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BOLIVIA'S FORESTRY SECTOR -- THE
COUNTRY'S NEW ECONOMIC PILLAR
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FORUM I
REGIONAL PROJECTS
USAID FORESTRY
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"The forestry sector can be a new
economic
pillar for Bolivia"
USAID has had a deep interest in the forestry sector for the last two
years. USAID is currently financing various forestry projects in Latin
America, with the support of EGAT (USAID Forestry Office), LAC (USAID
Office for Latin America), USAID main offices in Washington D.C. and the
USFS (US Forest Service).
The USAID Forestry Projects’ Forum I is a perfect opportunity to share
and coordinate activities in the region. All the projects are located in
the Amazon basin, centered on the sustainable management of tropical
forests, working with local communities, and promoting exports, as well
as forestry certification.
USAID Bolivia’s Specialist in Natural Resources and Environment, Ricardo
Roca Steverlynck, said that this initiative was undertaken because the
Bolfor Project in Bolivia is the oldest in South America (ten years),
and has the most experience and lessons to share in tropical forest
management with the rest of the visiting countries. And Bolivia was the
first country to initiate sustainable forestry management with
appropriate regulation. Bolivia is a leader in voluntary forestry
certification, and now wants to take a step towards a forestry network—currently
lacking in Latin America.
The Forum is first of all focused on design and establishing a network
of permanent forestry management of USAID’s forestry activities in Latin
America, as well as the offices of environmental missions, to become
familiar with each other, exchange information and identify common
strategies so as to avoid mistakes or reinventing already existing
initiatives.
Mr. Roca affirmed that after ten years of support to the sector, USAID
believes that the vision of Bolivia as a forestry country is possible.
The sector can be a new pillar in the national economy. If one
recognizes that sustainability is in renewable resources, the forestry
resource is the one that has most potential in Bolivia, as we currently
utilize only 5% of the forests. The idea of Bolivia as a mining country
must be exchanged for the idea of Bolivia as a country with a forestry
industry.
We have the resources, we don't need to reforest, we can manage the
forest that is already available to us--and that must be made perpetual
by implementing all the forest management techniques to guarantee the
existence of this resource for future generations. Meanwhile, it can
provide needed income for present generations.
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MANUFACTURED PRODUCTS HAVE GREATER MARKET
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Manufactured products, with value added,
generate a multiplying effect that is expressed in the use of more
manpower (more jobs), consumption of energy and input, training of human
resources, salary increases and others. Additionally, economically, if 1
mo of sawed wood is sold at $1.00, when processed, it is sold at $6.00.
This additional economic movement has a favorable social impact on the
country.
Since its creation in 1976, the Roda Group's forestry company CIMAL/IMR
has opted for value added, becoming the first company to produce wood
other than that sawed into planks or beams.
According to Engineer Cristóbal Roda, the social aspect plays a basic
role in the forestry sector. Around 50,000 jobs are currently generated,
with better labor conditions than when only sawed wood is produced.
In addition, the products are of international quality, and have
forestry certification, which assures permanent forests and the quality
of their products, enabling the entrance of Bolivian products to
demanding foreign markets such as Europe, North America, Asia, and South
America. This has occurred thanks to years of work, improvements in the
forestry sector, new investments and the Forestry Law (impacting on
forest management techniques, cost reduction, planning, etc.).
Finally, Engineer Roda highlighted that Bolivia can become number one in
forestry exports. However, there is legal and social insecurity, which
discourage investment, and, although Bolivians want social tranquility,
we daily see hundreds of Bolivians demonstrating for something in the
streets, when we should instead be encouraging change, that is to say,
not asking for something from the country, but, what asking what we can
give the country, what we must give the state so that Bolivia can have
better days, and attract investments. The October problems originated
from the lack of employment. Then we must generate employment and well-being,
so that Bolivians have a better life.
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THE FORESTRY SECTOR IS REACTIVATED
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Bolivia's forestry product exports were up 14%
in 2003, as compared to the previous year. This recovery, although slow,
demonstrates the forestry sector's reactivation.
The last data from the Bolivian Chamber of Forestry on the first quarter
of 2004, shows that Santa Cruz Department's exports were up considerably.
The best year in the last 5 was 1999, when USD 7.85 MM was exported in
the first quarter; with USD 7.81 MM in the first quarter of 2004.
This means that, after the forestry sector's deep five-year crisis, we
glimpse better trends regarding forestry, and therefore Bolivian exports.
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COUNTRIES OF DESTINATION INCREASED
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The destination countries have increased (from
42 countries in 2000 to 49 in 2002), extending the European and Latin
American markets.
The main destinations were the United States, the United Kingdom, Mexico,
Chile, the Low Countries and Germany.
Exports in this period concentrated on manufactured products. Bolivia is
a great exporter of furniture, doors, benches, chairs, veneer sheets and
others.
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FORESTRY TRADE BALANCE IS POSITIVE
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The forestry sector's trade balance (exports
less imports) has been strongly positive over the years.
In 2002, forestry sector exports were almost triple its imports: for
each dollar spent in imports, 2.6 dollars was generated in sale of
products abroad.
The positive trade balance generates more jobs, and contributes to a
stabile national economy.
In 2002, the forestry sector's trade balance was a positive USD 56
million, while in the same year, the country had a USD 460 million
deficit.
The main forestry products imported are paper, cardboard and their
derivatives (90%), followed by semi-manufactured and manufactured wood;
while the exports are doors, Brazil nuts, furniture in general, garden
furniture and others.
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BOLIVIA SHOULD EXPORT EVERYTHING
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At the same time that the manufactured forestry
products are consolidating foreign markets, primary products have a
valuable position. This demonstrates that the forestry companies can
enter markets based on their product production and sale capacity.
The medium- to large-size companies are in a position to manufacture
their products and reach demanding foreign markets such as the United
States and Europe, but what happens to the small ones who have only raw
material (beams, boards, etc.)? These also have a market, because
Bolivian species are attractive in Latin American countries. There is
opportunity for everyone.
The export of manufactured products was 75% of total exports until the
year 2002, and the remaining 25% was raw material.
The advantage of exporting manufactured products, or more products with
value added, is that they generate more economic benefits (employment,
taxes, etc.).
However, in economic terms, the foreign market has a primary product
demand of approximately USD 25 million p.a., that is to say, it is an
attractive market niche for many Bolivian companies, especially for
medium- and small-size companies, which are tending to export more and
more.
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"FORESTRY SUPPORTS A GREAT PART OF NORTHERN BOLIVIA"
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"Forestry activity is currently the mainstay of
northern Bolivia, including Santa Cruz, in the Chiquitanía area. Bolivia
only needs to develop forestry activity in a natural manner, it doesn't
need to create plantations to generate wealth as they do in other
countries," said the Technical and Operations Manager of the Forestry
Superintendence, Engineer Olvis Camacho.
The forestry sector's socio-economic contribution is significant. From
the overall view of wealth generation, distribution and sustainability,
the forestry sector meets all the requirements, because the generation
of wealth is of no use if it doesn't include distribution and
sustainability. That is to say, a country's GDP measures its economic
growth, but distribution is a much more efficient indicator of impact on
the well-being of society.
If Bolivia's GDP is evaluated, it can be interpreted that the mining,
hydrocarbons or agriculture sectors are the most important the country.
But if we take a census of the villages, a great part of Santa Cruz,
Pando, northern La Paz and Beni work in forestry activities. Heavy
investments are required for the hydrocarbons and mining sectors.
Agriculture (not subsistence, but commercial scale) is not competitive
because the distance to the cities makes agricultural products more
expensive. Therefore, it is forestry activity that opens the doors to
everyone, from workers, to small businessmen, to the big industries.
This is the basic concept of distribution, that is to say, generation of
value.
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IMPACTS ON EMPLOYMENT AND WELL-BEING
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The hydrocarbons and mining sectors, for
example, generate more foreign currency, but don't have impact on
employment nor on well-being in most of the population. Agriculture and
cattle raising employ large amounts of manpower. However, in agriculture,
the expenditure for agro-chemical products totals 60%.
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THE FOREST IS PERPETUAL
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Regarding the maintenance of value, gas
reserves run out, as do mining reserves. On the other hand, the forest
does not. The forest, sustainably managed, is perpetual. Even
agriculture can reach risk levels, as it requires soil management, which
has not been yet proven to be sustainable.
In 42 years, Bolivia's eroded surface has increased by 86%, also
affecting our country's biological diversity in product yield and
competitiveness. Bolivia has varied soils, basic materials,
physiographic relief, climates and waters. Their use is also diverse,
and is not always adapted to its nature and potential. The ecosystems
have suffered deep changes due to over-grazing and to the introduction
of annual and perennial cultivation with inadequate management (Source:
El Deber. 23/04/04). Soil erosion is caused by other sectors:
agriculture, mining and hydrocarbons, in the long term. "This makes us
think we need to focus on developing sustainable wealth, and to also
distribute it," said Engineer Olvis Camacho, Technical and Operations
Manager of the Forestry Superintendence.
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OTHER BENEFITS
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Without forest there is no fauna, and this is
the main source of meat and fruit for the rural population.
The environmental services provided by forests are invaluable. For
example, El Choré, simply by existing, provides the levels of humidity
and precipitation necessary for agricultural activity in a part of Santa
Cruz.
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CERTIFICATION CONTRIBUTES TO MANAGERIAL EFFICIENCY
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Although voluntary forestry certification (granted
to companies that use their forests sustainably, without destroying the
forests) does not impact favorably on current prices, it causes a change
of attitude regarding what type of products the consumers should acquire,
and especially how the companies must be managed. This saves the State
resources, and puts the businessman in a more competitive position,
which in turn is more beneficial for the employee, because certification
also demands that the employees have a beneficial work place.
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FORESTRY SECTOR NECESSITIES
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The concessions, as well as private properties,
should have proper title, so that businessmen invest long term.
Private activity must be strengthened in alliance with the State, to
improve the traditional structures of management, production and market
access.
The knowledge currently acquired in universities is more an attitude
than true managerial skill. The incorporation of qualified personnel in
the companies is necessary.
Strengthening the forestry sector implies analyzing current managerial
structures, whether single person or limited liability companies are
superior to corporations.
We must take into consideration that the State cannot support the
sustainable productivity of the forests as a State itself. It has to
resort to a strengthened private sector, so that the conservation of the
forests is strengthened. Therefore, the companies must identify
efficient and more suitable operating styles.
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THE FORESTRY SECTOR CONTRIBUTED 230 MILLION BOLIVIANOS
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From 1997 to 2003, the forestry sector
contributed more than Bs 230 million to the Forestry Superintendence for
forestry rentals.
These resources are redistributed by the Superintendence to Prefectures
(35%), Municipalities (25%), Fonabosque (10%) and the Forestry
Superintendence (30%); and are dedicated mainly to the sustainable
management of Bolivia's forests.
Collections by the Forestry Superintendence for Forestry Rentals is more
than Bs 22 million p.a.
Promulgation of the Forestry Law in 1996 determined that every forestry
agent who wants to use the forests pays a rental that grants him this
right.
Since 1997, this government disposition has been honored, and the
collections have an important role in the payments to the State, because
the public institutions that benefit from these contributions are: the
Prefectures, the Municipalities, Fonabosque and the Forestry
Superintendence.
During the 7 years the Forestry Law was applied, from 1997 to 2003, the
productive sector delivered Bs 230 million, almost $30 million to the
Forestry Superintendence.
Thanks to these resources, the Forestry Superintendence covers its total
budget, without contributions from the National Treasury. This way,
public sector forestry management is not a burden on the State.
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109 MUNICIPALITIES RECEIVE FORESTRY RENTAL INCOME
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Of the 314 Municipalities in Bolivia, every
year 109 receive a portion of the Forestry Rental paid by the producing
companies to the State.
During 2003, more than Bs 4 million was transferred by the Forestry
Superintendence to these 109 municipalities, located in seven Bolivian
departments.
Except for Potosí and Oruro, which don't have productive forests, the
other departments benefit with this contribution of the forestry sector.
Since approval of the Forestry Law in 1997, the productive forestry
sector has generated $7.5 million for the country's forestry
municipalities. For most of them, this is the economic activity that
contributes the most to their treasuries.
By law, these resources must be dedicated to the Local Social Groups
[Agrupaciones Sociales del Lugar] (ASL), to support the ASL, to inspect
forestry activities, to order preventive measures and others.
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PREFECTURES RECEIVE 35% OF FORESTRY RENTALS
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The prefectures of the departments with
productive forests receive the greatest part in the distribution of the
Forestry Rentals--35%.
In 2003, the timber companies generated more than Bs 5 million for the
seven prefectures in the country. This is collected and distributed by
the Forestry Superintendence.
The Santa Cruz Prefecture received the most (42%), followed by the
prefectures of Beni and Pando (20% each), La Paz (13%), Cochabamba
(3.4%), Tarija (1.4%) and Chuquisaca (0.5%).
Since application of the Forestry Law in 1997, these seven prefectures
have received over $10 million from the country's forestry activity.
According to the Forestry Law, the prefectures must use these resources
for the following: formulating and executing research projects,
rehabilitating basins and forestry lands, reforestation, conservation
and preservation of the environment, and order opportune and effective
aid of the public force to the Forestry Superintendence for the
execution of the Nation's Forestry Régime.
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FORESTRY SECTOR GENERATES 50,000 JOBS
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The forestry sector's strong influence on the
Bolivian economy is expressed in employment generation. According to
data of the STCP - Consultora Brasilera, starting in the year 2000,
employment rose to approximately 50,000; or 4% of the EAP (Economically
Active Population).
This data is obviously encouraging. However, the potential in 10 to 15
years is even more so, because this consultant calculates that. with a
series of state incentives, employment generation can reach 200,000 new
direct jobs.
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FORESTRY SECTOR RECOVERS SLOWLY
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In spite of the country's harsh economic
crisis, nationwide wood production has increased by 12% in the last 3
years.
In 1998, production fell from almost 800,000 m³ to 500,000 m³ the
following year, resulting in several company closures, the loss of jobs,
of exports and less contributions to the State.
Fortunately, there has been a slight recovery of the sector, with a
gradual 12% average increase since 2001.
In 2003, recovery accelerated a little more, the country's wood
production rising by 19% (almost 700,000 m³). Thus, the offer of raw
material and manufactured products has increased, opening the doors to
export to more countries, such as Malaysia and several others in Europe.
Santa Cruz holds first place as a wood producer (337,632 m³). In La Paz,
there has been an interesting increment that has raised the national
figures. This department tripled its production in 2003, reaching 80,577
m³.
The departments with significant production levels are: Beni with 58,305
m³, Cochabamba with 55,710 m³. Tarija increased to 29.021 m³, Pando had
25,169 m³ and Chuquisaca 7,431 m³.
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WHAT THE FORESTRY SECTOR NEEDS TO PRODUCE MORE
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The forestry sector currently produces 5% of
its potential, according to USAID data. That untapped potential can be
used by creating a new economic pillar with perspectives of sustainable
growth. That is to say, because they are renewable natural resources, we
can think of profitable long-term planning.
Only with conditions favoring growth that stimulates forestry production
is it possible to consider this development alternative for Bolivia.
Some of these conditions are:
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Legal security and protection regarding
forestry rights to national and foreign businessmen.
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Financial policies to incentivate the forestry
sector, lowering interest rates and extending repayment times.
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Programs for commercial promotion of forestry
products.
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Practical training of human resources, focused
on forestry administration and management.
We need to prepare a forestry zoning for the
country: to order the use and occupation of forestry lands, based on the
capability and potential of the different regions, under the principles
of sustainability of natural resources.
Conclusion: THE FORESTRY
SECTOR MUST BE ATTRACTIVE
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IN ADDITION TO RENTALS, FORESTRY ACTIVITY PAYS OTHER
TAXES
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In addition to the Forestry Rental and the
Regulation Tariff, the forestry sector pays the other taxes in force,
such as the Value Added Tax (VAT), Transactions Tax (IT) and the Company
Income Tax (IUE) on the forestry companies' profits.
In the period 1995 to 2001 (7 years), the Forestry Sector tax
contributions to the National Treasury (TGN) were $38.5 million, an
average $5.5 million p.a.
Of the activities that are part of the forestry sector, the most
important are: rough wood, sawmills; carpentry parts and piece
production (doors, windows); production of wood sheets for veneer,
boards and laminates; sawmills and planing mills, and specialized trade
furniture retail.
Within "Other activities," the ones that pay more government taxes are:
felling and transport services, chemical treatment of the wood with
preservatives and others, manufacturing of furniture and accessories,
trade of articles of wood, cork, wicker; and manufacture of boards for
wood floors, including parquet.
Source: Internal Tax National Service
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TECHNOLOGY FOR WOOD COMPETITIVENESS
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The Industrial Services Center (ISC)
inaugurated a workshop for wood transformation and an educational
sawmill, which will be at the service of carpentries, sawmills and
forestry companies. The ISC is a program of the Bolivian Chamber of
Forestry, receiving financing from the Swedish International Cooperation
Agency (ASDI). Its objective is to be self-sustainable over the long
term.
The ASDI, representatives of the Swedish Embassy, and of the Forestry
Superintendence, the Bolivian Chamber of Forestry, the consultant
Scandia Consult Nature, the UPSA and forestry businessmen attended the
inauguration of the Industrial Services Center extension, which has
identified the greatest technical demands in the wood companies, having
designed specific services to contribute to their competitiveness and
efficiency.
The construction and installation of machinery and the sawmill was
possible thanks to the ASDI, with the involvement of the Bolivian
Chamber of Forestry (CFB). This effort focuses on providing unique
services in Bolivia, with high quality and low prices to the clients. It
is more a contribution than a business.
The educational sawmill is dedicated to train the personnel that work in
the forestry areas. Training in these facilities foresees the attendance
of at least 15 people per month. The objective is to have high quality
wood products, to satisfy the demands of local and foreign clients.
The ISC opened its doors in 2000, with a department for crown grinding
bandsaw wheels. Later on, they began to provide services selling and
making stellite and carbide tipped sawblades, and today is taking next
step, expanding the workshop. This is important, to be able to offer
services, which consist of:
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Grinding and preparing tools for wood
manufacturing mills (carpentries, industries manufacturing furniture,
doors, flooring etc.).
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Grinding milling cutters, blades and circular
saws.
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Producing and repairing milling cutters.
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Repairing circular saws (placement of carbide
teeth).
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Repairing milling cutters
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Welding and sharpening carpentry band saws.
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Equipment for balancing cutter heads, shafts,
bandsaw wheels, etc.
This is a great contribution to the forestry
business, expected to contribute to the advance of the companies for the
creation of excellent quality products with value added, and in this way
to continue moving ahead internationally, keeping in mind that the
Bolivian products most demanded abroad are doors, garden furniture,
general furniture and others.
Forestry exports:
Furniture, Doors, Brazil Nuts and Palm Hearts are the most important
Of the total $100 million forestry exports in 2003, 65% was for wood
products, and 35% non-wood products.
Among the non-wood products, Brazil nuts dominate stand out with $31
million, palm hearts with $3.3 million, and cocoa with $1.2 million.
Wood products are 80% manufactured wood articles such as doors,
furniture, windows, floors and others; the remaining 20% is sawed wood
of different species.
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ALMOST 1,000 COMPANIES IN THE FORESTRY SECTOR
A TOTAL 952 FORESTRY COMPANIES ARE REGISTERED IN THE FORESTRY
SUPERINTENDENCE
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The number and type of registered companies
gives a clear idea of the sector's importance in the generation of
employment and production with value added to the national economy, in
addition to the legality and formality of the forestry sector and what
this means in contributions from taxes and rentals.
The sawmills, the lumber yards, the carpentries and the export companies
currently predominate among the registered companies.
Some 57% of these companies are situated in Santa Cruz, followed by
Cochabamba, La Paz, Chuquisaca and Beni.
Including the small companies, micro-companies and handicrafts shops
that work wood, it is thought that there are more than 4,000
establishments over all Bolivia. We can state that forestry activity is
present over all the country.
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