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How Large Will Brazil’s Planted Forests be by 2030?

December 16, 2019
Author: Marcelo Schmid

The characteristics that make the Brazilian forest sector unique in the world are many. Chief among them are the high growth potential to attract new investment, a vibrant forest-based industry and fast-growth rates of popular tree species.

In recent years, forest plantations in Brazil have undergone significant changes. Three fundamental aspects must be evaluated in order to understand these changes and to offer sound speculation about the future of these resources:

  1. The total planted area in each state
  2. The total planted area by species
  3. The timeframe of any analysis

The figures presented below are sourced from Brazilian Tree Industry (IBÁ) data and were compiled by Miguel Fabra, director of Stafford Capital Partners, a company that owns forest investments in Brazil. In an attempt to better understand how the planted forest area will evolve over the next few years, Miguel worked with historical data based on the rate of change in the planted forest area by state and species over the short and medium term (the last five years and last 13 years, respectively).

At the end of this exercise, he shared his work with Forest2Market do Brasil Director Marcelo Schmid and challenged him to answer an important question: “How large will the area of ​​planted forests in Brazil be in 2030?” (In addition to providing an interesting analysis, the challenge between the two executives yielded a friendly wager to see who actually gets closer to reality, and the loser will have to buy the winner a drink in 2030.)

Currently, according to IBÁ data, Brazil has 17.9 million acres of planted forests. Over the last 13 years, (2005 - 2018) this area has grown by 38% (2.9% per year) but in the last five years, the growth rate has fallen to only 1.32% (0.26% per year).

During that time period, the eucalyptus planted area increased by 32% while the pine planted area decreased by 20%. However, over the last five years, the eucalyptus planted area grew by only 2.0%, while the pine planted area decreased by 1.3%. These figures confirm an important change that has taken place within Brazil’s forest industry: In recent years, there has been a significant increase in demand for pine, which has slowed the rate of decline in pine plantation acres and conversion to other land uses.

Figure 1. Change in eucalyptus and pine planted area in Brazil (acres)


Source: IBÁ, adapted by Stafford Capital Partners and Forest2Market do Brasil

Demand for eucalyptus seems to have peaked in 2017, suggesting that the pulp mills that rely on this resource are operating at capacity. However, based on the new investment into the pulp sector, this situation will certainly change in the coming years and the planted area of eucalyptus should increase yet again.

Looking at the numbers by state, the trends are equally interesting. In the case of eucalyptus, all major producing states increased their planted area. In the last five years, only Paraná and Mato Grosso do Sul had significant increases — 22.7% and 10.9%, respectively — confirming that the planting rate of the species is flattening.

Figure 2. Change in eucalyptus planted area in its main producing states (acres)


Source: IBÁ, adapted by Stafford Capital Partners and Forest2Market do Brasil

While there was a decrease of over 20% in the planted area for pine across the country, in Paraná (the main producing state) the decrease was only 3.4%; in Santa Catarina (the second leading producer), there was an increase of 1.8%. The large reduction in pine plantation area has largely taken place in states where pine has not historically been the most popular species, such as Minas Gerais, which lost more than 247,000 acres, and Bahia, which lost more than 127,000 acres as shown in figure 3.

Figure 3. Reduction of pine acreage in states where pine has not been popular (acres)


Source: IBÁ, adapted by Stafford Capital Partners and Forest2Market do Brasil

Over the last five years, the pine planted area decreased by only 1.5% in Paraná while it remained practically the same in Santa Catarina, suggesting that the conversion of pine plantations to other agricultural land uses is decreasing and the demand for pine fiber is growing in the market. In other states where the pine market is also important, the planted area also hardly changed during this period; in São Paulo there was a reduction of only 1.8% and in Rio Grande do Sul the area remained the same, as shown in figure 4.

Figure 4. Change in pine planted area in primary states (acres)


Source: IBÁ, adapted by Stafford Capital Partners and Forest2Market do Brasil

Table 1 shows the annual rate of change in the planted area for both periods, by state and species. Over the last 13 years, the annual growth rate of eucalyptus planted area was higher than the growth rate in the most recent period. Similarly, the annual reduction in the pine planted area has been much more significant in the last 13 years than in the last five years, when it remained fairly stable.

Table 1. Annual rate of change of the planted area in each state, by period and species


Source: IBÁ, adapted by Stafford Capital Partners and Forest2Market do Brasil

Based on the irregular change observed over the last 13 years, is it possible to predict that the planted eucalyptus area will increase from 13.8 million acres to 18 million acres by 2030? Is it also possible to say that the pine area will decrease from 4 million acres to 3.2 million acres by 2030? Or would it be more prudent to adopt the rate of the last five years and predict that the planted eucalyptus area will grow by 4.8% and the pine area will shrink by 3%, totaling 13.8 million acres and 3.8 million acres, respectively?

What is your forecast for Brazil’s planted forest area? Readers are welcomed to join the wager, so send us your predictions!

To prepare their forecasts, executives at Stafford Capital Partners and Forest2Market do Brasil took into account several variables in addition to the annual planting area rate: economic conditions, demand, national investments, politics, foreign investment, environmental issues, etc., but only two things must be agreed upon by all who wish to submit a prediction: 1) Regardless of how we arrive at our various predictions, we all hope that the most optimistic forecast is correct and the Brazilian forest sector grows to new highs during this period; 2) The loser pays for the drinks!

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