FORESTRY-BASED INDUSTRY IN 2017 Base Year 2016

FORESTRY-BASED INDUSTRY IN RIO GRANDE DO SUL 2017

Message from AGEFLOR

This has been a very intense year, with political and economic crises, restructuring of international alliances, currency fluctuations, and many uncertainties. Despite all these challenges, the forestry-based sector has made headway; through its efforts to demonstrate the importance of the sector and point out bottlenecks, it accompanied the state legislature up until Sustainability its final approval of the Law for Planted Forests (No. 14961/2016) which, after There are 780,000 hectares seven years of discussion, provides a foundation and greater legal certainty of forest plantations and for the forestry industry. The law streamlines the obtaining of environmental 748,000 hectares of permits, increases the rural registration base, initiates the work of forestry re- protected areas registration, and changes the institutional responsibility for planted forests from the Ministry of Environment to the Ministry of Agriculture, aligning the state with the national guidelines of the Ministry of Agriculture.

Growth These and many other victories were only possible due to the joining of forces Constantly pursuing of organizations, the public sector and civil society. We need to stay united sustainable growth, and focused, constantly pursuing sustainable growth, streamlining streamlining bureaucracy bureaucracy and enhancing the safety of forestry-based enterprises, which and enhancing the safety are responsible for 4% of the GDP of Rio Grande do Sul. We hope that the of forestry-based data in this document can provide useful input, since policies and guidelines enterprises must be made on the basis of solid data and facts. There are 780,000 hectares of forest plantations and 748,000 hectares of protected areas that will demonstrate the responsibility the sector has toward development combined with preservation.

AGEFLOR would like to thank its members and partners who have in some way Legal framework contributed, as well as invite those who are concerned about sustainability, Despite challenges, the development and social well-being to team up with us in this ongoing forestry-based sector challenge. Our doors will be open to receive you. accompanied the state legislature until its final approval of the Law for Enjoy reading! Planted Forests (No. 14961/2016) Diogo Carlos Leuck President - 2016/2017 AGEFLOR – Association of Forestry Companies of Rio Grande do Sul

TABLE OF CONTENTS

1. Presentation 2. Forest plantations 2.1. Planted forests 2.2. Forest plantation areas 2.3. Distribution of forests planted by Regional Development Councils 2.4. Distribution of forests planted by cities 2.5. Certified forest areas 2.5.1 FSC (Forest Stewardship Council) certification 3. Industrial production 3.1. Distribution of forestry-based industries 3.2. Share of Rio Grande do Sul in domestic production 3.2.1 Pulp 3.2.2 Paper 3.2.3 Reconstituted wood panels 3.2.4 Lumber 3.2.5 Wood chips 3.2.6 Pellets 3.2.7 Charcoal 4. Non-wood forestry products 4.1. Back acacia bark 4.2. Yerba mate 4.3. Pine resin 5. Importance of the sector for Rio Grande do Sul 5.1. Exports 5.1.1 Pulp 5.1.2 Paper 5.1.3 Reconstituted wood panels 5.1.4 Lumber 5.1.5 Wood furniture 5.1.6 Wood chips 5.2. Socioeconomic indicators 5.2.1 Job creation 5.2.2 Municipal Development Index 5.2.3 Socioeconomic Development Index 5.3. Environmental Indicators 5.3.1 Conservation of natural habitats

1. Presentation

The forests planted in Rio Grande do Sul stand out for the diversification of their production chain and their creation of jobs and income, along with environmental conservation. AGEFLOR is the association in the state that represents forestry-based companies. The information contained herein seeks to demonstrate the importance of planted forests, particularly the acacia, eucalyptus and pinus genera. In this edition, the main objective was to provide an update on the planted area of each genus and in each city, highlighting the production and export data of wood and non-wood forestry products.

AGEFLOR The Association of Forestry Companies of Rio Grande do Sul is a nonprofit, private entity that represents the companies from the forestry-based production chain in the state. Founded on September 22, 1970, it encompasses companies that work in different segments of the forestry-based production chain, such as forestry and reforestation; lumber for use in construction and the furniture industry; panels (MDF and MDP), plywood, particle board, laminates and veneer sheets; pulp and paper; resins (rosin and turpentine); tannin and its by-products; treated wood poles; wood chips for producing pulp; energy (firewood and charcoal); pellets; tree seedlings; machinery and equipment; inputs and chemicals; provision of services; and consulting.

Member companies

AGRO INDUSTRIAL E PASTORIL CENTAURO LTDA Rua Carlos Trein Filho, 909, Apt. 1402 CMPC CELULOSE RIOGRANDENSE CEP (Zip Code): 90450-120 - – RS Rua São Geraldo, 1680 92500-000 - GUAÍBA - RS AGROPECUARIA CONDOR LTDA www.celuloseriograndense.com.br Rua Antônio Carlos Berta, 475 conj.1401 91340-020 - PORTO ALEGRE – RS DURATEX FLORESTAL LTDA www.agropecuariacondor.com.br Rua Julio de Castilhos, 1787 - Room 1 95860-000 - - RS AGROVER AGRICULTURA FLORESTAMENTO www.duratex.com.br Vila Ouro Verde 95480-000 - CAMBARÁ DO SUL - RS F&W FORESTRY - CONSULTORIA FLORESTAL www.cambarasa.com.br LTDA Rua Miguel Couto, 474 - Menino Deus ÂMBAR FLORESTAL LTDA 90850-050 - PORTO ALEGRE - RS Rua Ramiro Barcelos, 657 www.fms.com.uy 96225-000 – SÃO JOSÉ DO NORTE – RS www.ambarflorestal.com.br FIBRIA CELULOSE S/A Rua Gonçalves Chaves, No. 3830 ARBORGEN TECNOLOGIA FLORESTAL LTDA 96015-560 - – RS Rua Major V ieira, 795 - 1 st floor - Room 6 www.fibria.com.br 89460-000 - CANOINHAS - SC www.arborgen.com.br FLOPAL – FLORESTADORA PALMARES LTDA Rua 24 de Outubro,1557 conj. 201 BRETSCHNEIDER SERVIÇOS CONSULTORIA E 90510-003 - PORTO ALEGRE - RS ASSESSORIA LTDA www.flopal.com.br Rua Walter Souza Rodrigues, 116 - Colina 92500-000 - GUAÍBA – RS FLOSUL - INDÚSTRIA E COMÉRCIO DE MADEIRAS LTDA CAPEDE RS 040 - km 84 - Túnel Verde Av. Getúlio Vargas, 300 - Room 1 95552-000 – – RS 96750-000 - BUTIÁ – RS www.flosul.com.br www.capede.com.br GRANFLOR - GESTÃO DE EMPREENDIMENTOS CELULOSE IRANI SA FLORESTAIS LTDA Rua General João Manoel, 157 - conj. 903 Av. Carlos Gomes, 1200 - Room 502 90010-030 - PORTO ALEGRE - RS 90480-001 - PORTO ALEGRE – RS www.irani.com.br www.granflor.com.br

HABITASUL FLORESTAL S/A REFLORESTADORES UNIDOS S.A. Rua General João Manoel, 157 - conj. 903 Rodovia RS 020, km 135 90010-030 - PORTO ALEGRE - RS 95480-000 - CAMBARÁ DO SUL, RS www.irani.com.br www.reflorestadoresunidos.com.br

JIMO QUIMICA INDUSTRIAL LTDA RODOPARANÁ TIMBER FOREST EQUIPAMENTOS Rua Ítalo Raffo, 693 Av. Juscelino K. de Oliveira, 3545, CIC 94930-240 - - RS 81270-200 - CURITIBA - PR www.jimo.com.br www.timberforest.com.br

LINCK MÁQUINAS S.A. SETA SA EXTRATIVA TANINO DE ACÁCIA Av. das Indústrias, 500, Industrial District Rua 1 o de Maio, 1109 92990-000 - - RS 93600-000 - ESTÂNCIA VELHA – RS www.linckmaquinas.com.br www.seta-sa.com.br

MADEIREIRA GIACOMET S.A. - INDÚSTRIA E STORA ENSO FLORESTAL RS LTDA COMÉRCIO Av. Presidente Juscelino Kubitscheck, Rua ,1045 - 1 st floor 1400 - 12 th floor 95020-002 - – RS 04543-000 - SÃO PAULO - SP www.storaenso.com/careers/latin-america MADEIREIRA INTERNACIONAL LTDA Rua Tomaz Flores, 219 - 1 st floor TANAC SA 90035-201 - PORTO ALEGRE – RS Rua Torbjorn Weibbul, 199 95780-000 - MONTENEGRO - RS MADEM S.A. - INDÚSTRIA E COMÉRCIO DE MADEIRA www.tanac.com.br E EMBALAGENS Rodovia RSC 470 km 223.82 TANAGRO S.A. 95720-000 - GARIBALDI – RS Rua Torbjorn Weibbul, www.madem.com.br 95780-000 - MONTENEGRO - RS www.tanac.com.br MOINHOS DE TRIGO INDIGENA S/A MOTRISA Av. Carlos Gomes, 700 – conj. 801 TERRAS VERDES FLORESTADORA LTDA 90480-000 - PORTO ALEGRE - RS Rua dos Andradas,1001 – 4 th floor www.sarandialimentos.com.br 90020-007 - PORTO ALEGRE - RS www.terrasverdes.com.br PARTICIPAÇÕES RESIGAL LTDA Av. Cristovão Colombo, 3084 conj. 207 TRAMONTINA MADEIRAS 90560-002 - PORTO ALEGRE – RS Rodovia RST 471, km 233 www.resigal.com.br 96610-000 - - RS www.tramontina.com.br PINVEST PINHEIRAIS G. E I. SA Av. 24 de Outubro,1557 - Room 406 TREVO FLORESTAL LTDA 90510-003 - PORTO ALEGRE – RS Av. Padre Cacique, 320 90810-240 - PORTO ALEGRE - RS PLAJAP ATIVIDADE RURAL LTDA www.trevisa.com.br Av. Mauá, 1263 90030-080 - PORTO ALEGRE – RS VALMOR JOSÉ RAUBER Rua Adalberto Muller, 628 RAUBER E CIA LTDA 96640-000 - – RS Gen. Emilio Lucio Esteves, 1131 - Room 101 95600-000 - – RS VALOR CONSULTORIA Rodovia BR 386, km 388 S/N RB SUL INDÚSTRIA E COMÉRCIO LTDA Bairro V elha Rua B, Sector 5, Industrial District 95840-000 - TRIUNFO – RS 96204-040 - RIO GRANDE – RS www.gruporesinasbrasil.com.br

2. Forest plantations

2.1. Planted forests

The three main forest genera are grown in Rio Grande do Sul: acacia, eucalyptus and pinus. The raw materials that drive the industries in the state are obtained through growing different species of these genera. After being transformed in a wide variety of production chains, they arrive in our homes as wood, furniture, books, paper, packaging, cosmetics, paints, cleaning products and even in the treated water we use daily. The gross domestic product and economy of Rio Grande do Sul have been steadily growing, as shown in Figure 2.01. In 2016, the state’s GDP was BRL 410.276 million (Figure 2.02).

Figure 2.01 – Evolution of GDP and real growth of the state

There are approximately 780,900 hectares of planted forest in Rio Grande do Sul, corresponding to 2.7% of the 28.2 million hectares of the state's overall territory. The total estimated area of properties where silviculture is the predominant activity is 1.84 million hectares. At the national level, the planted area of Rio Grande do Sul represents approximately 10% of the total area of planted forests in Brazil. Eucalyptus plantations account for 54.5%, while pinus and acacia account for 33.9% and 11.5%, respectively.

Figure 2.02 – Composition of the state's GDP

2.2. Forest plantation area

At the national level, the forests planted in Rio Grande do Sul correspond to 10% of the national total, particularly the acacia genus, where practically 100% of the country’s plantations are located in the state, followed by pinus and eucalyptus plantations, with 17% and 8%, respectively, according to Figure 2.03.

Figure 2.03 – Representation of RS in terms of forest plantations

The history of planted area in Rio Grande do Sul is presented in Table 2.01 and Figure 2.04. The significant difference in planted area between 2015 and 2016 does not reflect an increase in planted area, but rather greater availability of data and changes in the methodology for gathering information.

Table 2.01 – Evolution of planted area by genus in RS PLANTED AREA (1,000 HA) YEAR EUCALYPTUS PINE ACACIA TOTAL 2006 184.2 181.4 142.4 508.0 2007 222.2 182.4 159.0 563.6 2008 277.3 173.2 188.3 638.8 2009 272.0 171.2 139.1 582.3 2010 273.0 169.0 89.9 531.9 2011 280.2 164.8 89.1 534.1 2012 284.7 164.8 90.2 539.7 2013 316.4 164.2 88.8 569.4 2014 309.1 184.6 103.6 597.3 2015 308.5 184.6 100.0 593.1 2016 426.7 264.6 89.6 780.9 Source: AFUBRA, AGEFLOR, FEPAM, RDK Logs, SEMA.

Figure 2.04 – Evolution of planted area by genus in RS

Note: The data for acacia plantations in 2009 was estimated by Consufor (2016). Source: AGEFLOR / Adaptation: RDK Logs. The genus that occupies the largest planted area in the state is eucalyptus, followed by pinus and acacia. In the last ten years the area planted with eucalyptus has grown; the area planted with pinus has remained stable (until this last survey at which time there was a change in the collection methodology), with a downward trend; and there has been a decrease in the production area of acacia (Figure 2.05).

Figure 2.05 – Evolution of planted area by species in RS

However, AGEFLOR estimates, based on the data collected in this work and based on the knowledge of the state's forestry producers, that the planted forest area in Rio Grande do Sul was over 800,000 hectares in 2016. Silviculture is an activity found on small family farms as well as major industrial projects that have forest assets as the basis of their activities. In 2016, there were 29,440 forestry producers registered with SEMA, with the largest number of forestry workers found in Montenegro, and Triunfo (Figure 2.06).

Figure 2.06 – Spatial distribution of registered forestry producers in RS

2.3. Distribution of forests planted by Regional Development Councils

The Regional Development Councils (RDC) were created by Law No. 10283/1994 and are regulated by Decree No. 35764/1994. Their objective is to promote harmonious and stable regional development; integration of resources and actions of the government and region; improvement of the population's quality of life; equitable distribution of the wealth produced; encouragement of people to remain in their regions; and the preservation and recovery of the environment. The state is divided into 28 Regional Development Councils that seek to formulate public policies for each region. The Regional Development Councils with the largest coverage of planted forests can be seen in Table 2.02.

Table 2.02 - Regional Development Councils with the largest coverage of planted forests

Source: AFUBRA, AGEFLOR, FEPAM, RDK Logs, SEMA.

The South Regional Development Council has the largest coverage of planted forests, with 20.3% of the total, followed by V ale do Rio Pardo, with 14%, and Center-South and Hortênsias, with 12.3% and 12.2% respectively (Figure 2.07). Eucalyptus is the genus most grown in the following Regional Development Councils: Center- South (18.8%), South (17.4%), Vale do Rio Pardo (16.9%) and Western Border (9.8%) (Figure 2.08). Pinus is the genus most planted in the following Regional Development Councils: Hortênsias (34.9%), South (18.8%), Campos de Cima da Serra (15.9%) and Coast (10.7%). With respect to black acacia, it is planted in the Regional Councils of the South (38.8%), Vale do Rio Pardo (18.6%), Center-South (12.3%) and Campanha (10.7%) (Figure 2.10).

Figure 2.07 – Spatial distribution of forests planted by Regional Development Councils Total

Figure 2.08 – Spatial distribution of forests planted by Regional Development Councils Eucalyptus

Figure 2.09 – Spatial distribution of forests planted by Regional Development Councils Pinus

Figure 2.10 – Spatial distribution of forests planted by Regional Development Councils - Acacia

2.4. Distribution of forests planted by cities

The first commercial forest plantations in Rio Grande do Sul date back to the beginning of the twentieth century: black acacia in the V ale do Rio dos Sinos region, eucalyptus in the Pampa Gaucho region, and pinus in the Highlands region. The first specimens were eucalyptus, introduced right after the Revolution (1835-1845).

Since then, forest plantations have been promoted by the state and, today, they can be found in practically every city in Rio Grande do Sul. Table 2.03 presents the 20 cities with the largest coverage of planted forests. The spatial distribution of the plantations in the state can be seen in Figure 2.11.

Table 2.03 – Cities with the largest planted area in RS CITY PLANTED AREA (HA) Encruzilhada do Sul 59,957 São Francisco de Paula 42,957 36,262 Cambará do Sul 29,776 Canguçu 22,473 Butiá 21,721 19,199 Bom Jesus 17,078 16,734 Triunfo 16,508 Bagé 15,666 15,618 São José dos Ausentes 15,328 Pantano Grande 15,153 São Gabriel 14,524 São José do Norte 14,172 Rio Pardo 11,791 11,306 10,979 Rio Grande 10,729

Figure 2.11 – Spatial distribution of forests planted by cities

The planted area of eucalyptus in the state is the most representative, particularly in the cities of Encruzilhada do Sul, Butiá and Pantano Grande (Table 2.04 and Figure 2.12), accounting for 5.9%, 4.8% and 3.6% of the eucalyptus plantations, respectively.

Table 2.04 – Cities with the largest planted area of eucalyptus in RS CITY PLANTED AREA (HA) Encruzilhada do Sul 25,108 Butiá 19,716 Pantano Grande 15,153 São Gabriel 14,472 Bagé 11,360 Rio Pardo 10,663 Triunfo 10,394 10,194 10,035 Canguçu 9,839 Cachoeira do Sul 9,716 Pinheiro Machado 9,632 Taquari 9,632 São Jerônimo 9,056 8,472 Piratini 8,266 Dom Feliciano 7,807 Eldorado do Sul 7,443 7,329 São Francisco de Assis 7,127

Figure 2.12 – Spatial distribution of forests planted by cities Eucalyptus

The planted area of pinus in the state is second in terms of representation, particularly in the cities of São Francisco de Paula, Cambará do Sul and Encruzilhada do Sul (Table 2.05 and Figure 2.13), accounting for 15.5%, 11.1% and 7.3% of the pinus plantations, respectively.

Table 2.05 – Cities with the largest planted area of pinus in RS CITY PLANTED AREA (HA) São Francisco de Paula 41,117 Cambará do Sul 29,419 Encruzilhada do Sul 19,261 Bom Jesus 16,997 Jaquirana 16,486 São José dos Ausentes 15,307 Mostardas 14,943 Piratini 14,446 São José do Norte 14,076 Cachoeira do Sul 8,825 Rio Grande 6,902 Santa V itória do Palmar 6,727 4,384 4,254 Canela 4,185 Canguçu 3,523 Tavares 3,128 Caxias do Sul 3,035 2,965 Tapes 2,793

Figure 2.13 – Spatial distribution of forests planted by cities Pinus

Table 2.06 – Cities with the largest planted area of black acacia in RS CITY PLANTED AREA (HA) Encruzilhada do Sul 15,589 Piratini 13,550 Canguçu 9,111 Triunfo 6,114 Montenegro 5,344 Bagé 4,306 3,745 Jaguarão 2,484 2,479 2,464 São Jerônimo 2,206 Pinheiro Machado 1,674 Dom Feliciano 1,596 Cristal 1,251 1,093 Butiá 1,076 Camaquã 1,037 1,034 829 Arroio dos Ratos 797

Black acacia is another important tree planted in Rio Grande do Sul, which accounts for practically all the planted area of Brazil. Plantations of this genus are important in the following cities: Encruzilhada do Sul, Piratini and Canguçu (Table 2.06 and Figure 2.14) with 17.4%, 15.1% and 7.3% of the black acacia plantations, respectively.

Figure 2.14 – Spatial distribution of forests planted by cities Acacia

2.5. Certified forest areas

The forest certification process seeks to ensure that wood is from areas where forest management is environmentally friendly, socially just and economically feasible. One of its requirements is total compliance with current laws. In view of this, forest certification is used as a marketing element of companies, which contributes to their image and products, besides facilitating access to international markets.

2.5.1 FSC (Forest Stewardship Council) certification

In Rio Grande do Sul, there are around 300,000 hectares of planted areas certified by the FSC. Figure 2.15 shows the share of certified areas in relation to the total, in Brazil and the state.

Figure 2.15 – FSC certified areas in Brazil and RS

3. Industrial Production

3.1 Distribution of forestry-based industries

In Rio Grande do Sul, the forestry production chain is comprised of approximately 2,300 companies, particularly from the wood furniture segment, accounting for 95% of these companies, located in the furniture hubs of Bento Gonçalves and . The main wood panel and cellulose companies are found in the metropolitan region of Porto Alegre. Figure 3.01 illustrates the distribution of forestry-based industries and production hubs in the state.

Figure 3.01 – Distribution of forestry-based industries in RS

3.2 Share of RS in domestic production

3.2.1 Pulp

In 2016, pulp production in Rio Grande do Sul reached the mark of 1.8 million tons, representing 10% of domestic production. Pulp production in Brazil grew 7.8% in relation to 2015 (Figure 3.02)

Figure 3.02 – Industrial pulp production

3.2.2 Paper

Paper production in Rio Grande do Sul is not significant. The state accounts for only 2% of domestic production, totaling approximately 220,000 tons of paper produced, a growth of 10% in relation to 2015, as shown in Figure 3.03.

Figure 3.03 – Industrial paper production

3.2.3 Reconstituted wood panels

In 2016, domestic production of reconstituted wood panels rose arose 4% year-on-year. In Rio Grande do Sul, production dropped 7.8% compared to 2015, totaling 1.42 million cubic meters. However, the state holds a prominent place in this sector with 19% of domestic production (Figure 3.04).

Figure 3.04 – Industrial production of reconstituted wood panels

3.2.4 Lumber

Lumber production also grew in relation to 2015, primarily due to the sharp growth in exports. There was a drop in the domestic market due to the crisis and slowdown in the construction sector. In 2016, Rio Grande do Sul produced approximately 1.63 million cubic meters of lumber (Figure 3.05).

Figure 3.05 – Industrial lumber production

3.2.5 Wood chips

Rio Grande do Sul dominates domestic wood chip production, accounting for 74% of total production in the country. In 2016, the state produced 1.7 million tons of the product, a growth of 88% in relation to 2015 (Figure 3.06)

Figure 3.06 – Industrial wood chip production

3.2.6 Pellets

Pellet production in Rio Grande has been growing significantly, and in 2017 two new plants started up production in the cities of Rio Grande (TANAC S.A.) and São José dos Ausentes (Forespel Ltda). Pellet production in 2016 grew 40% (Figure 3.07).

Figure 3.06 – Industrial pellets production

3.2.7 Charcoal

In 2016, charcoal production in Rio Grande do Sul was stable, remaining at 144,000 tons, i.e., corresponding to only 3% of domestic production, as shown in Figure 3.08.

Figure 3.08 – Industrial charcoal production

4. Non-wood forestry products

In Rio Grande do Sul, the production of non-wood forestry products is comprised primarily of tannins (derived from acacia bark), yerba mate and resin (extracted from pine trees).

4.1. Black Acacia Bark

Black acacia bark is one of the main products derived from these trees. This species has been historically renowned for the quality of its bark, from which tannins are extracted and highly used in the leather industry and for producing adhesives and flocculants for water and effluent treatment. Acacia bark is outstanding in terms of yield and quality. As a result, it is currently the main source for the plant tannin industry in the world.

The production of acacia bark for tannin extraction is concentrated in Rio Grande do Sul and accounts for all of the country's production. In 2016, approximately 230,000 tons of acacia bark were produced, representing a growth of 15%. Since 2013, there have been small annual increases in production. The export of tannin extracted from acacia totaled USD 49.6 million in 2016 (Figure 4.01).

Figure 4.01 – Acacia bark production and value of exports in RS

4.2. Yerba mate

Yerba mate ( Ilex paraguariensis A. St.-Hil. ) is the main native forest product of southern Brazil. The plant inhabits only broad-leaved forests and pine forests of part of the South American continent. It is a native plant endemic to southern Brazil, and only exists naturally in Brazil, Argentina (state of Missiones) and Paraguay. Yerba mate is planted on a commercial scale, whether monocropped or intercropped with other agroforestry crops. Chimarrão (mate) or tea is prepared from infusion of the leaves and proper processing.

The yerba mate production chain generates around 700,000 jobs, encompassing more than 725 processing companies, which produce 355,000 tons per year and provide income for 180,000 family families working in 486 cities in the states of Rio Grande do Sul, Santa Catarina, Paraná and Mato Grosso.

Yerba mate crops in Rio Grande do Sul are typical on small family farms. Its production chain, with over 250 industries, is based on 13,000 family farms which plant around 30,000 hectares. Yerba mate is the tree symbol of the state of Rio Grande do Sul (Decree Law No. 7439/80), and chimarrão is the typical beverage of the state's residents (Law 11929/03).

Rio Grande do Sul is the nation’s largest producer of yerba mate leaves, and the Alto V ale do Taquari region accounts for about 50% of all the state’s production. The cities of Ilópolis and are the leading producers, with 21% and 18% of the total production of Rio Grande do Sul, which totaled 280,000 tons in 2015. (Figure 4.02). In 2016, the state exported USD 66 million, a drop of 17.3%. The main destination of this product is Uruguay.

Figure 4.02 – Yerba mate production in RS

4.3. Pine resin

Gum resin or natural resin from pine trees is a non-wood forestry product collected from live trees through a resin extraction process similar to the one used for rubber extraction. In Rio Grande do Sul, the species used the most for extracting resin is Pinus elliotti , mainly in planted areas on the coast, since it has a better balance between resin quality, extraction yield and regional climate. Mean annual production varies from 2 to 4 kg of resin per tree. Rosin and turpentine are obtained from pine resin through washing and distillation processes.

Rosin can be used as a raw material for paint, varnish, glue, adhesives, enamel, synthetic rubber and thermal insulation applications. Turpentine has various applications in the chemical and pharmaceutical industries, as an ingredient in cleaning products, disinfectants, insecticides, perfume fixatives and deodorants, among others.

Resin production in the state rose 72%, totaling a volume of 36,000 tons, representing 21.4% of domestic production or 168,000 tons (Figure 4.103). In 2016, Rio Grande do Sul increased the volume of resin it exported by 2.4 times, for a total of 13,160 tons (Figure 4.04).

Rosin and turpentine exports totaled USD 21.7 million and USD 5.3 million, respectively, in 2016, remaining stable in relation to 2015.

Figure 4.03 – Rosin and turpentine exports and resin production in RS

Figure 4.04 – Resin exports in RS

5. Importance of the forestry sector for RS

5.1. Exports

In 2016, forestry-based exports from Rio Grande do Sul grew 49.2% year-on-year, primarily due to resins, pulp and reconstituted wood panels which experienced the largest growth rates: 138.6%, 93.65% and 92.23%, respectively. This increase also meant that the sector had a larger share in the state's total exports, corresponding to 6% of the USD 16.57 billion traded in 2016. Since 2015, pulp has been the leading forestry- based product exported by Rio Grande do Sul, representing 59% of the total (Figure 5.01).

Figure 5.01 – Forestry-based exports from Rio Grande do Sul

5.1.1 Pulp

Pulp exports reached the mark of USD 592 million in 2016, 93.65% higher than 2015, due to the expanded production of the Celulose Riograndense factory in Guaíba (Figure 5.02). In recent years, the average price of pulp has fluctuated little, after reaching its peak in 2011, when it stood at USD 549 per ton. The average price has since dropped to USD 408 per ton.

Figure 5.02 – Evolution of pulp exports in RS

5.1.2 Paper

Paper exports from Rio Grande do Sul had been growing in volume since 2009, but in 2016 the total value of exports dipped 5.9%, due to the sharp drop in the average price (22%) (Figure 5.03). In domestic terms, the state accounts for only 2% of the country's exports. The average price paid per ton of paper in 2015 was USD 1,172, 22% lower than the average value obtained in 2015. The primary destination of the state's paper exports is Uruguay.

Figure 5.03 – Evolution of paper exports in RS

5.1.3 Reconstituted wood panels

In 2016, exports of reconstituted wood panels from Rio Grande do Sul totaled USD 32 million, representing a 100% increase compared to 2015. However, in terms of average price, it was 24.5% lower than in 2015 and 42% lower than 2014. The volume exported was 2.5 times higher than in 2015, with a total of 118,000 tons, as opposed to 46,000 tons in 2014 (Figure 5.04.).

Figure 5.04 – Evolution of reconstituted wood panel exports in RS

5.1.4 Lumber

Rio Grande do Sul regained its 2007 level of exports – the year before the major U.S. real estate market crisis in 2008 – with 116,000 tons. However, the average price of products exported slid by around 10% (Figure 5.05).

Figure 5.05 – Evolution of lumber exports in RS

5.1.5 Wood furniture

Exports of wood furniture from Rio Grande do Sul fell slightly, totaling USD 155 million in 2016. The average export price of wood furniture has been dropping since 2011. This downward trend continued in 2016, with prices below those in 2015 (Figure 5.06).

Figure 5.06 – Evolution of wood furniture exports in RS

5.1.6 Wood chips

Rio Grande do Sul is Brazil's leading exporter of wood chips. In 2016, the state exceeded the mark of 1 million tons, climbing to 1,106 million tons and generating USD 90 million. Despite the higher amount compared to 2015, average export prices were well below the peak reached in 2012, when the average price paid per ton of wood chips was around 22% higher (Figure 5.07).

Figure 5.07 – Evolution of wood chip exports in RS

5.2. Socioeconomic indicators

5.2.1 Job creation

In 2016, it is estimated that the number of jobs in the forestry-based sector in Rio Grande do Sul was around 373,000. Of these, 63,450 were direct jobs, 112,000 were indirect and 198,000 were the result of income effect. Therefore, the forestry-based sector made a positive contribution to job and income generation in the state (Figure 5.08).

Figure 5.08 – Distribution of the number of jobs in the sector

The jobs generated and maintained in the forestry-based sector range from rural laborers employed in silviculture to more skilled industrial manpower. The average salary (rural and industrial) of workers in the forestry-based sector is BRL 1,448 per month, which is 6% higher than the monthly salary paid to agricultural workers in the state (Figure 5.09).

Figure 5.09 – Average monthly salary by economic activity

5.2.2 Municipal Development Index

The Firjan Municipal Development Index, an indicator similar to the Human Development Indicator (HDI), annually monitors the socioeconomic development of over 5,000 Brazilian cities in relation to three areas: jobs and income, education, and health.

The evolution of the Firjan Municipal Development Index from 2005 to 2013 shows that some cities in Rio Grande do Sul that are more focused on forestry activities achieved higher results than the capital, Porto Alegre, and the mean for the state (Figure 5.10).

The index varies from zero to one, such that even small increases are reflected in real change in the quality of life of cities.

Figure 5.10 – Average increase in the Firjan Municipal Development Index in cities, particularly in the percentage of planted forests

Most quality of life improvements in these cities can be attributed to the jobs generated and investments made by forestry-based companies from Rio Grande do Sul.

Figure 5.11 – Average increase in the Firjan Municipal Development Index in cities, particularly those with forestry-based industries

5.2.3 Socioeconomic Development Index

The Socioeconomic Development Index, monitored by the Foundation of Economics and Statistics of Rio Grande do Sul (FEE), seeks to measure the level of socioeconomic development of the cities in the state. Twelve indicators, divided into three areas, are assessed: education, income and health.

Among the indicators analyzed, those related to income were of significant importance for socioeconomic development, with average growth of 11% from 2007 to 2013 (Figures 5.12 and 5.13). Similar to HDI and the Firjan Municipal Development Index, the Socioeconomic Development Index indicates a higher level of municipal development when these indicators approach a value of 1. From 2007 to 2013, the average growth rate of the index in the cities from Rio Grande do Sul was 0.05 points.

Figure 5.12 – Average increase in the Socioeconomic Development Index in cities, particularly those with planted forests

Figure 5.13 – Average increase in the Socioeconomic Development Index in cities, particularly those with forestry-based industries

5.3. Environmental indicators

5.3.1 Conservation of natural habitats

The forestry-based sector contributed significantly to the conservation of natural areas and the recovery of degraded areas in Rio Grande do Sul. The rural areas with forestry-related activities maintain 748,000 hectares of protected areas in the form of Legal Reserves, Permanent Protection Areas and Private Natural Heritage Reserves, as well as archaeological sites and a wide variety of remaining natural habitats. This area is 20% larger than the conservation areas legally defined as Conservation Units in the state (Figure 5.14).

Figure 5.14 — Conservation areas in Rio Grande do Sul

Based on already licensed enterprises or those in the regulatory stage with Fepam, it is estimated that forestry enterprises preserve 286,000 hectares of permanent protection areas, conserve 462,000 hectares of native habitats and use another 50,000 hectares as support areas for forestry production.

Prepared by: RDK Logs Ltda Rio Grande do Sul – Brazil + 55 51 99656-5634 [email protected]