Willagri :The crisis in the European tropical timber sector in Central Africa



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Dossier-Crise-Filiere-Europeenne-Bois-Afrique-Willagri.pdf (4.6 MiB)



In early 2018, the Africa Branch of the Rougier Group filed for bankruptcy. The announcement sent shock waves through the professional tropical forestry sector and wood industry observers in Africa. A publicly listed family business founded in the city of Niort in 1923, the Rougier Group is one of the oldest and largest logging companies in Africa. The company which first began logging Okoumé wood in the 1950s in Gabon, also has operations in Cameroon, the Congo and, since 2015, in the Central African Republic (CAR). Rougier-held concessions span a total surface area of more than 2.3 million hectares, with 3000 employees, mainly in Africa. It is expected to halt activities either completely or in part, with the exception of operations in Gabon.



Citing the reasons for the bankruptcy claim, Rougier’s management pointed to known issues which it said are common knowledge in the timber export industry. Issues included congestion at the Douala port, the main shipping point for wood products of most businesses in Cameroon (but also in the Congo and the CAR) following an extended journey by rail or by road, in addition to growing delays in VAT refunds owed to exporters by the Central African states. These problems are also impacting other logging companies, European for the most part, who have been compelled to sell off some of their assets in recent months. Dutch group, Wijma Cameroon, was forced to sell four of its five Cameroonian concessions to a rival business (Hong Kong-based Vicwood SA) in 2017. Cora Wood SA, an Italian company and leading manufacturer of plywood in Gabon, was compelled to sell one of its concessions to a Chinese company to pay off its debts. Rumors are swirling of more concession transfers by other European companies, in Gabon or in the Congo in the days ahead.



The end of a cycle



While concession transfers from European loggers to Asian companies began in the 2000s, Rougier Group’s current troubles will likely mark a turning point in the industry’s history. Notwithstanding the economic woes, the signs point to the end of a virtuous economic cycle which began with the first forest management plans in the 1990s and was fueled by the “sound forest management" certification boom (the Forest Stewardship Council, (FSC) label) fifteen years later. It was thought at the time that sustainable logging of natural forests, by striking the balance between economic profitability, environmental concerns and social progress, had proven to be feasible in Central Africa, despite the region’s well-known governance problems. Yet, the profitability of natural forest logging is now contingent on harvesting a handful of species that are well-known to consumers of wood. In Gabon, it is the Okoumé species; in Cameroon, Ayous, Sapelli and Azobé; in the Congo, Sapelli in the north and Okoumé in the south; in CAR, Sapelli; and in the DRC, a few valuable species, such as the Wengé or the Afrormosia which bring in the profits. This highly selective logging approach has the benefit of limiting forest destruction, as volumes harvested rarely exceed one or two trees on average per hectare, amounting to 10 to 12 m3 of forest area.



On the flipside, targeting only these few species for harvesting may gradually deplete "reserves" as forests are systematically exploited. The issue with this depletion is not the risk of species extinction. The real concern is the economic implications: volumes left from a second round of harvesting (by law, an interval 25 to 30 years between two rounds) are usually not substantial enough to sustain industrial activity and meet market demand. The Rougier case is perfect illustration: its 2015 acquisition of a concession in the CAR was driven by the need to supply timber to the its main plant in Cameroon, not far from the border with the Central African Republic. The move was a direct consequence of declining Sapelli and Ayous volumes in eastern Cameroon, a region that has been repeatedly exploited both by industrial and artisanal operators) for several decades. In Cameroon, several concessions have also been abandoned by WIJMA owing to a sharp decline in Azobé volumes following the first round of harvesting carried out under the logging permits.



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