Plantations, poverty and power - Critical Information Collective

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possible price. Subsidies, linked to credits and support, at the present price levels make this investment
profitable.” 98
While subsidies provided by governments in the South are perverse, even more perverse are the subsidies
in the form of cheap loans and political support from multilateral and bilateral aid agencies, which
supposedly have a mandate of reducing poverty. These international subsidies play a vital role in
encouraging commercial investors to invest. Because of the political risk of the countries involved, or the
financial risk of investing in a cyclical industry such as pulp and paper, the support of the World Bank,
regional development banks or the European Investment Bank is often necessary before commercial
banks will risk investing in pulp mill projects.
In a 2006 report, Andy White of the Rights and Resources Group, Gary Bull of the University of British
Columbia and Stewart Maginnis of IUCN looked at the impact of subsidies to industrial plantations. They
found that direct subsidies to industrial plantations amount to US$2 billion per year. This is small
compared to the US$400 billion in subsidies paid each year for agriculture, but the authors note that it is
more than four times the amount of development aid spent on forest conservation each year. 99
“[T]he market distortions caused by these subsidies diminish incentives to invest in and conserve natural
forests,” White, Bull and Maginnis pointed out. “Top plantation companies have dramatically captured a
growing share of the global forest products market over the past 40 years, contributing to a major price
decline for almost all forest product categories.” They recommend (among other things) that “Technical
and financial support to community and other small-scale forest businesses – since they are such strong
contributors to local employment and economic development.” Industrial tree plantations are the exact
opposite of this – large scale, poor providers of employment and disastrous for rural economies.
Dennis Neilson, a pulp and paper industry analyst and proponent of industrial tree plantations, confirms
the importance of subsidies for plantations in his 2007 report for the FAO: “There has been one very
important factor which has linked almost all successful planted forest (sic) expansion projects
internationally. That has been the application by governments of generous direct subsidies, and/or tax
concessions to planted forest establishment and management.”
Neilson acknowledges the problems caused by such subsidies:
“There is always a lot of criticism about providing free handouts, or tax concessions to any project. Such
schemes invariably attract ‘fast money’ investors who are only motivated by greed and not by the
worthiness of the project itself; and it also invariably means that planted forests get established in the
wrong areas, outside sensible guidelines for suitable soils, rainfall and other factors necessary to grow a
successful tree planted forest crop.” 100
Further evidence of the perverse nature of subsidies for industrial tree plantations comes from a 2003
98 Ricardo Carrere (1993) “The dangers of monoculture tree plantations”, Third World Resurgence, 40, December 1993.
http://www.wrm.org.uy/plantations/information/danger.html
99 Andy White, Gary Bull and Stewart Maginnis (2006) “Subsidies for industrial plantations: turning controversy into
opportunity”, Arborvitae, The IUCN/WWF Forest Conservation Newsletter, September 2006.
100 Dennis Neilson (2007) “Corporate Private Sector Dimensions in Planted Forest Investments”, Forestry Department
Food and Agriculture Organization of the United Nations Planted Forests and Trees Working Paper Series, Working Paper
FP/40E, October 2007. http://www.fao.org/forestry/site/10368/en/