Business Overview of the Uruguayan Forestry Sector Producer of Eucalyptus globulus

Abstract

Uruguay’s forestry production is relatively new compared to traditional activities such as agriculture and livestock. Generally, the forestry producer is associated with multinational companies that exploit large tracts of land. However, there is a whole sector in the forest business that comprises a set of diverse firms whose organization type and business decisions are different from those of multinational investors. This paper aims to describe the business map of the forestry sector producing E. globulus in Uruguay. This includes a characterization of the firms and a description of their decision-making processes and the challenges faced, which is of utmost interest to understand the future of pulpwood production in the country. The study begins with a literature review followed by the analysis of secondary data and a set of interviews carried out to growers. The results identify three types of firms: association of producers that share common goals, mutual funds, and vertically-integrated corporations. The origin of the invested capital is both domestic and foreign. The evidence emerged from this study suggests that the forestry sector is moving towards a market highly concentrated on the demand of two firms producing pulp, coexisting with a E. globulus sector whose sales portfolio is determined by the price of timber in the local market and abroad.