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Chapter 13

Dutliff Smith

Brief outline of the project

The upliftment of the impoverished rural communities in South Africa is high on the government's agenda. In this regard, Sappi, Gencor Development Fund and the KwaZulu-Natal Department of Agriculture launched the Sappi Forests Outgrower Scheme during 1983. The main objectives are job creation and socio-economic development. The project has grown from three farmers managing 12 ha in 1983 to more than 8,000 growers currently managing 13,000 ha in KwaZulu-Natal.

Farmers are provided with free seedlings, technical advice and a guaranteed market for their product. Owing to the nature of forestry, the farmer can only expect an income after eight to ten years when the trees reach felling age. However, in assisting the farmer during this period, Sappi pays the grower advances for work done on his or her plot. In return, the farmer is contracted to sell his or her crop to Sappi when the trees are ready for harvesting.

Sappi's contribution

The project is currently fully funded and managed by Sappi Forests. Sappi contributes in the following ways to the project:

Financial contribution

Each grower is entitled to an interest-free loan of up to R 2,700 per hectare. Money is advanced to the grower for land preparation, planting, weeding and fire protection. The growers are expected to do the work themselves and must realize that the trees belong to them. To date, Sappi has invested more than R 10 million in the project in terms of loan advances to growers. This investment excludes Sappi's annual operational and seedling costs pertaining to the project which currently amounts to R 5 million per annum.


To ensure optimum production, i.e. tree growth per site, it is important that growers are provided with the seedlings best suited for that specific area. All seedlings supplied are produced by Sappi nurseries to ensure that the growers are supplied with the best genetic material available. To date, the value of the seedlings made available to growers from the project inception is R 5.2 million. These seedlings are made available free of charge and growers ARE NOT expected to repay Sappi for the seedlings.

Technical assistance

Qualified Extension Officers assist the growers in selecting the most appropriate sites, as well as assisting with preparing, fertilizing and planting the land. A site selection Check Sheet needs to be completed for each site to ensure that plantings do not take place in environmentally sensitive areas. The Extension Officers also visit the growers frequently after the trees have been established to provide assistance with weed control and the preparation of firebreaks.

Sappi, if requested by the growers, may also assist during negotiations with harvesting and transport contractors. Sappi acts as facilitator/coach to assist growers during these negotiations to ensure that the grower is charged a market related price by the contractor.

Community participation

One of the objectives of the project is that it should have positive spin-offs for the community at large and not only for the few participating growers. Although the growers are expected to do as much of the work themselves they often have to employ members from the community to help them with their forestry activities. The project also strives to ensure that as much as possible of the money paid to the growers is retained within the community.


The project faces the following challenges.

Water licences

Since the incorporation of the former homelands there has been confusion regarding the procedure for dealing with afforestation permits on non-title deed land, i.e. communal land.

The National Water Act (Act 36 of 1998) addresses some of these shortcomings, but still does not provide a proper procedure for dealing with multiple applications from small growers. The following legislation all have some regulatory effect or specific requirements, which should be adhered to before new areas can be planted:

The above imposes specific and often conflicting requirements for applicants. However, Sappi has initiated a workshop, facilitated by the Institute of Natural Resources, to formulate a procedure for applications on non-title deed land. After several meetings with the different government departments, the process has been streamlined to an extent.

According to this process, the Department of Water Affairs will consider group applications per tribal authority for new plantings in the future. Sappi will record GPS (geographic positioning system) readings for all new plots prior to planting. The Department of Water Affairs will then ensure that no new plots are located in water stressed catchment areas. As part of the consultation process, the GPS points are also distributed to 12 other interested and affected parties for their perusal and comments. The comments of the different interested and affected parties are collated and form the basis of the scoping report to be submitted to the KZN Department of Agriculture and Environmental Affairs.

Funding of small, medium and micro enterprises (SMMEs)

The project, especially in the Zululand area, has now entered the second phase whereby the focus of the grower has changed from planting and managing the trees to harvesting and transporting the timber. With this new phase, entrepreneurs are needed to assist growers with harvesting and transporting the timber to the various Sappi mills. Although there are a number of people willing to assist with these functions, they lack the management skills and resources to become involved. One of the main challenges for these entrepreneurs is to obtain start-up capital to purchase the necessary equipment for their new businesses. This is especially difficult in view of the fact that they do not have any form of security against which they can borrow money. Sappi has approached commercial banks and private companies to seek assistance in this regard.

Timber theft

Timber theft is also a challenge in the Zululand area. Theft occurs mainly in specific areas and can be attributed to the fact that growers also have access to markets, other than the Sappi. Sappi and other timber companies in the area have reached an agreement that timber will not be purchased from "Project Grow" suppliers. However, unscrupulous timber traders offer the grower a slightly better price and try to entice the grower not to honour his agreement with Sappi.

Paying difficulties

As indicated large amounts of money are paid out to the growers, either as advances during the growing period of the trees, or for timber delivered. As most growers are located in remote rural areas, they do not have access to banking facilities. In the past, these growers were paid by cheque, which they could then cash at their local store. However, new legislation with regard to cancellations of crossed cheques makes this method of payment extremely difficult. Sappi is in the process of investigating new payment methods taking cognizance of the lack of a banking infrastructure in the rural areas.

Inadequate road infrastructure

The existing road infrastructure is not sufficient to cater for the development that has occurred in the area. There is a need for access roads, which link plantations to district, or local roads. This will ensure that timber can be utilized if planted far away from a current road and that the cost for extracting the timber is therefore not exorbitant. An ideal road construction system should be based on manual construction that could create many short-term jobs.


An indication of the success of the project is the fact that it is still running after 17 years and people are still keen to join. It is clear that the project creates a large number of direct and indirect jobs. The main success of the project is that it gives people from impoverished rural areas access to the forestry industry, which would previously have, owing to the high entry barriers, been inaccessible. The project also acts as a catalyst for the stimulation of other businesses in the area. Thirty-three of the growers have used the money generated from their plots to start other businesses in the area and currently employ 750 people. Some of the growers have become independent forestry contractors, opened tuck shops and started their own taxi businesses.

The project in itself has created employment for 8,624 growers participating in the scheme. It is estimated that an additional 1,120 people are employed by contractors who assist the growers with planting and the harvesting of their plots.

The project contributes to the upliftment of women in the rural areas of KwaZulu-Natal. Currently 80 percent of the growers with Sappi contracts are women.

One of the project aims is that as much as possible of the money invested in the project should be retained in the community.

The job opportunities created by the project should also be filled by the community where the trees are planted. About 42 percent of the turnover remains with the grower, a further 50 percent stays within the community through payments to harvest and transport contractors, while 8 percent goes back to Sappi as loan repayment.

Most growers have put at least two of their children through school and university with the money. Fifty-three-year-old Babo Mbonambi has built a church for the community from the proceeds from his plots. These types of benefits would probably never have been possible with the subsistence farming practised in the past. As stated in Babo's own words "with farming if there is no water, the crop just dies. With forestry you can be surer of a crop".

Key learning areas

Inherent in the success of the scheme is the fact that all participants benefit. There is neither hand-out nor a paternalistic approach from Sappi - nobody gets anything free of charge. The keywords are ownership, responsibility and accountability, and this must lie with the grower.

The fact that the loans are made available interest-free contributes to the success of the project, as the scheme is more profitable from the growers' point of view.

Community projects often fail owing to the absence of a secure market for the final product. The fact that Sappi guarantees a market at a competitive price contributes to security from the grower's point of view It is also important that the whole community is involved in the scheme. iNkosi, Indunas and the community members should be involved in the development of a scheme in a specific area. The existing tribal authority structures must be used when the project is introduced to a new community.

Experience has shown that larger plots are cheaper to establish and manage than small one-hectare plots. In terms of extracting the timber, it is also beneficial to have larger plots. However, suitable forestry land and environmental conditions in a specific area will determine plot sizes.

All plots should be mapped. Sappi is in the process of capturing all the plots on a geographic positioning system.

Further enhancements

There is a real opportunity for other companies, organizations and non-governmental organizations (NGOs) to become involved in capacity building relating to the management of small, medium and micro enterprises (SMMEs) in the area. There is a real need for financing of equipment.

There is also an opportunity to assist the farmers in organizing themselves into a cooperative or timber farmers' union. This will give growers more power in lobbying and negotiating with local and national government. It is important that the farmers become independent of Sappi with regard to permit applications.

This forestry project has huge potential in facilitating an integrated development programme. Links with other regional economic development groups (NGOs) will add value to the base project by encouraging SMME development

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