Why wood prices are set to double in Kenya's construction, furniture sectors

Illegally harvested cedar posts ready for market. [Fred Kibor, Standard] The cost of processed wood for furniture and construction purposes is expected to double as the government unveils a Sh176 billion plan to improve the commercial forestry sector. The plan contained in the Kenya Industrial Wood Sector Vision 2050, and prepared by the Ministry of Environment, Climate Change and Forestry, bets on the government's intention to privatise public forests. The plan unveiled on Tuesday highlights a shortage in the country's wood supply, with 50 per cent of the country's needs currently met by imports. It says the current prices of round wood (timber in its log form) are inflated due to supply challenges associated with moratoriums placed on forests by the government. "While basic roundwood prices are expected to fall slightly in future (correcting today's inflated prices resulting from the logging moratorium), quality differentiation, particularly on timber and panels, means that growers accessing higher-value markets could see more lucrative returns," the document says. It adds that higher quality sawn timber (clears), for example, are expected to fetch more than three times the current price of ungraded timber. According to the plan, with the privatisation of forests through concessions, the price of industrial round wood per cubic metre is expected to drop from Sh8,100 to Sh6,300 due to increased supply. While ungraded sawn timber now goes for Sh28,300, quality differentiation will see sawn timber (structural) fetch Sh46,000 and sawn timber (utility) go for Sh29,900. Low-quality panels now go for Sh54,900. This price could go up to Sh64,500 if quality improves - an increase of 17 per cent. Wood-based furniture that now goes for Sh59,700 is expected to go up to Sh115,000 (an increase of 92 per cent) while wood-based construction that fetches Sh58,900 will bring in Sh86,000 per cubic metre (an increase of 46 per cent). "Such prices are expected to more than reward the increased level of investment required to upgrade to upgrade growing and processing," the document says. "While many forestry operations are currently expected to be loss-making overall, future profit margins could range from 30 to 40 per cent (for growers of all scales)." The document states that processor margins are also expected to grow, particularly for sawmilling. It notes that this business is loss-making at the moment due to insecurity of supply and lack of quality differentiation in the market. "Production of wood-based panels is expected to see more than a 50 per cent increase in profitability (from 18 per cent to 28 per cent), making it the most profitable primary processing operation," the ministry says in the document. The document notes that due to the challenges associated with the moratorium, small growers have become the major suppliers of roundwood. "Though the quality is low, supply is thinly dispersed across wide landscapes, and smallholder preferences for short-rotation, small-diameter trees are unsuitable for most existing sawmilling infrastructure," the ministry says in the document. While calling for an expedited forest concession process, Kenya Association of Manufacturers (KAM) Chair for the timber and furniture sector Kaberia Kamencu pointed out that the deficit of industrial wood has put Kenya in a challenging position, considering increased urbanisation that raises the demand for housing. Mr Kamenchu, who spoke at the launch of the document, said steel is now competing with wood in the housing sector. "Even with our engagement with the State Department for Housing on affordable housing, wood is in competition with concrete, steel or competitors like Uganda, who have expanded its plantation base to 200,000 hectares through public-private partnerships," he said. Mr Kamenchu referenced data that claims by 2050, the continent is looking at about 850 million Africans moving from rural to urban. "If you have been attentive, if you are driving towards the North, Nairobi Metropolis ends at Kenol. Going towards the East, it ends in Machakos. Towards the South, it ends in Ngong, and towards the West it ends in Naivasha. And it is happening right in front of our eyes," he said. He noted that expanding the industrial wood sector is an opportunity to replace imports, tap the export markets and create thousands of green jobs. "If we fail to act, we risk losing these opportunities to alternative materials like steel and concrete with larger environmental (carbon) footprint," he said. Principal Secretary in the State Department for Forestry Gitonga Mugambi noted how the moratorium on logging, while necessary, hurt businesses and caused people to lose their livelihoods. "That is why the government decided to deal with the issues head-on and allow businesses to continue," he said. The ministry in March published Draft Forest Conservational Management (Concessions on public Forests), Regulations, 2025. He said the intention of the government is to make the forestry sector a key contributor to the country's gross domestic product (GDP), mimicking what South Africa is doing. "We are trying to bring in the private sector in a big way. And that is the reason why we are trying to push the commercialisation regulations," he said. "I was in South Africa and I could not believe what I saw. The type of industries, the level of export, but in it all, they said they cannot meet their own demand." The PS, however, lamented the hiccups associated with activism when ideas such as the privatisation of forests are introduced. "This is one area where there is a lot of activism. The worst thing is internal activism," he said. "When we talk about commercialisation, we are talking about opening areas in our forests for the private sector to do concessions and add value." The document foresees the contribution of the industrial wood sector expanding from the current Sh5 billion to Sh137 billion by 2050. This will also see the number of full-time jobs in the sector increase from 17,000 to 85,000. This venture, however, requires Sh176 billion in investments in the whole ecosystem. Upgrading existing processing facilities over the period would require over Sh52 billion per year. Investment in new processing facilities is estimated at Sh1.6 billion per year to 2027. Some Sh600 million is required for the expansion of processing to bring in smallholder players into the mainstream market. "The largest investments in processing would correspond with new and improved wood supply coming online in the mid-2030s, from which point almost Sh4 billion per year could be required to meet the vision," the ministry says. Programme Coordinator at Farm Forestry Smallholder Producers Association of Kenya Edwin Kamau said private commercial forestry will be important in the coming decades. This is considering Kenya's target to plant 15 billion trees by 2032. He said smallholder farmers collectively hold a considerable amount of land that can be used for this purpose. "One of the things needed is proper incentives for farmers to plant trees and also to supply the products that we need. One of the biggest incentives is income. Incomes, whether coming from the sale of forest products or the payment of ecosystem services," he said.

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