Press Release Detail

Fiji Hardwood Corporation Limited (FHCL) is a state-owned enterprise responsible for the sustainable management of Fiji’s mahogany plantations in Viti Levu and Vanua Levu. The company manages a total lease area of 75,223 hectares of plantation estate, of which 41,325 hectares consist of mahogany (Swietenia macrophylla), also known as, American Large Leaf Mahogany, with an estimated volume to produce around 5 million cubic metres of logs processed for sawn timber exports.
The lease area covers 14 stations in Viti Levu and Vanua Levu, and land is leased from around 200 landowning units or mataqali. The landowning units benefit through lease rental, log stumpage, and management fee payments from FHCL.
Apart from the Fiji Pine Group of Companies – another State-owned enterprise, FHCL is the other leading player in Fiji’s forestry sector, which according to the Prime Minister and Minister for Forestry Honourable Voreqe Bainimarama, “has never been more prosperous, more sustainable, or more important to our economy.”
FHCL collaborates with both the Ministry of Economy on state-owned business administration issues, and with the Ministry of Forestry on scientific and technical aspects including research and development, plantation development, implementation of activities that reduce emissions from plantation forests, maximum utilisation of waste wood from harvesting, trade and product development.
Today's Question and Answer interview with SEMI DRANIBAKA, acting general manager of FHCL, covers the company's operations, contribution to Fiji's forestry industry, and business management.
The forestry sector achieved record-breaking export revenue of $118.5 million in 2021, up $41.9 million compared to 2020, and FHCL was a major contributor to this success.
Mr Dranibaka said the company was able to achieve a total annual production and sales of 38,000 m3 with a gross revenue of over $11 million in 2021. He added that this year the company forecasted to increase its production and sales to 43,000 m3, with an expected revenue of $16 million.
This is in addition to the reaffirmation of the company’s commitment to attaining Forest Stewardship Council (FSC) Certification of its plantation management. This followed the launch by the Attorney General and Minister for Economy Honourable Aiyaz Sayed-Khaiyum in June this year of FHCL’s Forest Certification Gap Analysis and Roadmap Report. The report was funded by WWF under the UNDP Ridge to Reef Project, with the Ministry of Forestry providing technical support and authoring the report. 

Below is an excerpt of the interview: 

Q: Briefly outline the background/portfolio of Fiji Hardwood Corporation Limited (FHCL) 

Dranibaka: In 2010, the Government introduced reforms under the Mahogany Industry Development Act 2010 (MIDA) which enabled a framework for restructure of the Mahogany Industry to facilitate and enhance further development for:

             i.        The interest of the iTaukei landowners;

            ii.        Facilitating an enabling environment for current mahogany industries;

           iii.        Also aligning the Company to the Government’s reforms under the Companies Act of 2015

The Government also formed the Mahogany Industry Council (MIC) to oversee the function and roles of the Fiji Mahogany Trust (FMT) that looks after the landowner affairs and the Fiji Hardwood Corporation Limited engagement managing the mahogany plantations under the MIDA 2010. 

The six key objectives of the MIDA 2010 were for the Mahogany Industry to be:

1. Sustainable: operated on a sustainable basis for the long-term including a comprehensive reforestation programme;

2. Value Adding: desirability of value adding of Fijian Mahogany for the country to realise its full potential;

3. A fair return to the landowners: whereby landowners are paid returns for use of their land and active engagement and empowering landowners to also participate in business ventures;

4. Interest of the Fijian people: the mahogany industry to generate increased employment activities and encourage skills that could create opportunities to promote mahogany utilisation and value adding locally and internationally;

5. Quality Assurance: Maintaining a high quality mahogany product that could compete in the niche international market;

6. Branding: the development of a recognised brand for Fijian mahogany timber and associated products.

In August 2020, the Government appointed a new Board of Directors which has made significant progress in a short span of time to the organisation as a whole to achieve good governance, transparency and accountability. This was considered a priority to enable FHCL to operate in a viable business environment. 

Q: Outline FHCL’s key strategic directions in the next three years 

Dranibaka: FHCL is focusing on seven key strategic directions in the next three years:

i.             Succession Planning

Identification of staff to fill senior positions, training and capacity building are part of an overall FHCL succession planning process.

ii.           Improving genetic material

FHCL will continue to work on improving the quality of genetic materials for its mahogany plantation stock through the constant identification of trees with superior genetic characteristics throughout its 14 stations for the purpose of protecting such trees as potential future seed sources.

iii.          Plantation development research

The mahogany plantation is a biological and naturally growing asset. Plantation assets consisting of live trees have a natural risk of deterioration due to natural aging and decay, genetic defects due to inbreeding, including threats from other sources such as natural disasters, pests and diseases. Silvicultural research will be conducted to improve knowledge about the characteristics of the second rotation crop in order to improve its management prescriptions. Management strategies will have to take into account the risks of loss due to various natural disasters and biological threats, and improve plantation management strategies to minimise these threats.

iv.          Diversification of business

Expanding operations to include the possibility of a joint venture, sawmilling, and the export of slabs and sawn timber.

v.            Diversification of the customer base

FHCL will work towards the diversification and expansion of its customer base both locally and abroad.

vi.          Encouraging innovation and operational efficiencies

Innovation in this context is the changing of the way things are done in order to make the operations more efficient, effective and sustainable, both environmentally and economically. FHCL will support a culture of innovation and continuous improvement. This will include addressing areas such as: methods for increasing productivity in all facets of the operations from tree planting, maintenance, and harvesting, annual review of log prices, maximising log utilisation where logs left in the forest can be further sorted for other products such as sawn timber, furniture industry and waste wood utilization cottage industries and residue into biomass fuel.

vii.        Improving customer service

FHCL customers are vital stakeholders for achieving the company's vision and mission. FHCL will continue to build and improve its customer service, both internally and externally, through improving customer relations, meeting and exceeding customer expectations, and dealing with customer dissatisfactions promptly and holistically. 

Q: The Fijian public expects that State-owned enterprises will continuously improve their governance and performance. Please share some aspects of these since the appointment of the new Board of Directors and management in 2020. 

1. Paying off the company’s pending loans to the Fiji National Provident Fund with a total of $601,882.00 in July 2021 (loan period of 15 years ending in 2019) and to the Fiji Development Bank with a total of  $1,269,469.64 in March 2022 (loan period of seven years ending in 2013);
2. Paying off three years' worth of lease rental arrears through the iTaukei Lands Trust Board, from an outstanding amount of $1.2 million in September 2020 to zero by April 2021. The new management of FHCL has paid out all lease payments to the 230 mataqali up until December 2022. FHCL has also paid out pending stumpage fees from 2018 to 2021 totaling $1.2 million to the respective mataqali.
3. The company was able to achieve a total annual production and sales of 38,000 m3, with a gross revenue of over $11 million in 2021. This year, the company forecasted to increase its production and sales to 43,000 m3, with an expected revenue of $16 million. The management was able to achieve these by improving the current field work processes and upgrading the company’s financial management.

Q: What is the update of FHCL’s Forest Certification Gap Analysis and Roadmap Report after its launch in June this year? 

Dranibaka: FHCL has managed to appoint key positions within the organisation to progress the work on forest certification according to the roadmap in the report. It has upgraded its information system through its geospatial information system and mapping and strengthened its data and information storage system. It’s planning to create a taskforce that will then progress the implementation of the roadmap so that FHCL could achieve forest certification within the next two to three years.

There is a tremendous need to get our mahogany certified to enable us to compete in the international market arena, adding niche value to place us above other similar mahogany sources from Asia and Africa. To maintain our plantation's sustainability, we need rigorous reforestation activities in our harvested mahogany plantations so that a consistent supply is maintained for our export markets.

FHCL has reaffirmed its commitment to attaining Forest Stewardship Council (FSC) Certification of its plantation management. FSC Certification values the social, environmental and economic benefits of forest management, a balance of these to communicate resource sustainability and its management, from the forest through the various processing phases to our shop shelves and maybe even further to promote responsible forest management. 

Q: Discuss the company’s reforestation efforts in all stations nationwide and your contribution to the Government’s landscape restoration program including the national 30 million trees in 15 years initiative. 

Dranibaka: One of FHCL’s key roles is to maintain the sustainability of its mahogany plantation resources for the future, not only by harvesting mahogany for export markets, but also by continually reforesting harvested areas to ensure the sustainability of the resource.

FHCL has prioritised reforestation of its harvested mahogany plantations since 2017 up until to date. FHCL has replanted over 4,039 ha hectares of new mahogany plantations in Nukurua and Galoa Stations. This equates to 1.5 million mahogany trees planted on the ground.

In 2022, its target is to replant over 250 to 300 hectares of harvested mahogany plantations in Nukurua and Galoa Stations.

All reforestation and maintenance operations are given to the Fiji Mahogany Trust to employ landowners at Nukurua to replant mahogany forests within their land on a contract basis, and in return, they are paid for work undertaken. This will empower landowners to look after mahogany trees on their land and work closely with FHCL to benefit from the mahogany trees planted by FHCL on their land.

When you consider the numerous incentives Government has provided over the years, it is only fair to expect FHCL to be one of the leading players in the country's forestry sector. FHCL’s responsibility is to ensure that the entire mahogany industry is sustainable from an economic, social and environmental perspective. The ultimate goal is a triple win for our economy, people and environment.

Source: Ministry of Forestry