World Rainforest Movement

Plantations, poverty and power: Europe’s role in the expansion of the pulp industry in the South

Before the current global economic meltdown, the pulp industry had ambitious expansion plans. Although the industry was closing mills in the North, it was expanding dramatically in the South where about five million tons of new capacity was due to start up each year for the next five years. Vast areas of monoculture tree plantations have been established to feed raw material to huge new megamills, particularly in Latin America, southeast Asia and South Africa.

Today, however, industry analysts are talking about overcapacity in terms of a “wall of pulp”. Between September and December 2008, global pulp production shrank by more than 2 million tonnes. Hardest hit is southeast Asia, where Asia Pulp and Paper and APRIL have reduced pulp production by a total of 580,000 tonnes. In Brazil, Aracruz is desperately trying to save money after losing about US$2 billion on investment in derivatives and has scrapped (for the time being, anyway) its proposed 1.5 million tons a year pulp mill at Guaiba in Rio Grande do Sul.

Pulp mills do not build themselves any more than plantations plant themselves. One of the reasons for the industry’s current problems is a conflict of interest. European companies, aid agencies and institutions play a significant role in promoting and financing the expansion of the industry in the South. They promote this expansion not as a form of “development” but because it is beneficial to European industry.

My new report, “Plantations, poverty and power”, looks at the role of European companies and institutions in promoting the expansion of the pulp and paper industry in the global South. The report replies to the lies that plantation proponents repeat to justify the expansion of industrial tree plantations in the South: that plantations provide jobs, relieve pressure on forests, are only established on degraded land, restore soils, sequester carbon and help meet a “global demand” for paper. The biggest lie of all is that plantations are forests.

The reality for people living in the areas where plantations have been established is that plantations have destroyed their livelihoods and sucked streams and rivers dry. The few jobs created are dangerous, poorly paid and often seasonal. Pulp mills are among the most polluting of industrial processes. Among the reasons that the South looks so attractive is that regulation is less strict. Trees grow faster in the tropics, labour is cheaper and governments provide a series of subsidies to encourage the expansion of the industry. But another important reason, which the industry is more reluctant to acknowledge, is that in several countries, the area of industrial tree plantations expanded rapidly under brutal military dictatorships, when protest against the impacts of plantations was either extremely dangerous or impossible. Examples include South Africa, Chile, Brazil, Thailand and Indonesia.

The report looks at five pulp projects in detail: Veracel (Brazil); Sappi (Swaziland); Advance Agro (Thailand); Asia Pulp and Paper (Indonesia); Botnia (Uruguay). Without generous subsidies it is unlikely that any of these projects would have gone ahead. The projects provided a series of lucrative contracts for European, Nordic and North American consulting firms, machinery companies, chemical suppliers and engineering firms. All of these projects have resulted in serious problems for local communities. 

This is followed by profiles of some of the European actors involved in promoting, designing and building pulp projects in the South. Pöyry is the largest forestry consulting firm in the world and has facilitated (and benefited from) the expansion of the pulp industry in many countries, both North and South. The Confederation of European Paper Industries supports the European pulp and paper industry regardless of its impacts on people and forests. The Asian Development Bank, the International Finance Corporation and the European Investment Bank provide examples of multilateral aid agency support to the pulp industry. Each of these aid agencies has different standards which it is supposed to apply to potentially destructive projects such as industrial tree plantations and the pulp industry. In each case, the standards (and the way in which the standards are applied) are inadequate to prevent the impacts on local communities and the environment.

The report looks in detail at two sets of voluntary standards: the UN Food and Agriculture Organisation’s voluntary guidelines for “planted forests”, and the Forest Stewardship Council’s certification scheme. Both organisations support the pulp industry and the expansion of industrial tree plantations. By defining plantations as forests, the FAO helps create the illusion that plantations are not destructive, but simply another form of forest. FSC supports the pulp industry by certifying industrial tree plantations as well managed, failing in the process to address even the most egregious impacts of industrial tree plantations. 

The report concludes with a suggestion for an alternative way that the pulp industry could develop, which would provide the paper needed to meet local demand, based on small-scale pulp and paper mills using local raw materials. Paper could and should be produced without destroying forests, grasslands and local people’s livelihoods. A first step in moving towards a less destructive pulp and paper industry would be to stop the subsidies which help to keep the status quo. No more development funds should be used to facilitate the expansion of the global pulp industry and its associated industrial tree plantations.


By Chris Lang,

Chris Lang’s new report, “Plantations, poverty and power: Europe’s role in the expansion of the pulp industry in the South”, can be downloaded here: