Elizabeth de Carvalhaes, who has extensive experience in negotiating with governments and international markets, was installed as the executive president of Bracelpa in 2007. In Brazil, her role is to negotiate public and industrial policies that drive the growth of companies and the expansions of the industry's participation in global trade. As the Brazilian's pulp and paper industry's representative at the United Nations Organization's Food and Agriculture Administration (FAO) and at the International Council of Forest and Paper Associations (ICFPA), Ms. Carvalhaes leads an association with an international scope.
Elizabeth de Carvalhaes, Executive President of Bracelpa, leads an association with an international scope
RISI: What are some of the major challenges you see today in the Brazilian forest products industry?
Carvalhaes: Between now and 2020, Brazil's pulp and paper industry will experience one of its most important growth cycles, in order to increase its share in the global market. Recently, the companies announced investments of $ 20 billion in production-increasing projects, within the next ten years. The area covered by planted forests will grow from the current 2.2 hectares to 3.2 hectares. The construction of new mills and modernization of existing ones will make it possible to increase the annual pulp production by 57%, i.e. from the current 14 million metric tons to 22 million metric tons. The annual paper production will grow by 34%, from 9.5 million metric tons to 12.7 million metric tons.
This is a positive scenario, but Brazil has to guarantee its competitiveness, which will not be possible without strategic measures that need to be taken by the next federal administration, which took office on January 1, 2011. With that in mind, Bracelpa and its member companies are debating the issues of the National and Sectoral Agenda for the 2011-2014 period, aiming to announce the industry's good prospects and voice its claims, with a view to the growth of pulp and paper companies.
The pulp and paper industry's main claim, in line with that of all of Brazil's industry, is the lowering of taxation on investments, which are currently taxed at 17%. In addition, the industry also emphasizes the importance of measures to achieve exchange rate parity between the Brazilian Real and the U.S. dollar, the creation of a special system to interrupt the generation of tax credits on exports. The pulp and paper industry also champions the construction of important infrastructure and logistics projects.
Are there any transportation or logistics challenges you see for the industry?
The issue of transportation and logistics in Brazil has an impact on industry as a whole, especially if we consider the country's continental dimensions and huge infrastructure deficit, which is a result of decades of scarce investments. With the exhaustion of highways and ports, in addition to the virtual nonexistence of a railroad network, Brazil cannot support the complex transportation and logistics operations required for effectively distributing the production.
In addition, the high port operation duties and freight prices have a strong impact on the industry's competitiveness. These issues cannot be resolved without major investments by the federal and state governments, in addition to private investments.
What role do you see transport and logistics taking in future growth of the Brazilian forest products industry?
The paper and pulp industry operates in 18 of Brazil's 26 states. This alone shows how fundamental transportation and logistics are to the companies' activities, since their role is to guarantee the supply of input and transportation of final products, be it for export or for distribution in the domestic market. Considering that pulp producers are geographically close to the forestland bases and distant from paper producers, it is essential to have safety, trust and quality in transportation.
What investments is Brazil making in logistics over the next few years to assist the forest products industry?
In our assessment, there is much more work to be done than work already completed. Bracelpa has just concluded a study that points out to 26 projects in railroad, highway and port infrastructure that are fundamental to make investments viable. From these, five are urgent: building an alternative to the Itaqui Port (state of Maranhão); increasing the capacity of the Port of Santos (state of São Paulo); restoring railway access to the Port of Paranaguá (state of Paraná); and doubling (or tripling) the number of lanes of the BR 101 and BR 381 highways (state of Minas Gerais). The elimination of these logistics and transportation bottlenecks, in addition to increasing the industry's international competitiveness, will help other production chains associated to ours.
Why is sustainability important to the overall economic health of the forest products industry?
Today, sustainability is an increasingly more important competitive differentiating factor in the globalized market, be it due to the requirements of the companies' customers or because of consumers' ever increasing demand for environmentally friendly products, which will contribute to protecting nature. Also, the entire climate change debate now has an influence on the industry's operations. In this regard, Brazil has proven to be an important agent, mainly due to the carbon dioxide absorption potential of planted forests.
What part can logistics take to build sustainability within the forest products industry?
The very sustainable management of forests is a good example of this. We can also emphasize the use of clean energy and renewable fuels. In addition, logistics can contribute to reducing operating costs.
Do you think forest products producers should work with logistics companies to minimize costs incurred from sustainability efforts?
This is an issue that each company should evaluate more closely, but we believe that establishing a shared sustainability agenda can be positive for all parties.
How can transport and logistics assist the forest products industry in reducing climate change?
The reduction of emissions on the part of the companies is an ongoing objective. Improving the highway network and finding alternatives to promote the use of renewable fuels are fundamental steps toward achieving this goal.
The Brazilian Pulp and Paper Association (Bracelpa) represents the forest products industry in Brazil and abroad. Bracelpa's member companies account for the entirety of Brazil's pulp production and 80% of the country's paper production. These companies operate in 539 municipalities of Brazil's five geographical regions and employ over 690,000 direct and indirect workers. Bracelpa's area of service encompasses sectorial negotiations, economic and industrial policies, environmental issues, climate change, and recycling, among others. Supporting best environmental practices and the expansion of planted forest areas, a renewable resource for the world, are some of the specific areas supported by Bracelpa.