June 20, 2012

Mato Grosso Leads in Crop Production, but Lags in Reforestation

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Forestry officials in Mato Grosso would like to see eucalyptus plantations viewed like just another crop such as soybeans, corn, cotton, and cattle, but unfortunately, while the state has done very well in the production of row crops, it has barely scratched the surface of its potential for forestry plantations. The slow growth of the forestry industry in the state is not due to a lack of resources, but rather the lack of consensus on how the industry should move forward in the state. Impediments to the industry in the state include high taxes, lack of infrastructure, and a lack of political will to overcome the obstacles.

Currently in the state of Mato Grosso there are an estimated 200,000 hectares of planted forest including: 100,000 of eucalyptus, 60,000 of teak, 45,000 of rubber, and 17,000 of various other species. According to the Brazilian Association of Planted Forest Producers (Abraf), Mato Grosso has a very small percentage (less than 3%) of the 7 million hectares of planted forests in Brazil.

The Reforestation Association of Mato Grosso (Arefloresta) is pushing for an increase in forestry plantations in the state as not only a way for landowner to generate additional income, but also as a means of generating additional employment. The president of Arefloresta, Fausto Takizawa, estimates that for every hectare of planted forest, there are 0.6 jobs created, R$ 1,060 paid in additional taxes, and the generation of R$ 7,690 in gross receipts.

Arefloresta has put fourth three projections as to the potential for future forestry plantations in the state. Under the conservative scenario, they feel that by the year 2020 there could be 500,000 hectares of forestry plantations in the state. Their optimistic scenario has it at 750,000 hectares and their very optimistic scenario has it at 1 million hectares. Their optimistic scenario could create 500,000 additional jobs and the very optimistic scenario could create 675,000 jobs.

Officials at Arefloresta feel the state has potential for increased reforestation, but there has been little support from local politicians for the type of incentives needed to bring industries into the state that could transform the lumber into value-added products.

Southern Mato Grosso is viewed as the best location to increase forestry plantations due to the recent arrival of the Ferronorte Railroad. As the railroad construction makes it way to the city of Rondonopolis, where the state's major highways intersect with the railroad, the capacity to transport pulp wood to processors in southeastern Brazil will be greatly increased.