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CHILE: Forestry Industry Sows Poverty, Study Says

Daniela Estrada

SANTIAGO, Aug 26 2010 (IPS) - The poverty rate in the districts of southern Chile where the logging industry is the main economic activity is nearly twice the national average, a new study shows.

“In our view, a mature industry like forestry that generates 26 percent poverty is unsustainable,” Eduardo Ramírez, senior researcher at the non-governmental Latin American Centre for Rural Development (RIMISP) which has offices in Bolivia, Chile, Ecuador and Nicaragua, told IPS.

According to Ramírez, the situation could flare up in either of two directions: “local social conflicts, or economic vulnerability,” because international customers for Chilean wood and paper pulp are becoming increasingly “sensitive to the environmental impact of the companies from which they purchase goods and services.”

The forestry industry, headed by Chilean firms Arauco and CMPC, is regarded as a spearhead of national development. Its main exports are cellulose, as well as paper and cardboard, board, veneers and lumber, and industry estimates put export earnings this year at around 4.6 billion dollars.

In the south of Chile, which has the highest poverty rates in the country, RIMISP compared four economic activities in municipalities in the Bíobío, Araucanía, Los Ríos and Los Lagos regions, more than 500 kilometres from the capital.

These four economic activities — forestry, livestock, salmon and rural tourism — were selected and studied by cross-referencing data from the 2009 CASEN socioeconomic survey published last month, the 2007 agricultural and livestock census, and information from the National Tourism Service.

On average, the 34 municipalities in Bíobío and Araucanía with the highest areas of forestry plantations had a poverty rate of 26 percent, nearly twice the national average of 15.1 percent.

Poverty in these areas where the logging industry is the main economic activity was also higher than in municipalities where tourism is predominant, which have a poverty rate of 21 percent; salmon farming areas, where it is 15 percent; and livestock districts, where it is 12 percent.

Between 2006 and 2009, poverty in the forestry municipalities fell barely 0.3 percent, according to RIMISP, compared to the 2.1 percent decline in the 13 livestock raising municipalities in Los Ríos and Los Lagos, which had the best results out of the four economic activities studied.

Furthermore, the study found that in the forestry areas, average monthly household income in November 2009 was equivalent to 214 dollars per person, compared to the salmon area earnings of 322 dollars per person, livestock sector incomes of 293 dollars per person and earnings of 239 dollars per person in rural tourism areas.

According to Ramírez, studies by RIMISP as well as the available literature point to two major issues: “the low degree of interaction of forestry companies with local communities, because they are basically extracting natural resources with very little added value; and the industry’s need to achieve economies of scale.

“The companies are buying up more and more land, displacing not only other economic activities but also the families that lived on that land,” he added.

In concert with other environmental and human rights organisations, Ramírez emphasised that this generates conflicts with communities of Mapuche indigenous people, the largest native group in the country, numbering nearly one million out of a total population of 16 million, who claim ownership of lands held by the logging companies.

On its web site, however, the Corporación Chilena de la Madera (CORMA), an industry association, claims that 85 percent of forestry sector export products have high added value. The United States, China and Japan are the largest markets.

CORMA declined to answer enquiries from IPS.

In Ramírez’s view, the results of the study “call for government policies that are more consistent with what is happening in the sector.” They also, he said, “call the industry itself into question, because it is unthinkable for it to continue operating like this. It must adopt a different strategy.”

For more than three decades, the industry has been receiving state forestation subsidies under a decree in force since 1974, which is due to expire in 2011. CORMA wants the decree extended, as it estimates that three million hectares are still available for forest plantations, but environmental and indigenous people’s organisations are opposed to an extension.

The government of rightwing President Sebastián Piñera sent a bill to Congress Aug. 10 that seeks to extend the decree for two years and expand its benefits to include small producers and indigenous people, while a new Forestry Promotion Law is drafted.

“The CASEN survey shows that the four forestry regions have the highest poverty and extreme poverty rates in the country, which is because the companies pay very low wages,” Sergio Gatica, spokesman for the Consejo Nacional Forestal, a national confederation of forestry workers’ unions, told IPS.

Founded in 2007, the confederation representing close to 15,000 workers in the Maule, Bíobío, Araucanía and Los Ríos regions is demanding that forestry companies pay wages of around 495 dollars a month. At present they pay workers the minimum wage, 340 dollars a month.

“This is a highly profitable commodity export sector that brings large quantities of foreign exchange into the country. The problem is that many companies pay their subcontractors poorly,” complained Gatica, who is requesting meetings with lawmakers and the authorities to table proposals by organised labour.

“A large number of Chileans depend on the forestry industry. We’re talking about 130,000 direct employees and 300,000 indirect jobs, so we must all work together to make this a modern, just and equitable industry that develops in a sustainable way,” Gatica said.

Twenty percent of this South American country — 15.9 million hectares — is covered with forests. Native forests make up 85 percent of the total, while the other 15 percent is plantation forests, mainly non-native species like radiata pine and eucalyptus.