Ways to Maximize Financial Gains from Forestry Activities

Natural forests in Papua New Guinea (PNG) are used for several things. They are cleared for human settlements (villages, urban developments), subsistence gardening, large-scale agriculture, logging, oil and gas, and mining developments. According to scale, subsistence garden and logging developments have accounted for more than 90 percent of deforestation and forest degradation in PNG in the last 43 years.

 Subsistence agriculture is necessary for human survival, and people garden on their land, so it is not an issue. Logging on the other hand is a controversial issue because it is done on customary land, but little socio-economic benefit accrues to the customary landowners.

 Logging of natural forests is one of the highest revenue earners for Papua New Guinea (PNG). It ranks fourth after oil and gas, mining, and agriculture in terms of export revenue.

 Nevertheless, not all forest areas in PNG are suitable for logging. Of the 33 million hectares of forested land in PNG, only 14 million hectares is suitable for logging. And over the years, we have logged out 12 million hectares and we are left with some 2 million hectares to go before we start groping for tropical hardwoods to sell on the export market.

Today, with the global issues of climate change and environmental degradation, forestry is now viewed as a problem and solution. Forestry, therefore, can continue to provide for the world’s need for timber, fiber, and other resources, but it can also be used to address the issues of climate change and environmental degradation.

 Consequently, there is now a need for a paradigm shift in the forestry sector in PNG and around the world to address climate change and environmental degradation. This would require a different approach to forestry, and the business-as-usual approach would have to be abandoned for a better future.

 Logging of natural forests is the biggest forestry activity in PNG. Forest plantations in PNG are a little more than 70 thousand hectares, which is not significant. Production of minor forest produce such as eaglewood, sandalwood, rattan, mushrooms, and many others are insignificant but have the potential to be developed for the local as well as export markets. The carbon trade concept is now traversing the PNG landscape through mechanisms like REDD+ and conservation activities, but its implementation is currently controversial.

 Herein, the issues of logging of natural forests, forest plantations, minor forest produce, and carbon trade are discussed. These activities are contrasted to elucidate the social, economic, and environmental issues involved, and to portray the direction that forestry in Papua New Guinea needs to pursue to maximize profits from forestry activities and at the same time address the issues of climate change and environmental degradation.

 For many coastal peoples in Papua New Guinea, logging of their natural forests seems to be a lucrative business venture for them. They perceive that their lives would change for the better if a large logging company came to their area and logged their natural forests.

 However, for those whose natural forest areas have now been logged out, the dreams of having their lives improved for the better were only a fairy tale. Now that logging has wound up, life is worse off than before. The money earned from timber royalties is gone, and there is nothing left in their bank accounts to appease their appetite for store goods such as rice, corned beef, sugar, coffee, milk, etc. With the logging company gone, they cannot afford to drink a few bottles of beer or smoke a packet of cigarettes. Moreover, the promised roads, bridges, and schools have not materialized, and how would these things come to reality now that the logging company is gone?

 Logging of natural forests is not as lucrative as one would perceive. On average, a hectare of forest in PNG would hold 30 - 40 cubic meters of merchantable volume of timber, where customary landowners would be lucky enough to make K900 – K1200 per hectare in royalties. But in reality, landowners never get to see this K900 – K1200 because of corruption, timber transfer pricing, and such deductions as Log Export Development Levies (LEDL), which the landowners never get to use for socio-economic developments in their areas.

 Just because thousands of hectares of customary land are being logged for 30 – 40m³ of timber per hectare, illiterate landowners are overwhelmed when some thousands or millions of kina are paid to them in royalties. But in reality, K900,000.00 – K1.2 million is paid per 1000 hectares of forested land logged, which is peanuts when equating the cost of environmental damage incurred as a result of logging. The landowners do not usually get to see all that money because of theft, timber transfer pricing, and deductions for LEDL.

Plantation forestry in Papua New Guinea began in the late 1950s, but after some 60 years, the total forest plantation area in PNG is about 90, 000 hectares.

Not all the forest plantations in PNG are owned by the government. Some forest plantations are owned by customary landowners and private companies.

 Forest plantations would hold 100 – 300 cubic meters of timber per hectare of land, making plantation forestry 4 – 8 times more lucrative than logging of natural forests. Nevertheless, plantation forestry is insignificant at the moment.

 Stocks of premium hardwood species like Kwila, Rosewood, and Vitex are being depleted from natural forests. And in the next 10 – 15 years, PNG will have exhausted its natural forest resource if we continue at the current rate of harvesting.

 Minor forest products such as Eaglewood, Sandalwood, and rattan are high-value commodities that could earn more money per hectare of land than logging of hardwoods from natural forests. If somebody can plant Eaglewood trees, artificially inoculate them, and harvest a ton of high-grade agarwood, this would net the guy a million kina or more per hectare of land. Plantations of Sandalwood and rattan would earn a little less than Eaglewood but many times more than logging of hardwoods from natural forests.