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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).

    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.”

    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.

    Brazil agribusiness exports to Middle East reach $1.35bn

    2017 - 03.22

    The Arab-Brazilian Chamber of Commerce (ABCC) is confident that trade relations between the Middle East and Brazil will continue to thrive this year following considerable growth in the first two months of 2017.

    According to data released by Brazil’s Ministry of Agriculture, Livestock and Supply (MAPA), the value of Brazil’s agribusiness exports to the Middle East reached $1.336 billion, an increase of 22.8 per cent compared with 12 months ago. Reportedly, top exports included soy, poultry, beef and raw sugar.

    The report revealed that the share in total foreign sales in the region held by the sector increased to 11.3 per cent in January and February of this year, up from 9.3 per cent in the first two months of 2016, resulting in the Middle East claiming the label of Brazil’s third largest agribusiness importer for the period behind Asia and the European Union.

    Of the Middle Eastern countries relying on Brazilian exports, Saudi Arabia was named the top buyer as a result of transactions reaching $426.5 million, surpassing figures for January and February 2016 by almost 30 per cent.

    Commenting on the results of the report, Dr Michael Alaby, CEO of ABCC stated that the Middle East’s growing demand for Brazil’s agribusiness products could be due in part to its rising population and its economic growth, as well as a drive to continue trade ties between the two areas.

    “In the coming years, we will see stronger coordination and cooperation built upon mutual confidence, trust, and common interests in line with our commitment to increase trade and investment flows between the country and its key Arab partners,” he said.

    “We would like to believe that the new MAPA data concerning Brazil’s flourishing agribusiness exports to the region is a positive nod to our relentless efforts.”

    Brazil economy sees historic job increase

    2017 - 03.20

    In a sign that the Brazilian economy could be emerging from its worst recession in a century, figures have revealed that the country has added jobs for the first time in almost two years.

    According to President Michel Temer, the country added 35,612 jobs in February 2017, in the first monthly increase since March 2015. Mr Temer added that many of these new positions are within the agriculture, manufacturing and services industries.

    The data also revealed that job growth was mainly concentrated in the south, south-east and centre-west of the country, with the north and north-east still requiring support until jobs begin to reopen.

    Mr Temer added that the passage of his proposed reforms to Brazil’s social security system and modernisation of labour laws will remain an essential part of continuing the job growth, and bringing the country’s budget deficit under control as it pulls out of a “very violent” recession.

    Brazil’s two-year recession, its worst on record, has resulted in the loss of three million jobs overall, and prompted the rise of the unemployment rate to a record 12.6 per cent. However, the president has suggested that the latest job figures are a sign that the economy is recovering.

    In fact, in his recent speech, Mr Temer also revealed the country’s rating outlook has recently been upgraded, and inflation is now likely to meet the central bank’s 4.5 per cent target after slowing at a significant rate.

    “This shows confidence is returning bit by bit,” he said. “Inflation is slowing and the forecast is it will be below the target by the end of the year.”

    Furthermore, the president announced plans that the success of a recent corruption probe has resulted in high foreign direct investment and a rapidly growing trade surplus

    Brazil strategy to encourage agri-business start-ups

    2017 - 03.14

    Software firm SAP is to invest R$40 million in Brazil’s agri-focused start-up firms as part of a co-operation agreement with the country’s government.

    This week Brazil’s Ministry of Industry, Foreign Trade and Services (MDIC) signed the deal with the multinational to encourage the development of Brazil’s start-up base and create new jobs.

    Invested over the next five years, the R$40 million will be focused on creating digital services and using Internet of Things (IoT) solutions for agribusiness.

    Marco Pereira, head of the MDIC, said the investment will bring greater efficiency to Brazil’s agricultural sector.

    “With this agreement, SAP committed to establishing a support network for start-ups and small businesses and sharing best practices that can help Brazil in its path towards more efficiency in agricultural production and in sectors that benefit from it, such as transport and logistics.”

    SAP will inject the money into its Research and Development Centre in the Brazilian city of São Leopoldo. It will also create 600 jobs to “maintain its growth in the country”.

    Under the initiative SAP will help start-ups access its supply chain, support the promotion of private investment in innovation and encourage the training of human resources.

    “We are proud to become a partner for the digital acceleration and the economic development of a region that is so important for SAP and for the world,” said Bill McDermott, SAP’s chief executive officer.