State loses $ 16 million of stumpage values – Study

A study shows that the state from 2003 to 2013 lost $ 16 million of stumpage value of timber due to the inability of the Forestry Commission to review and publish new fees within the period.

The stumpage fees, which is the price a firm pays for the right to harvest timber from a given land base, has not been reviewed since July 2003 until March this year.

On March 1, the Forestry Commission (FC) reviewed the stumpage fees, which subsequently would be reviewed quarterly to reflect prevailing economic conditions at both the local and international markets.

The study by Forest Watch Ghana (FWG), a campaign vehicle of more than 40 civil society organisations (CSOs) and individuals committed to the rights of forest users, was presented to the media on Friday in Accra by Mr Gene Birikorang of Hamilton Resources and Consulting plc.

Mr Birikorang, who authored the study, said observations made, was that over the period 2003-2012, the FC did not comply with legislative instrument (LI) 1649’s requirement that stumpage fees be determined partly in relation to the free-on-board price of air-dried lumber.

He said the amount lost by the forest sector through stumpage fees was close to four times the potential contribution of the timber industry to forest communities’ welfare under Social Responsibility Agreements.

Mr Birikorang noted that the significant amount resulted because the annual potential loss was allowed to increase progressively over the period, declaring that it was also observed that 80 per cent of the loss did not originate from failure to adjust to free-on-board price but inflation.

He said the FC’s Board over the period failed to adjust stumpage fees to their real levels, which might be due to strong industrial sentiments. According to the study, notwithstanding the FC’s failure to comply with LI 1649, the law was also weak in not providing for adjustment to inflation.

Mr Birikorang said political decisions have always been influenced by the consideration that price reforms would cause unemployment in the timber industry.

He said the failure to reform timber pricing had resulted in continued over-harvesting and closure of more than two-thirds of the industry towards the end of 2000s, adding that the state in turn has had to bear the pressure of restoring livelihoods from its own budget.

The study called for the repositioning of the Timber Industry Development Division of the FC, to place it one step ahead of the timber industry. It urged the FC to begin to implement quarterly reviews of stumpage fees indexed to both the free-on-board value of the air-dried lumber and quarterly average inflation.

The study recommended that the Ministry for Natural Resources, Lands and Forestry to recognise CSOs as FC’s partner’s in policy implementation and provide support for building its capacity. Mr Samuel Mensah Mawutor, FWG Coordinator, said there is the need for CSOs and individuals to campaign for greater benefits from forest resources.