The minimum required yield for profitable sawtimber production from Pin us patula in the escarpment area of Mpumalanga

Abstract

In a recent study (1998) the minimum required yield for profitable sawtimber production from Pinus patula in the escarpment area of Mpumalanga was established. Net Present Value was used as financial profitability criterion. All cost components were 1996 costs (the latest available at the commencement of the study) derived from the cost monitoring system of Forestry Economics Services. The prices of pulpwood and sawlogs were 1996 prices used in the study area. The prime overdraft rate from 1978 to 1997, used by a major South African bank, was used to estimate the Nominal Cost of Capital as 17%. By making use of trend analysis the long-term inflation rate was estimated as 13%. Based on these two estimated values, a Real Cost of Capital of 3,5% was calculated and used in the study. Two other scenarios were also used (a low Real Cost of Capital of 2,0% and a high Real Cost of Capital of 5,0%) to determine the minimum required yield. The results showed that a minimum Mean Annual Increment at 20 years of age of 14, 17 and 20 m³/ha/annum is required for profitable sawtimber production from Pinus patula in the escarpment area of Mpumalanga at a Real Cost of Capital of 2,0%; 3,5% and 5,0% respectively.