By Edmund Mingle
About 60 timber companies have collapsed, resulting in 70,000 job losses in the past few years due to the dwindling fortunes of the industry, says the Ghana Timber Millers Organisation (GTMO).
Attributed the decline of the industry to the high cost of operation emanating from the high cost of electricity, fuel and high interest rate on bank loans,
the organisation warned of its total collapse of urgent measures were not instituted to save it.
Dr. Kwame Asamoah Adam, Chief Executive Officer of the GTMO, who made this known during an interaction with the journalists in Accra at the weekend said “the future of the industry is very gloomy.”
Among other effects, he said, was the stump of revenue from the timber industry, which remained one of the main export revenue earners for the country from 200million euros to 120million euros.
He said the remaining 45 companies with a total employee population of about 30,000 were also struggling to survive, and could collapse if the challenges facing the industry were to addressed.
Dr. Adam identified the main factor contributory to the decline of the industry as the increasing cost of operations as a result of increases in electricity, tariff which constituted between 15 and 20 per cent of production cost, adding that the high cost of fuel was militating against production.
“Any collapse would open the floodgates to illegal loggers, who will the plunder forest resources and massively degrade our lands,” he warned
.
He lamented that despite the high electricity tariff power supply remained irregular, leading to loss of production time and equipment breakdown, “although salaries are paid when there is no production.”
The industry, he said, was worried about fuel cost increases, which in turn increased field operations, compounded by high interest rates of between 27 and 30 percent, against a profit margin of between five and15 per cent, adding that under these conditions, it takes a miracle to keep head above board.”
To address the situation, Dr. Adam called for fovourable interest rate arrangement for the industry, introduction of modern technology, and an aggressive pursuit of a national industrial timber plantation policy.
In addition to the problem, he said some financial institutions had been confiscating properties of timber firms because of to their inability to repay loans contracted
That, he said, had led to the collapse of most timber firms in Takoradi, Kumasi, and Akyem Oda, among other places, and the selling out of the by the banks for use as bus terminals, fuel filling stations, residential accommodation and hotels.
“Within the Kumasi environs in the Ashanti Region alone, about six companies have been sold this year resulting in the loss of leading to about 5,000 jobs he disclosed.
He expressed fear that the collapse of the industry would pave way for more illegal logging which would result in the destruction the country’s forests, stressing that the operations of members of the organization operated in a way to protect the nation’s forest cover.
Dr. Adam also attributed forest degradation to poor and unsustainable agricultural practices in farming areas and feared that the situation could worsen with the collapse of accredited timber operators.
“GTMO engages in selective logging and complies strictly with the laws governing the sector. We presently have a voluntary partnership agreement with the European Union and we can export only legally sourced lumber to that market,” he said.
Touching on stumpage (money collected for felling trees), Dr. Adam said the industry favoured a regime of fees was commensurating with the market of wood and cost of processing and cautioned that any further increase in stumpage fee would lead to downsising.
About 60 timber companies have collapsed, resulting in 70,000 job losses in the past few years due to the dwindling fortunes of the industry, says the Ghana Timber Millers Organisation (GTMO).
Attributed the decline of the industry to the high cost of operation emanating from the high cost of electricity, fuel and high interest rate on bank loans,
the organisation warned of its total collapse of urgent measures were not instituted to save it.
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| Mr. Kwame Asamoah Adam, CEO of GTMO |
Among other effects, he said, was the stump of revenue from the timber industry, which remained one of the main export revenue earners for the country from 200million euros to 120million euros.
He said the remaining 45 companies with a total employee population of about 30,000 were also struggling to survive, and could collapse if the challenges facing the industry were to addressed.
Dr. Adam identified the main factor contributory to the decline of the industry as the increasing cost of operations as a result of increases in electricity, tariff which constituted between 15 and 20 per cent of production cost, adding that the high cost of fuel was militating against production.
“Any collapse would open the floodgates to illegal loggers, who will the plunder forest resources and massively degrade our lands,” he warned
.
He lamented that despite the high electricity tariff power supply remained irregular, leading to loss of production time and equipment breakdown, “although salaries are paid when there is no production.”
The industry, he said, was worried about fuel cost increases, which in turn increased field operations, compounded by high interest rates of between 27 and 30 percent, against a profit margin of between five and15 per cent, adding that under these conditions, it takes a miracle to keep head above board.”
To address the situation, Dr. Adam called for fovourable interest rate arrangement for the industry, introduction of modern technology, and an aggressive pursuit of a national industrial timber plantation policy.
In addition to the problem, he said some financial institutions had been confiscating properties of timber firms because of to their inability to repay loans contracted
That, he said, had led to the collapse of most timber firms in Takoradi, Kumasi, and Akyem Oda, among other places, and the selling out of the by the banks for use as bus terminals, fuel filling stations, residential accommodation and hotels.
“Within the Kumasi environs in the Ashanti Region alone, about six companies have been sold this year resulting in the loss of leading to about 5,000 jobs he disclosed.
He expressed fear that the collapse of the industry would pave way for more illegal logging which would result in the destruction the country’s forests, stressing that the operations of members of the organization operated in a way to protect the nation’s forest cover.
Dr. Adam also attributed forest degradation to poor and unsustainable agricultural practices in farming areas and feared that the situation could worsen with the collapse of accredited timber operators.
“GTMO engages in selective logging and complies strictly with the laws governing the sector. We presently have a voluntary partnership agreement with the European Union and we can export only legally sourced lumber to that market,” he said.
Touching on stumpage (money collected for felling trees), Dr. Adam said the industry favoured a regime of fees was commensurating with the market of wood and cost of processing and cautioned that any further increase in stumpage fee would lead to downsising.
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