Forestry Incentive Program

The purpose of the Forestry Incentive Program is to increase incomes in rural areas, by planting forests in idle and marginal areas of properties. Besides helping to settle rural populations on their own land, this activity encourages recuperation of the vegetation.

About the Program

Created in Santa Catarina in 1984 and in Parana in 1987, Klabin’s Forestry Incentive Program arose from the need to promote integration between the company and the communities where it was operating.  Through the Program, the company makes forestry technology available to small and medium-sized rural landowners, involving them in a globalized chain, promoting regional development, making more wood available and creating opportunities for other industrial sectors.
The wood that the company buys from its program participants represents 9% of total volume consumed.  By 2012, Klabin plans to raise this percentage to 20% of the total.

Results
• 17 thousand farmes receiving incentives in the states of Paraná and Santa Catarina
• 87 thousand hectares of cultivated forests tied in to incentives
• 153 million seedlings distributed since startup of the Program

Klabin’s Forestry Incentives - Parana

Since 1987 Klabin’s Forestry Incentive Program has been encouraging landowners in the region (up to 100 kilometers from its mill) to plant eucalyptus and pine trees on untilled and marginal areas of their properties.

Different types of partnering schemes with the company are offered, including the supply of inputs and technical assistance, as well as the sale of seedlings.

The Forestry Incentive Program covers over 17 municipalities in the state of Paraná.

The program encompasses an area within a radius of 75 kilometers of the mill in the city of Telêmaco Borba, in Paraná, or at a distance of 100 kilometers by road. Currently over 11 thousand small and medium-sized land owners participate in the program, totaling over 64 thousand hectares.

In all modes, the company has first choice of purchase their production at market prices.  Since the start of the program, more than 113 million seedlings have already been distributed.

Types of Partnering Schemes

• Forest Entrepreneurship The Owner: Prepares the soil and encourages growth by applying herbicides and fertilizers, weeding, clearing ground, pruning, employing ant control, and maintaining fire-breaks and other precautions as needed.  Payment is made at the first thinning, with part of the wood being harvested and delivered to Klabin’s wood yard in Telemaco Borba.

Klabin: Does the planning, the first round of ant prevention, the planting, and one replanting, should the survival survey (done 60 days after planting) indicate a 5% or higher seedling death rate.  Offers technical assistance for the project.

• Sale of Seedlings

The Owner: Prepares the soil, employs ant and other pest control and, if necessary, plants, replants, fertilizes and encourages growth by weeding, clearing ground, pruning, and maintaining fire-breaks and other precautions as needed.

Klabin: Sells high-quality seedlings and ant-killer and provides for transport of the seedlings if the owner prefers.  Technical assistance is free of charge.  The cost is then transformed into tons of wood delivered to the mill and it is paid for with part of the product from the first thinning (eucalyptus trees at 6 years, pine trees at 8 years).

• Donation of Seedlings – Partnership with Emater (Empresa Paranaense de Assistencia Tecnica e Extensao Rural): Intended for producers owning a maximum of 50 hectares who depend solely on the property for their income.  Maximum donation of 20,000 seedlings or 30% of the property (whichever comes first).  There is no formal obligation to sell to Klabin.

Emater: Selects the participants and offers technical assistance.

• Leasing

In areas greater than 100 hectares, leasing is possible, with Klabin taking full responsibility and making a monthly payment in cash or part in wood production, based on the owner’s preference.  The first step is a more detailed analysis of the property, in which the following items are taken into account: planting capacity, incline, accesses, existing vegetation, species to be planted, distance from the mill, levels of soil readiness, compliance with environmental legislation, etc.  The contractual term may vary, with the minimum being 14 years, depending upon the management requirements and species of tree to be planted.  Klabin handles all of the operations, from soil preparation through harvesting of the wood.

Payments to Owners

Payments in Brazilian reals: Proposal of an annual value per hectare planted, which may be divided into monthly payments, in Brazilian currency with seasonal adjustments based on a mix of official indices (IPC-Fipe, IPCA-IBGE and ICV-Dieese) or tied to an agricultural product, based on average prices for the previous 36 months, as published by Dera (Secretaria da Agricultura do Parana, Regional de Ponta Grossa).

Payments in wood: Proposal of a percentage of the wood produced and standing at the time of cutting or pruning.

N.B. Under all partnering schemes except donation, Klabin has first preference in the purchase of all wood produced

Klabin’s Forestry Incentives - Santa Catarina

Since 1984, Klabin’s Program of Forestry Incentives, in conjuction with Epagri (Company for the Study of Livestock and Agriculture and Rural Education in Santa Catarina) and local town halls, has encouraged landowners in over 54 of the state’s municipalities to plant eucalyptus, as a way to generate income for the local population.

At presente, more than six thousand landowners are taking part in this initiative.  In all, more than 22 thousand hectares have been planted  with forests.  The company participates with technical support and the donation of seedlings.  In 20 years of the program, Klabin has distributed more than 39 million seedlings in the State.  The Program is steered to small and medium-sized rural propertiesof the Santa Catarina Highland region and of the Upper Valley of the Itajaí River.

Klabin provides technical assistance tailored to each type of partnering scheme making up the Program.  Program participants can rely on ongoing support from the company’s technical staff, who monitor the entire reforestation process, from the provision of seedlings through technical advisory services.  The producers receive a technical manual on silviculture and the basic principles of the marketing of wood.  The same quality employed in the genetic material of the seedlings planted by Klabin itself is employed in the seedlings supplied to the program participants.

Klabin performs GPS mapping of the properties supplied with seedlings.  The objective is to demonstrate the distribution of participating areas within each municipality and to monitor growth of the forests.  Additionally, this system makes it possible to register the progress of each new forest, which facilitates matters when the time comes for Klabin to buy the wood.

Types of Partnering Schemes

• Institutional Incentives

Klabin supplies pine seedlings and technical assistance free of charge and undertakes to buy the wood at harvest time. Under this scheme, Klabin donates 5% of the total in native-species seedlings to enrich the areas of permanent preservation and legal reserves, thus promoting environmental balance and improvements to the landscape of the property.

• Industrial Incentives

This type of scheme is directed at rural landowners and small entrepreneurs and covers the region of the Santa Catarina Highland.  Klabin supplies pine seedlings and technical assistance, and program participants undertake to return to Klabin, from the first thinning, 8 tons of wood for every 1,000 seedlings supplied.

• Loyalty Program
Partnership between Klabin and the suppliers of small pine logs.  Klabin supplies 1,000 pine seedlings and technical assistance free of charge for every 150 tons of small logs delivered by the wood suppliers.

• Forest Leasing

This type of scheme is directed at rural landowners and includes regions located up to 150 kilometers from the Correia Pinto and Otacilio Costa mills.  The rural landowner leases his land and Klabin undertakes to pay for the lease in one of several ways, as mutually agreed.

Financing for the planting of trees

Proving that sustainable development is at the foundation of its work, Klabin acts as a co-signer for its registered producers and those interested in obtaining bank financing for the planting of forests.  Small and medium-sized producers normally encounter difficulties in offering the guarantees required by financial institutions.  With the company’s endorsement, they acquire direct access to credit lines, and the debt is paid off with part of the wood resulting from the financed project.

As of 2005, Klabin has been acting in conjunction with Itau BBA bank as a co-signer for small and medium-sized landowners in Santa Catarina and Paraná interested in obtaining resources for planting forests.

The objective of the initiative is to expand forest planting and cultivation in the two states and increase the participation of third parties in the supply of wood to the company, within the scope of the Forestry Incentive Program.

To this end, Klabin has started using two lines of credit already available in the market, Propflora (Programa de Plantio Comercial e Recuperaçao de Florestas) and Pronaf (Programa Nacional de Fortalecimento da Agricultura Familiar).

The Federal Government offers funding from the BNDES through the Ministry of the Environment’s PNF program (Programa Nacional de Florestas).

Klabin and Itau BBA bank have signed an agreement under which the company recommends possible partners and figures as the co-signer and payer of the approved funds. The participant’s debt with Klabin will be paid with part of the wood resulting from the financed project. 

Benefits of the Program

For the rural landowners:

Social:

• Uses family labor in the intervals between harvests
• Utilizes land which is unused or inappropriate for agriculture to plant forests
• Cooperates with government efforts to create jobs
• Promotes social inclusion through partnerships between a large company and small forest planters
• More evenly distributes wealth from the forest
• Keeps small farmers in rural areas

Environmental:

• Reduces economic pressure on native forests
• Protects river basins
• Restores secondary forests
• Controls soil erosion
• Supports the dissemination and enforcement of environmental laws
• Builds awareness of ecology and forestry

Economic:

• Provides alternative sources of income
• Increases income of rural families
• Contributes towards the acquisition of farm machinery, allowing for the growth of new markets and processing industries
• Fosters the establishment of industries for transforming the wood produced
• Makes high-quality wood available for use by the property owner, with the surplus being available for sale.

SUCCESS STORY – Sowing the Seeds of Sustainable Development

“When I harvested my first forest crop last year, I was overcome by two conflicting emotions: the satisfaction of having reaped the excellent results of a project and a sense of loss:  the loss of time because I hadn’t started sooner and because I hadn’t planted more.”

Willian Buss Costa, of Reserva, Parana – owner of 72 hectares.  He is planting 29 hectares of eucalyptus and 16 hectares of pine, and on the rest of his land he plants corn and pastureland for a small herd of cattle.