Brazil: Stimulating private investment in plantations

ITTO's Tropical Timber Market Report
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The Strategic Affairs Secretariat (SAE) of the Brazilian government is developing ideas on mechanisms to stimulate more private financing in the forest sector.

The SAE is investigating a variety of models appropriate for the long term investment that is necessary for plantation development.

The SAE says that it is necessary to identify or develop a credit mechanism offering a grace period for repayments for borrowers. At the same time the SAE recognizes that there is a need to provide guarantees to investors since plantation development requires substantial investment for periods that can range from 7 to 35 years before income is generated.

The SAE Secretariat for Sustainable Development has held a series of meetings with financial analysts to assess options for financial instruments related to private financing for forest plantations.

According to an SAE advisor, at present there are a variety of financial models being applied in the agricultural sector but these often only address the short-term financing needs for agricultural crops. The key difference between the agricultural and forest plantation sectors is the time until harvesting generates income.

According to the SAE a research programme will be undertaken on possible private investment financing models for the development of forest plantations in Brazil. The aim of the SAE is that a new financing model should be included in a National Policy for Planted Forests which is also being formulated by the SAE.

Alagoas State to ensure growth of furniture cluster
The Alagoas State Planning and Economic Development Secretariat (SEPLANDE) recently met with representatives of Arapiraca’s local government, the Brazilian Service Support for Micro and Small Enterprises (SEBRAE) of Alagoas and the steering committee for the development of the furniture industry in the Agreste region to discuss ways to expand the furniture industry cluster in Arapiraca.

Through such a meeting the partnership between the state and the manufacturing sector is strengthened.

The State has invested resources to support the promotion of a furniture manufacturing cluster in the region and emphasised the need for effective participation of entrepreneurs in the management of activities in support of the cluster. Currently, the Agreste Furniture Industry Association (Amagre) is taking the lead in this undertaking.

The furniture cluster in this region has grown in recent years with the support of local and state governments and now extends to an area of 96,000 sq.m with 45 plots for micro-enterprises.

Many micro-industries cannot afford to invest in their own storage buildings and to address this a building will be provided through a partnership between the Arapiraca local government and the State Government.

The building of the community storage capacity will, it is hoped, encourage more small companies to the cluster and will result in greater employment opportunities in the municipality of Arapiraca, State of Alagoas, located in the Northeast Brazil.

Rio Grande do Sul furniture manufacturers up-beat on export prospects in 2013
The state of Rio Grande do Sul was the only state reporting a year on year growth in furniture exports in 2012. However, the level of growth in 2012 compared to 2011 was only 1.1% for a total export for 2012 or US$ 205.7 million.

The Bento Gonçalves furniture cluster, the largest in the state, chalked up a 4.4% increase in exports in 2012 to US$ 63 million. Overall Brazil’s furniture exports in 2012 fell by 5.2% to US$ 723.4 million.

Thise data is presented in a report published by the Rio Grande do Sul State Furniture Industry Association (MOVERGS), in collaboration with the Innovation Management Center (CGI Moveleiro) and the Foreign Trade Secretariat of the Ministry of Foreign Trade, Industry and Development (MDIC).

The report identifies Uruguay, the United Kingdom, Chile, Peru, and the United States as major importing countries for furniture from Rio Grande do Sul in 2012. However, Argentina was the largest importer of Brazilian furniture in 2012.

While the 2012 data is not very encouraging, MOVERGS says that the latest statistics indicate signs of recovery in furniture exports. Manufacturers have been trying to achieve product differentiation, investing in exclusive designs and applying the latest technology to improve the competitiveness of Brazilian furniture.

MOVERGS is forecasting a 10% growth in regional furniture exports but analysts point out that, after taking into account likely inflation levels and increases in the price of inputs and raw materials, the most optimistic forecast for the national furniture sector is a net growth of 3%.

High hopes for ‘Brazil Móveis’ international furniture fair
The international furniture fair “Brazil Móveis”, planned for August 6-9, 2013 in São Paulo, is one of the largest fairs for the furniture sector. This year the fair is expecting around 200 of the national furniture makers to exhibit.

The organisers report that around 45% of the exhibition area is already booked and some 30,000 national and international visitors are expected. Exhibitors have expressed expectations that the 2013 fair will be the springboard for their success with international buyers. The pace of growth in the Brazilian construction sector should give a boost to the furniture sector this year.

According to the Rio Grande do Sul State Furniture Industry Association (MOVERGS) during 2012 consumers have invested in remodeling of homes but now there is greater interest in new home building a trend that will increase demand for new furniture.

According to the Institute of Industrial Studies and Marketing (IEMI), the domestic furniture sector could grow 5.5% this year, up on the 2.8% growth last year. MOVERGS has suggested that the exemption of the sector from payroll taxes and the tax on Industrialized Products (IPI) and the efforts by industry to better meet consumer demand will improve competitiveness.

Domestic Log Prices

Brazilian logs, mill yard, domestic US$ per m3
Ipê 154
Jatoba 111
Guariuba 85
Mescla (white virola) 91

 Sawnwood Prices

Sawnwood, Belem/Paranagua Ports, FOB US$ per m3
Jatoba Green (dressed) 1,330
Cambara KD 705
Asian Market (green)        Guariuba 354
Angelim pedra
Pine (AD) 215
Brazil sawnwood, domestic (Green)
US$ per m3
Northern Mills (ex-mill)     Ipe 862
Southern Mills (ex-mill)     Eucalyptus (AD) 232
Pine (KD) 1st grade

 Veneer Prices

Veneer, Export  (Belem/Paranagua Ports) FOB US$ per m3
White  Virola  Face  2.5  mm 338
Pine Veneer (C/D) 237
Rotary cut Veneer, domestic US$ per m3
(ex-mill Northern Mill)      Face    Core
White Virola      266   214

 Plywood Prices

Plywood Export, FOB US$ per m3
White  Virola  (US Market)  
5.2 mm OV2 (MR)
15 mm BB/CC (MR)
White Virola (Caribbean Market)  
4mm BB/CC (MR)
12mm BB/CC
Pine Plywood EU market, FOB US$ per m3
9mm C/CC (WBP) 345
15mm C/CC (WBP) 323
18mm C/CC (WBP) 323
Plywood Prices, domestic (ex-mill Southern mill) US$ per m3
Grade MR (B/BB)  White Virola 4mm 764
 White Virola 15mm
Domestic prices include taxes and may be sbject to discounts.

Export Prices For Other Panel Products

Belem/Paranagua Ports, FOB US$ per m3
Blackboard Pine  18mm  5 ply (B/C) 405
Domestic Prices, Ex-mill, Southern Region  
Blackboard White Virola faced 15mm 542
Particleboard 15mm 363

Export Prices For Added Value Products

FOB Belem/Paranagua Ports US$ per m3
Decking Boards     Cambara 920
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