Two articles from Janette Bulkan, published in the Commonwealth Forestry Association Newsletter looking at logging and illegal logging in Guyana.
The failure of the Guyana Forestry Commission (GFC) to implement meaningful change to address illegal logging is notable, despite the fact that this is one of the progress indicators in the 2009 Norway-Guyana Memorandum of Agreement.
REDD-Monitor posted three previous articles from the CFA Newsletter by Bulkan in November 2011. The articles are reproduced here with Janette Bulkan’s permission.
News from Guyana
CFA Newsletter, December 2011
Since the middle of 2011 several documents have been issued on the forest sector in Guyana. The US Agency for International Development distributed in August the report by the Efeca consultancy on the Guyana national Legality Assurance System, undertaken in March. The report was officially handed over to the junior Minister for Forestry in October. The Guyana Forestry Commission (GFC) registered several disagreements with statements in the report but gave few or no reasons for dispute, and has not evidently taken up the re-design offered by Efeca. The GFC has not posted the Efeca report on its website nor engaged in public discussion. The Efeca re-design conforms to the general principles of legality verification systems now being associated with the voluntary partnership agreements of the EU Forest Law Enforcement, Governance and Trade (FLEGT) action plan. Adopting the re-design would have allowed the GFC to register real forward movement on one of the progress indicators in the Norway-Guyana Memorandum of Understanding (MoU) of November 2009.
The GFC issued in June a draft REDD-plus Governance Development Plan as required by the Norway-Guyana MoU, and a little later issued drafts of revisions of the National Forest Policy 1997 and the National Forest (action) Plan 2001.
The conversion yield from log to sawn lumber is generally low in Guyana, from both chainsaw milling and unmodernised fixed sawmills. The GFC generally uses a 40 per cent conversion in its statistics. Yields of up to 70 per cent have been demonstrated with mobile, thin-kerf, high-strain bandmills. Tests have shown that taper sawing for grade would give more saleable and higher value sawnwood volume than the traditional through-and-through sawing. The GFC has not used annual mill licence conditions to force modernization. Instead, it has been giving slide shows of better mill practices and lumber yard standards. Currently, ITTO is funding development of a national standard for best practice in mills and lumber yards, and stakeholder discussions are continuing slowly.
Opposition to change seems to stem from two sources. Firstly, the proposed technical standard is not associated with a fiscal incentive package from the national investment support agency GO-Invest. Secondly, there is justifiable suspicion that the GFC will operate selectively any new regulations, as it does now. Even if there was political will, the ability to over-turn long-standing regulatory capture (corruption) is limited when the Government admits it but does nothing about it. The suspicion is enhanced when the largest concession holder, the Malaysian-owned Barama with 1.61 million ha, is not held to its vague promises of inward investment, is exempt from or pays only minimal export taxes, and re-negotiation of its special area fees and royalty rates in its 1991 foreign direct investment arrangement with the Government of Guyana continues to be in secret. Barama is the only producer of plywood in Guyana, has enjoyed generous FDI tax incentives and lax accounting since 1991, and has been reducing its plywood production since 2000 to only 13 per cent of the installed capacity (108,000 m3) in 2010.
There is no space in this quarter’s report to cover the re-opening of discussion on the failed log export policy. All policies favour in-country processing, but exports of unprocessed logs were 83 per cent of total log production in the first quarter and 56 per cent for the first half-year in 2011. With only 7 out of 26 long-term large-scale logging concessions in current production, it is not surprising that the construction industry is experiencing a shortage of domestic lumber. Policy is clearly not working when a country with more than 75 per cent cover of natural tropical rainforest and a national forest service for over 85 years restarts imports of lumber.
CFA Governing Council
 ^^ State or regulatory capture occurs when a government regulatory agency which is supposed to be acting in the public interest becomes dominated by the vested interests of the existing incumbents in the industry that it oversees.
News from Guyana
CFA Newsletter, March 2012
In my last report (CFA Newsletter number 55, December 2011, page 7) I noted that discussion had been re-opened on the failed log export policy which came into effect in January 2009. All national policies favour in-country processing, but exports of unprocessed logs were 37 per cent of total log production during the period 2009 – September 2011. Three prime timbers for flooring and furniture comprised over 66 per cent of the total of 253,000 m3 of logs of 89 species, all gone to China and India for value-addition. The top six species make up over 75 per cent, and the top twenty timbers made up over 97 per cent, of the exported volume, so the remaining 69 timbers comprised less than 3 per cent of the total exported. The claim by the big log exporters that they have to export prime timbers in order to persuade the market to accept lesser used species is thus not correct. And those big log exporters also hold foreign direct investment tax concessions for processing in Guyana and so should not be exporting logs anyway.
I have just shown that log exporting is indeed hugely profitable. Exactly who is making the big money is difficult to estimate because of secrecy over shipping costs and doubts about the accuracy of Customs declarations and bills of lading. Documentation to circumvent or defraud the US Lacey Act controls against import of illegally produced timber, and next year’s European Union Timber Regulation (EUTR), is easily purchased in Guyana; as in Perú. New or tighter regulations by the Guyana Forestry Commission (GFC) and the Customs and Trade Administration of the Guyana Revenue Authority involve only partly-computerised bureaucracy mixed with hand-completed and typed forms. The additional formalities add almost nothing to international security or the prevention of illegal logging and trade but do expand opportunities for petty corruption. For legitimate traders, these formalities add unpredictable time for document processing before shipment, plus the time and cost to make missing government staff ‘re-appear’ to give their signatures to documents. Operators and shippers known to be close to the apex of power in government are not subject to checks by junior government staff.
In addition to the Efeca study on the defective Guyana Legality Assurance System in May 2011, GFA Consulting Group carried out a scoping mission on the GFC proposal for independent forest monitoring (IFM). This mission was restricted by the TORs being a sub-set of those proposed by Global Witness in 2005. GFA failed to notice that the GFC was imposing penalties on forest producers which greatly exceed the legal limit allowed by the Forests Act 1953/1997 for minor administrative mistakes. GFA also failed to notice that the GFC was sometimes making reference to the Forests Act 2009 which for legal reasons is not yet law (and should not become valid law, being a highly defective item of legislation, especially by giving the GFC large discretionary powers for making administrative decisions with no guiding criteria and no appeals process). As the GFC fails to prosecute any alleged forest offences in open court, the defendants cannot challenge the GFC through legal cross-examination. GFA did notice that the GFC was applying laws and regulations selectively, with the GFC explaining that it had ‘policy directives’ to exempt (politically favoured) clients from application of law. Exactly who provided these ‘policy directives’, with what legal authority to circumvent law, was left unstated.
Similar problems are linked to the new 65-page GFC Code of Practice for Wood Processing Facilities for Guyana (Sawmills and Lumberyards, January 2012). This Code has been developed since 2008 with funds from the International Tropical Timber Organization (ITTO) and technical support from the US Forest Service. The long consultation period extends until the end of February 2012. The Code is generally written clearly but is remarkably directive even in matters which are essentially commercial and technical decisions for the private sector millers and yard operators. It is sometimes unclear how this Code relates to the normative mandate of the GFC, given the near-absence of direct references to legislation and national policies. More worryingly, the introduction states that ‘It is the intention that all sawmilling and lumberyard operations will show progress towards compliance to this document which will be legally binding for all new operations, whilst selected elements will be made mandatory for existing licensees with full implementation within a stated time frames’. Reasonable objections to such government intervention in
commercial decisions include:
- no parallel process to prevent or discourage effectively the current export of prime commercial timbers for processing overseas;
- a justified belief that this bureaucracy will be applied selectively and not equitably;
- the failure of the government investment support body (GO-Invest) to implement equitably its claimed industry support programme for the forest sector, such that politically favoured enterprises receive support and others do not;
- in spite of the long period of development, there are incoherences in the Code. For example, if one aim is to foster the best practices ‘that will realize the maximum value from processing logs’, it is unclear why profiled lumber (dressed planks) must be cut in one-foot lengths (section 5.6, page 47). There is no evidence that the consumer or end user is so precise and anyway page 11 has extolled the use of random lengths and widths.
CFA Governing Council