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  • Brazilian Finance Minister predicts employment recovery in 2017

    2017 - 05.08

    Brazilian minister of finance Henrique Meirelles has predicted the labour market will reverse the negative trend before the end of the year.

    Speaking at an event in Washington, he asserted that there are definite signs of economic recovery ahead, but stressed the importance of approving economic reforms so the country could consolidate the recovery of growth.

    “There is no doubt that we will see a strong spike in employment in 2017. Afterwards, certainly very strong recovery in 2018, causing unemployment to fall sharply,” said the Finance Minister. “Our conviction is that the approval of these reforms will soon become reality so this growth of the economy can be consolidated.”

    Meirelles predicted that Brazil should begin to show growth in the first quarter, and lauded the signs of economic improvement that are already becoming evident.

    Forecasts have Brazil growing between 0.5 and 0.7 per cent quarter on quarter in the three months ending in March, with Meirelles expecting a 2.7 per cent expansion when compared with 2016’s last quarter.

    “The reason is that Brazil had a much worst-than-expected recession last year. And then, the GDP further declined and we had a lower basis to start the year with,” said Meirelles. “But we are already growing month-on-month.”

    The boost in employment will in part be due to the modernisation of labour laws. Another important factor will be pension reforms.

    The pension reform is currently under review by a special committee of the Chamber of Deputies. Approving it would provide for the adoption of a minimum retirement age of 65 for men and 62 for women.

    In 2016, the deficit in Brazil’s social security budget was R$ 149.7 billion, and it’s forecast that the shortfall for this year will rise to R$188.8 billion. Without pension reform, it’s estimated that the deficit will reach R$202.2 billion.

    The traction that the Brazilian economy is beginning to regain will no doubt have positive knock-on effects for the timber industry, with a boost to investment returns.

    Brazil’s industrial production ‘recovering’

    2017 - 05.05

    Industrial output in Brazil enjoyed its best quarter one since the first three months of 2013, data shows.

    Brazil’s government said that as the country’s economy begins to recover, industrial production is beginning to show “signs of recovery” in good news for forestry investors.

    Figures from the Brazilian Institute of Geography and Statistics (IBGE) show growth in the industrial sector of 0.6 per cent for the first quarter of 2016.

    This is the first time since 2013 – when output increased by 2.1 per cent – that industry growth has been positive, after experiencing “bitter consecutive losses”.

    “However, the scenario began a reversal in the wake of the reforms and measures implemented by the government,” it said in a statement.

    “Losses were gradually turned into positive results. The sector’s performance is still far from ideal, now close to 2008 numbers, but is expected to fully recover in the coming months and years.”

    The IGBE said more industries are reporting growth, with positive results seen in two of the four major economic categories.

    Among the sectors surveyed, those that made the greatest contributions to the positive results were mining and quarrying (8.2 per cent) and motor vehicles, trailers and vehicle bodies (11.5 per cent).

    Other major contributors include computer equipment (18.3 per cent), apparel and accessories (eight per cent), metallurgy (1.9 per cent), rubber and plastic products (2.7 per cent), textiles (6.2 per cent) and machinery and equipment (two per cent).

    Macquarie buys UK Green Investment Bank

    2017 - 05.01

    Macquarie, an Australian bank known for infrastructure financing, has led the purchase of the British government’s Green Investment Bank for £2.3 billion, according to reports.

    Macquarie, which was joined by Macquarie European Infrastructure Fund 5 and the Universities Superannuation Scheme, a UK pension fund, has made the investment as part of plans to expand its green investment foothold across the UK and Europe.

    Since it was first launched in 2012, the Green Investment Bank has invested a total of £3.4 billion in public funds in more than 100 low-carbon and green infrastructure investment projects.

    Currently, the Green Investment Bank has stakes in 85 projects across a variety of sectors, including an energy efficient street lighting project in Barking and Dagenham and a wind farm in Dumfries and Galloway.

    The bank is also responsible for managing the world’s first offshore wind fund, which includes private capital from a sovereign wealth fund, European institutional investors and a number of UK pension funds

    Following the announcement of the deal, critics questioned the sale over concerns the Australian bank could strip the bank’s assets. However, Macquarie said ‘special share’ arrangements held by independent trustees will safeguard the bank’s green purpose.

    Mirroring these concerns, environmental groups have urged Macquarie to stay true to the bank’s original purpose by honouring its mission to green mission and providing substantial capital for green investments.

    Karen Ellis, chief adviser on economics and development at WWF-UK, said: “Numerous market failures are constraining the availability of finance for green investment, so to ensure the Green Investment Bank continues to deliver on its mandate, it should invest in novel green projects, which are less likely to be funded privately; it needs to focus on crowding in additional finance by reducing the barriers to investment.”

    Target commits to sustainable packaging goals

    2017 - 04.26

    Retail giant Target has announced five new sustainable packaging goals that aim to help the brand’s customers “take a step toward sustainable living”.

    Leading the announcement, Jen Silberman, Target’s Chief Sustainability Officer, suggested that the firm wanted to increase their commitment to sustainable wood use and other environmental concerns: “As a leader in design, we can use our expertise to create more sustainable packaging options for our guests and help deliver products that are both better-for-you and better for the environment.”

    The five goals include the sourcing of all brand-owned paper-based packaging from sustainably managed forests and the elimination of expanded polystyrene from brand-owned packaging by 2022.

    Additionally, the brand will aim to add the How2Recycle label to all of its brand-owned packaging by 2020, while also supporting The Recycling Partnership’s mission to encourage more than 25 per cent of Americans to recycle by 2020.

    Finally, the goals highlighted the brand’s desire to create greater demand for recycled packaging by creating three new end markets for recycled materials and educating consumers by 2020. This particular goal will be achieved alongside two industry efforts – the Material Recovery Facility of the Future and Beyond 34, with the former focusing on increasing the percentage of packaging that can be recycled and the latter focusing on raising the recycling rate among consumers.

    Silberman added: “With the power of Target’s team and our scale as one of the country’s largest retailers, we hope to be a catalyst for change across the industry — aiming for the day when all packaging will be recyclable and leading the way to a packaging-waste-free world.”

    The announcement comes just weeks after Target released a new forest products policy, in which it pledged to source all of the wood, paper, paper-based and wood-based fibre used in its branded products from recycled materials and credibly certified forests.

    Rainforest conservation ‘may be aimed at the wrong areas’

    2017 - 04.18

    According to new research published in Nature’s open-access journal Scientific Reports, the conservation efforts implemented as part of the Reducing Emissions from Deforestation and Forest Degradation (REDD+) policy framework could be aimed at the wrong areas.

    Currently, forest conservation projects are based on previous research that has indicated that tree diversity may have a positive correlation with carbon storage ability, or that forests with a greater number of tree species could potentially store more carbon that forests with fewer species.

    However, a group of international scientists have discovered that no set carbon storage-tree diversity relationship exists on a large scale, such as in the Amazon rainforest. In fact, the report revealed that tropical rainforests in Africa actually show that carbon storage is high in an area with low tree diversity. Similarly, in South America the researchers found that tree diversity was high while carbon storage was low.

    As a result of the findings, researchers have suggested their results indicate some current conservation campaigns, including those promoted by REDD+, could be aimed at the wrong areas and lead to more stringent deforestation and conservation rules being applied to the less crucial forest areas, and vice versa.

    Commenting on the findings, the authors said: “Methods to select protected areas that consider multiple metrics of conservation value (e.g. above ground biomass carbon and aspects of biodiversity) are available. Our results support the use of such an approach over carbon-dominated prioritisation incentivised under REDD+.

    “Applying this in practice is challenging as it requires knowledge of spatial variation in tree diversity, composition and carbon stocks, highlighting the importance of careful identifications to species level during forest inventories,” they added. “As tropical forests can have any combination of tree diversity and carbon both will require explicit consideration when optimising policies to manage tropical carbon and biodiversity.”

    Fund acquires stake in Laos plantation to boost sustainable timber

    2017 - 04.12

    Tropical Asia Forest Fund (TAFF), managed by Sydney-based New Forests, has completed the acquisition of a majority stake in one of the largest hardwood plantation estates in Laos, with the aim of boosting sustainable timber production.

    The Australian-based fund reportedly purchased 85 per cent of Mekong Timber Plantations based on plans to develop the 54,000-acre site as a high-quality sustainable hardwood plantation to serve regional markets.

    New Forests, a specialist in sustainable land and infrastructure, made its investment through the $170 million TAFF fund, which is the only forestry fund in Southeast Asia for institutional investors.

    The purchase further supports its investment aims of acquiring significant interests in plantation timber companies and investing to transition assets towards higher value end markets, as well as servicing the growing demand for certified, sustainable timber in Asian markets.

    Currently, the TAFF fund’s investments include eucalyptus and acacia plantations, as well as a rubber plantation that will produce both latex and timber products.

    Commenting on the fund’s purchase of the plantation, CEO David Brand suggested that the organisation is steadily aiming to expand its investment portfolio across the Southeast Asia region. “The fund has proven that there is an opportunity for institutional investors to contribute to the shift of Asia’s forest sector to long-term, sustainable management,” he said.

    Mr Brand added that he hopes the Laos plantation will be “cash-flow positive” in between two and three years. Additionally, the fund is replanting its plantation in Malaysia with high-quality timber, which is expected to take around 14 years to mature.

    “With a patient and disciplined approach to acquisitions, good forestry investments are available throughout the region. We also believe there is great opportunity to improve silviculture, increase growth rates, and develop markets linked with the growing demand for wood products in Asia.”

    Platform to connect traders of timber products

    2017 - 04.10

    A new platform designed to connect buyers and sellers of legal and certified timber products in a way that is safe, clear and friendly to the environment is now being promoted.

    Known as the BVRIO Responsible Timber Exchange, the platform gives members the opportunity to post requests and offers and receive their replies online, which is predicted to increase market efficiency and reduce illegal timber trading.

    According to the Ghana associate of the BVRIO, Mr James Mckeown Parker, the system will support traders across the sector to verify that timber being purchased is legal, so they can buy in confidence.

    “Since it’s difficult to come down here and do that, our system is going to help them,” he said. “We will hook our system into the Wood Tracking System (WTS) that has already been developed so that with the click of the button you do your assessment there and then you can buy timber legally.”

    According to Mr Parker, the Forestry Commission has previously completed a successful pilot for the domestic market. “Unlike formerly where contractors were issued timber utilisation permits for a concession, they gave them documents along the chain when they harvested but all these are going to be digitised and will go into the WTS,” he said.

    The platform reportedly also includes an in-built risk assessment system designed to help users conduct due diligence of each of the timber consignments they trade in. President of BVRIO, Mr Pedro Moura Costa, suggests that this means it could be beneficial in Brazil, where there’s an estimated 60 per cent illegality. According to Mr Costa, the BVRIO can create the exchange to promote the trade of legal timber and producers complying with the law.

    Stakeholders in forest and agricultural commodities supply chain – particularly those within timber, palm oil and cocoa – and government and civil society representatives from a number of countries affected by illegal timber trading have already met in Ghana to discuss how this platform can be utilised around the world to support sustainable commodity markets.

    Brazil trade surplus reaches record levels

    2017 - 04.05

    Latin America’s biggest economy logged a trade surplus in March of a record $7.1 billion, which marks the highest monthly gain since 1980, when data was first compiled by the Brazilian government. These results are believed to be due, in part, to the weaker currency helping to power agricultural exports, and a two-year recession that is weighing on local demand for foreign goods and imports.

    According to Brazil’s Ministry of Development, Industry and Trade, the March results were 61 per cent greater than they were just 12 months ago, with this high level of exports playing a pivotal role in the performance of the Brazilian economy.

    The news comes despite the recent unveiling of a corruption scheme within Brazil’s Ministry of Agriculture, which unmasked corruption between the operators of regional plants and health inspectors, the latter of which were receiving bribes in exchange for fraudulent sanitary permits. This resulted in a number of countries temporarily banning Brazilian meat imports as the investigations took place.

    Following the uncovering of the scandal, meat exports from Brazil dropped from $63 million to only $74,000 per day, or from $15.47 billion in February up to $20.1 billion in March. However, overall meat exports rose by 4.4 per cent in March compared to 12 months ago, when the daily average was $57 million and the overall export total for the month reached $16 billion.

    “This drop shows that importers were initially scared, but the government acted promptly to overcome the image crisis,”, said Herlon Brandão, the Ministry’s director of Statistics and Support to Exports. Imports were also found to have increased by 7.1 per cent, or from $10.9 billion in February to $12.9 billion in March 2017.

    Brazil soybean exports to reach record high

    2017 - 04.04

    The record soybean crop being harvested in Brazil will generate record levels of soybean exports in 2017, according to Hamburg-based oilseeds analysts Oil World.

    The organisation has estimated that Brazil will harvest 108.5 million tonnes of soybeans in early 2017, up from 95.43 million in early 2016. “We estimate Brazilian soybean exports will be boosted to a new high of 61.4 million tonnes in calendar year 2017, up 9.8 million tonnes from last year,” they said in a statement. “The increase in exports could be even higher, considering that the Brazilian soybean crop will rise by at least 13 million tonnes.”

    The forecast is above the 59.8 million tonnes originally predicted by Brazilian vegetable oil industry association Abiove in March, with Rally da Safra, the main expedition to monitor grain harvest, predicting a harvest of 113.3 million tonnes of soybeans this year.

    In fact, the result of the Safra Rally was a record yield of 49.78 bushels per acre, compared with 43 bushels per acre in the previous season. “This is a spectacular soybean harvest,” said André Pessôa, coordinator of the Rally da Safra. “This year, rains occurred earlier and were constant throughout the season, and farmers took advantage of early planting.”

    This earlier soybean harvest reportedly allowed for effective implementation of the second-corn crop, offering a “positive outlook” and increasing the chance of higher productivity of corn.

    This increase in productivity is reflected around South America, with soybean harvests delivered by leading producers Brazil, Argentina, Paraguay, Bolivia and Uraguay also forecast to rise to 180.2 million tonnes in early 2017, up from 165.3 million tonnes last year, according to Oil World.

    According to consultancy AgRural, the soybean harvest has reached 68 per cent of the planted area across South America. In a statement released in March, AgRural said that productivity is surpassing estimates, adding that production estimates will be revised as a result.

    New study offers blueprint for indigenous forest monitoring

    2017 - 03.29

    A new study has revealed that well-trained indigenous people are as effective in monitoring rainforest as forestry professionals, and can provide a number of benefits.

    According to the study’s authors, the use of indigenous tribes can be more cost-effective, takes less time and helps to meet the requirement of participation by indigenous peoples in Reducing Emissions from Deforestation and Forest Degradation (REDD+) programs.

    As part of the study, a thirty-strong team of indigenous technicians performed a forest inventory to measure forest carbon released in five Emberá and Wounaan territories across Darién, Panama. This data was then compared with that of forestry experts.

    The study also compared the tree height and diameter data that was previously gathered by expert technicians and indigenous technicians. In both cases, the research revealed that there were no significant differences between the two.

    Smithsonian predoctoral fellow and McGill University Ph.D. Candidate Javier Mateo-Vega, lead author of the new study, commented that this approach could be a valuable and cost-effective alternative to traditional forest management around the world, including across Africa, Asia and Latin America.

    He said: “Given that large swaths of tropical forests, and forest carbon stocks, are held in indigenous territories, both recognised and under claim, it behooves national REDD+ programs to engage with these communities in culturally appropriate ways that will ensure their legitimate participation, generate clear benefits for them, and leave a legacy of capacity for future REDD+ related endeavours.”

    According to Mateo-Vega, this new forestry method is not only cost-effective, fast, and accurate, but also encourages the active participation of indigenous communities in climate change mitigation strategies, such as in REDD+.

    Mateo-Vega added that the study could provide a blueprint for carrying out the same process elsewhere in the tropics, including in Brazil, Peru and Guyana.