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Deforestation of Brazilian forests present a no-win situation

Sustainable forestry plantations are needed more than ever in Brazil in order to maintain the productivity of the country's land. In fact, the country's agricultural economy has little option but to cut down on deforestation if it is to maintain Brazil's fertile ground and high rates of productivity.

A recent paper from Brazilian and US scientists, published in the journal Environmental Research Letters, has predicted significant drops in the country's agricultural productivity if current levels of deforestation continue.

The study warned: “The more agriculture expands in the Amazon, the less productive it will become.” The next statement in the paper is worth paying particular attention to: “In this statement, we all lose.”

We've built our business on the very concept that nobody should have to lose out in order for a forest to be profitable. We have established plantations around Brazil that have sustainability built into their ethos in order to tackle this issue, but studies like this are sorely needed to push sustainable forestry plans and other alternatives to excess deforestation.

Failing to tackle the issue will bring some serious risks, not only for the global environment, but for Brazil's own economic development. Based on existing trends of deforestation, the loss of carbon sequestration and related feedbacks on biomass, temperature and rainfall mean that a 34 per cent fall in pasture productivity is predicted for 2050. Soya bean yields, one of the most profitable crops in Brazil, are also predicted to drop by 28 per cent over the same time period.

Given that one of the major drivers for deforestation is the clearing of land for agriculture, the news that doing so is damaging yields is clearly an issue that needs to be tackled soon. The report observed: “It was a surprise to us that high levels of deforestation could be a no-win scenario – the loss of environmental services from the deforestation may not be offset by an increase in agricultural production.”

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US rejects genetic engineering in eucalyptus trees

The US public have rejected the possibility of genetically-engineered eucalyptus trees, giving more weight to the sustainable development option.

We were pleased to learn that the vast majority (99.99 percent) of people questioned during the USDA APHIS public comment period were against the legalisation of genetically engineered trees.

Genetic engineering (GE) has been considered as an option to help supply the demand for more timber and cheaper costs. A similar situation has taken place within the food industry where ongoing pressure mounts against farmers to provide more for less.

This particular vote was in relation to a petition by GE tree company ArborGen, which had requested permission to commercially sell their GE freeze tolerant eucalyptus trees.

Anne Petermann, global justice ecology project executive director, and coordinator of the campaign to stop GE trees, remarked that "the people of the US issued a firm demand to APHIS to reject, invasive, flammable GE eucalyptus trees".

This issue has come to light in the US but GE trees are a concern in other areas around the world. Rural communities in Brazil have been particularly keen to keep such trees out of their forests, while the UN Convention on Biological Diversity has warned countries around the globe of the social and ecological dangers of GE trees.

But eucalyptus has a wide variety of uses and is an essential crop for biofuel production, as well as paper production and raw use. This has helped it to become the most commonly developed commodity pulp lumber in higher rainfall areas throughout the world.

Brazil, however, remains one of the most productive ecosystems for growing eucalyptus and between the 1990s and 2005, Brazilian exports of the product rose from $1 billion to $3.5 billion.

We've been working hard to capitalise on this investment potential, while maintaining a sustainable model for the future. This involves considering the high yield opportunities in Brazil alongside the country's ecosystem and local communities to provide a future that doesn't require the genetic modification of trees or the abuse of land systems to turn a healthy profit.

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Greenwashing is no longer an option

Sustainability is one of Greenwood's key areas of focus; we're keen to prove that it's perfectly possible for ethically-minded investors and businesses to turn a profit while supporting sustainable growth and the environment. But this approach to business is still in its infancy; although some people cottoned on to the possibilities years ago, it is only recently that sustainability has become important on a grander scale.

With this in mind it is interesting to learn that companies are still struggling to find the right way of approaching the matter. For example, a recent announcement from ForestEthics revealed changes in the way people see the Sustainable Forestry Initiative (SFI). In fact, a total of 24 prominent brands have decided to move away the scheme, including AT&T and Allstate. Aaron Sanger from ForestEthics observed: “For major brands, as for ForestEthics, SFI is not environmental leadership.”

The group went so far as to suggest that the organisation is 'greenwash' – a term coined to describe the marketing practice of using green credentials to deceptively promote the perception that an organisation or company is environmentally friendly.

The main fault levelled at the scheme by ForestEthics is that it is too dependent on the industry it serves, which means that it doesn't always deliver for forests.

We believe that schemes like the SFI do go some way to promoting sustainable growth. But it's vital that they aren't the only approach being employed and they need to be carefully monitored. We're keen to see more work take place at the other end of the system to ensure that new plantations are able to provide a sustainable source of timber for the growing industries in and around Brazil, as well as those further afield. With these plantations also turning a profit for investors, the system looks set for secure growth with benefits in place for investors, the environment and timber buyers.

But it is essential that businesses get past the concept of 'greenwash'. Sustainable industry is fast becoming the only way forward – it is vital if our economies are to prosper. Glossing over this need with false marketing is simply not an option.

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Is EU demand for Brazilian exports perpetuating Amazon deforestation?

A recent report has highlighted the interconnected nature of the modern marketplace and the importance of ensuring that products are sourced sustainably wherever possible.

Compiled by the Center for International Climate and Environmental Research (CICERO), the study found that while Brazil is working internally to slow down the deforestation in the Amazon, Western demand for products is making this a difficult task.

The European Union is a supporter of the UN programme of reducing emissions from deforestation in developing countries, but it also appears to be demanding more and more products derived from Brazilian beef and soybeans, both of which have been cited as a contributing factor to deforestation in the Amazon region.

In fact, the report estimated that carbon dioxide emissions caused by deforestation in the Brazilian Amazon between 1990 and 2000 correlated with deforestation driven by the demand for more land resources for cattle and soybean cultivation.

The solution to the conflict of interest is not going to be simple. An email from European Commission Climate Spokesman Isaac Valero-Ladron to EurActiv read: “The Commission and EU Member States are fully aware of this issue and have raised it in the context of their participation in leading international negotiations and initiatives.

“Trade restrictions however do not seem to be a viable solution: They could quickly hamper development and be deemed incompatible with World Trade Organisation rules. Instead the Commission and other governments (US, UK, Norway) seek solutions together with the private sector on the supply side: Public support could be granted for developing or promoting labelling schemes for sustainable ('deforestation-free') agricultural production, for example in Brazil.”

While Asia now accounts for a greater percentage of carbon emissions linked to beef and soybean exports from Brazil, Europe still makes up around six per cent of Brazil's exported emissions from beef to European consumers.

It's clear that a commitment to an approach that facilitates both fair trade and sustainability is needed. We believe that the development of sustainably managed forests is an important phase in meeting this end because it provides local communities with security and viable alternatives to the exploitation of their environment.

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In a positive sign for investors, economic growth in Brazil is again looking steady. Brazilian GDP levelled at growth of 0.9 per cent in 2012, according to the Brazilian Institute of Geography and Statistics (IBGE). This follows growth of 2.7 per cent in 2011 when the country overtook the UK to become the sixth-largest economy in the world.

We were expecting a slightly higher level of growth last year given the 4.5 per cent expansion prediction that came at the start of the year. But in the long run a steady rate of growth should be more beneficial to investors and the country as a whole; giving Brazil time to consolidate its infrastructure following a fast period of expansion.

Mark Williams of Capital Economics spoke to the BBC about the situation: “For Brazil, the issue is that consumer spending, which for years was the driver of growth, can no longer continue to increase at rapid rates.

“Brazilian households spend roughly a fifth of their income servicing debt – far more than over-leveraged US households did before the financial crisis. This debt burden has understandably started to take a toll on their spending.”

But to give us a bit of solid confidence in the economy’s return to growth, Brazil has also posted some good industrial stats this week. The country’s industrial production figures grew by 2.5 per cent month-on-month. Capital goods were leading the way with an 8.2 per cent gain over the month, compared to a 0.1 per cent contraction in December.

These economic and industrial improvements are continuing to feed demand down to our plantations where we’re poised to meet the ongoing need for sustainable resources in Brazil and abroad.

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Global consumption of wood from forests and plantations is expected to triple by 2050, according to a new report from environmental charity WWF.

The Living Forests Report, which was presented to delegates at the Paperworld industry conference in Frankfurt on Monday 28 January, endorses the use of renewable timber from well-managed forests and plantations for the production of renewable energy. Wood consumption is also expected to rise due to general population growth, demand for sustainable building materials and even paper.

Rod Taylor, who heads up the WWF’s Global Forest Program, explained, “Wood, if sourced from well-managed forests or plantations, is a renewable material with many advantages over non-renewable alternatives.”

He added that the expected increase in demand means that ensuring forests and plantations are managed sustainably has become even more important and regulation and stewardship needs to reflect this: “A scenario of tripling the amount of wood society takes from forests and plantations needs to motivate good stewardship that safeguards forests – otherwise we could destroy the very places where wood grows.”

The report outlines the challenges that lie ahead for the timber and forest sector. Finding ways to increase production of timber without harming the environment is one such challenge. Planting and managing sustainable plantations in regions where natural forests are vulnerable to deforestation is one solution.

Greenwood Management’s plantations of non-native timber varieties in Brazil are a good example of projects that provide an ongoing supply of timber for the production of charcoal or for use in house building in Brazil and elsewhere. The more alternatives there are, the less pressure there is to use wood from the rainforests.

WWF is keen to promote the idea of nurturing the forest products industry to make sure sustainably produced timber plantations can thrive and that deforestation becomes a thing of the past. Its goal is for zero net deforestation by 2020. Currently, some 13 million hectares of natural forest each year are still lost – so achieving this goal is still some way off. WWF’s manager of global pulp and paper work, Emmanuelle Neyroumande, claims reducing deforestation to zero is possible, however: “WWF’s research suggests that it is possible to achieve zero net deforestation and forest degradation while sustaining a vibrant wood products industry that meets people’s needs.”

The WWF report makes a series of recommendations, which could help the forestry industry to achieve the zero deforestation goal. One of these is to increase the use of plantations to ease pressure on natural forests. It claims that being more responsible with wood consumption, re-use and recycling will go some way towards helping reduce deforestion, but that demand for timber is still going to grow.

A further 250 million hectares of plantations could be needed to meet demand for wood by 2050 – nearly double the current amount of space given over to forestry plantations. The role of plantations, which are well managed and are planted on land that is already degraded, “will play an increasingly important role” according to WWF.

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If you follow our blog you’ll know by now that our work ties in closely with the Brazilian government’s policies regarding sustainable forestry and the environment.

Recently we’ve spotted some more coincidences between our plans and those of Dilma Rousseff. Honestly, it’s like she’s copying us. Housing, for example, is a key topic being looked at by the government at the moment through its My House, My Life programme. Following this plan, Brazil hopes to have built 2.4 million new homes by 2014, going some way to helping out the seven million families in the country that are currently without adequate housing.

Great news and good luck to them, but how exactly does this tie in with Greenwood’s plans you might ask. Here’s how, so listen up. Greenwood’s latest Acacia Mangium Project, located in Bahia State, is all about Acacia Mangium, a top-grade, durable hardwood, ideally suited to furniture making and the construction industry.

We’re already running and managing a number of different acacia plantations across Brazil’s Western and Central Bahia regions, but this latest project will provide a significant boost to our supply, allowing Greenwood and its investors to meet the growing demands for wood generated by the My House, My Life programme.

Our supplies of wood are right in the heart of Brazil, just where they are needed, so our freight and logistics costs can be kept low. Greenwood also has its own wood-processing center, so we can push our efficiency savings that bit further and pass these on to the government and its low-cost housing schemes.

We love it when a plan comes together and Greenwood as a whole is looking forward to playing its part in facilitating Brazil’s ongoing economic improvements.

For more information, please read our press release on the Acacia project.

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Brazil’s government is to forecast a 7.34 percent rise in their economy this year, a figure that defeats the trend of many other nations that suffered shrinking economies during the global recession. Growth surpassed most expectations, but some economists debate that the government should start to lower spending and raise interest rates to avoid a backlash next year.

Reasons for the expanding economy according to Sergio Amaral, an official in Brazil’s foreign ministry and president of the China Brazil Business Council, is because government loans kept domestic production levels on a high, and as a result “I think China played an important role because China is now our first trading partner and China has been expanding its imports from Brazil.

After a decade of growing economic ties, China is now Brazil’s largest trading partner replacing the United States as Brazil’s top trading partner in 2009. Exports to the U.S. declined reflecting economy, but as soon as that recovers demand should naturally increase as markets differ in North America and Europe. China relies on trading raw materials such as soybeans and agricultural goods, as opposed to exporting more expensive and industrialised products.

Some analysts believe that exporting such commodities will only offer Brazil a temporary boost to the economy, one that is not sustainable in the long-term.

Gilmar Masiero lectures in economics at the University of Sao Paulo, says exporting soybeans and iron ore does not create enough jobs to really impact Brazil’s economy. If trade with China is to provide Brazil with continued economic growth and create jobs for Brazilians, then it must broaden beyond commodities.

“If we build more technological partnerships with countries who are more or less in the same level of development that we are, then we can grow together and we can be competitive in specific sectors that must be new emerging technological sectors and not put our efforts in old industries”

As a result, there is already a shift in Sino-Brazilian export relations.  “I think there is an evolution, recently, the outstanding point is not trade, its investment,” Amaral said.  “Chinese companies are expected to invest $10 billion in Brazil this year and this year China will be the largest investor in Brazil.

Chinese companies will continue to invest in their Brazilian relations by building telecommunications and infrastructure projects, which include a bid to construct a high speed train line between Sao Paulo and Rio de Janeiro ahead of Brazil’s hosting of the 2014 World Cup and 2016 Olympic Games.

For now, China continues to fuel Brazil’s economic growth even when the developed world is still struggling with sluggish recoveries as the world emerges from the financial crisis and economic slowdown. One can say that economic slowdown has helped pushed two countries closer together

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My sincere apologies to any Beetles fans.

2016 might seem an eternity from today, but it is actually about the time for one of  Greenwood Management’s main scheduled eucalyptus harvests.

The relevance of which is?

Well, as many of our resident forestry investing experts will know,  ABRAF,  The Association of Planted Forestry Producers,  compile the  “ABRAF Annual  Statistical Data Yearbook”  each year.

Not the punchiest title you’ll ever come across.

The publication is  long-winded and not necessarily one for a Booker Prize nomination but nevertheless, for us at greenwood management,  the contents of the report make compelling reading.

Getting back to the future for a moment,  2016 will be a big harvest date on our calender – that’s established.

The ABRAF report here,

http://www.abraflor.org.br/estatisticas/ABRAF10-EN/controle.html

(If you fancy checking it out  – page 12 chapter 2)

says:

“It is noteworthy to mention that a new investment of iron and steel industry in Minas Gerais is under way, resulting from a partnership of multinational corporations, to build manufacturing plant of seamless tubes, based exclusively on charcoal consumption from planted forests, with production to be started in 2016.”

So:

Minas Gerais  > Multinational Steel Corporation Partnerships  >  Steel Production 2016  > Big  Charcoal Demand >  Investor Profits

We can work it out.  (Lennon and McCartney)

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I imagine most people are familiar with google earth nowadays. We’ve all had a good look at our houses from high up in the heavens followed by a  good snoop around  to see if the anyone nearby has a house with a secret collection of garden gnomes hidden in the back garden, or is that just me being nosy?

Greenwood Management recently decided to employ googles technology to have  a look around our plantations and a few of the other facilities nearby in the state of Minas Gerais in Brazil.

This should literally give clients a clearer picture of how the land lies, so to speak.  We also plan to augment googles imagery, when it gets right down to ground level, by slightly overlaying our own photos at the very end of the footage. It sounds tricky but all will become clear soon.  Again the purpose is to help  to show how the actual plantation on the ground is shaping up  in relation to the general area using Google earth.

Having trialled a couple of videos on one of  greenwoods plantations, we’re really quite pleased with the results and want to get it online as soon as we can. Just a flash of artistic flair from our videographer and we should be ready to go fairly soon.

Other plantations should follow if this is well received. As ever, all feedback is welcome

The April  newsletter should keep you in the loop too.

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