Salvador Beltrán explains to Forbes Mexico how the outgoing government changed forestry policy to involve ejidos, communities and private owners in the development of plantations.
The government that ended up changed the country’s forest policy to involve ejidos, communities and private owners in the development of commercial forest plantations and the management of natural forests. Their results coincide with the campaign commitment in this matter of the president-elect, Andrés Manuel López Obrador, affirms the director of the National Forestry Commission (Conafor), Salvador Beltrán.
With 37,000 million pesos of public investment and 400 million dollars of private investment, 1 million hectares were restored in the sexennium, an average of 170,000 per year, says the official. Companies are formed from three or four ejidos that operate separately, and they are advised for production and marketing, adds Beltrán. In addition, they are put in contact with companies such as Ikea, Nestlé or Grupo Modelo to become their suppliers.
Mexico has a forest area of 137 million hectares (Mha), which represent 70.5% of the national territory, according to Conafor. Of that area, 65 Mha are forested areas and, of this, 23% is temperate forest in production, in addition to 18 forests with production potential.
However, Mexico is deficient in forest products: local production is 9 million cubic meters, while national consumption far exceeds that figure and reaches 21 million.
Beltrán affirms that the outgoing government worked according to the goal of the forestry sector managing 23 Mha and producing 21 million cubic meters by 2030, in line with the commitments assumed by Mexico in the Convention for Climate Change.
He adds that between 15 and 16 Mha are already incorporated in the management programs and that 12 Mha have the authorization to take advantage of the Ministry of Environment and Natural Resources (Semarnat), so the task, he believes, is to incorporate more hectares and increase production. “One million hectares is achievable,” he says.
What approach did the outgoing government give to forestry production?
The national strategy of increasing production and productivity was visualized in two aspects: the management and sustainable use of natural forest, and the promotion of commercial forest plantations.
For the first case, the Commission promoted programs subject to authorization from the environmental authority and financed or invested in forestry programs.
In the management of the natural forest, the work is the organization and training of ejidos, communities, organizations, and owners who have a forest so that, within the economic possibilities of the National Forestry Program [Pronafor], technological transfer and modernization are promoted of the forest industry.
It is a strong work in which we must continue investing, but a step towards modernization has already been made, with not only productive but also environmental benefits, because it makes the transformation of wood more efficient and, consequently, It consumes less forest.
Photo: Conafor
An important side of accompaniment is the forest certification with international standards, under the FSC standard. We have practically certified, in the country, an area of 2.1 million hectares.
The other side has to do with commercial forest plantations. They were given a strong impulse, with a focus in the southeast: Campeche, Veracruz, Tabasco …
We made synergy so that the private initiative could make investments. This strategy was established by promoting genetic improvement and fast-growing species, with medium and short-term commercial potential.
The trust of investors and private initiative, which have bet not only on the establishment of three MDF plants, which is wood for medium density products, but also commercial forest plantations. In this administration, we had an investment of more than 400 million dollars [mdd], a figure that had not been seen in the forestry sector in the last 20 years.
The MDF processing plants were established in Tabasco, Durango, and Parral [Chihuahua]. An important part of the capital invested by the companies comes from the Afores. It is a relevant scheme for Mexico because it gives certainty to investors.
As a reference, in the plant of Huimanguillo [Tabasco] practically 100% of the raw material that is required comes from local plantations.
An important investment was also made in the restoration of forest cover. This administration made the commitment to restore 1 million hectares, to return them to their forestry vocation (until 2017, we already had an advance of 90%, and this year we will be concluding with one million hectares). They must be land that can be converted to a forestry activity; they are hillsides or zones in which there was some productive activity and that was later abandoned.
How much is the investment channeled?
The federal government, through Conafor, has invested in the order of 37,000 pesos from 2013 to 2018.
Mexico also has a payment program for environmental services, aimed at forest conservation, mainly in those areas that are protected natural areas and that can not be 100% productive in terms of wood. We have little more than 2 million hectares incorporated into this program, which is the largest on a global scale.
At the payment for environmental services, we have applied between 600 and 800 million pesos per year.
Salvador Beltrán, director of the National Forestry Commission. Photo: Angelica Escobar / Forbes.
What was the work with companies or small ejido businesses and communities?
The first thing is to finance programs for the sustainable use of the forest and, the following is training, organization. One more has to do with forest certification: they are financed [ejidos and communities] so that they can pay certification companies; this gives certainty of transparency that things are done in a sustainable way.
We also support them through incentives and financing for the modernization of sawmills with new technologies, for a more efficient work in the industrialization of wood and with less waste.
And marketing has been supported. We have an open forum at the Forest Expo that, from this administration, takes place every two years. There are business meetings between bidders and plaintiffs.
How many units have been benefited?
We have supported 558 community forestry companies. Examples of success are the indigenous communities of San Juan Nuevo Parangaricutiro [Michoacán] and that of Lachatao Amatlán [Oaxaca], and the ejidos of Petcacab [Quintana Roo], Peñuelas in Pueblo Nuevo [Puebla] and San José el Llano [Sinaloa].
We also have a group, called Sezaric, in Durango, which groups 41 ejidos. They, not only process, they did not stay in the stage of producing boards or sawed wood, but they also offer certified wood, boards, and furniture.
How much is the investment made?
80% is from ejidos and communities. The production volumes that we had until 2017 were 9 million cubic meters, which practically leads us to recover the volumes that were in 2000.
The lowest [production] was in 2011, with 5.5 million cubic meters, a historical fact. It had been falling since 2000, with 9.4 million.
What was the reason for that fall and what effects did it have?
It has to do with the [applied] policies. For several years there was a focus on restoration, investment in reforestation, but it was not the most appropriate, because if you do not give an economic boost to the owners or owners of forest land, they will change the use of land, and a vicious circle is made.
What we did was invest in the social sector. Most of the surface is owned by ejidos and communities.
Another reason is that, for many years, the country has been subject to forest closures and that discourages productive activity and investments. For years, forests were granted to private companies, leaving their owners aside, in the case of ejidos and communities. And, while it is true that these ejidos and communities had an advantage practically without sticking their hands, what is involved now is that they are managed, enter a process of transformation, until industrialization, from sawn wood to the elaboration of furniture, and that do not become only exploiters of raw material.
What was done in this administration was to invest in regaining competitiveness. Domestic production satisfied less than 30% of local demand; The domestic market is strong enough, but our companies were not competing.
The current production is 9 million cubic meters and the national consumption is more than 21 million.
Photo: Conafor.
How many productive units are impacted with the investment made?
There are just over 2,600 ejidos and communities that have an authorization for use; They are the ones that directly benefit. There are those who have more than one company. Those 558 community forestry companies are among those numbers.
Where they invested the 400 million dollars, are they companies that did not exist, that were created? Are they national, foreign companies?
We started in 2013. We held meetings with the main planters in the country and, as a result of these meetings, we decided to give a strong boost to the forest plantation program with what we call “projects in hand”; we implement them, we develop them and they continue to be implemented to date.
They also, in turn, confirmed investments until 2015 to expand the forest production plant. In some cases they are capital reinvestments of an established industry. For example, in Durango, Masisa bought some existing assets. It was a plant expansion, but with new technology.
And the cases of Parral, Chihuahua, and Huimanguillo, Tabasco, were new companies [Duraplay, in Parral, and Proteak, in Tabasco].
The three plants are MDF and all three have German technology, one of the most advanced in the world. What is the significance of this?
That has to do with the demand in Mexico for a lot of medium density product, just the MDF, for furniture of [type] “arm yourself”, which we find everywhere.
It was bet that practically, as of this year, Mexico was already surplus in MDF. These companies are already exporting from this year and will increase their export volumes by 2019.
Before, most of what was consumed [came] from imports, basically from the United States, Chile and China.
How big is the MDF market?
Only in 2017, these companies had exports for 6.2 million dollars. In 2018 it will be a similar amount.
We still have a very high deficit in the trade balance, of almost 6,000 million dollars, but 80% of that is paper and cellulose product. That makes it difficult to counteract it, for the investments that are required; They are highly expensive companies.
The deficit we have hit is 20% that make up other products, such as sawn wood, MDF, plywood, boards, agglomerate. There you are investing.
Photo: Conafor
Can we say that we are moving towards intermediate products, but we have not managed to integrate the chain until we reach the final product?
Exact. We are still working on this part. We had a series of meetings with Ikea, a European furniture and kitchen manufacturer.
What are you doing with them?
Ikea’s interest is to establish a plant in Mexico. Due to this, we are getting closer so that the suppliers could give it ejidos and communities of the country. A few weeks ago [at the beginning of August] we were with them in Chihuahua.
What is the most common support scheme they give to these local companies? Financing, advice?
One is like investment products, direct support. In the case of owners who have a forest, we put resources of that bag that we have; we take our operation rules and we put conditioning, work schemes. And, in the case of ejidos and communities of the social sector, we directly invest up to 70% of the cost of the operation project.
Bottom line?
It is an investment; we do not take it as a lost fund.
No returns?
No returns.
But it gives benefits …
It goes to direct benefit; and, in the case of the private sector, it is up to 50%.
In that case, under what conditions?
It is exactly the same: an investment complement to develop the productive sector. Additionally, we created the Fund for the Financial Inclusion of the Forestry Sector [Fosefor] and the Financing for the Modernization of the Forestry Industry [Fonafor]. They are similar; both give liquid guarantees to obtain financing or credit through first-tier banking or government banking.
Do you support with half and, apart, do the accompaniment to those who have a plantation project that has already proved viable and requires 500 million pesos?
In commercial forest plantations there is, in this program, an additional package: the projects in hand. If the total cost of a project, of one hectare for example, costs you 30,000 pesos, we enter up to 23,000 pesos as support; then you can request the difference via credit and we give the guarantee.
How do they know they support viable projects? What review do they do?
There is an advisor who is behind the project. These resources are not given in a single exhibition, but in games. This ensures that, if someone asked us, to establish a plantation, make a forestry or buy a sawmill, [he himself] has to submit, in the request, the updates of the cost of the machinery, and we verify.
Is there a volume of production with which the applicant must comply?
There is a number to reach. For example, in the case of natural forests, they are minimum 10-year cycles. So, it is perfectly established how much you will harvest the first year, the second … until year 10.
Photo: Conafor.
And, in the case of reforestation, a surface to be restored is established. In the past administrations, they had the Chapingo Autonomous University as the evaluator. We do not change that. In the last year of the last administration there was an average of between 20 and 25% of survival, but, in the last evaluation, we have 64%. This means an important advance.
It has also promoted a standard for the production of plants, seed orchards, seed areas and nurseries, in which it is expected that the properties that are going to be reforested are within a radius of no more than 70 kilometers, [it] to avoid “Plant walk”, that is, we could be reforesting in Chihuahua with plants produced in Michoacán.
The new government brings a project that sounds quite ambitious: allocate 1 million hectares for forest production and an investment of 20,000 million pesos. How does that plan sound?
I see it positive.
Is it achievable?
A million hectares is what we established in this administration; It is achievable.
Do they also talk about restoration?
Yes. We were working at a rate of 170,000 hectares per year, more or less, to be able to achieve this million hectares to be restored. It is very different when talking about the number of trees to be planted, because, in those cases, there is no mention of a “third restoration”; that is, [over time] we no longer know what happened to those trees.
How long did they achieve one million hectares?
In six years.
There are peasant organizations that have asked the new government to refound Conafor. Have you worked on the issue with dissenting communities?
We do not know what it is. In Conafor’s work, given that 80% of land ownership is in the hands of ejidos and communities, clients are always them.
But have they had enough coverage in all the territory to …?
Not enough. That has to do with resources, which are always finite.
In what percentage did they provide coverage?
We achieved 6,900 ejidos and communities; It’s just over 80% coverage. The needs are very varied because what yesterday was a need, today is no longer or is already another.
The dissenters say that the councils of natural and protected areas, and climate change, excluded the peasants …
Conafor has, by law, a national forestry council, made up practically of 80% by the social and private sector; the academy and the providers of technical services are represented, the community sector. The only dependencies that participate formally, with voice and vote, are Semarnat and Conafor.
Has the Conafor budget changed?
Yes, we were subject to budget adjustments. In 2013 we had 6,937 mp. The year that we had the most budget was 2015, with 7.744 million pesos; and 2016 was the same. In 2017 and 2018 we already had the adjustment, which was of the order of 4,000 mp.
Source: Forbes
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