The Cost of Energy Uncertainty for the Forestry Sector

By Ignacio Vera Izquierdo, General Manager of Forestal Santa Blanca

The uncertainty generated by the sustained rise in oil prices has ceased to be a limited phenomenon and has transformed into a structural factor affecting both the global economy and Chile. In this scenario, energy and logistics-intensive sectors face growing pressure, with the forestry sector being one of the most exposed due to its critical dependence on transportation and industrial processes that intensively use fossil fuels.

The impact is direct and multidimensional. The rising cost of diesel increases transportation expenses from the worksite to ports and then to customers or ports, while higher energy tariffs drive up costs for key operations such as drying and thermal generation. This increase creates an unavoidable domino effect throughout the value chain: price transfers between intermediaries are not a zero-sum game, and the final bill ultimately puts pressure on overall inflation, affecting supplies, services, and labor.

In this context, although the Government has implemented targeted measures to mitigate the damage to lower-income sectors, the fiscal maneuvering room is limited. The viability of each private actor will continue to depend on their negotiation capacity and resilience. This dynamic reveals a profound fragility in the industry, where margins are narrowing dangerously due to a combination of lower domestic demand and new international trade barriers. This scenario not only strains large companies but also jeopardizes the continuity of medium and small actors, threatening to deepen processes of closure and consolidation.

However, reducing this diagnosis to a crisis would be incomplete; what is at stake is the sector's ability to adapt. To sustain competitiveness, the response must advance along three urgent lines:

1. Logistics and Operational Efficiency: Optimizing routes and improving transportation management are no longer options but necessary conditions to survive the cycle.

2. Energy Diversification: The incorporation of renewable sources and biomass must cease to be a medium-term goal and become a priority to reduce exposure to fossil fuel volatility.

3. Strengthening the Business Model: It is crucial to understand that, while forests as assets maintain their strategic value due to carbon capture, the associated industries require conditions that allow them to face increasingly demanding cost cycles.

The current energy uncertainty will not be the last. How the forestry sector responds today will define its ability to remain a relevant player in a challenging global environment.