Unlocking future investments in Uganda’s commercial forest sector

FAO

Unlocking future investments in Uganda’s commercial forest sector

Understanding the impacts of timber trade restrictions on the profitability of pine plantation and sawmill investments

Year of publication 2020

Place of publication Rome, Italy ;

Pages 8p.

Author FAO

Publisher FAO ;

Product type Brochure, flyer, fact-sheet

Edition 1

Full item page

Synopsis (short abstract) Key messages: - Supplies of pine produced by commercial plantations will increase rapidly over the next 5 years. Pine plantations planted in the early 2000’s will soon mature, leading to an increase from roughly 200 000 m3 of pine production currently, to 800 000 m3 in 2023, and stabilizing at 1.2 million m3 after that. - Exporting timber from Uganda is impeded by restrictive policies. Numerous approval requirements and a lack of approved grading standards substantially hinder access to export licenses for timber. These restrictions are suppressing domestic prices relative to neighboring countries. - Trade restrictions hinder the profitability of commercial pine production. Based on average production costs and current domestic prices the Net Present Value of investment in commercial pine production ranges between negative USD 368 and negative USD 657 per hectare. - Removing export restrictions is critical to attract and sustain future investments in pine plantations and sawmilling. Access to higher prices offered in regional export markets contributes to a positive Net Present Value of pine plantation investments, in most scenarios, and a positive Net Present Value for investment in sawmilling.

Language English

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Over the last 20 years, the Government of Uganda has implemented several policies to promote investments in commercial forest plantations. As a result of these policy efforts, the supply of commercially produced pine is set to increase dramatically over the next few years. This brief summarizes a cost-benefir analysis based on interviews carried out in July 2019. The findings highlights a significant challenge facing the sector. Without reforms to the current market situation in the country, plantation owners are unlikely to replant pine once existing trees are harvested. The Government of Uganda now should consider implementing policies to sustain the sector, and enable it to help meet the rapidly growing demand for timber and other wood products in the region, and beyond. This depends fundamentally on enabling producers and processors to easily access to external timber markets.