World Rainforest Movement

Brazil: Tree monoculture promotion mechanisms and opposition

In order for vast extensions of industrial plantations to be viable in Brasil direct interactions where established between the government, companies, banks, universities, media, as well as with international and financial institutions, producers and buyers. A broad political orchestration resulted in the creation of a number of mechanisms related to legal, taxation, financial, technical, scientific, agrarian and logistic support. In the same manner articulations opposing those policies increased as monocultures expanded.

Initially forest policy sought to define a conjunction of techniques capable of managing the utilization of forest resources. The first forest regulation in Brasil dates to 1934 with the first Forestry Code that defines some protected areas but also includes the possibility of substituting forests for tree monocultures.

In 1965, through Law 4.771 a second Forestry Code was adopted, which included new categories of conservation units. In this same context, Law 5.106 of September 1966, regulated tax incentives for reforestation, benefiting physical and legal entities contributing to income tax. Physical entities could discount from aggregate income (used to calculate income tax) all costs deriving from the activity up to a limit of 50% of income. Legal entities could deduct the value of costs incurred from the activity in up to 50% of due tax. In 1970 a modification passed through decree–law 1.134 (16/11/70) allowed the contributor to discount up to 50% of taxes due, to invest in forestry instead of deducting expenditure costs from the value of taxes due.

During the first decades of the 20th century some states established forestry departments linked to the Ministry of Agriculture and in 1967 Decree- Law 289 established the Brazilian Institute for Forestry Development (IBDF for the abbreviation in Portuguese) under the Ministry of Agriculture.

In order to promote economic growth large investments where made in scientific and technological development. In 1967 the first generation of professional foresters graduated from a course supported by an agreement between the IBDF and FAO. In 1968 the Institute for Forestry Research (IEPF) was established through a joint initiative between the Higher School of Agriculture Luiz de Queiroz (ESALQ- USP) and the companies Champion, Duratex, Rigesa, Suzano and Madeirit. The objective of IEPF was the development and dissemination of technology in the forestry sector with funding for carrying out research with resources from the public sector through financial incentives for reforestation.

Financial support from the State, through the National Development Bank (BNDE), made it possible for leading pulp-producing companies to benefit from Decision Nº 196/68 for installation and/or augmentation projects that exceeded a production capacity of 100 tonnes a day and that ensured self sufficiency in the supply of wood equivalent to at least 50% of estimated need. As from 1972 priority was given to incentives for projects with a production capacity exceeding 1000 tonnes per day, but accepting that this aim could be achieved in two stages of 500 tonnes each.

The proliferation of sectoral executive groups led to the creation, in 1969, of the Industrial Development Council, integrated by representatives from the economic ministries, the armed forces,  BNDES, Bank of Brazil and representative private sector institutions such as the pulp and paper group that was given the function of formulating and coordinating the orientation guidelines of the expansion of this sector.

The stage of greatest financial incentive for tree plantation took place during the 1970’s and up until the mid 1980’s with the Second National Development Plan. According to this plan the aims that had to be achieved between 1974 and 1979 for pulp and paper production represented an increase of 85% and 28% respectively.

The BNDE action plan for the period 1974-78 included support to large pulp projects so that the sector could reach a level of production higher than 2.5 million tonnes in 1978.

The Sectoral Incentives Fund (FISET) established by Decree- Law 1376/74 provided the principal source of tax incentives between 1974 and 1988, providing long-term loans at reduced interest rates and allowing deductions in income taxes for investments in reforestation projects.

The National Pulp and Paper Plan (PNPC) was launched in 1974, with the aim of establishing 4 million hectares of tree plantations. To achieve this, a programme was approved for the establishment of 30 “forestry districts” –areas selected for avoiding the dispersal of forestry resources.  A division was established between pulp production and energy production sub districts.  The minimum area demanded was 1000 hectares per project and the proximity to the industries was also taken into account.  Industries having their own wood supply from plantations were privileged. In order to ensure large contiguous areas, the government would promote the establishment of plantations in defined areas.

Other incentive modalities provided to private companies were the exemption of Import Tax and of the Tax on Industrialized Products, in addition to stimulating the expansion of export-oriented products.

The Second National Pulp and Paper Plan adopted in 1987 established the expansion goals until 1995 (imports of equipment, new reforestation and export of production). The projected expansion of pulp production implied an increase from 3.5 million tonnes per annum to 6.6 million/tonnes/per annum.

In addition to large scale financing from BNDES, another financing and capitalization mechanism, mainly for pulp companies was provided by loans from international institutions like the International Finance Coorporation (IFC) of the World Bank. Raising resources in the international market included a number of operations with commercial banks, like in the case of Aracruz Cellulose with the Den Norske Bank (Norway), Citibank, J.P. Morgan, Chase Manhatan, and the New York stock exchange.

The National Forest Programme (PNF for the Portuguese abbreviation) was created in 2000 within the Environment Ministry and placed under the responsibility of the National Forest Programme Directory. The programme was implemented with resources coming from the national Treasury and external financial and technical cooperation, principally from the International Tropical Timber organisation (ITTO), the Pilot Programme for the Protection of Tropical Forests (PPG7), the Global Environment Facility and the governments of Japan, the Netherlands and United Kingdom.

From 2004 to 2007 one of the goals of the PNF was the expansion of the plantation area through the planting of 800,000 hectares in small and medium sized properties and 1.2 million hectares in corporate programmes.

A number of financial sources for the establishment of tree plantations were created, the main ones being: BNDES-FINEM (Direct financing for investments), PRONAF Florestal (coordinated by the Ministry of Agrarian Development since 2002), PROPFLORA (coordinated by the Ministry of Agriculture since 2002).

Other additional funding sources were regional forestry funds like FNO Floresta (northern region), FCO Pronatureza (central west region), FNE Verde (North East region).

Among other financial stimuli favouring tree plantations are the National Programme of Agrarian Credit as part of the National Plan of Agrarian Reform of the Agrarian Reform Ministry which derives from a loan agreement with the World Bank.

Having succeeded in creating such a broad set of mechanism for the viability of monocultures, the companies make strong investments in electoral campaigns of candidates of all parties and in this way secure parliamentary support as, for example, with the Parliamentary Front for Forestry as well as with the ruralist parliamentary group.

Of more recent origin, another strategy promoting the expansion of tree plantations in Brazil is that of carbon credits, originating in the Kyoto Protocol. One of the primary markets that negotiates these credits is the Brazilian Carbon Market (MBRE) –a joint initiative of BM&F (stock exchange) and the Ministry of Development, Industry and Trade.

Another potencial market in Brasil is that of biofuels based on cellulose that is already attracting investments for research.

There are also some proposals for introducing changes to the Forestry Code (at the National Parliament) aimed at reducing the area of legal reserve in the Amazon from the current 80% to 50% in areas that have already been logged. In the remaining 30% property holders could plant exotic species.

Initiatives that oppose industrial monoculture tree plantations

The expansion of tree monocultures has been accompanied by a number of articulations aimed at restricting the planted areas, stopping the expansion and even stopping large-scale plantations.

The following are some of the restrictive actions:

* state legislation such as law 6.780/01 of Espirito Santo State that prohibits eucalyptus plantations aimed at the production of pulp until an Ecological Economic Demarcation has been concluded and promulgated. Yet the Supreme Federal Court left it without effect in June 2002.

* laws that guarantee the territorial rights of traditional peoples like the Quilombolos (decree- law 4887/ 03) can also limit the possession of lands in the hands of pulp companies.

* the articulation of civil society networks that have been organised to generate awareness on the impacts of monocultures, to denounce, to put pressure on the government and companies, to propose alternatives to the prevailing development model amongst other actions. Among these are the following: the Network against the Green Desert, the National Agroecology Articulation, the Brazilian Network for Environmental Justice and the Brazilian Network on Multilateral Financial Institutions.

*civil society participation in public hearings for the presentation or expansion of industrial projects. Public hearings condition the approval of industrial investments; however, in practice they do not decide on anything.

*complaints to the Public Ministry, to international institutions, legal actions.

* in several regions of the country occupations by rural social movements have taken place on lands planted with eucalyptus, principally by the Landless Workers Movement demanding Agrarian Reform whilst questioning the productivity and the social function of these large estates (in line with articles 185 and 186 of the Brazilian Constitution).

*There has also been a strong articulation of civil society to demand from BNDES that it complies with its function as a public bank and that it establishes policies of openness, dialogue and transparency regarding its investments, that it defines more appropriate social and environmental criteria to diminish social inequities within the Brazilian population and that it stops investing in private projects of agribusiness, like in the pulp and paper sector in line with the 2007 “BNDES Platform”.

By Daniela Meirelles and Alacir De´Nadai, FASE-ES, email: fases@terra.com.br