WILLIAM F. HASTIE and JOHN MACKENZIE
WILLIAM F. HASTIE is managing director and JOHN MACKENZIE general manager of the Usutu Pulp Company Limited, Swaziland. This paper was prepared for the FAO Symposium on Man- made Forests held in Australia in April 1967.
Experience in Swaziland
IN WRITING a paper on the planning of an integrated forest program, the authors assumed that their primary task was to use the experience gained in the Usutu enterprise in Swaziland to provide a kind of blueprint for future ventures of this type. Many of the factors mentioned here were carefully considered in the initial stages of the pulping project. It is hoped that this article will provide some guidance for those planning similar enterprises in other developing countries.
The Usutu forestry enterprise was initiated in 1948 by the Colonial Development Corporation of Great Britain with the objective of creating a man-made forest of about 40,000 hectares consisting essentially of pine trees. Swaziland is a British Protectorate in southern Africa and is, of course, a separate political entity from South Africa. In 1948 it was thought that there would be a market for kraft paper in South Africa and that this would provide a profitable outlet. Subsequent development in South Africa satisfied the kraft paper demand there, but in 1959 a joint company was formed with Courtaulds Limited for the exploitation of the pine plantations by means of the production of unbleached kraft pulp for export to overseas markets. A mill was designed for an output of about 100,000 metric tons per year, so matching the calculated annual potential of the forest. In Swaziland a wood growth equal to 2.5 metric tons of pulp per hectare per year can be counted upon.
A brief survey will now be given of the historical background of these man-made forests, giving the reasons for their establishment and emphasizing the difficulties encountered in forecasting the end use of a plantation's timber. A primary interest, of course, lies in forestry investment in the developing countries, and this must influence, for example, both the siting of the mill in relation to raw material supplies and the recruitment of those required to run the enterprise.
An overwhelming proportion of the world's wood supplies, whether for lumber, pulp and paper, chemicals or fuel, is supplied from natural forests. Man-made tree plantations are, however, beginning to play an increasing role, and the advantages to be derived from the application of scientific knowledge to tree farming are receiving increasing recognition even in countries where the main wealth is still measured by vast areas of natural forest.
It is probably true to say that only in rare cases have manmade forests been planned with as specific processed end product in view. In many instances afforestation has been undertaken to provide work in times of economic recession or to halt the ravages of soil erosion. Due to the time which must elapse between tree planting and reaping, only governments, in general, are able to make available the required financial resources. In the case of New Zealand, where the Kaingaroa forests form the largest man-made tree farm in the world, it is clear that the project was accelerated to provide work for the unemployed during the recession of the 1930s as well as to utilize land that was apparently unsuitable for any other form of agriculture.
In many parts of Africa, including South Africa, a substantial part of the afforestation work has been initiated by government forestry departments in order to repopulate with trees areas which had been denuded in the past and which could degenerate into soil erosion centers unless action was taken. In these cases also there was an additional incentive during times of depression to provide work for the unemployed. Spain, France, the West Indies and parts of South America provide examples of controlled afforestation designed as part of land preservation schemes or as a means to provide employment for people who might otherwise be destitute.
There are two exceptions to this general pattern, i.e. the development of wattle and eucalyptus plantations in Africa and South America. In the case of wattles, the high price and demand for wattle extract for leather tanning led to the creation of vast wattle plantations. Due to the relatively short rotation of wattle trees (approximately 10 years) and the high bulk value of the main product, private investment entered this field with every prospect of a good return on the capital within a reasonable time.
The gold mining industry in South Africa provided a good market for mine props and this led to the development of quick-growing eucalyptus plantations with, once again, a 10-year rotation period, so that the private farmer saw a good return for his efforts within his lifetime. The Usutu enterprise is probably the only one in the world where a forest development was planned with the objective of ultimate conversion of the wood to paper or pulp. The authors do not know of any other instance where the private investor has been prepared to venture into the field of tree plantations with the objective of converting all the trees to pulp and/or paper, except in cases where well-established pulp and paper companies found it necessary to augment their existing natural forest resources.
The final product
The most difficult decision to be taken in planning an afforestation program is that relating to the ultimate product or products of the first crop of mature trees. Assuming that afforestation on a large scale is only likely to prove economically feasible in the developing countries of the world, it is unlikely that all the products of the operation will find a market in the country of origin. One must look therefore for an international commodity, the demand for which is likely to expand. The problem then is to be able to forecast Likely developments in the market for forest products some 10 to 15 years ahead. Lumber, chipboard, building board, wood pulp and/or paper are the possible fields.
Since it is Likely that those areas which would be most suitable for major afforestation schemes are fairly remote from the most remunerative markets, there will inevitably be a large element of land transport and ocean freight in the delivered cost of the product. Bulk value therefore becomes important and plans should be made to increase the value of the wood raw material to the maximum at the processing site in order to reduce the ratio of freight cost to sales value. One must not ignore, however, site disadvantages in terms of raw materials other than wood, e.g., chemicals, and a careful evaluation is essential to determine the most economical balance between site cost of production and the freight/production cost ratio.
Similar considerations in terms of the above points apply to most processed timber products other than lumber, i.e., chipboard, building board, pulp and paper, but most world commodity demand projections forecast a steady and increasing market for pulp and paper. It will therefore be assumed here that the forest project will be designed to provide ultimately the raw material for a pulp mill. It must be emphasized, however, that the final decision as to the ultimate product must be left until two or three years before the first crop is ready for cutting since a complex operation involving several end products may be more profitable than a simple one-product enterprise.
In the case of Usutu, although the original objective was the manufacture of kraft paper, the pattern changed ultimately to kraft pulp for export after passing through a phase based on a combined lumber and pulp operation. The latter was abandoned in favor of pulp only, due to considerations relating to the minimum economic unit required for commercial success in a market pulp venture.
LAND AVAILABILITY AND COST
In the manufacture of wood pulp the wood price controls to a great extent the ultimate product cost. The total investment in the forestry operation must therefore be kept to a minimum if the ultimate wood cost is to be reasonable. It would be natural to assume that the cheapest possible land in the correct climatic environment would be a logical choice but this is not necessarily true. If one analyzes the cost of development of a forest area up to the stage of initial cutting for pulpwood, it will be found that land cost contributes only a minor proportion of the total cost, even when interest on the investment in the land is included. In a recent exercise in which a substantial area of land was involved, the land cost based on £5 per acre ($34.60/ha) worked out at slightly above 20 percent of the total cost of forest development, over a 12-year period after allowing 8 percent interest on the land investment. The cheapest land is therefore not always the most economic, and consideration must be given to the ultimate probable cost of exploitation of the trees. In steep rocky ground leading to difficult problems in road construction and limited use of mechanical equipment for harvesting, extraction costs may be high and far more than offset any original economy in land purchase where some choice was possible as between difficult and relatively easy terrain.
Unfortunately the kind of rainfall needed for fast-growing trees is usually found in mountainous areas, and it is pointless to try to afforest in areas without adequate rainfall. It is, however, vital to assess any area not only in terms of its suitability for growing trees but also, and this is at least equally important, in terms of the difficulties in harvesting the crop.
It is not suggested that land suitable for growing more remunerative crops should necessarily be used for trees, although the relative stability of wood product prices over the last couple of decades might well be compared with other primary agricultural products, e.g., sugar. The point to be emphasized is the need to consider the effect of the terrain on the long-term and recurrent costs of harvesting.
The terrain at Usutu is not particularly easy and is fairly typical of the escarpment of the great African plateau. In traveling westward from the east coast, it is the nearest area to the sea which provides a rainfall pattern adequate for tree growth. With the building of the Swaziland railway linking the territory with the port of Lourenço Marques in Mozambique, transport of the finished product to the docks presents no problem.
CLIMATIC CONDITIONS
Water is needed to grow trees and a minimum rainfall of about 750 millimeters (30 inches) per annum is generally accepted. Swaziland has about 1,125 millimeters (45 inches) and most of this falls between October and March. Rain therefore falls in summer, and the combination of heat and rain leads to high growth rates. In Africa growth rates tend to be proportional to rainfall but, again with exploitation costs in mind, it is possible to have too much rain.
Frost, snow, hail and electrical storms are also hazards for forestry. Conifers stand up reasonably well to frost and snow but are very susceptible to hail damage. Lightning causes quite a number of forest fires.
Ideal climatic conditions are rarely found but, provided rainfall and temperature are satisfactory, the other climatic hazards mentioned must be accepted as a penalty of the primary requirements provided there is no evidence of abnormal conditions.
GEOGRAPHICAL CONSIDERATIONS
All primary forest products, whether processed or not, are of relatively low bulk value, i.e., large volumes or tonnages of material are moved per unit of currency earned. Furthermore, for processed wood products such as pulp or paper, the weight ratio of raw materials to finished product is high. Therefore the siting of a forest project should take into consideration as far as possible the geographical relationship of the area to ease of supply of raw materials other than wood and easy and cheap access to a port for overseas exports. This question is discussed in more detail under the section dealing with the siting of a pulp mill, but the problem can be underlined by emphasizing the absurdity of developing a forest on an ideal growing site in an underdeveloped country with virtually no home market, no railway system and 1,600 kilometers (1,000 miles) from a port.
This does not mean that a forest area must necessarily include a site suitable for a mill. Sometimes the ideal forest area would not provide a good mill site owing to lack of adequate water, remoteness from centers of habitation and inadequately developed communications. However the cost of wood transport to a mill site will obviously have an important effect on delivered wood costs and the relative advantages of a short wood haul must be balanced against the need for a developed transport system, sources of labor, raw materials, availability of water and disposal of effluent.
The forest development at Usutu was planned to straddle the Usutu river with the objective of siting the mill in the center of the forest area. Log haulage costs are thereby minimized. This has worked out well with only the disadvantage of a fairly steep drop into the Usutu valley from the northern and southern areas of the forest. The mill site is approximately 500 meters (1,500 feet) lower than the plantation areas.
CHOICE OF SPECIES
Choosing the right species is a very difficult problem and it should be emphasized that it is vital to establish by means of a pilot scheme which species are best suited to the climatic and soil conditions of the area under consideration. There is, however, a good deal of knowledge of this subject available throughout the world, and it should be possible to get fairly close to the ideal by utilizing the expert advice available through FAO and other organizations.
Secondly, the species must be able to provide the right kind of fiber characteristics for the ultimate product desired. This is in many ways more important than attempting to achieve the highest increment figures for the first crop, since adjustments can always be made subsequently in second and third crops once the project is under way, a salable product acceptable in world markets is established, and more is learnt about the performance of different species on the site selected.
Thirdly, the authors believe it is better to restrict the species to the minimum as this simplifies silvicultural procedures such as nurseries, pruning, spacing, etc. Some minor variation in species is permissible to take care of obvious differences in soil and drainage conditions on the site, but this problem can usually be covered by two or three species only. In most large forest areas there will be enough variation in soil, rainfall, wind and frost conditions to render the foresters' job a sufficiently difficult and complicated task without superimposing on all these natural deviations from average the additional variations due to a large number of species.
It has been suggested that by limiting the number of species there is a grave risk of susceptibility to disease or pests and it must be accepted that these hazards exist. However the authors believe that nature takes care of a good deal, provided good silvicultural practice ensures healthy growth conditions in the plantations and that scientific knowledge can take care of the rest. The key to avoiding forestry disasters arising from disease or pests lies in an alert and knowledgeable forestry staff who must be able to recognize quickly any incidence of abnormality and decide when to call in experts to advise on suitable remedial action.
Finally, different species often behave differently during the pulping process for various reasons, and what may be ideal for one species may be completely wrong for another. This adds to the complication of subsequent processing and, unless there are very valid reasons for multiple species, it is recommended that the program be restricted to one or two only, except for experimental sites.
Apart from the use of Eucalyptus saligna for fire protection between blocks of pine, there has been a tendency at Usutu to concentrate on Pinus patula, supplemented by P. elliottii and a little P. taeda. These trees are sufficiently similar in fiber properties to avoid serious difficulties in processing, although we do attempt to maintain a reasonably constant proportion of P. patula to P. elliottii.
SCALE OF OPERATIONS
Natural and man-made forests tend to cover very large areas and the task of the forester even in ideal conditions often involves a good deal of traveling about over difficult terrain. Experienced forestry men are expensive and the Usutu organization normally assumes a cost of at least double the man's salary to cover provision of transport plus other fringe benefits. :It is essential, therefore, to ensure that his time is profitably employed and this can only be done if plantations are planned on the basis of an ideal management area. It is expensive to develop scattered areas of two or three thousand acres, and under growth rate conditions normal to Africa it :is considered that the minimum area for a satisfactory forestry management unit is about 20,000 acres (just under 10,000 hectares). There is every reason why such units should be adjacent to each other, but this is :less important if adequate rail or road facilities are available for transferring the trees from the forestry sites to the mill.
The size of the forest entity as a whole depends largely on the ultimate product. For a complex involving lumber, pulp or paper or chipboard with a fair outlet in a local protected market, the scale can be lower than in the case of a pulp mill depending almost entirely on overseas exports. In the latter case one has to think in terms of a perpetual supply of wood for a mill of between about 100,000 and 200,000 metric tons per annum capacity. Obviously the forest area involved will depend on the mean annual increment possible and the yield of finished product per unit of wood. Any project of lesser scale is unlikely to be profitable under today's competitive conditions.
It is clear that any investment which is unable to yield any return for 10 to 15 years or longer is going to build up heavy interest charges over that period. On the basis that forestry either utilizes land that would otherwise be unproductive or is designed to avoid the development of soil erosion problems by correcting the previous misuse of natural vegetation, it would seem that there is a case for special interest rates for long-term tree farming. It is, after all, another form of agriculture except that cropping takes longer and it is customary throughout the world to make special finance available to farmers.
Technical factors
There are certain basic technical requirements for a pulp or paper mill site which are more or less equally applicable to any other processed wood product, with the possible exception of lumber milling.
The first primary need is an adequate all-the-year-round water supply. Although this may seem to be easily satisfied to those whose background is Europe or Japan or America, it is a requirement that is not so commonly available in Africa. Many African rivers which are flooding torrents in the wet season are nothing but dry sandy depressions during the other half of the year.
Secondly, the site must be suitable as a foundation for heavy equipment, preferably reasonably flat and not subject to floods or landslides. One of the Usutu mills was inundated by a flash flood some years ago and, although it was brought back into production within a relatively short time, the cost, effort and disruption involved were considerable.
Thirdly, although tremendous advances have been made in connection with effluent treatment recently and it is possible to design a mill with virtually no obnoxious discharge, some provision must be made for those periods when all is not running as it should, and a suitable sink for untreated effluent when the mill is in a state of imbalance is essential. In most cases this emergency outlet can be in the form of spray irrigation equipment but one does not want to pump the unwanted material 300 meters (1,000 feet) up the side of a mountain if it can be avoided. An area of one hectare per 1,100 metric tons of product per annum should be adequate.
Fourthly, most pulp mills cause atmospheric pollution to a greater or lesser degree. It is quite remarkable how an oil refinery, a pulp mill or a chemical works becomes the scapegoat for every unusual odor in a built-up area, even if the real cause is a fault in the sewerage system or decaying vegetation washed down by a river flood a month or so previously.
To sum up, the mill site must be chosen to provide for adequate water supply, satisfactory foundation and plant layout conditions, discharge of some obnoxious effluent even though only intermittently, and the avoidance of complaints from the public in connection with unpleasant odors.
Economic factors
Obviously any export-orientated enterprise involving ocean freight cost will favor a site at a seaport and, as is well known, in Scandinavia and North America many large mills are sited on the coast. Unfortunately in Africa the climatic conditions at the coast are rarely conducive to - the rapid growth of trees and African rivers are hardly ever navigable for any significant distance from the coast. It is necessary therefore to compromise to some extent and the decision will depend on the availability of railway freight facilities and whether the railway tariff is weighted. In many countries rail freight rates are lower for low value high bulk agricultural commodities, and timber lies in this class. Low rates for agricultural products are balanced by correspondingly high rates for finished goods, and paper and pulp tend to be put into this category. After having assessed the availability and transport costs of pulping chemicals and the weight ratio of raw materials (including wood) to finished product, it is not too difficult to calculate the ideal position for the mill site on the basis of the freight cost factor.
The advantages of siting a mill in such a way that it is directly served by a railway cannot be overemphasized. Road haulage is now a highly developed branch of transport and, for the regular bulk haul of large tonnages of the same product over considerable distances, can sometimes be competitive with a railway. The haulage of the finished product and the primary raw materials is, however, only part of the story. Any industrial complex requires a multitude of general items ranging from heavy and light engineering spares to toilet paper. In a remote site the cost of transport of such items can be excessively high unless the source of such materials is the same as the delivery point of the finished goods. Where manufacturing centers are located in the opposite direction to the outlet for the finished products, the mill will be at a considerable economic disadvantage and may, for instance, find it cheaper to make spare parts in its own workshops from primary steel products rather than face the excessively high cost of spares from remote manufacturing centers.
MANNING FACTORS
Forest and mill enterprises are going to require a large number of people who have to live and work together under such conditions as to induce them to stay with the development, at any rate for a reasonable service period. It is. of course, a prerequisite that unskilled or vocational labor should be in relatively easy supply. The main problem in Africa lies in the provision of technical (skilled trades), professional and managerial staff.
The employees will require adequate housing and all that this implies in the way of community services such as power, water, sewerage and refuse disposal, shops and churches. They will also need schools for the education of their children. Leisure time must also be provided for in the :Form of sporting facilities and the opportunity for cultural pursuits such as music and theater, even if the latter need is met by facilities for amateur dramatics.
It will be obvious that, if a mill site can be chosen within a few miles of an existing township, many problems which face an enterprise in a remote area can be avoided. Some disadvantages in :respect of transport costs for materials or risks in terms of effluent disposal and atmospheric pollution would be acceptable if it were possible to avoid the high permanent cost of the building and running of a company township with all its services and the inevitable human problems that can develop in a closed community. One of the main difficulties in situations where all housing and community services are provided by the company is the fact that, however good the facilities are and however well run the township may be, all the little problems, personal and otherwise, tend to find an outlet in a big grouch against the management of the enterprise. Much of this arises from the fact that the same people are living, working and playing together and tend to develop into an inbred community. In the kind of society in which we live today, when everything seems to be dominated to some extent by "keeping up with the Joneses," the wives will tend to watch the progress of their husbands very closely and, if Charlie is promoted in preference to Bill, then Bill's wife will blame the shortsighted management rather than Bill's shortcomings. This probably happens in any large community but it is not so difficult if Bill and Charlie work for different firms or if all the friends of Bill's wife are unaware that Bill has been passed over in the promotion rat race.
If a company township is unavoidable, and in many mill projects there is no choice, very careful thought and planning are required in advance as to how far the company is prepared to subsidize the community requirements and whether there is any alternative to company management assuming direct responsibility for running township affairs. The human aspect of a large enterprise, and any development involving forestry and wood processing on a substantial scale, is at least as important as the technical and economic aspects, and unless one can create the right conditions from the start a good deal of money will be wasted in high turnover and recruitment costs and, more important, it will be difficult to develop the sort of spirit in the enterprise which is so essential to success.
At Usutu there was no choice but to provide a company township and all the necessary facilities such as shops, a garage, an abattoir and, at one time, a dairy herd for milk supply. Time has solved many of the initial problems and a useful step forward was taken when a township committee of nominated and elected residents was set up to run the township affairs within strictly defined financial limits. The present setup is not necessarily ideal and one questions the desirability of heavily subsidized or free housing facilities. There is, however, an historical background in Africa for this approach which makes a change difficult. It does, however, tend to breed a welfare state type of attitude on the part of staff whereby the company is expected to provide a shield and shelter against the realities of economic conditions and inflationary tendencies.
It will be clear that the difficulties described stem to some extent from the employment of expatriate people, i.e., people working and living far away from their country of origin or from their normal environment. This is not entirely a matter of color or race but stems to some extent from the high level of prosperity enjoyed by those countries which can supply scientific know-how and manual skills and by the tendency for people to want to live in highly developed communities rather than in rural surroundings lacking what are called the: amenities of civilization. The pressures of unemployment, religious intolerance or economic exploitation, which had always provided the incentive for men to look for a new life overseas, have fallen off in recent years and people have been less inclined to accept the risks involved unless they were very adequately rewarded. Perhaps this is not quite so true of the present day. However it is clear that it has become increasingly difficult and certainly much more expensive to employ expatriate staff in enterprises in the developing countries. There are many reasons for this, not least of which is fear of political instability tied perhaps to insufficient differential between the standard of living enjoyed in the home country (whether employed or otherwise) and that which might be enjoyed in an expatriate position overseas.
In view of these problems it is desirable to plan from the start not to rely on expatriate staff more than is absolutely necessary. Highly trained professional and/or managerial staff may be difficult to recruit from local sources at present, particularly when it is recognized that many years of training and experience are needed to fit an individual for the most senior posts in agriculture, forestry or industry. For people at this level it is likely that overseas sources will have to be depended on. The number required is small, however, and the enterprise can afford to offer conditions sufficiently attractive to ensure satisfactory recruitment. Included in this group are managers, chief chemists, senior technologists and engineers.
At the other end of the scale there should be no problem in connection with vocational personnel for planting, felling, exploitation and similar manual work in forest or mill, since these techniques are easily and quickly taught and the degree of mechanization will depend on the adaptability of the local people to mechanical equipment, the cost of labor an/1 facilities for maintenance and repair.
Between these two levels there is a range of occupations in the technical category which will be expensive to cover by means of expatriate staff but for which no local trained personnel will normally be available. The skilled artisan in the mechanical engineering, electrical and building trades, including instrument mechanics, the forest ranger, the motor mechanic, the road construction foreman, the radio mechanic, the process supervisor - these are the key personnel who are essential in fairly considerable numbers for this kind of forest project.
For the obvious reasons of cost and stability, plans should be made well ahead to fill as many as possible of these posts with local people. This presupposes that the general level of state education in the territory concerned provides an adequate basis on which to build the technical skills required to meet the needs of the enterprise.
In Africa generally local education lacks scientific or technical bias: local ambitions have been slanted toward government service, the law, politics and :medicine, apparently without a read appreciation of the fact that high material standards of living depend entirely on the technologist whether the field is agriculture or industry. More effort is needed to provide a mechanical environment for children during their years at school in the form of mechanical toys, including construction and building techniques. In the Usutu training school high levels of intelligence can be found among the trainees but progress is retarded by lack of a mechanical environment during the formative years of childhood.
It is essential, therefore, as part of our forward planning during the early development phases of the forest and the construction phase of the mill, to budget for a training school and. to start to prepare the human material for the task ahead in the same way that nurseries have to be provided for the trees and buildings and equipment for the processing plant. This will cost money but it is just as much a part of the essential investment as that which is allocated to tree growing or factory construction. This will go a long way toward satisfying local aspirations and local employment needs and at the same time the enterprise will become less vulnerable to changing world conditions which have led to a scarcity of people prepared to pull up their roots and work permanently in the less developed parts of the world.
The training staff and the people required for starting the venture, who may be expatriate, should be on contract at attractive terms but their objective should be to teach the local people and then move on to new pastures. If terms are sufficiently attractive, there is no problem in finding people to do this.
An attempt has been made here to summarize the main points which require careful consideration before embarking on an afforestation program. It will be clear that the task calls for knowledge and experience of a Very high order plus, perhaps, the ability to use a crystal ball successfully in order to predict the future. It is hoped that experience at Usutu may be of some use to those countries where there is a possibility of large-scale afforestation in the relatively near future.
The authors would like to acknowledge the advice and assistance provided by Charles Hubbard and John Keet, forestry consultant and forestry manager of the Usutu Company, particularly in connection with the history of manmade forest development.
