery rates on sawmillersí ability to pay for roundwood inputs is shown in Figure 18. As the figure shows, a one percentage point increase in product recovery rate increases the average sawmillers ability to pay for roundwood inputs by Sf 2,000/m3 to Sf 2,500/m3, depending on the sawmillers production costs and product prices. Consequently, even a modest increase in product recovery rates of only 5% could increase ability to pay for roundwood and, thus, the economic rent from roundwood production by Sf 10,000/m3. It is also worth noting that, at recovery rates closer to what would be typically expected in other tropical countries (say 45% to 50%), the ability to pay for roundwood would also be closer to what sawmillers typically pay in these countries (US$ 70/m3 to US$ 90/m3). In other words, pushing-up forest charges may just simply result in higher delivered roundwood prices, which would have the beneficial effect of forcing sawmillers to improve recovery rates.

To summarise, the possibility for increasing economic rent by pushing-up delivered roundwood prices and stimulating better product recovery rates seems to be in the order of Sf 15,000/m3 to Sf 30,000/m3. It should be noted however, that the scope for pursuing such changes is somewhat limited by the current overcapacity in the sawmilling sector in Suriname. For example, part of the reason why product recovery rates are so low in Suriname might be simply that sawmillers do not have a market for the additional products that such improved recovery rates would result in. Therefore, such changes would either result in a downsizing of the existing forest processing industry or have to be accompanied by significantly improved market conditions. These issues will be considered further in the last section of this report.

Development of markets for roundwood and forest products

The final way in which economic rent could be increased (through higher delivered roundwood prices), would be to improve the marketing of roundwood and forest products. As noted above, there is considerable evidence that the small domestic market for forest products in Suriname is saturated, so the most scope for improving markets would be from the development of export markets. Some information about the current timber market in Suriname and the scope for market development is given below.

Current status of domestic and export markets. The current status of the major markets for forest products in Suriname is shown in Table 26. As the table shows, officially recorded roundwood production was about 140,000 m3 in 1998, a slight fall from the previous two years (180,000 m3 and 200,000 m3). About 15% of officially recorded roundwood production is exported and the majority of the remainder is processed into sawnwood. Based on the official roundwood production figures and commonly accepted conversion factors, sawnwood production might be around 35,560 m3, of which about 16% is currently exported. Also, based on these figures, current sawnwood consumption would seem to be at a similar level to other countries in the region (see Table 27).

Table 26 Estimated production and export of major forest products from Suriname in 1998

Product

Production

(in m3)

Exports

(in m3)

Exports

(as % of production)

Export value

(in US$)

Average export prices

(in US$/m3)

Roundwood

141,031

20,747

15%

1,648,000

79

Hewn squares

1,893

865

46%

185,000

214

Sawnwood (est.)

35,560

5,560

16%

1,361,000

245

Plywood (est.)

4,500

2,976

66%

2,156,000

724

Note: Production of sawnwood and plywood is not known. The estimates presented above are based on the consumption of roundwood by the domestic wood processing industry.

Table 27 Per capita consumption of sawnwood in Suriname in 1998, compared with other countries in the region

Country

Consumption of sawnwood

(in m3)

Population

Consumption per capita (m3/person)

Belize

17,399

224,000

0.078

Brazil

18,036,700

163,700,000

0.110

French Guiana

11,613

160,000

0.073

Guyana

66,900

843,000

0.079

Netherlands Antilles

32,138

211,000

0.152

Suriname

30,000

412,000

0.073

Trinidad and Tobago

103,300

1,277,000

0.081

Venezuela

242,700

22,777,000

0.011

Source: FAO

However, there is anecdotal evidence to suggest that sawnwood production could be much higher than the figures presented above, due to unofficial roundwood production used in sawmills and chainsaw logging operations. A more realistic level of output of say, around 55,000 m3, would suggest that current domestic consumption is somewhat higher than in neighbouring countries. The main implication of this is that the domestic market is probably saturated, with little prospect of price improvements or potential for expansion in quantity terms.

The problem of domestic market saturation is exacerbated by the fact that Suriname has a wood processing industry capable of producing at least 70,000 m3 of sawnwood (with one-shift working and a 25% recovery rate) and potentially up to 225,000 m3 of sawnwood (with two-shift working and a 40% recovery rate). In other words, low domestic prices and the absence of almost any scope for increased domestic consumption are a result of too many producers chasing too small a market. Therefore, the only reasonable prospect for improving profitability, prices and, ultimately, economic rent, will come form the development of export markets.

Export market potential. Suriname appears to have two main export market potentials. Firstly, there is already some interest in Suriname as a source of industrial roundwood supplies for Asia. This market can be expected to grow as Asia recovers from current economic difficulties experienced in the region. Already, the prices paid for export quality roundwood are significantly higher than the prices paid by domestic producers even with the very unfavourable foreign exchange controls currently in place and the sizeable export levy. Roundwood exports are always a source of some controversy because of the strongly held belief that domestic wood processing is to be preferred because of its potential to create employment and income in the domestic economy. However, in terms of maximising value-added and foreign exchange earnings, a strategy to increase roundwood exports, reflecting Surinam's natural advantage in this area, may be an appropriate strategy to pursue.

The second potential area for expansion is the sawmilling industry. As noted above, Suriname already has a substantial sawmilling infrastructure. The industry is often criticised because much of its machinery and equipment is old. However, this should not necessarily be a major barrier to export expansion. There are many examples around the world of countries with old and outdated equipment that still manage to produce strong export performance. Indeed, Suriname was one once such a country. Rather, the main deficiency in the sawmilling sector in Suriname at the moment seems to be in technological, management and marketing skills.

In terms of potential markets, the Caribbean is obviously one region where Suriname could have an impact. The main importing countries and territories in the Caribbean are shown in Table 28. As the table shows, the region has the capacity to absorb over 900,000 m3 of sawnwood imports, of which Suriname currently has a share of about 2%. Prices are not significantly higher than domestic market prices in Suriname, but the potential for expansion of sales (and the consequent improvements in processing costs this might bring with better capital utilisation in sawmills) is something worth considering.

Perhaps the best way to demonstrate what could be done is to contrast the situation in Suriname with neighbouring Guyana. Guyana is a similar size to Suriname and has a similar forest resource and processing industry. However, in 1998, Guyana exported three times the volume of roundwood exported from Suriname (60,580 m3 as opposed to 20,747 m3) and nearly four times the volume of sawnwood (21,200 m3 as opposed to 5,560 m3). Since abandoning an export tariff calculated as a percentage of export prices (with posted minimum prices), export prices for Guyana have also increased. Roundwood export prices varied from US$ 66/m3 - US$ 124/m3 for Mora to US$ 65/m3 - US$ 184/m3 for Greenheart in 1998 and, for sawnwood, from US$ 318/m3 - US$ 369/m3 for Mora to US$ 332/m3 - US$ 438/m3 for Greenheart (Guyana Forestry Commission, 1999).

The prices quoted above were somewhat lower than prices obtained in Guyana in 1997. To a certain extent, the depressed market that Guyana experienced during 1998 mirrored that experienced in Suriname. However, in as much as Guyana appears to have developed more significant export markets than Suriname and earns more revenue from forest charges, it is an example worth following.

 

Table 28 Major importing countries and territories in the Caribbean in 1998

Country/territory

Consumption of

sawnwood

(in m3)

Net imports of

sawnwood

(in m3)

Import

dependence

Average import

price

(in US$/m3)

Antigua and Barbuda

10,738

10,738

100%

282

Aruba

15,588

15,588

100%

249

Bahamas

124,300

122,900

99%

117

Barbados

70,900

70,900

100%

343

British Virgin Islands

3,747

3,747

100%

185

Cayman Islands

13,629

13,629

100%

181

Dominica

8,600

8,600

100%

257

Dominican Republic

299,000

299,000

100%

241

Grenada

11,900

11,900

100%

339

Guadeloupe

70,281

69,281

99%

330

Jamaica

125,470

113,470

90%

238

Martinique

30,329

29,329

97%

369

Netherlands Antilles

32,138

32,138

100%

292

Saint Kitts and Nevis

4,832

4,832

100%

204

Saint Lucia

14,504

14,504

100%

242

Saint Vincent and Grenadines

15,052

15,052

100%

214

Trinidad and Tobago

103,300

68,300

66%

292

Turks and Caicos Islands

3,779

3,779

100%

186

Total/average

958,087

907,687

95%

249

Source: FAO

Summary of opportunities to increase rent

A summary of the various opportunities to increase the economic rent from roundwood production is given in Table 29. The first row shows the originally estimated economic rent, with the current levels of inefficiency in the forest concession and forest processing sectors, depressed local roundwood prices and limited export opportunities. The final row shows how different the performance of the sector could be given the right incentives to move in this direction. This is of course, only a rough estimate. Some of the benefits from the various cost-cutting measures suggested above probably overlap, implying that there may be double-counting in this table. However, on the other hand, in some respects the figures in this table are quite conservative (e.g., the potential benefits from improving product recovery rates in the sawmilling sector).

Table 29 A summary of the various opportunities to increase the economic rent from roundwood production

Measures/activities to increase rent

Economic rent

 

in Sf/m3

in US$/m3

Current estimated average level of economic rent from roundwood production

11,000

8.15

Measures to reduce production costs

   

Economies of scale resulting in better capital utilisation

+2,000

+1.50

Improved harvesting techniques

   

Higher harvesting intensity

+1,000

+0.75

Better felling practices

+2,000

+1.50

Improved work planning and technology

   

Improved skid trails

+7,000

+5.25

Use of high capacity logging trucks

+3,000

+2.25

Measures to increase delivered roundwood prices

   

Processing industry development

   

Take rent captured by processing sector

+10,000

+7.50

Improve product recovery (by 5%)

+15,000

+11.25

Market development

   

Double exports of roundwood

+9,300

+6.90

Improve sawnwood export performance

?

?

Potential average level of economic rent from roundwood production

60,000

44.45

Three points are worth noting about these results:

The sheer magnitude of the potential for improvement. The final row of the above table is nearly six times higher than the first row indicating the considerable room for improvement in the sector. It should be noted that, given the history of extremely low forest charges in Suriname, the forest charging system has allowed both the forest concession and forest processing sectors to expand capacity beyond a sensible level. However, in contrast to some other tropical countries, it is not the forest resource that is now the limiting factor to the performance of the sector, but rather the limitation of forest products markets.

Average versus marginal productivity. A second point worth noting is that, as with any economic activity, there is tremendous variation between operators. In effect, the average level of forest charges determines the number of operators that can continue to operate at the margin. In other words, with very low charges, a large number of marginally profitable forest concessionaires and forest processors can stay in business. In addition to these marginal operators, there are a number of more profitable enterprises that are more efficient, make higher profits and can potentially afford to pay higher charges. If charges are increased, only the marginal operators are likely to go out of business. To a certain extent, the continued existence of a large number of marginal operators in the sector in Suriname is probably dragging-down the profitability of the whole sector (i.e. too many producers chasing too small a market) and will make it difficult to achieve some of the improvements suggested above.

Improvements in the forest versus improvements in the mill. The last point worth noting is that the most scope for improvement in economic rent can be found in the forest processing sector rather than the roundwood production sector. For example, adding together all of the potential cost savings that might be made in the roundwood production sector, gives an increase in economic rent that is equal to just a 5% increase in product recovery rates in the processing sector. This suggests that any moves to increase forest charges may be felt first in the forest processing sector (as the additional costs are passed onto roundwood purchasers) rather than the roundwood production sector.

The above points all strongly imply that the recommendations for increasing forest charges presented earlier should be considered as an absolute minimum. In other words, they could probably be applied without too many disturbances within the sector. Alternatively, to put it another way, they are not likely to encourage any improvements in efficiency in the sector.

However, the question that really needs to be asked is: does it make sense for Suriname to continue to support a forestry sector that is, on average, so inefficient? It is likely that continuance of the status-quo will continue to result in not only the wasteful use of the forest resource, but also the continued diversion of scarce national resources (land, labour and capital) into activities that are relatively unprofitable. From the point of view of overall national development, this is a very wasteful policy. It is strongly recommended therefore, that serious consideration should be given to increasing forest charges to levels above those presented earlier. These and other similar issues will be discussed further in the last section of this report.

 

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