Timberland Investment Taking hold in Western Kenya

A Commercial Eucalyptus Plantation in Kenya

2008-06-14 00:08:42 - Timberland Investment is a US$35 Billion
industry in the USA. All trees in the USA have a value
assigned to them and the monetary value increase as they grow money literally grow on trees in the US, lastly there is a beneficial owner assigned to every tree! In Africa, the paradigm has been that of conservation for the common good, every tree is assumed to be a public good with no particular beneficial owner. It seems Africans are being
asked to provide a carbon sink for the developed world for free then beg for development aid!

This is changing; Africans are assigning value to their trees. In Western Kenya, Commercial tree growing is becoming a multi-billion shilling business, thanks to the recent moratorium on harvesting of trees in public forests and emerging markets. Most farmers are turning from crop production to tree farming and in particular eucalyptus trees. Commercial enterprises are also pushing African mahogany and Elgon Teak.
Statistics from the Kenya Forestry Services indicate that between 690,000-800,000 hectares, which account for 20 per cent of the land holdings
in the region, are under eucalyptus trees. The director of Londiani Regional Research Centre, Dr Joshua Cheboiwo, says eucalyptus trees in the region are expected to increase from 14.5 billion to 31.6 billion by 2020 as more farmers venture into farm forestry. "Ready market for various tree products has made many farmers in the region to shift to commercial tree growing on different scales, ranging from small woodlots of 10 acres of trees, to large estates of up to 400 hectares," says Dr. Cheboiwo. Currently, the farmers prefer the eucalyptus because of its fast growth, good stem form, reasonable durable wood, multipurpose use and ready market for its various products. "Most of the commercial tree planting has targeted
fast growing exotic trees, mostly eucalyptus as opposed to the indigenous ones," confirms Dr. Cheboiwo. The eucalyptus trees can be harvested in
two years to more than 100 years, but firewood and construction poles, classified as short rotation crops, can be harvested in 2-7 years. Pulpwood and transmission poles can be harvested in 4-15 years. Sawlogs can be harvested between from 13 years, depending on the owner and the product desired. Dr Cheboiwo says studies show that an hectare of firewood and poles can generate a net surplus of Sh540,000 and Sh1 million respectively, in eight years compared to Sh88,000 for low medium maize and Sh96,000 for medium size maize and Sh376,000 for high production maize and Sh630,000 for tea crop within the same period. "The findings have established the financial superiority on intensively managed eucalyptus enterprises, as compared to agricultural crops, which has resulted in the recent upsurge in planting of eucalyptus in the region, with
an estimate of over 10,000 hectares under cultivation of the tree," discloses Dr Cheboiwo. However, food security, long gestation period, high
transaction costs in terms of marketing of the tree products and environmental impact on water catchments, are discouraging some farmers from
embracing eucalyptus enterprise despite the high profitability. "The emerging markets are turning eucalyptus cultivation into a multi-billion-shilling business sector as most farmers venture into it," adds Dr.Cheboiwo.

These sentiments are supported by farmers who have ventured into the cultivation of eucalyptus and are earning high profits. "The ever increasing
demand for wood products is making eucalyptus cultivation a profit making enterprise. There is no regret in investing in the business," says Isaac Kibogy of Sergoit in Uasin Gishu District, who has put 100 acres under eucalyptus. He says high profits have made him switch from maize and wheat cultivation and other farmers in the district are gradually following suit. To avoid incurring losses, farmers are cautioned against planting eucalyptus in poor sites such as swamps, drylands, murram soils, and steep slopes with rock outcrops. Such miscalculations may realize
poor crop yields and poor returns, or huge losses as the trees are likely to die in large numbers.
"To realize good harvest and earn better profits, maximum care has to be taken on the trees, just like any other crop," says Annah Kosgei from Chepkumia in Nandi North, who is about to harvest her 10 acres of eucalyptus.

The mother of four says the demand for trees has outstripped supply with the ever increasing orders from the public and factories. Some of the
emerging markets for the eucalyptus products include increased firewood demand from the Kenya Tea Development Authority (KTDA), affiliated tea processing factories that are shifting from use of expensive furnace oil to firewood fired boilers, and the recent shift by Pan Paper Mills (PPM) to get pulpwood and firewood from private farms.
Potential farm forestry products range from firewood, industrial wood, and charcoal, transmission and construction poles. According to findings by
the Kenya Forestry Services charcoal produced from acacia mearsi traded annually in the western Kenya region stands at 25,200 tonnes, with a retail value of Sh380 million. The findings further indicate that industrial firewood for industries in Eldoret and sugar belts is estimated at 44,000 tonnes valued at Sh55million annually.
At the same time, the 19 tea factories in the region have a combined demand potential of 360 million tonnes of firewood with a factory gate value
of Sh360 million per year. The combined intake of firewood and pulpwood by Pan Paper Mills is estimated at 500,000 tonnes per year with an average value of Sh520 million.
Power and telecommunication sector annual demand is estimated at 212,000 pieces of semi-processed polewood, with an estimated value of
Sh170 million. Sawn log demand by sawmills and mobile benchsaws is estimated at 200,000 cubic meters per year valued at Sh300 million.
Demand for construction poles, which is dominant in Kisumu and other towns in the region, have an estimated annual turnover of 200,000 pieces
valued at Sh125 million per year. Dr Cheboiwo says the demand for firewood is estimated to increase to 12.9 million tonnes valued at Sh40 billion, while that of charcoal is to hit 2.4 million tonnes valued at Sh24 billion by the end of the year. The increased demand for transmission and construction poles is expected to grow from 7 million to 110 million by 2020 with estimated increase value from the current Sh12 billion to Sh64 billion in the same period. And as the demand for wood products continue to rise,farmers in western Kenya stand to benefit from farm forestry -
thanks to the fast maturing and profit earning eucalyptus trees.

African Wood Inc is involved in this transformation. The company has plans to have commercial tree nurseries in four Districts concentrating on three tree species: Ecalyptus grandis, African Mahogany and Elgon Teak. We already have a qualified and experienced Forester and an Agricultural Engineer on the ground. The company is preselling the trees to clients who would like to own the trees from planting time, the application forms can be found at www.afrwood.com/docs/atps.pdf