November 13, 2023

CERES Consulting presented a report on the multiplier effect of the forestry sector

Source: Rural El País

 

According to a study carried out by the Center for Studies of Economic and Social Reality (Ceres), the solid growth of forestry industry In Uruguay, over time, the forestry industry not only generates a greater multiplier effect than other sectors of economic activity, but also reflects a commitment to the protection and care of the environment

These achievements cannot be explained without the stability of appropriate public policies, according to this special report by the executive director of Ceres, the Dr. in Economics Ignacio Munyo, presented last Wednesday at the World Trade Center Auditorium as part of the Forestry Breakfast, organized by the Society of Forest Producers (SPF).

The work, entitled “Forestry production in Uruguay: a leading and sustainable sector”, It reveals that the country’s institutional stability and legal guarantees have been the pillars of the sector’s boom, fundamental factors for attracting long-term investments.

Also noteworthy is the implementation of favorable tax policies at the beginning that have boosted productive development and have been supported by governments of different political orientations, only to be withdrawn later in the case of plantations destined for cellulose, according to their growth.

Currently, plantations destined for the pulp industry, the main component of forestry, receive tax treatment comparable to other primary activities.

The study also addresses the development of the forestry industry, based on a comprehensive analysis of the results and projections of aspects such as activity, exports, and job creation, as well as its significant role in multiple facets of the economy. State policies geared toward this relatively new sector of the production matrix, along with the availability of suitable land for tree plantations, form the foundation for sustainable growth.

In turn, forestry activity generates jobs with a lower risk of automation than employment in the rest of the economy.

The forestry industry is not only a relevant sector, but also represents a positive paradigm of the circular economy, which implies that its development approach contributes significantly to reducing resource waste and minimizing waste generation.

This translates into promoting the reuse, repair, recycling, and renewal of products and materials, fostering the creation of a continuous cycle in which resources and products are kept in use for as long as possible.

Environment. From the perspective of global warming, its key role in reducing net carbon emissions is highlighted. Furthermore, the report maintains that the environmental impact is significantly controlled through compliance with international certifications, regulations from the Ministries of Livestock, Agriculture, and Fisheries, and the Environment, which guarantee adequate oversight, in addition to widespread adherence to the National Code of Good Forestry Practices.

The forestry sector is one of the country’s main export sectors, accounting for almost one out of every five dollars of Uruguay’s export earnings. Its growth has been steady in recent decades, and with increased investment and the construction of three large pulp mills, the forestry sector is poised to become the country’s leading export.

The country’s institutional and legal stability, along with supportive policies that transcended government terms, were key to the development of the industry and set Uruguay apart as an investment destination in this sector. These incentives, crucial at the outset, were gradually phased out in the primary pulp and paper phase, in line with the sector’s growth.

Currently, forestry producers for this purpose face a tax burden comparable to other primary activities, in relation to the income they generate.

In 2022, the sector as a whole was the country’s second largest exporter, but it is poised to become the first during 2024, when UPM’s second pulp mill reaches peak production.

The study reaches conclusions of great relevance for development, highlighting that forestry generates significant production chains and has a greater multiplier effect than other sectors of activity.

The ruling states that, with strong international demand and increased investment in the sector, the forestry industry is positioned as a powerful driver for the development of the Uruguayan economy.

A Sustainable Engine

Forestry enjoys strong external demand. For this reason, and because it supports productive decentralization, has a multiplier effect on the economy, and generates jobs with a lower risk of automation, the forestry sector is a powerful engine capable of sustainably driving a new cycle of growth for the Uruguayan economy