Forestry in Argentina
Encyclopedia
The forestry sector in Argentina experienced significant growth rates between 2001 and 2006. An estimated 1.115 million hectares (2.8 million acres) were planted as of 2005. It is estimated that this year, between 40,000 to 50,000 hectares (100,000 to 124,000 acres) will be cultivated mainly in the Mesopotamia region (the provinces of Misiones, Corrientes, and Entre Ríos). Among the most important species cultivated in the country are pines and eucalyptus, representing 50 and 30 percent of production, respectively.
Major factors that have contributed to the industry’s growth have been the land quality, the relative lower price of the land compared to other markets such as Brazil
and Chile
, and Law 25,080, which has been in effect since 1999. This law, besides providing economic incentives for small and medium producers, has also created important fiscal benefits to attract both domestic and foreign investments. The outlook for the forestry sector is positive in the short term. The relative short average periods for harvest and Brazil’s current young cultivation should help Argentina become more competitive in the wood market. However, there are still challenges that the industry needs to overcome to exploit its potential, such as the development of infrastructure in various forestry areas.
The growth of planted forests has increased dramatically since 1997 due to new investments (especially from Chile). The implementation of Law 25,008 in January 1999 has also been an important factor for growth in this sector. This law promotes and assists the forestry sector for a period of 10 years. Between 1990 and 2000, foreign and domestic investments surpassed US$ 1.5 billion. The forestry industry depends on both cultivated forests (85 percent) and native forests (15 percent). The major species cultivated in Argentina are pines and eucalyptus. In addition, species such as salix and populus are also cultivated in a smaller scale. Currently, there are no other species that have been introduced for cultivation in Argentina.
The current plantation rate is estimated to be 50,000 hectares per year. It is also estimated that the consumption of wood products from cultivated forests is 5.3 million cubic meters, and sustainable wood supply to the year 2015 will be more than 20 million cubic meters. Argentina, however, is not a major consumer of wood products. For instance, wood is not commonly used in building construction. About 60 to 70 percent of wood product production is used for internal consumption (wood boards, plywood, cellulose pulp, etc) and the rest for exports.
, Corrientes
, Entre Ríos
, and Buenos Aires
. These four provinces form the country's eastern border with Uruguay
and Brazil
, and comprise of 80% of the total cultivated area.
Forests are composed of the following species:
The Argentine forestry sector has strengthened considerably in the last 15 years. The reasons behind this growth include:
During the 1990s, Argentina was a net import
er of forestry products with high value-added (i.e. paper
, cardboard
, furniture, etc.) and a net export
er of primary and low value added goods (i.e. wood
, cellulose pulp). This situation has changed especially after the currency devaluation in 2002 and foreign investment during the 1990s. Now, the country has begun producing a number of high value added products such as fiberboard
s and finished products such as furniture
. Argentina is now in a position to become an important producer of forest product
s in the future. The industry is focusing on the production of more high value added products, and increasing rates of plantation.
, especially in the area of Misiones and Corrientes, is specially suited for forestry, and has one of the highest growth rates for forestry in the world.
Another issue is the lack of interest of the SAGPyA (Secretaria de Agricultura, Ganaderia, Pesca y Alimentacion) to promote the forestry industry. Even though there is a law implemented for the promotion of the forestry sector, it is not a priority for the government. In many cases, economic support for cultivation projects has been delayed. For instance, it is not clear if Law 25,008 will be extended in the year 2009 or if it will be modified. In 2006, the Argentine Forestry Association-Mesopotamia (Afome) complained to the Ministry of Economy about how SAGPyA has managed the Law 25,008. Afome blames SAGPyA for not reaching cultivation goals established in 1999 due to delayed promotional payments.
, which forms the border between the two countries. This dispute began after Argentine environmentalist
s alleged that the plants would pollute the river that divides the two countries, and asserted that Uruguay had not provided the necessary information on the environmental impact
of the plants. In protest, Argentine environmentalists blocked traffic on the Libertador General San Martín Bridge
and General Artigas Bridge
, the two main international bridges connecting the two countries. As of now, the Argentine and Uruguay government have not been able to resolve the issue. This impasse could possibly slow down the development and introduction of new technologies for the forestry sector. Such technologies are crucial to increase cultivated land and production. Argentina has the potential to become a major cluster for the worldwide industry, but more investment is necessary.
The country also enjoys short harvest periods for the most important species. This has allowed the industry to become more competitive and continue its high growth rates.
It is estimated that for one hectare of cultivated forest, the industry produces 400 tons of wood. Moreover, the average value of a cubic meter of wood boards from cultivated forests is US$ 70 to US$ 80. In some cases, there are boards that run between US$ 200 to US$ 250 and there is a small niche of specific types of boards with prices up to US$ 400. The area between Misiones, Corrientes, and Entre Ríos is the major producer of wood products, and represents 65 percent of the total production in Argentina.
In terms of the major destinations of Argentina’s exports of wood and furniture products, the United States, Brazil, Spain, and Chile continue to be the most important markets. In 2005, both South Africa and the Dominican Republic emerged as markets for this sector. China in 2005 also increased its demand for forestry products from Argentina, but they are mainly low-value-added products. Some of the most important exports goods from Argentina are fiber and particleboards, plywood, wood boxes and containers, and wood handles for tools.
Imports of wood and furniture in 2005 experienced an increase of 52 percent compared to the previous year. This increase was mainly for products such as staves and barrels for the wine industry, boxes, and other products for packing. These imports in particular experienced a US$ 25 million increase compared to 2004, which represents 25 percent of the total imported goods in 2005. There are also other products such as cork products as well as paper and cardboard products in which imports have increased.
, paperboard
and corrugated fiberboard in Latin America. As of the 2004, the sector produced about 1.4 million tons. The production experienced an increase of 11 percent compared to 2003. However, this production only satisfied 67 percent of domestic demand. The paper production in Argentina is primarily for packing (48 percent), printing (25 percent), and newspapers (13 percent).
Major factors that have contributed to the industry’s growth have been the land quality, the relative lower price of the land compared to other markets such as Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
and Chile
Chile
Chile ,officially the Republic of Chile , is a country in South America occupying a long, narrow coastal strip between the Andes mountains to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far...
, and Law 25,080, which has been in effect since 1999. This law, besides providing economic incentives for small and medium producers, has also created important fiscal benefits to attract both domestic and foreign investments. The outlook for the forestry sector is positive in the short term. The relative short average periods for harvest and Brazil’s current young cultivation should help Argentina become more competitive in the wood market. However, there are still challenges that the industry needs to overcome to exploit its potential, such as the development of infrastructure in various forestry areas.
Forest situation
An estimated 1.115 million hectares were planted as of 2005. There are 33.2 million hectares (82 million acres) of additional land (native forest) for forestry. Out of this total, 20 million hectares (50 million acres) are high quality land for future development in Argentina. However, this vast amount of land is not easy to put into production due to its land tenure situation (the proliferation of owners holding areas of 5 to 10 hectares), legislation which protects native forests, and lack of infrastructure. If investors wish to expand their land for cultivation, the opportunity costs are substantial.The growth of planted forests has increased dramatically since 1997 due to new investments (especially from Chile). The implementation of Law 25,008 in January 1999 has also been an important factor for growth in this sector. This law promotes and assists the forestry sector for a period of 10 years. Between 1990 and 2000, foreign and domestic investments surpassed US$ 1.5 billion. The forestry industry depends on both cultivated forests (85 percent) and native forests (15 percent). The major species cultivated in Argentina are pines and eucalyptus. In addition, species such as salix and populus are also cultivated in a smaller scale. Currently, there are no other species that have been introduced for cultivation in Argentina.
The current plantation rate is estimated to be 50,000 hectares per year. It is also estimated that the consumption of wood products from cultivated forests is 5.3 million cubic meters, and sustainable wood supply to the year 2015 will be more than 20 million cubic meters. Argentina, however, is not a major consumer of wood products. For instance, wood is not commonly used in building construction. About 60 to 70 percent of wood product production is used for internal consumption (wood boards, plywood, cellulose pulp, etc) and the rest for exports.
Forestry by region
Among the most important regions in Argentina for the industry are the provinces of MisionesMisiones Province
Misiones is one of the 23 provinces of Argentina, located in the northeastern corner of the country in the Mesopotamiсa region. It is surrounded by Paraguay to the northwest, Brazil to the north, east and south, and Corrientes Province of Argentina to the southwest.- History :The province was...
, Corrientes
Corrientes Province
Corrientes is a province in northeast Argentina, in the Mesopotamia region. It is surrounded by : Paraguay, the province of Misiones, Brazil, Uruguay, and the provinces of Entre Rios, Santa Fe and Chaco.-History:...
, Entre Ríos
Entre Ríos Province
Entre Ríos is a northeastern province of Argentina, located in the Mesopotamia region. It borders the provinces of Buenos Aires , Corrientes and Santa Fe , and Uruguay in the east....
, and Buenos Aires
Buenos Aires Province
The Province of Buenos Aires is the largest and most populous province of Argentina. It takes the name from the city of Buenos Aires, which used to be the provincial capital until it was federalized in 1880...
. These four provinces form the country's eastern border with Uruguay
Uruguay
Uruguay ,officially the Oriental Republic of Uruguay,sometimes the Eastern Republic of Uruguay; ) is a country in the southeastern part of South America. It is home to some 3.5 million people, of whom 1.8 million live in the capital Montevideo and its metropolitan area...
and Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
, and comprise of 80% of the total cultivated area.
Forests are composed of the following species:
- 50% – PinePinePines are trees in the genus Pinus ,in the family Pinaceae. They make up the monotypic subfamily Pinoideae. There are about 115 species of pine, although different authorities accept between 105 and 125 species.-Etymology:...
(Misiones, Corrientes, Entre Ríos, PatagoniaPatagoniaPatagonia is a region located in Argentina and Chile, integrating the southernmost section of the Andes mountains to the southwest towards the Pacific ocean and from the east of the cordillera to the valleys it follows south through Colorado River towards Carmen de Patagones in the Atlantic Ocean...
, Central and Northwest areas of the country) - 30% – EucalyptusEucalyptusEucalyptus is a diverse genus of flowering trees in the myrtle family, Myrtaceae. Members of the genus dominate the tree flora of Australia...
(Misiones, Corrientes, Entre Ríos, Buenos Aires, La PampaLa Pampa ProvinceLa Pampa is a sparsely populated province of Argentina, located in the Pampas in the center of the country. Neighboring provinces are from the north clockwise San Luis, Córdoba, Buenos Aires, Río Negro, Neuquén and Mendoza.-History:...
, Santa FeSanta Fe ProvinceThe Invincible Province of Santa Fe, in Spanish Provincia Invencible de Santa Fe , is a province of Argentina, located in the center-east of the country. Neighboring provinces are from the north clockwise Chaco , Corrientes, Entre Ríos, Buenos Aires, Córdoba, and Santiago del Estero...
, Central and Northwest area of the country) - 16% – WillowWillowWillows, sallows, and osiers form the genus Salix, around 400 species of deciduous trees and shrubs, found primarily on moist soils in cold and temperate regions of the Northern Hemisphere...
and aspenAspenPopulus section Populus, of the Populus genus, includes the aspen trees and the white poplar Populus alba. The five typical aspens are all native to cold regions with cool summers, in the north of the Northern Hemisphere, extending south at high altitudes in the mountains. The White Poplar, by...
(Buenos Aires, Río NegroRío Negro ProvinceRío Negro is a province of Argentina, located at the northern edge of Patagonia. Neighboring provinces are from the south clockwise Chubut, Neuquén, Mendoza, La Pampa and Buenos Aires. To the east lies the Atlantic Ocean.Its capital is Viedma...
, MendozaMendoza ProvinceThe Province of Mendoza is a province of Argentina, located in the western central part of the country in the Cuyo region. It borders to the north with San Juan, the south with La Pampa and Neuquén, the east with San Luis, and to the west with the republic of Chile; the international limit is...
, NeuquénNeuquén ProvinceNeuquén is a province of Argentina, located in the west of the country, at the northern end of Patagonia. It borders Mendoza Province to the north, Rio Negro Province to the southeast, and Chile to the west...
) - 4% – Other broad-leaved treeBroad-leaved treeA broad-leaved tree or broad-leaf tree or broadleaf tree is any tree that has wide leaves, rather than slim, needle-like leaves as found in conifers...
s
The Argentine forestry sector has strengthened considerably in the last 15 years. The reasons behind this growth include:
- Great extensions of undeveloped land for the forestry industry at low prices that do not compete with other industries such as agriculture
- The Law 25,080 which provides economic incentives and favorable investment environment for the industry (including fiscal stability)
- No restrictions for foreign investment
During the 1990s, Argentina was a net import
Import
The term import is derived from the conceptual meaning as to bring in the goods and services into the port of a country. The buyer of such goods and services is referred to an "importer" who is based in the country of import whereas the overseas based seller is referred to as an "exporter". Thus...
er of forestry products with high value-added (i.e. paper
Paper
Paper is a thin material mainly used for writing upon, printing upon, drawing or for packaging. It is produced by pressing together moist fibers, typically cellulose pulp derived from wood, rags or grasses, and drying them into flexible sheets....
, cardboard
Cardboard
Corrugated fiberboard is a paper-based material consisting of a fluted corrugated sheet and one or two flat linerboards. It is widely used in the manufacture of corrugated boxes and shipping containers....
, furniture, etc.) and a net export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
er of primary and low value added goods (i.e. wood
Wood
Wood is a hard, fibrous tissue found in many trees. It has been used for hundreds of thousands of years for both fuel and as a construction material. It is an organic material, a natural composite of cellulose fibers embedded in a matrix of lignin which resists compression...
, cellulose pulp). This situation has changed especially after the currency devaluation in 2002 and foreign investment during the 1990s. Now, the country has begun producing a number of high value added products such as fiberboard
Fiberboard
Fiberboard is known as low density fiberboard is a type of engineered wood product that is made out of wood fibers. Types of fiberboard include particle board, medium-density fiberboard, and hardboard. Fiberboard is sometimes used as a synonym for particle board, but particle board usually refers...
s and finished products such as furniture
Furniture
Furniture is the mass noun for the movable objects intended to support various human activities such as seating and sleeping in beds, to hold objects at a convenient height for work using horizontal surfaces above the ground, or to store things...
. Argentina is now in a position to become an important producer of forest product
Forest product
A forest product is any material derived from a forest for commercial use, such as lumber, paper, or forage for livestock. Wood, by far the dominant commercial forest product, is used for many industrial purposes, such as the finished structural materials used for the construction of buildings, or...
s in the future. The industry is focusing on the production of more high value added products, and increasing rates of plantation.
Other issues
There are both negative and positive factors that currently affect the forestry industry in Argentina that need to be considered by investors. Argentina still has low land prices relative to other countries involved in forestry (e.g., Chile and Brazil). It is estimated that the cost of land varies between US$ 250 and US$ 450 per hectare ($101/acre - $182/acre). Also, Misiones and Corrientes have estimated cultivation costs of US$ 800 to US$ 1,000 and US$ 400 to US$ 500 per hectare respectively. The soilSoil
Soil is a natural body consisting of layers of mineral constituents of variable thicknesses, which differ from the parent materials in their morphological, physical, chemical, and mineralogical characteristics...
, especially in the area of Misiones and Corrientes, is specially suited for forestry, and has one of the highest growth rates for forestry in the world.
Another issue is the lack of interest of the SAGPyA (Secretaria de Agricultura, Ganaderia, Pesca y Alimentacion) to promote the forestry industry. Even though there is a law implemented for the promotion of the forestry sector, it is not a priority for the government. In many cases, economic support for cultivation projects has been delayed. For instance, it is not clear if Law 25,008 will be extended in the year 2009 or if it will be modified. In 2006, the Argentine Forestry Association-Mesopotamia (Afome) complained to the Ministry of Economy about how SAGPyA has managed the Law 25,008. Afome blames SAGPyA for not reaching cultivation goals established in 1999 due to delayed promotional payments.
Pulp mill dispute
There are also other issues that can make some aspects of the industry uncertain. Currently there is a dispute between Uruguay and Argentina over two cellulose plants that are being built on the Uruguayan side of the Río de la PlataRío de la Plata
The Río de la Plata —sometimes rendered River Plate in British English and the Commonwealth, and occasionally rendered [La] Plata River in other English-speaking countries—is the river and estuary formed by the confluence of the Uruguay River and the Paraná River on the border between Argentina and...
, which forms the border between the two countries. This dispute began after Argentine environmentalist
Environmentalist
An environmentalist broadly supports the goals of the environmental movement, "a political and ethical movement that seeks to improve and protect the quality of the natural environment through changes to environmentally harmful human activities"...
s alleged that the plants would pollute the river that divides the two countries, and asserted that Uruguay had not provided the necessary information on the environmental impact
Environmental impact assessment
An environmental impact assessment is an assessment of the possible positive or negative impact that a proposed project may have on the environment, together consisting of the natural, social and economic aspects....
of the plants. In protest, Argentine environmentalists blocked traffic on the Libertador General San Martín Bridge
Libertador General San Martín Bridge
The Libertador General San Martín Bridge is a cantilever road bridge that crosses the Uruguay River and joins Argentina and Uruguay. It runs between Puerto Unzué, near Gualeguaychú, Entre Ríos Province, Argentina, and Fray Bentos, Río Negro Department, Uruguay, with a total length of 5,966 meters ...
and General Artigas Bridge
General Artigas Bridge
The General Artigas Bridge is a road bridge that crosses the Uruguay River and joins Argentina and Uruguay. It runs between Colón, Entre Ríos Province, Argentina, and Paysandú, Paysandú Department, Uruguay. It is a cantilever bridge with a total length of 2,350 metres...
, the two main international bridges connecting the two countries. As of now, the Argentine and Uruguay government have not been able to resolve the issue. This impasse could possibly slow down the development and introduction of new technologies for the forestry sector. Such technologies are crucial to increase cultivated land and production. Argentina has the potential to become a major cluster for the worldwide industry, but more investment is necessary.
Characteristics of Forestry Sector
Argentina is a country with great potential for forestry. The geography of the country extends from north to south, encompassing 4,000 kilometers. In addition, its variety of climates, land quality, and reliable precipitation allow for the cultivation of different species at high growth rates.The country also enjoys short harvest periods for the most important species. This has allowed the industry to become more competitive and continue its high growth rates.
Law Number 13,273
This law is intended to conserve the forests, prohibit deforestation, and the irrational use of forestry products. It also specifies that any investment project carried out in natural forests needs to be approved by the Argentine government.Law Number 24,857
This law oversees activities such as implementation of projects, restoration, maintenance, protection, and sustainable management of native forests. It also establishes rules for the commercialization of forestry products and non-forestry products from native forests.Law Number 25,080
This law was implemented in January 1999 and is intended to increase land development by the Argentine forestry industry to 3 million hectares of cultivated forest in 10 years. It also establishes an inventory process for planted forests and it has provided for the establishment of agreements with international organizations that focus on development and technology transfer for this industry. This law also provides tax benefits and economic support for Argentine and foreign investors.- Tax benefits:
- Tax stability for 30 to 50 years for companies with forestry investment projects
- Accelerated amortization of income taxes
- Accelerated return of value-added tax (21 percent)
- Tax breaks on assets, real estate, sales, and gross income from state and municipal governments
- Accelerated depreciation of capital goods
- Economic Support
- The Argentine government will finance up to 100 percent for projects with 700 hectares, 50 percent for forests between 701 and 1,000 hectares, 30 percent for extensions between 1,001 and 2,000 hectare, and 15 percent for more than 2,001 hectares Support for projects focused in plantation of traditional species and enrichment of native forests
Production and trade
Argentina’s exports of forestry products began in the 1990s. However, as a producer of primary goods with low value added, the country experienced an overall trade deficit that ran from US$ 500 million to US$ 1 billion from 1992 to 2002. With the sharp devaluation of the peso in 2002, the exports of Argentine forest product were given a shot in the arm. Argentine goods became more attractive and exports began to increase, especially for high-value-added products. Between 2002 and 2004, exports increased from US$ 300 million to about US$ 700 million.Wood and Furniture
During 2005, the success of the forestry industry in Argentina continued. Compared to the years 2000 and 2001, the trade surplus for wood and furniture products increased dramatically. The year 2005 was the fourth consecutive year that this sector experienced a trade surplus.It is estimated that for one hectare of cultivated forest, the industry produces 400 tons of wood. Moreover, the average value of a cubic meter of wood boards from cultivated forests is US$ 70 to US$ 80. In some cases, there are boards that run between US$ 200 to US$ 250 and there is a small niche of specific types of boards with prices up to US$ 400. The area between Misiones, Corrientes, and Entre Ríos is the major producer of wood products, and represents 65 percent of the total production in Argentina.
In terms of the major destinations of Argentina’s exports of wood and furniture products, the United States, Brazil, Spain, and Chile continue to be the most important markets. In 2005, both South Africa and the Dominican Republic emerged as markets for this sector. China in 2005 also increased its demand for forestry products from Argentina, but they are mainly low-value-added products. Some of the most important exports goods from Argentina are fiber and particleboards, plywood, wood boxes and containers, and wood handles for tools.
Imports of wood and furniture in 2005 experienced an increase of 52 percent compared to the previous year. This increase was mainly for products such as staves and barrels for the wine industry, boxes, and other products for packing. These imports in particular experienced a US$ 25 million increase compared to 2004, which represents 25 percent of the total imported goods in 2005. There are also other products such as cork products as well as paper and cardboard products in which imports have increased.
Cellulose Pulp
Argentina is the third biggest producer of cellulose pulp in Latin America. As of 2005, Argentina produced 1.5 million tons. The major plants are located in Misiones and they use pinewood as their raw material. The most important plants in this region are Alto Paraná S.A. and Papel Misionero S.A. There are also other plants that use fiber from eucalyptus as raw material for both the production of cellulose fiber and paper.Paper Production
Argentina is the fourth largest producer of paperPaper
Paper is a thin material mainly used for writing upon, printing upon, drawing or for packaging. It is produced by pressing together moist fibers, typically cellulose pulp derived from wood, rags or grasses, and drying them into flexible sheets....
, paperboard
Paperboard
Paperboard is a thick paper based material. While there is no rigid differentiation between paper and paperboard, paperboard is generally thicker than paper. According to ISO standards, paperboard is a paper with a basis weight above 224 g/m2, but there are exceptions. Paperboard can be single...
and corrugated fiberboard in Latin America. As of the 2004, the sector produced about 1.4 million tons. The production experienced an increase of 11 percent compared to 2003. However, this production only satisfied 67 percent of domestic demand. The paper production in Argentina is primarily for packing (48 percent), printing (25 percent), and newspapers (13 percent).