Timber growers look for foreign market

by Orton Kiishweko, featured in the Daily News, October 19th 2009

The local farmers in Kilombero District are reluctant to grow timber trees for income generation because they do not have a ready market for their products.

However, the move does involve farmers who had opted to grow teak trees in Kilombero and Ulanga districts.

Having realized the importance of the timber industry, the farmers were now looking for the assistance of out growers’ schemes.

One of such large scale producers was the Kilombero Valley Teak company (KVTC). KVTC is expected to start buying such products from the farmers in 2015.

With the decline in commodity prices of farmers principal cash crops such as coffee and cotton compounded by the global crunch, farmers were increasingly viewing timber as an active cash generating farm enterprise to complement the existing smaller investments on farms.

This trend of opting for the second money maker, is further spurred by the decline in plantation as forest cover opens opportunities for greater involvement of the small holder sector in timber production.

For small scale farmers in Kilombero, considering timber as an enterprise, they have had to seek for technical support and seeds from their next door neighbour, KVTC, who was into large scale production.

KVTC recently announced its foray into wood supply chain with expected export annual revenue of 13bn/-.

In fact, it plans for its first containers to start leaving the Dar es Salaam port in two months time, according to the forest products manager Mr Hans Lemm.

Mr Lemm said the East African high end markets would eat up 10 per cent of the company’s products in the projected market size in the next six months, after processing started in September this year.

For certainty of the products’ reception onto the European markets, the General Manager, Mr Riaan Van, noted the that KVTC had already been certified under the TLTV scheme which guarantees buyers that the products were legally sourced and were sourced from wellmanaged forests.

It’s a step taken by large scale wood producers all over the world in line with, the European law passed earlier this year, calling for all wood companies to start providing information about the source of the products they trade in the EU, one of the main projected markets for Tanzanian company’s products.

The move by European markets was to ostensibly protect the forests but also clean the trade as governments streamlined the commercialisation of forest produce.

The KVTC’s venture into processing plant, it constructed a modern sawmill and wood processing facility from which teak flooring and other products would be exported from the country. The processing plant, which was the largest sawmill in Africa outside South Africa, was commissioned in August this year and is expected to generate export revenue in excess of USD10m (130 bn/-) each year.

This was a result of the company’s transformation programme from plantation development into commercial forestry and wood processing operation.

The decision was made to invest in a sawmill and value adding plant to process large quantities of small dimension logs and timber from the plantation.

Other important markets he said were the United States, Southeast Asia, the Indian domestic market “We expect significant sales due to the fact that we add value to our products,” he explained.

By 2015, the company will be buying products from small scale producers, some of whom are neighbours in Kilombero, being supported with technical knowledge and teak tree seeds for their schemes.

The absence of suitable markets for log sales, and ban on export logs are some of the factors, which necessitated their move to start processing their produce.

The KVTC had planted about 7,800 hectares of teak tree since 1993 and manages 20,000 hectares of indigenous forestry in the Ulanga and Kilombero districts in Morogoro Region.

Product mix such as kiln lumber and a variety of value adding products like solid wooden flooring, engineered flooring to furniture panels would be exported.

One of the business principles of the company and part of the original feasibility study was that a maximum of 30 per cent of the land holding would be planted with teak, with the balance of the land protected in order to protect and enhance the natural eco system value of the whole area.

However, he said that the company believed that the planted area should not exceed its current extent on its existing land title, since any expansion would mean conversion of land that is considered to be High Conservation Value (HCV), which would be contrary to its ethos and the best international environment practices.

He said that they held the belief that sustainable forest management was critical for the continued supply of timber to the markets in the face of pressure from agricultural expansion, over exploitation and annual fires that decreases forest cover.

The Kilombero Teak Valley Company was founded in 1992 following a joint government/Common Wealth Development Corporation (CDC) feasibility study into the viability of establishing a sustainable teak plantation in the Kilombero valley.

After a detailed evaluation, the government granted a land title over 28,132 hectares of partly degraded miombo woodland in the Kilombero and Ulanga districts to start a commercial teak plantation.