Plantations, poverty and power: Introduction

6 Feb

By Chris Lang, published by World Rainforest Movement, December 2008

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The area of industrial tree plantations is expanding in the global South. Vast areas of monocultures have been established to feed raw material to the pulp and paper industry. This report investigates the role of European companies and institutions in promoting this expansion and to look at the impacts on local communities and their environments in the South. It demands an end to financing business as usual in the plantations and pulp and paper sector, and an end to development “aid” to the sector.

European companies, aid agencies and institutions play a significant role in promoting the expansion of the industry in the South. The largest pulp and paper machinery exporters are Germany and Finland. In 2005, Germany exported more than US$2 billion worth of pulp and paper machinery and Finland more than US$1 billion.[1] European companies and institutions promote the expansion of the pulp and paper industry in the global South not as a form of “development” but because it is beneficial to Europe.

The first section of this report looks at the process by which plantations are established and pulp mills are built. What happens before a pulp mill can be built? Often the first stage is to build the political framework, to convince the public that large scale industrial tree plantations would be beneficial for the country. Plantation proponents, who include elites in the South, as well as Northern actors, repeat a series of lies to justify the expansion of plantations in the global South. Depending on the audience, they tell us that plantations provide jobs, relieve pressure on forests, are only established on degraded land, restore soils, sequester carbon and help meet the 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. Plantation proponents do not point out that pulp mills are among the most polluting of industrial processes and that one of the reasons that the South looks so attractive is that regulation is less strict in many countries in the South.

Other reasons for the expansion to the South include the fact that trees grow faster in the tropics, meaning that plantations can be logged on much shorter rotations than in the North. Labour is cheaper in the South and governments provide a series of subsidies to encourage the expansion of the industry in the South. 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.

The nature of global finance is another reason for the expansion in the South. To investors looking to finance the pulp industry, a US$1 billion pulp mill in Brazil is a much more attractive investment than, say, a small scale mill in the UK fed with locally collected waste paper. This is related to the notoriously cyclical nature of the industry. When pulp and paper prices are high, the industry expands, leading to overcapacity and inevitably a price crash. Once the price starts to recover, the industry expands again and the next boom-bust cycle is under way.

New investors have emerged recently, such as “Timber Investment Management Organisations” (TIMOs), that are investing in industrial tree plantations. While these have mainly focussed on plantations and forest operations in the US, they are increasingly looking to invest in the South. Private equity companies are also getting involved in financing the pulp and paper industry.

So far, however, these new investors appear to have played only a minor role in the expansion of plantations in the South. More important in this process is public money handed out as “aid”. Development funds are supposed to be used to relieve poverty. The pulp industry does not relieve poverty. On the contrary, for the rural communities faced with a sea of industrial tree plantations on their land, it increases poverty.

Section 2 of the report looks in detail at five pulp projects, in Brazil (Veracel), Swaziland (Sappi), Thailand (Advance Agro), Indonesia (Asia Pulp and Paper) and Uruguay (Botnia). Each example looks at how industrial tree plantations were established and subsequently pulp mills build, including where funding came from and the impacts on local communities. These examples are not chosen to show the worst five pulp and paper companies in the world but are intended to illustrate the structural problems underlying the global pulp and paper industry.

All of these projects were subsidised with Northern tax payers’ money. In fact, it is unlikely that any of these projects would have gone ahead without these subsidies. All of 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 the projects have resulted in serious problems for the people living in the area of the plantations and near the pulp mills themselves.

Section 3 of the report investigates some of the actors involved in promoting the pulp and paper industry. 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. Pöyry’s role in promoting the pulp industry in Indonesia and Russia is looked at in more detail. 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 institution 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 application of the standards) are inadequate to prevent the impacts on local communities and the environment.

The United Nations Food and Agriculture Organisation has for decades supported the expansion of the pulp industry and today continues to provide justification for the expansion of industrial tree plantations to feed the industry. By defining plantations as forests, the FAO helps create the illusion that plantations are not destructive, but simply another form of forest. FAO’s most recent support to the industry comes in the form of voluntary guidelines for “planted forests”. Section 3 ends with a look at the role of the Forest Stewardship Council which supports the pulp industry by certifying industrial tree plantations as well managed. In turn, FSC is supported by the pulp industry leading to questions about its independence from the industry it is supposed to be regulating. FSC has failed to address in any meaningful way the impacts of industrial tree plantations.

Section 4 looks at the pulp industry’s plans for new pulp mills in the global South. With the current financial crisis, several of these mills may be postponed or cancelled. Nevertheless, the industry has been expanding rapidly in recent years and is planning further expansion in the future. The problems of overproduction and overcapacity are becoming increasingly severe.

The conclusion of the report suggests 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.

Section 1 »


[1] “Paper mill and pulp mill machinery, paper-cutting machines and other machinery for the manufacture of paper articles”, Index Mundi website.

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