TC:TCP/GHA/6714 TECHNICAL COOPERATION PROGRAMME FOREST PLANTATION DEVELOPMENT GHANA Terminal Statement the Food and Agriculture Organization of the United Nations Rome, 1998 |
TC:TCP/GHA/6714 TECHNICAL COOPERATION PROGRAMME FOREST PLANTATION DEVELOPMENT GHANA Terminal Statement the Food and Agriculture Organization of the United Nations Rome, 1998 |
2.1 Proposed silvicultural and management models
2.1.2 Plantation management options
The forestry sector in Ghana has been subjected to various impacts and pressures which have threatened both the sustainability of timber resources and certain wildlife species and the sector's ability to contribute to the country's socio-economic development and maintenance of the environment. The present condition of the forest resource base is such that the annual sustainable harvest has had to be restricted to a maximum of 1 million m3 for the foreseeable future. However, this annual cut has to satisfy a timber industry that is characterized by excessive installed capacity and low recovery rates, mainly focused on exporting to a hardening market place, as well as domestic consumption for both sawntimber and fuelwood which is mainly fed from illegal sources. At the same time, environmental concerns have increased to the extent where wildlife and biodiversity conservation are demanding equal attention, with forest protection and rehabilitation of degraded and understocked areas occupying a third of the forest estate.
Ghana is thus faced with future export and domestic demands on local timber resources that are far in excess of sustainable limits. If these demands were to be realized only from existing local resources, the resultant shortages in a few years would signal the demise of the industry, not to mention the punitive international market sanctions on "uncertifiable timber" that would take effect, because the country's wood products would not qualify as "sourced from sustainably managed forests". Consequently, should timber exploitation continue at the present rate, over the next ten to twenty years there will be a significant reduction in the economic contribution of forests in Ghana. Export earnings could fall to zero (or become negative if wood is imported to meet domestic demand), tens of thousands of jobs could be lost, and the non-timber values of the forest would be eroded.
In 1994 a new Forest and Wildlife Policy was adopted, with the aims of "conservation and sustainable development of forest and wildlife resources for the maintenance of environmental quality and the perpetual flow of optimum benefits to all segments of society". A Forestry Development Master Plan was prepared as a sound basis for attainment of the aims of the Policy, in order to maximize the rate of social and economic development of the country and secure optimum welfare and adequate means of livelihood for all Ghanaians.
It is therefore crucial that the industry responds favourably to the policy reforms and incentives proposed and that expanded sustainable raw material supplies are produced from plantation forestry. The Forestry Development Master Plan has thus outlined a strategy to mobilize a wide range of Ghanaians to undertake tree-growing ventures throughout the country. Accordingly, there is need to devise a series of incentive packages to ensure widespread appeal and positive response across the nation. The tree-growing scheme envisaged would be implemented largely by mobilizing private-sector participation, with the Government providing technical advice, access to credit and promotional incentives and public education to encourage the involvement of people in forestation for both industrial wood and fuelwood.
Private interests and communities are currently planting trees on an increasing scale around the country. However, there are a number of major constraints to expanding private plantations and to obtaining a real economic and environmental impact, including the lack of land; finance limitations; a shortage of improved seeds; weak technical advisory capacity; and a lack of research to promote fast-growing species (other than teak) for sustainable planning.
The Ministry of Lands and Forestry (MLF) had proposed a project concept to address likely constraints to achieving significant expansion of the area under tree cover. This would require concentrated effort to mobilize financing and technical assistance, provide suitable sources of seed and ensure the production and supply of genetically improved growing stock. Indeed, special expertise, which did not exist, would need to be developed and located in an institution capable of fulfilling this dynamic role. Recognizing that the MLF was unsuited for this role and that the Forestry Department would be fully occupied with sustainable management of the forest estate, the Government proposed that attention be given to building the necessary institutional capacity in the private sector. Assistance was therefore sought from FAO to design a mechanism to support private forestry plantation development. Follow-up activities would most likely be funded by the African Development Bank and the World Bank.
This assistance was approved by FAO on 11 July 1997 under the Technical Cooperation Programme project TCP/GHA/6714, Forestry Plantation Development, with a budget allocation of $US 156 500. The Ministry of Lands and Forests was designated the government agency responsible for project execution. The project started on 5 July 1997 and ended in October 1997. Four backstopping missions were undertaken by FAO. In addition, a Commercial Plantation Development Incentive Survey was conducted at the end of 1997, in order to identify possible incentive schemes which could be adapted to the different potential tree-planting investors.
The project's main objective was to assist the Government with the design of long-term mechanisms to support private forestry plantation development and a flexible scheme for providing plantation incentives to firms, land owners, communities and individuals. It also aimed to assist in building the necessary institutional capacity for implementing practical options and ensuring effective monitoring of the results.
The results of the project have been presented in a series of working papers and reports. The main outputs of the project were:
- the definition of long-term financing mechanisms, including incentives, to support a financially viable private-sector forest plantation programme in Ghana;
- information for improved private plantation management and for the improved participation of small farmers in plantation development; and
- an initial environmental screening of proposals.
The main silvicultural, technical, social and environmental factors and implications surrounding the development of private forest plantations in Ghana were reviewed. Detailed silvicultural proposals for the High Forest and the Transition Zones and for four priority tree species were prepared. These recommendations formed the basis for developing management investment models which were proposed for the five main types of potential investors identified by the project.
As an umbrella organization and to provide a focus for the handling of the financing of development, a Plantation Development Fund was proposed, overseen by an autonomous Board representing the main functional and financial stakeholders in the subsector.
In addition, the project identified and analysed the feasibility of various possible incentives to promote private investments in plantation.
The proposals were costed for a 5-year programme and a financial analysis was prepared. The returns to the individual investment companies and the Fund were found to be satisfactory, even under quite extreme conditions.
As a basis for developing the plantation programme, the basic reforestation options were reviewed for two of the major ecological zones in the country: the High Forest Zone (primarily in the degraded forest reserves) and the Transition Zone. The selection of reforestation options was largely based on the evaluation of the experiences of existing plantations and using limited research results from provenance and species trials. The more promising options were developed into "silvicultural models". The following four species were finally selected, from which eight silvicultural models were developed, reflecting two different levels of soil site-qualities: wawa (Triplochiton scleroxylon); cedrella (Cedrella odorata); teak (Tectona grandis); and gmelina (Gmelina arborea).
Three main types of potential investors were identified who might be interested in plantation development: (i) forest investment companies (>1 000 ha); (ii) private investors (100 - 1 000 ha); and (iii) service companies delivering inputs and extension to small-scale planters (as outgrowers/smallholders) or on a leaseback basis (where the service company rents land from farmers and performs all establishment and maintenance operations). For the sake of simplicity and transparency, only the silvicultural models for teak and wawa have been used as a basis for developing the plantation management models, as it is likely that investors and planters will initially focus mainly on these species. However, returns for the project as a whole are likely to be higher if the investors adopt other species. Five different financial arrangements, reflecting the management options described above, have been developed as the plantation models.
The varying forms of plantation management enterprises/models will have different requirements, ranging from the larger-scale investor who would want only a minimum level of state involvement to the small farmer who might require maximum assistance, including easy access to credit and other incentives. Therefore, any institutional set-up which would encompass the entire plantation sub-sector would need to be designed to reflect the organizational differences of the enterprises. The organization would also have to allow support to other activities related to the development of forest plantations, some of which, such as research, would not have any immediate financial benefits, while others, such as the promotion of contract seed growers/distributors, could have direct financial returns.
Moreover, as forestry investments take a long time to mature and are not of interest to the private banking sector, in most cases some type of incentive is also necessary to make this type of investment feasible. In many countries, it is the Government that provides the incentives, often through a specially designed independent agency which uses funds from different sources. In the case of Ghana, it is expected that the bulk of the financing will have to be attracted from non-governmental sources; it is therefore proposed that a financial institution be established as an independent organization - a Plantation Development Fund. The management of the proposed Fund, including the creation of an Executive Board and the identification of the required borrowing conditions, were considered by the project.
A Commercial Plantation Development Incentive Survey was conducted at the end of 1997 in order to identify possible incentive schemes which could be adapted to the different potential tree-planting investors. The study identified and surveyed a representative sample of each group of potential investors, including millers, loggers, large-scale and small-scale timber tree growers, farmers and NGOs. In addition, the study distinguished between High Forest and Transitional Zones. The most popular incentives identified were:
- low-interest credit availability, availability of improved seed;
- availability of technical expertise;
- intercropping with shorter rotation trees and annual crops;
- technical training for investors;
- grants in kind and guaranteed market access;
- income and capital gains tax reduction; and
- concessions in Forestry Department plantations.
The feasibility of the following options were reviewed:
- reduction of the tax burden upon the investor;
- provision of subsidies or direct payments to the investor;
- facilitation of access to secure land holdings (possibly as a form of equity);
- provision of management and harvesting rights to existing plantations (perhaps as a form of equity); and
- encouragement of small investors (stakeholders) by offering rights to intercropping (multiple land use).
Prior to any full project preparation for plantation development, a number of issues need to be reviewed and clear decisions made so that effective project design is achieved. These concern: (i) legal issues, including the institutional basis, the form of contracts between the various parties and the impact of new laws; (ii) social and environmental issues of the various contracts and of the final plantation programme which will be prepared during the full project preparation (environmental impact assessment); (iii) technical issues in establishing the plantation programme, including research needs, the availability of seed and planting material, training of all stakeholders and land allocation; (iv) alternative institutional arrangements: the internal restructuring arrangements in the MLF as proposed under the NRMP could be used as a vehicle for the establishment of the Plantation Development Fund. Thus, the alternative to the setting up of a separate private Fund recommended by the project, operating as a limited company, would be to use the existing legislation; and (v) costs, benefits and possible funding arrangement issues. These issues are detailed in the main report and should be addressed during the project preparation mission.
Based on the conclusions and issues of the project, terms of reference were prepared for the follow-up project preparation mission. The mission should be composed of seven specialists: a forester/mission leader, a financial analyst/institutions specialist, a land use specialist, a legal expert, a forest economist, a sociologist and an environmentalist. Detailed terms of reference are included in the main project report.