Plantations, poverty and power - Critical Information Collective

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27 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/
28 study produced by the Centre for International Forestry Research (CIFOR) titled Fast-Wood Forestry. CIFOR notes in the report that subsidies to the pulp industry and industrial tree plantations create distortions to the economy, both internationally and locally. Subsidies make plantations viable on land which may be better put to other uses, such as agriculture, community forestry, forest conservation or logging. Companies that do not receive subsidies are put at a disadvantage. Subsidies reduce the cost of raw material to the pulp industry, thus making paper cheaper and encouraging the consumption of paper products. 101 CIFOR cites a submission by IUCN and WWF to the World Bank in 2002 which argued that “Large amounts of money that could have been better invested, either within or outwith the forest sector, have gone to support ill-conceived planting schemes.” 102 CIFOR concluded its Fast-Wood Forestry report with the recommendation to phase out subsidies to industrial tree plantations: “The sooner subsidies to commercial plantations are phased out, or at least dramatically reduced, the better. Subsidies create economic distortions and make plantations viable in situations where other land uses might make better economic and environmental sense.” 103 101 Christian Cossalter and Charlie Pye-Smith (2003) “Fast-Wood Forestry. Myths and Realities”, Center for International Forestry Research (CIFOR), Bogor, Indonesia. http://assets.panda.org/downloads/fastwood.pdf 102 IUCN/WWF (2002) “The role of plantation”, Note to the World Bank reacting to P.D. Hardcastle (2001) “Plantations: Potential and limitations”, cited in Christian Cossalter and Charlie Pye-Smith (2003) “Fast-Wood Forestry. Myths and Realities”, Center for International Forestry Research (CIFOR), Bogor, Indonesia, page 38. http://assets.panda.org/downloads/fastwood.pdf 103 Christian Cossalter and Charlie Pye-Smith (2003) “Fast-Wood Forestry. Myths and Realities”, Center for International Forestry Research (CIFOR), Bogor, Indonesia, pages 43-44. http://assets.panda.org/downloads/fastwood.pdf
Page 2 and 3: 1 Plantations, poverty and power: E
Page 4 and 5: 3 CONTENTS Introduction 1. Plantati
Page 6 and 7: 5 New investors have emerged recent
Page 8 and 9: 7 1. Plantations do not plant thems
Page 10 and 11: 9 plantations established on grassl
Page 12 and 13: 11 Nations Food and Agriculture Org
Page 14 and 15: 13 Another reason for the move to t
Page 16 and 17: 15 In his book, “Khor Jor Kor, Fo
Page 18 and 19: 17 Between 1991 and 2006, the numbe
Page 20 and 21: 19 are asking for”, notes WWF. 60
Page 22 and 23: 21 consume fewer goods. Less advert
Page 24 and 25: 23 credit crunch, unstable oil pric
Page 26 and 27: 25 Investment in plantations in the
Page 30 and 31: 29 2. The anatomy of five pulp proj
Page 32 and 33: 31 However, while the Bank confirme
Page 34 and 35: 33 make way for its tree plantation
Page 36 and 37: 35 In April 2004, about 2,000 famil
Page 38 and 39: 37 Sappi, Swaziland: 50 years of in
Page 40 and 41: 39 after an assessment by the Soil
Page 42 and 43: 41 impact of the plantations on wat
Page 44 and 45: 43 Advance Agro, Thailand: Deforest
Page 46 and 47: 45 confiscation and liquidation of
Page 48 and 49: 47 management was facing a bankrupt
Page 50 and 51: 49 Indah Kiat, Asia Pulp and Paper,
Page 52 and 53: 51 company owners want profits to b
Page 54 and 55: 53 • US$4.5 billion owed by APP i
Page 56 and 57: 55 explained that “association wi
Page 58 and 59: 57 Indah Kiat faces a series of lan
Page 60 and 61: 59 logging. While the investigation
Page 62 and 63: 61 experimental areas and not from
Page 64 and 65: 63 Staples and Office Depot in the
Page 66 and 67: 65 “the exhaustive studies have c
Page 68 and 69: 67 CEDHA has also filed complaints
Page 70 and 71: 69 of converting grasslands to indu
Page 72 and 73: 71 3. Pulp Inc. Profiles of seven p
Page 74 and 75: 73 Thailand, a power plant for a Ne
Page 76 and 77: 75 Management’s experts the possi
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77 A year after Aracruz’s third p
Page 80 and 81:
79 In January 2003, Pöyry announce
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81 Bank in the early 1990s. Groome
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83 Pöyry’s role in the Baikal Pu
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85 Under carbon financing, Pöyry o
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87 Pöyry is working on second gene
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89 The Confederation of European Pa
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91 CEPI Eurokraft states that “it
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93 sectors need to reduce by 21% co
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95 The ADB’s report notes that th
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97 Nepal In Nepal, the target area
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99 loan for the second plantations
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101 International Finance Corporati
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103 •In December 2000, IFC approv
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105 firm’s activities. After his
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107 safeguards are in practice.
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109 Bank projects are approved by a
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111 •€80 million to Portucel to
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113 The Food and Agriculture Organi
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115 Nevertheless, Poore and Fries n
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117 failure to define industrial tr
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119 FAO’s guidelines recommend th
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121 Rosengren did not reply to my e
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123 Forest Stewardship Council: Mis
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125 body that rubber stamps operati
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127 Criterion 1.6, for example, sta
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129 fast wood plantations have take
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131 Principle 10.8 should prevent t
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133 By April 2004, FSC had, at last
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135 plantations, because it creates
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137 integrated set of common Princi
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139 for clearing areas of Atlantic
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141 Colombia were certified by SGS.
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143 The dissociation became necessa
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145 4. Future planned pulp mills As
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147 Planned pulp projects: 698 Comp
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149 UPM and Sveza Group Vologda Rus
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151 paper industry along ecological
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