CHAINSAW MILLING IN GHANA: CONTExT, DRIVERS ... - Fornis.net

Chainsaw milling in Ghana: context, drivers and impactsand 44% of total production cost. It is difficult to compare the proportions ofvariable and transaction costs across the cases because the scope of operation isnot clear in the first case study.3.6.3 ProfitabilityThere is a common impression that CSM is very profitable because no stumpage feesor taxes are paid. The cost and revenue calculation in Table 16 suggests a profit (netrevenue) range of 15–22% of production cost. Some case studies report losses; for example,Damnyag and Obiri (2009b) reported negative net revenue ranging from GHC36–93 per m 3 in some districts. This variability in cost and profit could be expected;operations are not very standardised in terms of transaction costs, which mostly involvebribes and other illegal payments that are negotiated between dealers and communitiesand law enforcement agencies. Moreover, prices, and therefore gross revenue, arelargely determined by dealers, who buy from the forest gate or at the timber markets.Based on an average profit of GHC 66.6/m 3 , the total annual profit from sales of558,000 m 3 of chainsaw lumber is about GHC 37 million.3.6.4 Revenue distributionFigure 2 shows the distribution of gross revenue to the members of the chainsawnlumber product chain in a study of eight forest districts (Obiri and Damnyag 2009a).It should be noted that the number of recipients in each category varies between 1and about 20, resulting in different per capita revenues; the average gross revenuewas GHC 499.81/m 3 . With total sales of 558,000 m 3 of chainsaw lumber, total annualgross revenue can be estimated to be about GHC 279 million.Figure 2. Chainsaw revenue distribution (%), single operation in eight study districtscommunity leaderslaw enforcementFSD/Resource managerfarmers/tree ownerstransportersdealers in fuel, CSM accessorieschainsaw operatorslabourers/assistantslumber merchants0 5 10 15 20 25 30Source: Obiri and Damnyag 2009a; study of eight forest districts28