Reforestation the top priority – Revista The Business Year (Entrevista Drago Bozovich)

THE TREES FOR THE WOOD   Although coastal deserts and Andean plateaus are often the first landscapes that come to mind when many people think of Peru, the majority of the country’s land area, around 60%, is actually in the Amazon rainforest, giving Peru the second-largest portion of the Amazon after Brazil.   IN TOTAL AROUND 53% of Peru, or 68 million hectares, is covered in forests, giving Peru the tenth-largest forest resource in the world, and the second-largest in South America after Brazil. The country was previously in ninth place globally, but fell to tenth after losing 2 million ha to deforestation since 1990. Around 92% of Peru's forest resources are located in the Amazon basin in the northeast, near the borders with Colombia, Brazil, and Ecuador. Around 83% of Peru’s forested lands are publicly owned, with the rest divided between private and communal ownership. Of the 68 million hectares of resources, around 33.3 million have been designated for permanent production, and of that total, a Little more than half, or around 18.7 million, have actually been allocated to timber operators. Concessions have been granted to around 500 operators, with concessions averaging around 12,900 hectares each. An additional 12.6 million hectares belong to local and indigenous communities, and around 1200 indigenous communities have land rights to portions of the Peruvian Amazon. Plantation style production still makes up a very small portion of the forestry industry, accounting for less than 300,000 hectares. Despite Peru’s immense forest resources, the foresty industry remains comparatively underdeveloped. Forestry accounts for just under 1% of Peru’s GDP, compared to Chile, which has only 16.2 million hectares of forests, but where forestry accounts for more than 3% of GDP. One of the major differences between the two countries is that the Chilean forestry sector relies much more heavily on plantation-style silviculture, while the majority of forestry in Peru is through long-term concessions, which is more labor intensive, but can yeild higher-quality types of Wood and allow for more sustainably managed natural forests. For Susana Albengrin of Santa Rosa & Madereras, the lack of plantation-style silviculture is holding Peru back from being a global leader in the forestry sector. In an interview with TBY she explained “we could be at the level of Finland, Brazil and Chile, all of which exceed [Peru's] exports. They have replanted forests.” Albengrin added that Peru should “follow the example of Chile” and “develop its reforestation capacity” suggesting that “universities should be incentivized to invest in reforestation research”. However, others in the sector feel that, rather than trying to emulate its neighbors, Peru should forge its own path by taking advantage of the higher-quality and less common species of wood in its natural rainforests, which can often fetch a higher price. Drago Bozovich, CEO of Maderera Bozovich explained to TBY that “comparing us to Chile is rather misleading as you cannot compare a pine plantation to long-term agriculture.” Bozovich added that “Peru will never produce GDP-wise billions of dollars of exports like Chile” and that instead the country should specialize in higher-quality wood products.   **HE’S A LUMBERJACK, AND HE’S OK**   Peru is blessed with seemingly endless forests. But while deforestation once threatened the delicate ecosystem, today reforestation is also a top priority for the industry. ISABEL FRANCHINI General Manager, Maderas Peruanas Penetrating the Italian market was not easy; we had to meet international standards. Representatives of Italian industry came to Peru to decide which companies they were going to partner with. The challenge was to meet all their demands, which we achieved, after which our partnership was formed. Between 1981 and 2008 we exported to Italy. However, the financial crisis impacted our business. We had formerly exported 20 million wood blocks per container to Europe, every 40 days. The financial crisis left us with massive oversupply, whereupon we took the decision to diversify and develop new products for both the national and international markets. The products that most helped us weather the financial crisis were prefabricated flooring units that can be snapped together instantly. We now export these to Belgium and Italy.   DRAGO BOZOVICH CEO, Maderera Bozovich Here in Lima, at the factory, we employ 300 people per shift, 50 being administrative staff. In the Amazon region where our sawmills and forest, concessions are located, we employ, depending on the time of year, up to 1,000 people. You basically have three months in season in which to harvest that year's production. At that time, you need many people to perform the reduced-impact harvest. We usually employ approximately 500, which declines to 100 when the rains arrive. Some, though not all, then have the opportunity to work the same forest with us collecting Brazil nuts. SUSANA ALBENGRIN RUBIO Manager, Santa Rosa & Madereras Our company is focused on reforestation in terms of our work of social and environmental responsibility. In the past, we thought only to deforest for profit. Today we take the initiative to reforest, as this is prerequisite of sustainably remaining in the market. Reforestation also involves working with communities. The government should develop its reforestation capacity not least in terms of its knowledge base, given its potential to contribute to the wider economy. There is no knowledge today of reforesting with native species, which would be ideal for companies like ours. The research is costly, and I believe that universities should be incentivized to invest in reforestation research. Peru has a large land area, but forestry represents a small proportion of GDP. We should follow the example of Chile, which has successfully invested in reforesting. HENRY BALARÍN MAÚRTUA General Manager, Grupo Forestal Vulcano T he sector needs investment in infrastructure as well as incentives. I think Chile represents a good example of investment in reforestation. That country currently exports forestry goods valued at over $6 billion every year on an investment of just $500 million. In terms of investment in infrastructure, the cost of taking a tree from forest to production site is higher than the production cost itself—60% of the total cost of taking a tree from the forest to a finished product is accounted for by transportation. This is greatly excessive, and the government needs to invest in infrastructure, which would in turn boost investment. Peru represents the second largest Amazonian area in the región and in terms of forestry surface ranks among the top 10 in the world. We currently export $380 million of wood and wood products. At the same time, we import $1 billion of wood, mainly from Canada and Chile. This is clearly an issue to reverse.   *Fuente: Revista The Business Year