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"Addressing Supply and Reforestation is Key"

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A policy to promote afforestation is still pending, stated Lorena Vargas Reyes, general manager of Guivar Transforma, a timber company in Trehuaco, and vice president of Pymemad Biobío-Ñuble, a trade association representing small and medium-sized enterprises (SMEs) in the forestry sector.

In an interview with Radio La Discusión, she emphasized that the reality for small and medium-sized timber companies is very different from that of large ones. She asserted that one of the major challenges they face is the supply of raw materials, where large companies are the primary controllers of forest assets and also purchase logs from small and medium-sized plantation owners, reducing the supply options for SMEs.

"In recent years, it has become more complex because, after the wildfires, not all small and medium-sized owners—who are an important supply source for us—had the resources to reforest. So, today, reforestation is not happening at the pace the market requires, and the main suppliers for SMEs are the most affected. Some companies are working with Pymemad, but other large companies outright declare they have no supply available for SMEs," explained the leader, who lamented that "one of the major problems in our industry is its high concentration."

Regarding the relationship with large companies, Vargas reflected, "Part of the sustainability of this environment is healthy coexistence. It’s something we need to work on. SMEs deliver significant value and territorial development; we operate in areas like Trehuaco or Coelemu and are deeply connected with communities. The value of these types of companies must be understood—timber SMEs generate the most employment relative to their size."

The outlook is becoming increasingly complex for SMEs in the sector, warned the businesswoman. "Many SMEs lack the capital or strategy to secure supplies in advance, for example, because they can’t, and also because the post-pandemic market has been very challenging. Both the international and domestic markets, which are closely tied to construction, have been highly volatile. In fact, we haven’t yet seen the full extent of major supply shortages, though they’re starting to emerge. Some companies have had to halt operations temporarily or reduce shifts. Many have closed due to supply shortages and sales issues," she revealed.

Reforestation

While there are some examples of SMEs with their own forest assets, like Guivar, this is not the case for most. Therefore, Vargas stressed the need for incentives for afforestation and reforestation.

In this regard, when addressing the challenge of convincing authorities about the need for incentives for small and medium-sized landowners, she reaffirmed that it is key to highlight the contribution of timber SMEs to sustainable development, both environmentally and socially.

When asked about the political viability of such an initiative, she commented, "I don’t know if anything will happen under this government—these are long processes. I know the Minister of Agriculture has been in talks with our national leaders and in working groups, but I haven’t seen major progress yet. There’s a lot of talk, for example, about sustainable construction, timber construction, industrialized housing, but little about how we’ll supply the SMEs that must deliver these products."

Vargas acknowledged the resistance from some political sectors to promoting or approving a forestry subsidy, as Decree Law 701 long favored large forestry companies, and there’s reluctance to repeat that. Additionally, certain stigmas and myths about the sector, such as environmental concerns, play a role.

"I believe our sector has tasks ahead. Part of the challenge for SMEs is to regain the community’s trust. Once that happens, approving a law benefiting the sector likely won’t be a problem for politicians," she argued.

Projections

In the current context, without a forestry promotion policy, the trade leader stated that "the path forward is collaboration, because not everyone can integrate backward in the value chain (owning forests)—it’s very expensive and complex. I don’t know if financing exists, especially in such a challenging market."

She also proposed that "adding value is key, as is modernizing our businesses. I believe having support in modernization efforts to maximize fiber use and add value will help us diversify our product mix."

In this sense, Guivar is an example, as it adds value to production, sells processed timber in domestic and international markets, utilizes complete biomass, produces pellets, owns forests, and has partnerships with landowners and other SMEs.

However, she stressed that the most critical issue for the sector is raw material supply. "I insist: there’s a long-term problem here. Supply is key, reforestation is key—not just for timber SMEs but for sustainability and carbon neutrality."

Source:La Discusión