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Maximising mahogany: the easy way and the hard [The Fiji Times, 2 Jan 2001]

28/03/2012

Fiji people do not appreciate wood  

AreFijipeople stupid when it comes to wood?

Certainly that is what a lot of expatriates think.   We locals just do not appreciate the real beauty and value of our locally grown timber and timber products.

We are surrounded by exotic timber of all kinds, indigenous and introduced- mahogany, yaka, dakua salusalu, kaudamu, coconut, pine.  But we insist on buying all kinds of furniture and knick-knacks made from steel, plastic and other synthetics.  Or if we do buy wooden stuff, we cover it up with some gaudy ugly paint.

You may rightly complain that such expatriates are jaundiced and chauvinistic in their judgement.  Of course, “beauty” or “value” is in the eyes of the beholder, and is very much culturally determined.

For whether we like it or not, there is money to be made

But weFijipeople would definitely be stupid, if we did not see the great economic potential of our mahogany resources- for creating thousands of jobs and incomes.

Because the world’s wealthy, especially in developed countries, place great value on beautiful articles, made from beautiful wood, like mahogany.

Because the world’s population keeps growing at its currently horrendous rate, also gobbling up the world’s timber, which takes decades to grow.

Timber and timber products will be in demand for the foreseeable future, givingFijia genuine “comparative advantage”  industry, which will not require the kinds of trade protection that the World Trade Organisation opposes.

In timber and timber products,Fijican have a sustainable economic future, sustainable jobs, sustainable incomes, which can survive the world’s competitive pressures and the WTO, into the 21st century.

What should we do with it?

So what should we do with our timber resources, like the massive mahogany plantations?

We have a choice between two alternatives- the easy way, and the hard way.

The “easy” way will maximise short-term benefits for Government, land-owners, NLTB and many other people who would like to latch on to the easy money.  But the easy way does not maximise incomes, jobs and economic development.  As  the “hard” way can.

The “Easy” Way

  Make no mistake.

There is oodles  of money to be made very quickly by a small number of people,  if political decisions take the “easy” way  in developing the mahogany plantations.

The mahogany trees are ready for harvesting.  Companies are ready to buy up mahogany logs.  As my last article indicated, there can very easily be flows of more than $50 millions per year, just from shipping out the logs.  Piles of money, there for the taking.

And for foreign or local investors (not concerned about maximising long-term jobs and incomes in our society) there is every incentive to just export logs.

Minimum capital will be required.  Large amounts of revenues will be generated, very quickly returning the initial investment, with all profits thereafter being the icing on the cake, with little risk.

And everybody’s share of the pie, would be paid for from revenues generated internally. not from the investor’s own capital.

Land-owners (and amongst them, their leaders who will receive the largest cuts); landowners’  agents such as the NLTB; the ever-present lawyers; the potential corporate managers; the potential directors; and all those getting their perks and commissions on the side.

For any Government (past, present or future, Interim or otherwise), the least effort way would be to deal with just one company.  The chosen company, in return for monopoly control, would happily allow a few favoured shareholders or companies, to piggy-back on the deal.

And Government could be paid a quick lump sum, which would hopefull return all the tax-payers’ funds previously invested in developing the mahogany plantations.

These few interests would benefit fantastically, and very quickly.

But the mahogany logs would disappear overseas.  The bulk of the long-term value-added benefits, which easily amount to four or five times the total value of the log exports, would also be exported to overseas economies.  Few jobs and incomes would accrue toFiji.

It is unfortunate that the “easy” way scenario, is in fact, the most likely sequence of events, as it is with underdevelopment in general.

Not because there are evil men and women out there plotting this course of events.  But because there is every incentive- financial and effort wise, for the “easy” way to be followed.

Because there are no financial incentives lubricating the “hard” way.

And the “hard” way does require a lot of planning, co-ordinating, and just basic hard work, from a whole range of civil servants and government departments.

Not easy to come by, especially in the current climate.

The Hard Way

  The “hard” way would require that the export of crude logs be severely restricted by policy.

Government would call for the establishment of several if not many competing companies (with land-holders having co-equity), which would sign contracts for the processing of the mahogany logs into quality furniture, sawn timber, veneer, housing parts such as doors, windows, toys, etc.

There are many existing companies inFiji, which are already into the production of quality timber products, both for local sale and export.  They could be encouraged to invite strategic partners, should they not feel confident in going alone.

Most would have to be encouraged to go more up-market in their products; they would have to be encouraged to acquire the latest and best timber processing technology.

There would have to be a massive programme of training of skilled technicians for the plantation operations, the factories, wholesaling and retailing outlets.

There would need to be professional research into the peculiarities ofFijimahogany,  and expert assistance (probably expatriate) for product design and development, to suit the consumer demands of the top end of the mahogany product market.

There would have to be massive marketing drives throughout the world, pointing out the uniqueness and purity ofFiji’s mahogany trees: growing in the middle of the purePacific Ocean, far from the industrially polluted atmospheres in which other timber resources grow.

Marketing advantages for Fiji mahogany

And don’t forget, our mahogany has another marketing advantage.  In the ecology conscious developed countries, there is increasing opposition to the cutting down of natural tropical rainforests inBrazil,Malaysiaand other mahogany supplying areas.    The fact that our mahogany comes from “planted” trees should be a major selling point.

 

As withFiji water, appropriate high-powered marketing can surely create valuable brand identification forFijimahogany, throughout the world, so that it can be sold for a premium, not a discount as some forestry experts currently think.

 

Do all this, and we are indeed looking twenty years down at a major industry, on par with sugar and tourism.  Employing tens of thousands of people and generating hundreds of millions of dollars of income.

 

Significant long term national benefits, if we do things the hard way.

 

But unfortunately, the easy way is so inviting and easy: ship the logs out, make a lot of money for a few people very quickly, and forget the future generations.

 

The choice is here.

 

It will be interesting to see how the mahogany power-brokers decide.

 

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