Category: Labor Issues

June 25, 2019

The forestry sector “has continued its growth” and last year “we were in first place for exports in the country,” which “gave us more visibility than we already had,” the president of the Uruguayan Forestry Producers Society (SPF), Agricultural Engineer Carlos Faroppa, told Forestal magazine.

Interviewed by María José Fermi for the official publication of the trade association, he stated that “the sector is ready to grow more.”

Faroppa – who completed specialized studies in Sweden, Italy, Finland and Peru – has advised, designed, executed and directed projects for planting, replanting, harvesting and forest management for Uruguayan and multinational companies and organizations.

Cellulose and solid wood

“Basically, we have two production chains (in the sector): the cellulose and the solid wood chain,” said Faroppa, an agronomist with a forestry orientation who graduated from the Faculty of Agronomy (FAGRO) of the University of the Republic (UdelaR).

Regarding the pulp industry, he said that “it is well set up and works very well throughout the chain in terms of regulations, prices, labor and industrial capacities, and it has the potential to grow.”

Regarding the solid wood supply chain, he stated in Forestal magazine that “it is the sawmill and board sector, where we still have quite a few challenges to face. We have a greater supply of wood than we can industrialize, and that is why we export wood in logs.”

Converting waste into raw materials

Agricultural Engineer Carlos Faroppa stated that “the challenge lies in taking a further step towards the bioeconomy and a circular forest economy, taking advantage of everything related to secondary forest products.”

He cited as an example “chips, sawdust or bark”, products that “we should give value to in the energy generation or biofuel industry”.

“It is about the transformation of what is waste” into “a product with value as raw material for other production,” he explained.

Definitions

In a study published by ECLAC (Economic Commission for Latin America and the Caribbean), the bioeconomy is defined and characterized as follows:

“a) an economy based on the consumption and production of goods and services derived from the direct use and sustainable transformation of biological resources, including biomass waste generated in the processes of transformation, production and consumption;

 

1. b) leveraging knowledge of systems, principles and processes, and
2. c) technologies applicable to the knowledge and transformation of biological resources and to the emulation of biological processes and principles.”

The document – ​​entitled “Bioeconomy in Latin America and the Caribbean. Global and regional context, and perspectives” – mentions “three examples of biological resources that can serve as a basis for the development of national and regional bioeconomy strategies: biodiversity (including agrobiodiversity), especially in megadiverse countries and with unique ecosystems; the capacity to produce biomass for diverse uses, in addition to food; and the availability of agricultural and agro-industrial waste.

In Uruguay, the government has defined the bioeconomy as “key to productive development” and has indicated that it “seeks to enhance the country’s forest resources in order to take advantage of the opportunities in the sector, diversifying products and promoting local development” (in a booklet published by the Planning and Budget Office –OPP–, series “The future in development”, Year 4, No. 10, August 2018).

For its part, the central concept of the circular economy is “produce-use-reuse”, in opposition to the currently predominant paradigm: “produce-use-discard”.

Based on this premise, the BioValor Project operates in our country, coordinated and implemented by the Ministries of Industry, Energy and Mining (through the National Directorate of Energy); Housing, Territorial Planning and Environment (through the National Directorate of Environment); and Livestock, Agriculture and Fisheries.

“Generating value with agro-industrial waste” is the central slogan of BioValor and its objective is “to inspire, energize and activate the community to drive the transition to a Circular Economy in Uruguay and the region”, integrating the work between the government, academia and “key actors”, as stated on the Project’s website (http://biovalor.gub.uy/).

May 27, 2019

Total exports of forestry products in 2018 will reach US$2.25 billion – 33% more than in 2017 – setting a new record for the sector, which for the first time – and by a good margin – is at the top of the ranking and displaces another key driver of the national economy: meat.

Considering what was exported in the first nine months and the trends in prices and volumes, by the end of 2018 the forestry sector as a whole will have exported the indicated amount, according to the study Recent evolution and prospects of foreign trade of forestry products, prepared by Darío Fuletti and Cecilia Petraglia, technicians of the Office of Programming and Agricultural Policy (Opypa) of the Ministry of Livestock, Agriculture and Fisheries (MGAP).

The Opypa 2018 Yearbook states that these US$ 2.25 billion are a pillar in the total of US$ 6.915 billion that they estimate will be obtained in 2018 from agro-industrial exports (which slightly exceed the US$ 6.908 billion of 2017 and are also a record, supported mainly by the progress of the forestry and meat sectors).

Pedro Soust, Director General of Forestry at the Ministry of Livestock, Agriculture and Fisheries (MGAP), told El Observador that he is not particularly concerned about the sector’s ranking compared to others in the country. “The most important thing is this association, which consolidates an organized, calm, responsible, and respectful sector—an exemplary forestry sector.”

With that concept, the official alluded to the presentation of the 2018/2019 Fire Protection Plan, in which actions undertaken jointly by actors from the public and private sectors were disseminated, aimed at promoting the prevention of forest fires and, if necessary, being more efficient in fighting them.

Soust said he sees the sector as “very strong and calm,” in a year that “is ending very well,” with exports that “have gone smoothly, according to plan.”

After emphasizing that the forestry business “is long-term, slow-developing but with sustained growth,” he expressed satisfaction at seeing “more consolidated markets” and companies that are “more relaxed, comfortable, and very strong.”

The forestry director of the Ministry of Livestock, Agriculture and Fisheries (MGAP), when asked about trends indicating that the positive figures of 2018 would be repeated in 2019, responded that they are expecting a very optimistic year. “There may be unforeseen circumstances, but what is planned and expected is very similar to what we have had this year, which was a year of growth,” he added.

First on the podium and with light

The Opypa report states that of the US$2.25 billion exported by the sector, cellulose pulp represented 77% -US$1.739 billion- and ranked first in exports of agricultural products.

In second place were exports from the meat sector, with an estimated US$1.945 billion (and within that, a major impact from beef, with US$1.618 billion).

Based on data from Opypa, the income from exports of agricultural products such as soybeans, seriously affected by the drought that occurred at the beginning of 2018 and which noticeably reduced production, was left far behind and in a third tier.

The international context is very favorable for the sector, with high prices for both pulp and solid wood. Pulp prices are at record levels. Long-fiber pulp in Europe—the sector’s main price benchmark—reached US$1,230 per ton in September 2018. In China, the main pulp market (accounting for 35% of global demand), pulp reached US$875 per ton. These values ​​were reflected in regional export prices. In Uruguay, prices rose by around 35% for both types of pulp.

With both plants—UPM and Montes del Plata—operating at full capacity, pulp export volumes remained stable in 2018. However, export prices showed a significant increase, resulting in a 34% year-on-year rise in exports during the first nine months of the year (31% estimated for all of 2018 compared to 2017). China, the Netherlands, and Italy, in that order, were the main markets considering the last year with complete data.

Second on the list is the export of pine logs. Annual shipments are estimated to reach US$162 million, according to official figures. In an average month over the past year and a half, shipments averaged around 175,000 tons per month at an average price of US$80 per ton. Virtually all of these sales are destined for China. In this case, an 83% increase in foreign exchange earnings is estimated when comparing 2018 to 2017.

Eucalyptus chip exports are expected to reach US$96 million this year, 53% more than last year. Since 2015, Portugal has been the almost exclusive destination for this product.

It is estimated that total export revenues from the forestry sector will grow by 1% in 2019, reaching US$2.278 billion. At the beginning of this decade, exports totaled US$1.233 billion.

HE SAID IT

“The most important thing is this association that consolidates an organized, calm, responsible and respectful sector, an exemplary forestry sector.”

Pedro Soust

Head of the General Forestry Directorate of the MGAP

What came in

In 2018, imports of forestry products are projected to grow for the second consecutive year, according to estimates from Opypa, totaling US$188 million (+8.8%). The main import category will be paper and paper products, totaling US$153 million (+5.6%). As for solid wood products, the most significant will be boards, at US$27 million (+24.2% compared to 2017). Meanwhile, imports of sawn timber are expected to reach almost US$6 million (+22.1%), according to official projections.

Juan Samuelle twitter.com/juansamuelle

Source: El Observador

June 25, 2019

The forestry sector—including pulp—is currently the largest contributor to Uruguay’s foreign exchange earnings (US$1.66 billion in 2018). However, a significant segment of this sector—larger diameter, higher-value timber—is unable to reach its full potential due to the inability of industries and sawmills to absorb the pine and eucalyptus harvests the country produces annually, a figure that is expected to continue increasing over time.

Last year, Uruguay exported a record 1.95 million cubic meters of thick pine logs. The bad news was the price received for this raw material, falling short of the expectations of producers who invested in planting this variety more than a decade ago. Pine logs are trading on international markets between US$60 and US$70 per cubic meter, and eucalyptus logs between US$40 and US$50 per cubic meter.

However, the Uruguayan producer ends up with between US$2 and US$6 per cubic meter. This is due to the significant impact of timber freight costs to the ports, given that most of these forests are located in remote areas such as Rivera or Cerro Largo, explained Álvaro Pérez del Castillo, general manager of the forestry consultancy Pike.

In addition to the pine, approximately 200,000 cubic meters of thick eucalyptus logs were also shipped to Southeast Asia (primarily China) in 2018. In this case, there are logistical restrictions on transporting larger volumes because this type of wood requires special handling (preventing cracking or drying), so it must be transported in containers or warehouses. The alternative for processing this thick wood is chipping.

Currently in Uruguay there are about 900,000 hectares of forested land, with a wood extraction volume of about 16 million m3 at the end of 2017, according to DIEA data.

Cellulose, another business

The natural question that arises is why Uruguay does not take advantage of this by sending that wood to the two operational pulp mills or eventually to the third one that is close to being confirmed.

Firstly, both Montes del Planta and UPM have their own forests, which supply a large part of their industrial cycle.

The other aspect is that pulp mills in Uruguay use short-fiber wood, meaning they consume fine-grained eucalyptus wood. Wood for pulp costs around US$60 per cubic meter, but after deducting freight costs within Uruguay, its net value for the producer drops to between US$6 and US$12 per cubic meter, depending on the distance between the forests and the ports.

One option for Uruguay to make better use of its thick timber is to install a long-fiber (pine) pulp mill in the future, a possibility that Pérez del Castillo sees as “distant” because the area of ​​that variety in the country has been reduced by about 30,000 hectares – currently there are about 170,000 ha – precisely because of the few commercial prospects that this crop has today.

Most local producers have opted to replace that land with eucalyptus, a trend that may intensify in the future. The three or four growers who cultivate this variety choose to sell their timber abroad because they are forced to reduce the number of trees per hectare (thinning), and also because they sometimes need to generate income from their pine plantations. “They’ve been waiting for processing plants for 10 years. There comes a point when they have to sell,” explained Pérez del Castillo.

Forestry consultant Rosario Pou told Radio Rural’s “Tiempo de Cambio” program this week that during the first quarter of the year, 40% of timber exports consisted of pine logs sold at depressed prices. The expert noted that these trees had previously received government subsidies for their planting, but today this production is generating little added value for the country.

Pou considered that Uruguay should consider offering an “interesting framework” to attract the interest of industries that process sawn timber of “high quality and variety”.

“We know that eucalyptus is very good for construction, for frames, for engineered wood,” he emphasized.

Markets and costs

According to Andrés Dieste, a professor at the Faculty of Engineering at the University of the Republic (Udelar) and a member of the Forestry Process Engineering group, the main reason why processing industries are not being established today is due to the external market situation. He explained that after the 2008 crisis, the major markets that consume processed wood have not yet recovered.

“That clearly doesn’t favor the climate for industrial investment in Uruguay. The only remaining alternative is to export low-priced logs because per capita wood consumption in Uruguay is very low,” he noted.

Pérez del Castillo noted that there are also “internal factors” restricting the arrival of external investors interested in setting up plywood plants or sawmills that add value to the wood. He cited energy and labor costs, as well as the climate of labor disputes, as examples.

One of the companies that invested in industrializing thick timber in Uruguay in 2004 was the Urupanel plant, which produced MDF and plywood in Tacuarembó. A decade later, it closed its doors, leaving more than 400 workers without jobs. Today, that plant has been repurposed, but it operates as a sawmill (Frutifor) employing about 50 people.

The other large industry (Lumin, formerly Weyerhaeuser) continues to operate today.

In total, it directly employs about 750 people and has the capacity to produce 270,000 m3 of plywood panels annually.

Pou considered that, just as the State offered advantages to UPM so that it could install its second pulp mill in Paso de los Toros, something similar could be considered for companies that could form a cluster to set up in Tacuarembó, Melo or Rivera, near the tree plantations.

Agroempresa Forestal (AF), one of the private groups with the largest forested area in Uruguay, is optimistic about the arrival of investments in the short term. “We are going to make a strong commitment abroad so that Uruguay can have a new industrial plant,” its director, Francisco Bonino, announced to El Observador this week.

Beyond the current outlook for industrial investment in Uruguay, the timber market appears promising. Pérez del Castillo participated in conferences with experts in the US, where the prevailing message was that, in the future, “there will be a shortage of timber” to meet projected consumption. This is particularly true for industrial sectors such as adult diapers—manufactured with cellulose—and the booming retail sector, which primarily uses paper and cardboard for packaging.

The cultural factor

Dieste also identifies a “cultural factor” that leads to Uruguay also having a significantly lower per capita wood consumption than developed countries (USA, Europe, Canada), or even in the region where Chile is making steady progress.

In the case of pine, the Udelar professor believes that in addition to a cultural deficiency in incorporating this raw material, there is also a knowledge deficit.

“In Uruguay, we don’t know how to build with wood,” he stated. He added that only in recent years has a nascent path begun with the training of human capital in the Engineering and Architecture faculties of the University of the Republic (Udelar) and the ORT University. One of the misconceptions about wood is that it doesn’t allow for tall buildings.

However, Dieste pointed out that today in Uruguay there is a three-story hotel on La Juanita beach in José Ignacio built entirely of wood.

The expert is optimistic that the construction industry will increasingly incorporate this material into housing construction, due to several advantages such as environmental benefits, lower freight costs (because it is lighter than traditional materials), and time savings during construction. This is because a large part of the structure can be built through prefabrication.

The forestry sector as a whole directly employs 17,000 workers. The BPS (Social Security Bank) has 1,770 registered companies, 92% of which are micro, small, and medium-sized enterprises (MSMEs).

The Uruguayan company Agroempresa Forestal paid US$319 million to acquire 55,000 hectares of land belonging to Harvard University in Uruguay.

68% of the wood is processed in Uruguay by four companies, which consume more than 100,000 m3 per year.

Sawmills

With 14 companies, Rivera is the department with the most sawmills in the country. Next come Canelones (11), Paysandú (7), and Tacuarembó (7).

Source: El Observador – Andrés Oyhenard

June 25, 2019

Agricultural Engineer Nicolás Lussich.

Forestry is one of the most dynamic sectors of the economy. In recent times, the pulpwood production subsector has seen the greatest success, with UPM and Montes del Plata as its main players.

Conversely, the subsector linked to the production of physical wood (that which is not chemically altered and maintains its structural properties) has faced greater difficulties. The production of plywood (from peeled logs) and sawn timber faces market restrictions and high local costs that hinder industrial activity. Large projects to establish industrial plants in these sectors, originally conceived by the American company Weyerhaeuser, were reduced to a single plant, which was recently sold to a group led by the Brazilian bank BTG Pactual, along with a significant area of ​​forest. Urupanel—the other plywood company—failed along the way. The number of sawmills has decreased, although some new, larger, and more efficient ones have been added (such as Frutifor).

In the forestry sector of this subsector, the difficulties of industrial development mean that standing timber is difficult to sell and offers little to no profit margin. The marketing of pine trees has been particularly challenging, as the forests of this species are mostly located in the north, far from ports, making freight costs (extremely high in Uruguay) prohibitively expensive. Even so, given the opportunity to finalize sales and with the intention of replanting areas with eucalyptus, significant volumes of pine have recently been sold to China, another major consumer of these products.

Similar challenges are faced by the placement of Eucalyptus grandis for veneer or sawmilling. Exports in this case have been lower, and there are companies with good processing experience and a proven track record in the market, but it is expected that supply will gradually increase to much larger volumes. Unlike those destined for pulp, these Eucalyptus trees are managed to achieve much larger diameters, with appropriate pruning and thinning, which allows for the production of knot-free wood with properties suitable for construction, furniture making, and cladding.

Despite this challenging outlook, there are some signs of increased dynamism in the timber production sector. On the one hand, the decision by Harvard University’s fund to divest its forestry assets (mostly eucalyptus for sawmilling) attracted interest from various players; these assets were ultimately acquired by the AFAPs (Pension Fund Administrators) through a new trust structured by Agroempresa Forestal. This firm already operated three other trusts with AFAP funds, accumulating over 100,000 hectares and a cumulative investment of more than US$600 million (see table). The valuation of the assets generated discussion within the sector, given the market difficulties described for these products, with speculation that an inflated price had been paid. The company reported that an independent valuation by the Brazilian consulting firm BM2C established a value 5% lower than the amount actually paid.

According to Francisco Bonino, director of Agropempresa Forestal, the outlook for these investments is positive in the long term. “Good quality eucalyptus wood sells in Uruguay at prices equal to or higher than in New Zealand. In the case of pine, there are indeed difficulties, but the project proposes long cycles and—eventually—replanting with eucalyptus,” he explained on Radio Carve.

The Central Railway can facilitate business in the most remote forests by reducing freight costs. Furthermore, Agroempresa Forestal is developing long-term agreements with Chinese buyers to establish stable and larger-scale sales volumes.

While it may seem surprising, exporting raw timber (logs) presents logistical challenges similar to, or even greater than, those of seemingly more delicate products like meat or dairy. These logs are only valuable if they arrive at their destination with high moisture content (green); otherwise, the ability of buyers (Chinese, Vietnamese) to work and process them is hampered, which can disrupt sales.

To maintain the moisture level of the logs, the logistics chain needs to be very well-oiled. Until now, they have been exported in containers, which helps, taking advantage of the “returns” from imports. If larger volumes are considered, the number of containers could be a limiting factor; storage with irrigation to maintain humidity, specialized warehouses, etc., would be necessary. There are already Uruguayan companies with experience, but on a smaller scale. Agroempresa Forestal’s business is more ambitious and will surely require significant investments.

The firm’s previous trusts have had mixed results. The first entered the market with relatively high land prices, which has resulted in some losses as prices have moderated in recent years. Subsequent funds have mitigated this effect and generated positive margins.

According to some analysts and market players, forest land in Uruguay appears to have reached a price floor, creating a more favorable environment for renewed investment. This is aided by the US Federal Reserve’s decision to maintain interest rates, contrary to previous expectations of an increase. In this context, some Chilean groups, among others, have shown renewed interest in investing.

In any case, there are two key factors influencing the projections. On the one hand, of course, there are the markets: Uruguay has done very little to open new markets for wood products, and within Mercosur, Brazil is a major producer, so the regional market is not an attractive option. It is necessary to create these opportunities, and China is a key partner (see chart), as are Vietnam and Indonesia, where significant volumes of sawn timber have been sold. But without preferential access and with distances working against them, Uruguay will almost certainly pay a premium.

The unions in the sector don’t understand this, and here’s where the other factor comes in. These days, the Union of Wood and Related Industry Workers (SOIMA) is mobilizing, with strikes and assemblies, demanding wage increases and improved working conditions. Without much consideration for productivity or the market circumstances facing the companies, the unions are making demands that, in many cases, are unsustainable, ultimately costing jobs. It’s not the only factor, but the unions’ lack of consideration doesn’t help sustain forestry companies that could be important job creators. The Urupanel case was a regrettable example.

Without changes in labor policy and a more dynamic trade policy, achieving the goal of high value-added industrial development in the timber and other sectors will be difficult. All these risks are present in recent investments. The opportunities exist, but they must be seized.

Pulp mills are crucial because some of the timber from forests intended for sawmills ends up being used for pulp anyway (tree tops, thinnings, etc.). But if the competitiveness of the solid wood sector doesn’t improve, more timber than anticipated will be used for pulp.

July 29, 2019

The president of the Forest Producers Society, Carlos Faroppa, spoke with De Siembra about the future installation of UPM II, which will be the third pulp mill in the country and the largest in the world.

The confirmation of UPM II “is a crowning achievement, but we hope to have more crowning achievements in the future,” he said.

According to Faroppa, this is very positive news that is the result of “a well-defined state policy. Perhaps one of the most defined and most continuous state policies” in the country.

As an example, he cited that “every time there was an investment in the pulp industry, it was the largest productive investment of its time in Uruguay.” First it was Botnia (now UPM), then Montes del Plata, and soon the second UPM plant, which will be located in the center of the country, next to Pueblo Centenario, in the department of Durazno.

Faroppa spoke about the growth of the forestry sector, which has established itself as one of the main sectors in the country, to the point that last year “it was the most exporting sector.”

He also specifically referred to UPM II, saying that its arrival “speaks well of the country, not just of forestry policy,” since it is a safe, long-term investment with the highest standards worldwide.

This in turn implies the creation of thousands of direct, indirect and induced jobs, which are largely quality jobs, well paid and requiring ongoing training and development.

Regarding the environmental aspect, he pointed out that “the industrial performance (of UPM II) is not going to be a problem for the (Negro) river; the river already has a problem.”

August 2, 2019

The installation of a new pulp mill by the Finnish company UPM in Uruguay will consolidate the forestry sector as the most important production chain, surpassing the meat industry. Pulp will become the country’s main export product. And if the current market trend continues, Uruguay will be the world’s second-largest supplier of short-fiber pulp—with 4.7 million tons—surpassing Indonesia and trailing only Brazil, according to projections by Uruguay XXI.

Today, the two plants installed in the country -UPM and Montes del Plata- are working at maximum capacity, which is why the exported volumes remain relatively stable, at 2.5 million tons.

Considering that 1.3 million tons were exported in the first half of the year for a total of US$826 million, 2019 would close with total revenues of approximately US$1.6 billion. According to UPM, the new plant, once operational, would generate US$1.1 billion annually in pulp exports, which, added to the estimated US$1.6 billion, would result in a total of US$2.7 billion across the three plants—more than US$1 million more than total beef exports in 2018 (US$1.629 billion).

Uruguay produces over 25 million cubic meters (m3) of wood annually, of which the forestry sector markets 14 million. Javier Solari, UPM’s vice president of development in Uruguay, told Radio Rural’s Tiempo de Cambio program that “the new UPM plant will consume around 7 million m3, which would be added to the 5 million m3 of the existing plant.” This means that Uruguay’s timber extraction would increase by 50%, to 21 million m3.

Currently, the Uruguayan forestry sector has the industrial capacity to process 10.4 million m3, of which 88% (9.2 million m3) is consumed for obtaining pulp and the remaining 12% (1.2 million m3) for the sawing sector, according to statistics from CPA Ferrere (year 2017).

In Uruguay there are more than 900,000 hectares of planted forests and it is estimated that the forest area should grow for this project by around 60,000 to 90,000 additional hectares to the 389,000 hectares that the company already has.

“This growth will occur in a process related to the rotation of the already established forests – which are the ones that will supply the plant in its beginnings,” Solari explained.

The future availability of wood in Uruguay is growing in two ways.

One of them is that new areas are being forested year after year; the average for the last five years has been 20,000 ha (1% annually), mainly due to the impetus of UPM and Montes del Plata.

The second way to increase the availability of wood is that some of the harvested areas are reforested with genetic material that is more productive than the previous one.

Carlos Faroppa, president of the Forestry Producers Society, told Tiempo de Cambio on Radio Rural that “Uruguay has been accumulating timber stock and there is also timber growing in new forests, therefore the acceleration of growth would be moderate, of approximately 2% (30,000 hectares per year). What will increase are the lease or production agreements with agricultural producers.”

This new investment, which produces pulp and energy, has a positive impact on other forestry activities: all long-term timber (15-20 years) – from solid or sawn timber – will now have a market. “In these cases, it’s possible to effectively place the intermediate production – from thinning – at the pulp mill, where it is processed and value is added,” Faroppa explained.

In turn, it will bring other developments besides pulp production. UTU is developing an educational project related to forestry training in the department of Tacuarembó. It is expected to be launched between August and September. A source close to the project indicated that the installation of the new UPM plant is not related to the project.

Greater dynamism in the market for forest lands Javier Taró, manager of the real estate department of Megaagro, told Tiempo de Cambio of radio Rural that the rental market is registering greater dynamism than the buying-selling market, and everything that “appears on offer is rented.”

Depending on the location, the percentage of use, and the type of soil, the values ​​average US$160 per hectare.

Regarding land sales, within a 200-kilometer radius of the new plant’s site, prices are around US$2,000 per hectare for purely livestock-based lands, which are not ideally located and have lower productivity. Mixed-use lands, combining livestock and forestry, are priced at US$2,500 per hectare.

And there is some value above that for very good fields, which previously had some agriculture, but where livestock farming is now done with some improvement, Pablo Albano, head of the fields department of Zambrano y Cía, told El Observador.

The experience of a producer: Martín Stabile is a producer from the Río Negro department, bordering Flores. Of the 730 hectares of his property, 84 (less usable soils for other uses) are forested under the UPM Development Program, a long-term agreement for the management of eucalyptus plantations.

One of the advantages, he pointed out, is that after a year and a half of planting the forest, livestock can be introduced, with the benefit of shade and shelter for the animals.

Stabile offers two payment options, according to the company: on the one hand, the producer receives an annual rent (which varies depending on the proximity to the plantation, averaging approximately US$150/ha/year), plus a smaller percentage of profit after each harvest. The harvesting period lasts between eight and ten years. “The producer’s responsibility is to fence the area to be forested, prevent animals from entering, and use the land carefully,” he explained.

The second option is partnership: the producer does not receive a lease payment and, upon harvest, receives a percentage of the harvest (higher than in the previous option). The producer shares both the risk and the success.

Based on his figures, both methods allow him to achieve maximum returns on those soils. Considering the first method, with an average income of US$150/ha/year, where three hectares per livestock unit are needed annually, “it at least doubles the value I would get from any other alternative use,” noted Stabile, who works with cattle, sheep, and does some farming. “It’s a win-win system,” the producer reiterated several times, highlighting the benefit given the type of soil used for forestry.

The installation of the new pulp mill in Uruguay will revitalize the entire forestry chain and expand the productive integration of trees with other essential sectors for the country.

Production: Cecilia Ferreira and Cecilia Pattarino

The figures

Once operational, pulp exports could generate $2.7 billion per year.

At the same time, the three plants, the one in Montes del Plata and the two in UPM.

National pulp production could reach 4.7 million tons when the third plant that UPM is going to build near the town of Pueblo Centenario is operational.

Source: AGROPECUARIO (SUPPLEMENT TO EL OBSERVADOR) | Blasina y Asociados