Province	Plantation	Year Started	Area (ha)	Species	Ownership
Central	Brown River	1955	1266	Teak	Communities
	Kuriva	1985	738	Teak	State
Milne Bay	Ulabo	1985	1465	E. deglupta T. brassii	Communities State
Morobe	Bulolo/Wau	1985	12,000	Hoop, Klinki Pinus	State
Madang	Gogol, North Coast	1975	12,375	A. Mangium E. deglupta	Company State
New Ireland	Kaut	1986	200	E.deglupta	State Communities
West New Britain	SBLC	1972	12,000	E. deglupta T.brassii	Company
East New Britain	Kerevat Open Bay	1950 1972	2,385 12,000	Teak, Balsa E. deglupta T. brassii	Communities Company
Eastern Highlands	Kainantu Fayantina Lapegu	1976 1981 1963	962 1200 2723	Pinus patula Pinus patula Pinus patula	State Commercial
Western Highlands	Waghi	1962	2143	E.grandis E.robusta	State
Southern Highlands	Ialibu	1972	240	Pinus patula	State Communities
Total			62,277

All species are based on both the good performance under local conditions and the profitability in the market. Species currently used in forest plantations are suited to PNG conditions. Of the species currently used as presented in the Table below, Araucaria cunninghamii, Araucaria hunsteinii, Eucalyptus deglupta, Terminalia brassii and Tecton grandis are important plantation species for saw log and Veneer log production. Acacia mangium is grown in Madang for chip wood.

 Current Forest Plantations by Species in PNG

Species	Common Name in PNG	Area (ha)	Percentage (%)
Acacia Mangium	Acacia	12,375	20
Araucaria cunninghamii	Hoop Pine	3,335	5
Araucaria Husteimi	Klinkii pine	3,210	5
Eucalyptus deglupta	Kamarere	25,770	42
Euclyptus (others)	Kamarere	2,143	4
Ochroma Lagapus	Balsa	400	0.4
Octomeles sumatrana	Erima	213	0.3
Pinus caribaea	Pine	1,617	2.4
Pinus patula	Pine	5,125	8
Pinus spp. (others)	Pine	240	0.4
Tectona grandis	Teak	4,023	6
Terminalua brassii	Talis	3,474	6
Other mixed species		352	0.5
	TOTAL	62,277	100%

Table above shows that Acacia mangium and Eucalyptus deglupta account for high proportion of current plantation species, while araucaria hunstenii, araucaria cunninghamii, Tectona grandis and Terminalia brassii are the next most important species. Terminalia brassii is a recent inclusion and is gaining recognition as a potential species on land experiencing wet conditions.

Plantation by Regions in PNG

	Plantation Area in hectares by regions
Species	Momase	Southern	Highlands	Islands
Araucaria hunstenii	3,210
Araucaria cunninghamii	3,335
Acacia Species	12,274	101
Balsa				400
Eucalyptus deglupta	1,617	850		23,303
Eucalyptus (others)			2143
Pinus Species	1,617		5,365
Octomeles sumatrana	18			195
Tectona grandis	34	2,004		1,985
Terminalia brassii	317	750		2,407
Other Species	212	39		101
Total	22,634	3,744	7,508	28,391

As per above, the distribution of current plantation species by regions is shown. Momase and New Guinea Islands region have 82% of current plantations. The Highlands region with high population density is expected to experience a wood deficit as there is no major timber concession in the region.

Valuation of PNGFA Plantations

In 2005 with funding assistance from AusAID, valuation was done of all forest plantations under the direct management of PNG Forest Authority. The total investment value of our forest plantations is estimated to be worth K123,643,000.00.

As seen in the table below, some of the plantations are matured and ready for harvesting and are a potential source of generating internal revenue. In the valuation, all plantation costings were compiled on annual basis and undiscounted cumulative value of K3065 per hectare derived. This means that our growing cost on a hectare (100m x 100m) from nursery production to maturity (stumpage vale) is K3065. A model on cost – benefit when taking into account the average timber price of K47/m³, stand density of 250m³ per hectare with a rotation period of 35 years shoes positive cash flow of K1,288.00. This means that our plantations are profitable. The valuation figures contained in the table below need further verification by PNGFA on how these figures were derived and whether they are reasonable.

Current Investment Value of Plantations under PNGFA

Project	2005 Valuation
Bulolo	K   15,613,000
Wau	K     1,841,000
Waghi	K   26,203,000
Fayantina	K     4,246,000
Lapegu	K   16,238,000
Kaut	K     1,036,000
Madang North Coast	K        228,000
Kuriva	K   22,473,000
Ulabo	K   18,375,000

Given the improved knowledge on plantation management techniques and silvicultural practices, plantation stands can be manipulated to reduce the rotation period and with the application of fertilizers, the growth rate of trees at the young age can be improved.

Some species such as Kamarere, Terminalia brassii and Acacia have shorter rotation than 35 years. Even Kamarere at the age of 12-15 years rotation for sawlog and export – quality command a wood price of K50/m³.

Stumpage and Community Benefits

Stumpage is the standing value of the timber determined through appraisal. In forest plantations, stumpage covers the cost of growing and the growers’ profit. In many cases the stumpage reflects a market price based on supply and demand on wood and the costs in growing these timber. High value usually implies the higher growing costs, but stumpage value can vary by product objectives. High log quality wood can attract a higher stumpage.

Stumpage is determined in a variety of ways. In competitive auction, potential buyers are invited to bid for the timber usually subject to a minimum acceptable price. The highest bidder wins the harvesting rights and set the stumpage charges. In the absence of competition among buyers, the residual values becomes the basis for calculating the stumpage price. The net value of the timber captured by the seller depends heavily on the costs associated with harvesting, transportation, processing and the operations profit subtracted from the sales value of the processed product.

Revenue generated from matured forest plantations

Between 2003 and 2005, portions of a number of plantations have been harvested and revenue generated has been collected. While some plantations are being considered for harvesting in 2006 and 2007, we anticipate a continuous flow of revenue which can be used to enhance the future development of forest plantations.

Summary of revenue generated from forest plantations

Project	Species	Revenue Collected
Kerevat Plantations	Teak	K6,606,980.43
Madang North Coast	Kamarere	K   459,791.26
Brown River	Teak	K     73,596.77
Mesa (WNBP)	Kamarere	K   790,405.47
SBLC Plantations	Kamarere/T.bassi	K   935,039.00
Open Bay Plantations	Kamarere	K   767,761.33
Seedlings and others	Mix Species	K   113,842.96
	Total Revenue	K9,747,417.22

Expected Revenue for 2006-2007

The PNG Forest Authority as one of its Corporate Objectives aims to develop 240,000 hectares of commercially viable and sustainable commercial forest plantations by the year 2030. It intends to develop 12,000 hectares of new plantations each year to achieve its vision to sustain 3.6 million cubic meters of industrial timber currently harvested from natural forest. PNG Forest annually. While the balance of 4,000 hectares annually is expected to be contributed by private investments such as SBLC, OBTC, Jant, PNG Sustainable Development Ltd and other intending investors.

One of the fundamental factors for success in forest plantation establishment is continuity in annual funding. Lack of adequate funding by the successive Governments was the main reason for poor progress in plantation forestry in PNG.

A number of critics may argue that PNG has constraints in the current land tenure system. There are countries in the world with similar land tenure systems, but are successful in plantation development. PNG needs to offer high land rental rates and better incentives to promote landowner participation and making land available for forest plantations.

This may be an option for PNG to take, but in the meantime some internal revenue measures are needed to at lease have the programme rolling. As seen in the table below, the PNGFA intend to generate K9,542,000.00 or more to fund its ongoing core function.

Estimate on potential revenue from matured forest plantations in 2006 and 2007.

Location	Species	Volume (m³)	Rate (K)	Gross Revenue	PNGFA Share
Brown River	Teak	30,000m³	K22.50/m³	K700,000	K700,000
Kuriva	Teak	20,000m³	K202.50/m³	K4.05 million	K4.05 million
Ulabo	Kamarere	5,000m³	K50/m³	K250,000	K225,000
Lapegu	Pinus	12,000m³	K50/m³	K600,000	K540,000
Waghi	Eucalyptus	1,000m³	K30/m³	K30,000	K27,000
SBLC Plantations	Kamarere		K10/m³	K2.18 million	K2.0 million
OBTC Plantations	Kamarere		K10/m³	K2.0 million	K1.8 million
Seedling & others	Mix spp.			K200,000	K200,000
			TOTAL		K9,542,000

In order to actively implement its National Plantation Development Programme, PNGFA will require direct operational funds as summarized here under:-

Funds required to achieve 240,000 hectares of plantation by 2030.

Year	Funding (Kina)
2007	K3.5 million
2008	K6.0 million
2009	K9.0 million
2010	K12.0 million
2011	K15.0 million

An amount of K15 million annually over the next 15 years is sufficient to achieve its objective of commercial forest plantations in PNG. In plantations, most costs are incurred within the first five (5) years. If PNG wishes to create 240,000 hectares of plantations by year 2030, it requires the amount per year as stated in the above table.