Small Farmers are the Forestry Solution
Africa faces an ominous wood supply crisis, with no end in sight. Africa is already the world's largest wood consumer, and demand will double in the next two decades. Traditional plantation forestry will struggle due to limited availability of large-scale land, plus high costs and risks. Industrial wood imports will boom. Wood prices will skyrocket. And vast numbers of indigenous trees will be lost. This is an environmental crisis. This is a consumer crisis. This is a big business opportunity.
By leveraging farmer land and labor, Komaza's out-grower model can plant trees for far less than big plantations, yielding a very positive impact on long-term forestry IRRs. Now with a decade of operational experience and industry insights, we are confident smallholder farmers are Africa's only sustainable forestry solution, and Komaza is uniquely positioned to unlock this opportunity.
AFRICA'S WOOD CRISIS
75% of Africa's primary energy comes from fuel wood, and 93% of all wood comes from natural forests. With 80% of households relying on firewood and charcoal for cooking and heating, this is Africa's leading cause of forest degradation. Deforestation spreads in concentric circles around cities as informal charcoal traders must move farther to find trees. As a result, charcoal prices have increased 300-500% in the last 10 years, and will continue to climb. In the next decade alone, an area of trees that would cover all of California will be lost.
Over the next two decades, Africa’s industrial wood demand will grow 500%, driven by booming construction and furniture markets. Local production is increasing, but not nearly fast enough given dwindling natural forest resources and constrained plantation forestry. Over 75% of Africa’s 2030 industrial wood demand will be met by imports, growing into a $50 billion annual import market. Consumer prices are increasing, and vast sums of money will leave Africa to ship in wood. This is a huge market opportunity that should be solvable.
LIMITED WOOD SUPPLY OPTIONS
93% of Africa's wood is from natural forests, mostly for fuel wood, plus half the current industrial demand. Africa still has many trees, but most are in the Congo Basin; these trees are very far from urban markets, and conflicts plus poor transport infrastructure will protect most from harvesting. But incessant deforestation will certainly erode this precious resource over time.
Africa imports 30 million m3 of wood each year, set to reach 220 million m3 by 2030 (75% of industrial demand). Asian demand will keep global prices high for decades. Shipping wood is costly, and transport within Africa is very expensive. Consumers will suffer from growing prices, and reliance on imports will inhibit a local forestry sector, essential for solving the fuelwood crisis.
Plantations grow uniform wood quickly, but there's simply not enough big land available near most markets to meet demand. Plantations are also very expensive, face serious risks like fire from their highly consolidated assets, and often run into serious community conflicts. Thus, plantation expansion is seriously constrained, with production growing at a paltry 1% annually.
OUR INNOVATION: MICROFORESTRY
While often overlooked, millions of farmers are already growing trees. In Kenya, nearly half the local wood supply today already comes from small farmers. But on their own, individual farmers aren't achieving commercial quality or growth rates, and are disconnected from high-value industrial markets. Yet small-scale farmers offer effectively limitless land and labor, and live on the doorstep of every major urban market. Komaza aims to unlock their incredible production potential.