‘Unlimited’ export of logs at low prices continuing

– Janette Bulkan

Forestry expert, Janette Bulkan says that government has continued to allow “unlimited” exports of logs and at low prices and she has slammed the “perverse policy measure” in place.

“All national policies favour in-country processing and value-addition for forest products, yet the government continues to allow in effect unlimited exports, with logs at remarkably low declared FOB (free on board) values,” said Bulkan in a letter published in the Sunday Stabroek yesterday.

Bulkan analyzed data published by the Guyana Forestry Commission (GFC) and pointed out that figures show that thedeclared average price of exported logs was US$54 in 2010 and US$141 in the first half of 2011 but even this price was low in comparison to prices that obtain in other parts of the world.  “The trend until then, and no doubt into the present, has been for the export of the premium hard and heavy timbers of Guyana for conversion into top quality flooring and furniture in China and India. US$154 per cubic metre is a rock bottom price for these timbers,” she said.

“A more usual FOB price for technically equivalent timbers is three times as much, as demonstrated by the price paid for merbau logs in South East Asia, which are equivalent to purpleheart,” Bulkan added. She said that the rise in export commission on logs (from 2 to 7 per cent in January 2009, to 10 per cent in 2010 and 12 per cent in 2011) has “evidently been far too small and ineffective in preventing rises in both absolute volumes and percentages of exports relative to national log production.”

She pointed out that the average domestic log price has risen by more than 50 per cent in the first half of 2011 yet the declared average export FOB price for logs has declined. She noted that domestic log buyers also have to pay VAT on the logs they process. “To put it another way, domestic millers and consumers are penalized while Asian log exporters are rewarded by the GRA. This is what can be called a perverse policy measure,” said Bulkan.

Bulkan said that Guyana could have earned up to US$162 million from furniture in 2010 and up to US$73 million in the first half of 2011, instead of the “miserable” US$17 and 7 million actually recorded as the log export income.  “That is, Guyana could have earned up to ten times the amount from furniture than from the unprocessed logs,” she said.

She stated that according to surveys from the GFC, there is no shortage of installed capacity to process more than double the recorded total log production.

Around the Web