Sustainable Forest Management and Wood Industry in Mato Grosso

Interview with João Carlos Baldasso, President of CIPEM and Director President of Guavirá

Could you begin by telling us about the wood industry and forestry in general also about and your role in this sector?

Currently in Mato Grosso, there are approximately 3 million hectares dedicated to sustainable forest management. Of these 3 million hectares we are able to operate sustainably with 2 and a half million m3 per year. The wood industry today uses a production area of approximately 4 million m3 per year. Therefore we need to increase the area that is under forest management here in Mato Grosso. I believe we could expand the area to 10 million hectares and then we would be able to have a sustainable production area of 4 million m3 per year, which is a volume sufficient to serve the national and international market more efficiently and on a greater scale than we can today.

What are the main challenges for the wood industry at the moment?

I would say logistics is our main challenge at the moment, although it is an area that is being developed here in Mato Grosso. We are seeing investments in highways and railways and proposed investments in river transport. All of which will, I’m sure, help solve the logistical problems that we have. Brazil urgently needs to reassess and invest intelligently in infrastructure, which is currently one of the main setbacks in the country’s development. Other than logistics we also have a few issues with bureaucracy and regulations, etc, which are problems that affect every business.

What are the strengths that Mato Grosso offers?

Mato Grosso is a fantastic state, the soil here is excellent and we have the optimum climate for agricultural production and for forestry and reforestation. The ability of the forest under forest management to regenerate itself here is incredible. The green, natural sector of the economy is one that is very promising and can be capitalised on further. I think it will have great value in the future, much more so than today. There are various meetings and conferences taking place for example the Rio +20, it’s a slow process but we hope that the results will be worth it. I believe we have excellent potential for growth with our soil, rain, climate, land and roads here in Mato Grosso.

What message would you like to address to the outside world concerning Mato Grosso?

I think Mato Grosso is one of the southern Brazilian states that has great potential for growth, as does Brazil as a country in the southern cone. I really believe that Brazil is a country worth investing in. The Brazilian people are wonderful, I think we have come a long way and there is still a lot to do but we are on the right path.

Excellent, now speaking as a businessman: what opportunities do exist for you to do business outside of Brazil?

Let me tell you in terms of my business which is called Guavirá. I think my company still has great potential for growth not only on the agricultural side but also on the forestry side. I will tell you about the forestry part of my company. We have many native wood species that should be able to find a place on the market. I think there is a market willing to pay higher prices for these native woods that have added value.

What type of wood are these?

In terms of species we have Cumaru, Itaúba, Jatobá and Garapia which are all very well known on the world market now. They are all very beautiful woods that are very well accepted on the international market.

So where indeed are your markets?

We are in the middle of an international crisis however these things go in cycles. We have to be able to make the most of the situation and create opportunities so that once we are over this current crisis we can work on a new level.

The European market demands reliability, and I think Brazilian businesses, including my company, have worked hard to change the reputation Brazilian companies have of not sticking to their commitments. I think this has changed a great deal. The Brazilian business market has become much more reliable.

We have a whole range of high quality, regulated products to offer the international market such as decking, floors and framing.

We also fulfil our duty of reforestation in the case of teca and African mahogany which are being planted in large quantities in Mato Grosso and do well on the international markets, particularly the American, European and Asian markets. With Indian and Asian economies and populations growing at such rapid rates they will no doubt soon also become big consumers.

What competitive advantages do you have here?

I will give you a practical example. Here in Brazil it takes 25 years for a teca tree to grow enough to be able to be used for export while in Southeast Asia it takes 80 years to do so. This is obviously our huge advantage. We have the land capacity to be able to grow a huge quantity of wood for the world market.

What proportion of the wood is for export?

Currently we export only about 20% of our production but we should be able to expand and export 50 to 60%.

What types of wood or final products do have good export potential?

There are some countries such as India that don’t want to purchase manufactured products because they need to create and maintain their own workforce. So we export many products that are not completely processed which they can then process themselves, or square items such as door or window frames, etc. However, I think our main focus has to be products of greater value, such as decking, flooring, framing, panelling, etc.

Do you need to use foreign technology?

A lot of our machines are from Germany so we do use a lot of technology from abroad. I think nowadays it’s more and more important to be up to date with technology in order to increase your production and quality to be able to compete on the market.

What are your main goals and your development strategy for the next 2 or 3 years?

I believe that in terms of our native wood production we have one limitation: which is making the production sustainable. Our goal is to achieve 10 million hectares of area for sustainable forest management; this obviously depends somewhat on questions of bureaucracy and regulations. There is enough area of forest in the state to allow us to reach this 10 million hectares target whilst always ensuring production is sustainable.

There are huge areas in the state dedicated to extensive cattle breeding which could be transformed into areas used for sustainable forestry, which would be very good for the environment in terms of carbon footprint and very good for the economy because the forestry industry can bring in huge revenue.

Today, there are 200,000 hectares dedicated to forestry in this state, we could reach 2 or 3 million hectares. 27 million hectares are dedicated to cattle breeding, so if we were able to use just 10% of this area for reforestation, the revenue potential would be incredible.

I think the main goals are expanding the native and the planted forests and also to work on establishing ourselves on the market. The forestry sector has such great potential with the highly valued woods that we are able to grow; the sector could grow by four, five or even 10 times what it is today.