The Portuguese pulp and paper industry: myths and reality.

The Portuguese paper industry holds some myths, frequently advertised by some opinion makers. Are such myths real?

1.     The weight of the paper industry in the national economy and, in particular, in the exports, has been the most common belief lately.

If, on one hand, it highlights the contribution of the paper industry in the economy, on the other there is a sharp decrease in the weight of all the forest-based industries in the Gross Domestic Product (GDP) - which was already in decline over the last decade. The weight of the forest-based industries in GDP was 2.2% in 2000 and in 2010 it was only 1.3%. The advertised weight of 3.0% of GDP in the forest sector (forest + forest-based industries) for 2000 is reduced in 2010 for only 1.8%.

The importance of the forest-based industry in the exports gross value corresponds to the increased weight of imports of wood. Part of those Imports comes from countries with dubious management rules on their natural resources.

The increase of business profitability on the forest-based industry has been joined by a sharp decline in the forestry business; with the business risk transfer to hundreds of thousands of private forest owners engaged in the roundwood production (families and rural communities hold 92% of the forest areas in Portugal, 60% of farms have less than 5 hectares). At the end of the chain, the risk is supported by the Society. The lack of business expectations in the forests leads to the absence of forest management. The absence of forest management has serious consequences on forest fires, with devastating effects on the statistics of burned forest areas. The Society annually supports high economic costs and huge environmental and social impacts caused by forest fires in Portugal.

Currently, the domestic pulp and paper industry has a very poor auto supplying capacity; rounding 20% (around 16% is Group Portucel Soporcel).

The presence of the pulp and paper industry in the forest (the area of ​​greatest business risk) is continuously decreasing. Only in the last decade eucalyptus areas held by the pulp and paper industry decreased more than 34 000 hectares. There seems to be a progressive disinvestment in the forest and, consequently, a business risk transfer to the hundreds of thousands of families that contribute to supply this industry.

2.     The excellence management awards are another myth.

For this “excellence” in management evaluation, the unilateral imposition of the roundwood prices to the forest owners has been contributed greatly. Such imposition by the pulp and paper industry is protected by the State, in complete contradiction to the principles of equity and healthy functioning of the markets. The luxury of cogeneration profits, guaranteed by the State, has constituted a favorable factor to a good performance management result.

It’s also important to notice that, in 2010 and 2011, Portucel achieved extraordinary overall revenues of about 50 million Euros, generated by tax benefits granted by the State.

3.     The performance in innovation.

The area of eucalyptus in Portugal has increased ten times in the last 50 years (currently the fifth largest in the world), but the national average productivity is the same today as it was previously registered in 1928. The pulp and paper industry had invested in R&D in the past, but currently it has almost abandoned this area, focusing on the quantity instead of quality. However, the risks of quantity production have been assumed by the Society.

After all, everything suggests that the myths associated to the pulp and paper industry in Portugal are nothing but myths. In fact, successive governments have protected the economic interests of shareholders, and its headquarters fiscally addressed in the Netherlands. This state protection is performed on the detriment of families, forests and Territory.

Surely, this is not the type of investment and unsustainable extraction Acréscimo advocates for forest areas and the forest-based industry in Portugal.

Acréscimo is a non-governmental organization that promotes sustainable and socially responsible forest investment. The association is seriously concerned about the high risk of forest fires related to this investment as well as the responsibilities of forest-based industry in promoting this risk (with the complicity of the state) besides a healthy and competitive functioning of markets.

Forest certification and the application of sludge from pulp and paper mills in forestry

Acréscimo is a Portuguese non-governmental organization which aims to promote sustainable and responsible investments in forests and uncultivated areas. The association has been communicating, in several media resources, its concerns related to the need to increase the credibility of forest certification among the population. This organization believes that the certified entities, especially the industrial companies that manage forest areas, have a decisive contribution to this objective.

The recent suspension of certificates issued under the Forest Stewardship Council (FSC) in Portugal is our main concern as it corresponds to a very significant part of the Portuguese forest area certified by this scheme. Besides that, we also face the weakly regulated and supervised actions of industrial waste recovery through forestry fertilization programs, specifically the use of sludge from pulp and paper mills.

Pulp and paper industry, in the course of their activity, is responsible for producing a large amount of waste (estimated at approximately 48 tons per 100 tons of pulp produced) or inorganic (ashes, dregs and grits), or organics (sludge) and other sub products. The application of pulp and paper mills sludge on forest soil fertilization emerges as an alternative method of disposing of industrial waste. However, the application of sewage sludge should only be made ​​after a detailed study of its composition and after a proper characterization of the area for its application.

The Portuguese legal framework for the application of sludge in soils results from the implementation of the 1986 EU Sludge Directive (86/27/EEC). The law imposes the obligation to carry out frequent testing on the sludge or mixture of sludge, and on the soil and the water on the places where they are to be spread and incorporated. It imposes limits to the concentrations of heavy metals, organic compounds, dioxins and micro-organisms. It also determines the cases of prohibition in the application of sewage sludge, among others , injecting sludge in soils without agronomic value, burying sludge in soils (other than landfill), apply near water lines and its uptake, or adverse weather conditions ( between November and January, unless otherwise justified). The cellulosic sludge should be spread and incorporated into the soil within 48 hours of its extraction, using the appropriate means/action to ensure a proper soil surface mobilization.

The sludge producer, even if their forestry application occurs on lands of others, will always be co-responsible for possible harmful effects of its application in soil or anywhere else.

With an annual growth estimated at 25% for the paper industry, the production of sludge is projected to increase between 48 and 86%.

It is noted that concerns about the legal requirements for use of sludge and ashes in forest soils, are based on claims submitted to the competent National Authorities, involving Portucel Soporcel company that owns about 122.000 hectares of certified forest, ie more than 50% of the FSC certified forest area in Portugal.

Application of sludge from pulp and paper mills in eucalyptus forest without soil incorporation.

Therefore, it is important to clarify that the extent of a procedure of organic fertilization on forest soils is not conditioned by the growing need for disposal of industrial waste, with corresponding adverse effects especially for rural populations and habitats.

Acréscimo suggests the opening of these forested areas to the public visitation and experts’ evaluation.

Portuguese forests in numbers: a worrisome vision.

Over the last decades, the economic value of forests in Portugal has know a progressive decline, with several consequences on social and environmental levels.

Since 1996, it was diagnosed (Poyry, BPI, Agro.ges) that forests in Portugal have shown clear evidence of underutilization and over-exploitation. This diagnosis has worsened year after year.

At the current moment of crisis, the financial value of exports appears to be the more relevant factor for the government and for the economic analysts, however there is great concern about its impact on the degradation of natural resources that, though renewables, need measures to ensure their sustainability, both from an environmental and social, but also economic standpoint.

The current figures related to the forests and forestry in Portugal, based on the official statistics and credible sources, are worrisome:

67% represents the decrease in the weight of the Gross Value Added (GVA) of forestry in national GVA, i.e., 1.2% in 1990 fell to 0.4% in 2010.  (Source: Statistics Portugal, 2012)

40% reflects the reduction of the impact of the forest cluster on the Gross Domestic Product (GDP) from 2000 (3%) to 2010 (1.8%). (Source: GPP - Office for Planning and Policy, Ministry of Agriculture, 2012).

1.500.000 hectares is the estimated area of ​​abandoned soils in Portugal. This area corresponds to 43% of the total forest surface and to 17% of the national land area.  (source. Secretary of State for Forests and Rural Development, 2012)

1.500.000 hectares correspond to the burned forest area accumulated over the last decade (2002/2012). This cumulative area corresponds to 43% of the total forest area in Portugal and 17% of the national land area.  (Source: ICNF - Institute for Conservation of Nature and Forestry, 2012)

74.200.000 Euros correspond to the amount spent on direct combat of forest fires in 2012, 10.3% more than the amount spent in 2011.  (source: ANPC - National Authority for Civil Protection, 2012).

1.000.000.000 Euros/year is the estimated cost of forest fires in Portugal, both on economy and environmental perspectives  (Manifesto for Forest against crisis, 2012).

2.400.000 tons of CO2 eq were emitted to the atmosphere in the last decade, according to PCS (a Portuguese think tank), as a result of forest fires.  (PCS Report, 2012).  However, scientific studies estimate values ​​10 times higher than those reported by PCS. (www.atmos-chem-phys.net/11/2625/2011/).

5.700.000 oil barrels is more than the equivalent of that wasted with the forest fires in the last decade.  (PCS Report, 2012).

35% was the average percentage related to the distribution of burned forest area, recorded by Portugal, between 2000 and 2009, compared to the set of 5 countries of Southern Europe.

100% reflects the increase of eucalyptus area in the last 30 years. Data related to the last Forest Inventory is not yet available, however it is estimated that eucalyptus plantations in Portugal, which ranks fifth in the world, have increased by more than 400 thousand hectares. This positive evolution occurs in spite of the facts that the abandonment of eucalypt forest management is higher and the annual productivity average has experienced no changes since 1928 (currently 10 cubic meters per hectare and year).

700.000.000 Euros was the amount of funding spent on support for forestation, for only one woody species, over the past 20 years. This value could have boosted 350 thousand new hectares of this species; however the same species lost around 400 thousand hectares during this period. Could the public funds applied to support forestation have boosted the "industry” of forest fires in Portugal?

16 years is the period of time since the unanimous approval, in the Portuguese Parliament, of the Law on Forest Policy, published in August 1996. However, after this period the law has not yet been regulated in its core measures. The regulatory process has already gone through the mandates of seven different ministers.

More “red” numbers related to forests and forestry in Portugal.

Over the last decades, the economic value of forests in Portugal has known a progressive decline, with several consequences on social and environmental levels.

Since 1996, it was diagnosed that forests in Portugal showed clear evidence of underutilization and over-exploitation. This diagnosis has worsened year after year.

• 2,3% concerns to the decrease of the annual average change rate, in value, registered in forestry over the last decade (2000-2010), resulting from the lower prices paid out to forest owners (source: INE/CES 2010).

• 7,1% corresponds to the growth of the intermediate consumption/production ratio, shown in the last decade (2000/2010, 20.6% in 2000 to 27.7% in 2010), an adverse situation for forestry (source: INE/CES 2010),

• 1,5 million hectares is the estimated area of ​​abandoned soils in Portugal. This area corresponds to 43% of total forest surface and to 17% of the national land area (source. Portuguese Government).

• 74,2 million Euros correspond to the amount spent on direct combat of forest fires in 2012, 10.3% more than the amount spent in 2011 (source: ANPC).

• 35% was the average percentage related to the distribution of forest burned area, recorded by Portugal, between 2000 and 2009, compared to the set of 5 countries of Southern Europe.

• 100% reflects the increase of eucalyptus area in the last 30 years. Data related to the last Forest Inventory are not yet available, however it is estimated that eucalyptus plantations in Portugal, which ranks fifth in the world, has increased by more than 400 thousand hectares. This positive evolution occurs in despite of the facts that the abandonment on eucalypt forests management is higher and the annual productivity average has experienced no changes since 1928 (currently is 10 cubic meters per hectare and year).

  

Some "red" numbers related to forests in Portugal.

Over the past 20 years, the economic value of forests in Portugal has known a progressive decline, which causes several social and environmental impacts.

• 67% represents the decrease in the weight of the Gross Value Added (GVA) of forestry in national GVA, ie, 1,2% in 1990 fell down to 0,4% in 2010.

• 40% concerns the reduction of the impact of forest cluster on the Gross Domestic Product (GDP) from 2000 (3%) to 2010 (1.8%).

• € 250 million is the approximate reduction on the Net Corporate Income from forestry in the decade 2000/2010. Will be this the main reason for the progressive abandoning of woodland soils management over the past 20 years in Portugal?

• 1,5 million hectares, equivalent to the area of land abandoned in Portugal, represents the burned forest area accumulated on the last decade (2002/2012). This cumulative area corresponds to 43% of the total forest area in Portugal and 17% of the national land area.

•  € 700 million was the amount of funding spent on support for afforestation, only for one woody specie, over the past 20 years. This value could have boosted 350 thousand new hectares of this specie; however the same specie lost around 400 thousand hectares during this period. Could the public funds applied to support the afforestation have boosted the "industry" of forest fires in Portugal?

• 16 years is the period of time since the unanimous approval, in the Portuguese Parliament, of the Law on Forest Policy, published in August 1996. However, after this period the law was not yet regulated in its core measures. The regulatory process has already gone through for seven different ministers.

Portugal: forests of dubious sustainability.

Already at the end of 1996, an independent study, developed under the coordination of Jaakko Pöyry, diagnosed serious insufficiencies in the primary sector of forestry in Portugal. This was seen as a victim, simultaneously, of insufficient use of its potential and of an increasing pressure to furbish the industrial sector, worsened lately by the increasing demand for wood and biomass for energy production.

The increasing gravity of this situation of underuse and over-exploitation of forest areas limits a rational and sustainable utilization of Portuguese forest resources, which could portend great negative impacts for future generations. Portugal exports a large part of the goods produced from forest resources, essentially to member states of the European Union, in particular to Spain, France and Germany.

The maladjustment between demand and supply was, in 2011, the object of public denouncement by the highest responsible figure of the National Forest Authority, in foreseeing a situation of rupture in timber in less than 15 years. In order to face the lack of resources, the country presently imports approximately 2 million cubic metres of wood, some of which cause the preoccupation of the WWF insofar as their origin.

Faced with the constantly worsening situation in comparison with 1996, the present government recently revealed a disconnected wager on forestation, in particular in monocultures of fast-growing exotic species, concretely, of eucalyptus (Eucalyptus globulus). However, national specialists, researchers and academics show that, according to data from the latest forest inventories, there has been an increase in the number of cases of deficiency or even absence of forest management in the two principal Portuguese forest species, maritime pine (Pinus pinaster) and eucalyptus. In the case of eucalyptus, the data obtained may even signify a sharp increase of abandoned eucalyptus plantations between 1992 and 2005.

According to specialists, the increase in production of woody material from maritime pine and eucalyptus to supply the transformation industries will not depend so much on the increase of their areas of occupation, as was seen at the beginning of the last century and seems to be the option of the present government. Instead, fundamentally, it will depend on the promotion of active management of forest areas, with the intent to obtain greater productivity per area. This priority is based on the fact that the numbers related to productivities of 5 and 10 cubic metres annually per hectare, respectively for maritime pine and for eucalyptus, have remained unchanged since 1928.

The absence of active management in a significant part of the Portuguese forest area is at the origin of an easier spread of forest fires in Portugal, as well as a more favourable propagation of pests and diseases. This fact is not unrelated to the increasing concentration of industry and the lack of competition in the three main forest chains, both that of the eucalyptus and of maritime pine but also that of the cork oak (Quercus suber). Each of these chains is dominated by a specific entrepreneurial group. At present, the authorities abstain from accompaniment of commercial relations in the different forest industry chains, leaving farmers and forest owners (retainers of approximately 90% of the forest area in Portugal) at the mercy of large industrial monopolies.

The country has had the support, since 1989, of European Community funds for forests. In this area, however, worrisome practical results have been evident as well as degrees of success that are always lower than expected or even ridiculous, such as those seen in the present period (2007/2013). Here, errant strategies, namely with the laying of priorities on new forestation without ensuring subsequent forestry management or adjustment to the markets, have given rise to very preoccupying situations. In the most serious case, that of the maritime pine, hundreds of millions of euros have already been consumed (1989/2005) just for new forest plantations. However, although one would expect the efforts of national and European taxpayers to generate thousands of new hectares of maritime pine, through the attribution of non-reimbursed subsidies, in reality there has been a move backward in terms of the area of this species, in this time period, of about 400 thousand hectares. In parallel, in the period between 1989 and 2005, the negative impact of forest fires in Portugal has grown. Could the taxpayers’ money be promoting the forest fire “industry”?

It is not for lack of strategic documents that the problems persist. At the moment, another one is being announced. Portugal has been prodigious in creating strategic plans for forests, among them the Plan for Sustainable Development of the Portuguese Forest (PDSFP) of 1997, or more recently the National Strategy for Forests (ENF) of 2007. All have had irrelevant practical consequences for solving the problems of lack of management, of underuse and of over-exploitation, as well as those of their consequences, the fires, pests and diseases.

Portugal, despite the weak political relevance of forests in the country, has great forestry potential, with potential productivities unparalleled in Europe. It has 1.5 to 2 million hectares of uncultivated soil, with favourable forestry aptitude. Portuguese wild areas also have high biodiversity, favourable to multifunctional forest systems less dependent on negative periods in commercial cycles. There is, however, a necessity and a political will for a change of paradigm. The country needs a clear stand on active and necessarily sustainable management of its natural resources, specifically, conveniently directed toward and centred on the hundreds of thousands of retainers of forestry-apt spaces that exist in Portugal. These people must see their economic expectations safeguarded so that they can develop their forestry activity, providing social advantages, with special focus on rural areas, and environmental advantages, in the conservation of soils, water resources, fauna and flora and in carbon storage. This is the strategy for investment defended by Acréscimo.