information collected locally in suriname

This section of the report describes the information collected locally in Suriname by the International Consultant (Forest Economist) and counterparts from LBB. Very little information about costs and prices in the forestry sector is currently collected on a regular basis in Suriname. Some information is collected on export prices, but in view of the incentive for timber exporters to understate prices to avoid paying ad valorem export levies, this information must be treated with caution. All cost and price information is presented for the year 1998 (unless otherwise stated) and prices quoted in US$ have been converted to Suriname Guilders (Sf) at a rate of Sf 650 = US$ 1.

In addition to cost and price data, other types of quantitative information and some qualitative information about the general state of the forest industry in Suriname was also collected during the study. This information is presented at the end of this section.

Labour costs in Suriname

The labour cost information shown in Table 3 was collected from one of the large foreign-controlled forest companies operating in Suriname. The only other labour cost information collected was gathered during a discussion with the exploitation manager for Bruynzeel, who stated that his harvesting workers were generally paid about Sf 100,000/month (considerably less than the figures presented in Table 3). It is known that Bruynzeel probably pay below average salaries (and consequently, probably have low labour productivity rates). However, it is also possible that the foreign-controlled company may have been overstating salaries to avoid criticism.

It was not possible to validate this information against any other sources; therefore the figures presented in Table 3 may be a little on the high side. However, in the absence of any better data, this information was used in the production cost analysis.

Table 3 The level of forest employee salaries reported by one sawmiller

Source: LBB

The cost of consumable items purchased in Suriname

For the purposes of this study, consumables were defined as all raw materials, regularly replaced spare parts and minor pieces of equipment used in forest management and harvesting, including: fuel; oils and greases; filters; undercarriage and tyres; winch cables and chokers; batteries; files; tools; clothing; paints; measuring tapes; machetes; camping equipment and other miscellaneous inventory equipment. Information about the cost of such items was collected from local and international equipment suppliers (presented later) and during discussions with various logging operators.

Table 4 shows the current (1998) prices of fuel, oil and greases used by forest machinery. The government fixes the price of fuel in Suriname, so this cost item is known with certainty. The costs of oil and greases were the same for all local suppliers in Paramaribo. These figures were checked during the interviews with forest managers, who confirmed that they were about right.

Table 4 The cost of fuel, oils and greases

Source: Various suppliers in Suriname

Information about spare parts was slightly more difficult to collect. Unfortunately, the local supplier of spare parts for most of the forest machinery operating in Suriname could not (or would not) supply replacement part price information without a machine serial number. However, some of the logging managers interviewed were able to provide this information for the current year or for last year. Data taken from their records is shown in Table 5.

Table 5 The cost of filters, tyres, undercarriage and cables

Source: Discussions with forest managers

Table 6 shows the current (1998) list prices of various minor items used in forest inventory and harvesting, such as: replacement parts for chainsaws; small tools; and safety equipment. This information was collected from a number of local equipment suppliers.

In addition to the items listed in Table 6 the forest inventory consultant also collected more information about forest inventory and camping equipment prices (see: Cox, 1998). This was also used to calculate consumable costs, but has not been presented here in order to save space.

It is interesting to note that many pieces of forest inventory and safety equipment are not generally available in Suriname and have to be imported. The list prices of such items from international suppliers were also collected as part of this study and are presented later.

Table 6 List prices of various minor items used in forest inventory and harvesting

Source: Various equipment suppliers in Suriname

The cost of capital equipment purchased in Suriname

The cost of major pieces of capital equipment is shown in Table 7. These figures were obtained from Surmac (the local Caterpillar dealer) and other machinery dealers. LBB also collected this information in 1994, and these figures are given in Table 7 for comparison. Three points are worth noting. Firstly, the costs presented here are quotations for new pieces of equipment. Most forestry equipment in Suriname is very old, so the depreciated value of equipment currently being used in Suriname is probably much less than this. Secondly, the cost of new machinery in Suriname appears to be roughly twice the cost of the same sort of equipment in the USA (the main source of logging equipment used in Suriname). Finally, it should be noted that the cost of a logging truck collected for this analysis is the cost of a flatbed truck, rather than a proper truck designed to carry logs. Most forestry operators in Suriname use a variety of old converted flatbed and light freight trucks to transport their roundwood. The price of these vehicles is only slightly less than the price of a proper logging truck, but they have a much lower carrying capacity (10 m³ - 20 m³, rather than 30 m³ - 40 m³).

Table 7 Recent estimates of machinery costs

Source: Surmac machinery distributor and other suppliers

The only other major capital cost to be considered is the cost of building a logging camp. Currently, only four forest operations in Suriname have permanent camps in the forest and information about the cost of building such camps was not available. As forest exploitation in Suriname moves into more remote areas, it may be necessary for companies to start to build permanent camps to house employees, carry-out repairs to machinery and perform some administrative and planning functions. Therefore, estimates of these costs should be included in any appraisal of forestry development in the interior of the country.

The average age of machinery in Suriname

The age of the machinery currently working in the forest sector in Suriname is an important variable, because it determines the capital value of equipment being used and it can have a major impact on machine availability and repair costs. This is particularly true in the case of Suriname, where much of the machinery currently being used in the forest is very old.

With the exception of chainsaws and pick-up trucks, all of the small and medium-scale loggers and sawmillers said that their equipment was at least 10 years old and several said it was 20 years old. Only Bruynzeel appeared to have some equipment purchased within the last five years. Even the large foreign-controlled logging operations, which have imported a lot of their equipment, have imported mostly second-hand equipment.

Based on a general impression of the forest sites visited and interviews with sawmillers and forest managers, the average ages of machinery presented in Table 8 are the author's best estimates of the ages of various pieces of forest machinery currently working in the forestry sector in Suriname.

Table 8 Approximate estimated age of forest machinery currently working in Suriname

Source: Author's own estimates based on Bruynzeel's records and discussions with other forest managers

Contracting costs in Suriname

As an alternative to owning their own machinery, many forest managers use contractors to perform some of their roundwood production operations. During discussions with forest managers, it was discovered that contractors are frequently used to transport roundwood by road and by barge. Smaller forest logging operations also use contractors to extract and load timber. Table 9 shows the range of contracting costs mentioned during discussions with forest managers.

Table 9 Current costs of contracting-out various forest operations

Source: Discussions with forest managers

The felling cost of Sf 700/m³ - Sf 750/m³ (labour only) and Sf 2,000/m³ (tree feller with their own chainsaw) was mentioned by several managers and matched figures collected elsewhere by LBB. Two small logging operations quoted a contract skidding cost of Sf 8,000/m³. However, these operations were fairly close to each other, so they may have been using the same contractor. It is not known whether this is representative of contract skidding costs throughout Suriname, but discussions with LBB and others in the industry suggested that it was probably about right.

Loading and transport costs varied widely, depending on location, the distance transported and the type of timber being loaded and transported. Near Paramaribo, road transport and loading costs appeared to be cheaper, possibly because there is more competition to provide these services. Figures quoted were around Sf 1,500/m³ for loading and Sf 50/m³/km - Sf 100/m³/km for road transport. However, the highest unloading cost mentioned in discussions was for unloading at the quayside in Paramaribo (Sf 4,000/m³). Loading and transport costs in areas distant to Paramaribo were about twice the cost of the same operations in areas close to Paramaribo. In-forest loading costs were also slightly more than the cost of unloading, because of the additional cost of transporting the loader to the forest. Water transport costs varied widely, for no apparent reason.

The other interesting point raised in discussions was that contractors charge higher rates and want paying in US$ if they sense that the timber they are handling is for the export market (e.g. export-grade logs and hewn squares). Thus, for example, a crane owner in Paramaribo will charge Sf 4,000/m³ for unloading at a sawmill in Paramaribo, but charge US$ 10/m³ for unloading at the harbour. This is a good example of rent seeking on the part of the crane owner and suggests that competition to provide such services must be very limited such that they can act in this way.

Levies, taxes and other fees paid in Suriname

There are currently two sets of specific taxes and levies charged on the production and export of forest products in Suriname. The first is a complex array of concession fees, roundwood and minor forest product royalties and miscellaneous charges levied on production, transportation and grading of roundwood and forest products. These are shown in Table 10. The second is a rather simpler set of ad valorem (i.e. percentage-based) export levies charged on the value of roundwood and forest products exported from Suriname. To avoid under-reporting of export values, minimum values for each product are also specified and these, along with the export tariffs, are shown in Table 11.

Table 10 Current forest levies and other charges in Suriname

Source: LBB

The Minister of Natural Resources and Minister of Finance have joint responsibility for setting these levies. All levies are paid to LBB and transferred directly to the Ministry of Finance.

There is a provision in the 1992 Forest Management Act (Government of Suriname, 1992, or see Cullinan (1996) for an annotated English translation of the Act), that the forest levies should be revised at least every five years. However, many of these levies have not changed by much for many years. Indeed, during the last set of revisions in 1996, the export levy (and the schedule of minimum export prices) was reduced twice and the Exploration Licence Royalty was reduced. Only the grading fee was increased. There is currently (November 1998) a proposal to significantly increase these levies, but this has not yet been entered into the official gazette. Past attempts to raise the levies have failed to materialise (see, for example, Ministry of Natural Resources, 1998) and, given the recent history with setting forest levies, it remains to be seen whether these increases will be materialise.