General Economic Conditions
Colombia has been through political and economic
uncertainty in the last two years, which has undermined the vitality
of non-extractive activities and caused a sharp drop in investment.
Demand had far outstripped supply in previous years,
which caused the authorities to introduce deflationary monetary
policy which, although successful, impacted negatively on growth
and employment. Even though the GDP rose by 3 percent in
1996, this was lower than the 5.2 percent recorded in 1995.
The extractive industry, particularly petroleum production, has
increased on account of new discoveries and heavy investment in
fields discovered since 1991 coming on stream. The manufacturing
industry sector, however, declined by 3.4 percent.
The main economic problem for 1996 was the growing
fiscal deficit, caused basically by the central government deficit,
with expenditures rising to 6.4 percent of GDP but revenues
amounting to only 3.9 percent of GDP. Though the overall
deficit is only 1.1 percent of GDP, it will increase rapidly
if this trend continues.
Inflation rose from 19.5 percent in 1995 to
21.6 percent in 1996. However, with the accumulation of foreign
exchange from credit and privatization, the rate of devaluation
dropped from 18.8 percent in 1995 to 1.5 percent in
1996, which translated into real revaluation and undermined competitiveness
of the production sectors. The revaluation of the peso and high
domestic interest rates attracted foreign investment, especially
in the private sector, which further boosted international reserves.
The balance of trade continued to be in deficit
despite a lower rise in imports than exports. The highest growth
in exports were from the extractive sector, where activities have
little impact on the economy, while coffee and industrial exports
fell. This, coupled with the loss of competitiveness of local
production in relation to imports helped push up unemployment.
The manufacturing industry sector declined , with
only a few sectors - such as oil and tobacco - giving a good performance.
One of the sectors with lower production was the paper industry
but the fall was only a very modest 0.5 percent.
The Colombian economy will remain uncertain in the
near future as long as there is a possibility of the United States
applying sanctions following the withdrawal of certification.
Consumption, Production, Trade, Financial Situation
and Investments in 1995 and 1996
Paper and paperboard consumption in 1995 amounted
to 893 000 tons, while apparent consumption in the first
half of 1996 amounted to 416 000 tons, which is 7.6 percent
lower than in the same period in 1995. Apparent consumption for
the year as a whole is estimated at 923 000 tons - down 2 percent
Paper and paperboard production increased by 0.6 percent
in 1995 reaching 677 000 tons, but fell by 10.9 percent
in the first half of 1996. However, the upturn in the second semester
produced an overall reduction for the year of only 0.5 percent,
with a production of some 674 000 tons.
Exports in 1995 had risen by 46.8 percent
over the previous year, totalling 80 000 tons. They fell
by 28.9 percent as of June 1996 but improved somewhat to
15 percent as of December reaching a total of some 68 000
Imports in 1995, amounting to 296 000 tons,
were 12.2 percent down from the previous year. This downward
trend was maintained in the first half of 1996, falling 5.5 percent.
The market recovered in the second half of the year giving an
overall growth of 4 percent with a total import volume of
308 000 tons.
The paper industry which consumes little imported
raw material lost competitiveness and, with it, its export and
duty-free import substitution market on account of low external
prices, the revalued peso and the increase in domestic inflation.
This and growing domestic competition in sectors
such as tissues, linerboard and corrugated medium had a marked
negative impact on corporate profitability. The sector with greatest
growth was tissues, but demand turned increasingly towards the
cheaper and less profitable qualities. The sectors most affected
were linerboard and corrugated medium because of market loss and
fall in demand because of zero or low growth in the industries
using such packaging.
Political and economic uncertainty in the country
has delayed investment projects although this year work will begin
on a new tissues production plant by Papeles Nacionales, with
an initial capacity of 30 000 tons.
Aspects of Particular Interest
Progress in Sustainable Forest Management and
The Ministry of the Environment issued a new law
on the felling of forests which are now designated strategic resources
that require sustainable management.
The law aims to provide a regulatory framework for
production, protection and mixed forests, whatever the form of
ownership. Such clear-cut policy is vital for a country like Colombia
which has comparative advantages in the form of rapid tree growth
and extensive land availability.
All the wood used in Colombia for paper manufacture
comes from plantations or sawmill waste. Of the 310 000 tons
of wood used last year to produce paper, 57 percent came
from land managed by the large corporations; 31 percent from
small landowners and 12 percent from sawmill waste.
Most of Colombia's plantations are located on eroded
land in the Andean mountains with forest potential. Pests are
controlled with biological methods. The plantations grow much
faster than counterparts in temperate zones and are good at protecting
the soil, water and other natural resources.
Forest certification is not yet a concern as forest
exports are still very limited. What little is exported goes to
neighbouring countries that have no interest in the certification
systems presently under discussion. Most countries in the region
have adopted a "wait and see" attitude until the certification
issue becomes clearer and the cost/benefit implications have been
The Socio-Economic Dimension of the Forestry Sector
and Timber Processing
Forest plantations generate over 10 000 - mostly
local - jobs in Colombia, raising levels of income and quality
of life. They therefore help curb migration to urban areas in
search of better work opportunities, this being one of the major
problems of developing countries.
The forest industry based on man-made forests has
set up rural schools near plantation sites, laid over 1 000
km of roads and helped provide rural public infrastructure.
The 174 000 tons of wood pulp produced in the
country have saved US$ 740 million in foreign exchange.
The pulp and paper industry accounts for about 4 percent
of the country's GDP.
Sustainability of Fibre Supply
Fibre supply in 1995 for the Colombian paper industry
was as follows:
|Wood pulp||174 395
||64 571||238 966
|Bagasse and other pulp
|Recycled paper||340 289
||47 508||387 797
||112 627||768 515
Colombia's timber harvest is estimated at 23.3 million m3
per year, of which 77.3 percent is used as fuelwood, 18.9 percent
for solid wood products and only 3.8 percent for the manufacture
of paper and paperboard.
All the wood used for paper production comes from
plantations under corporate or small private ownership, with sawmill
waste accounting for a small proportion. The preferred species
are pine and eucalyptus. The country now has 80 000 ha
under pine, 35 000 ha under eucalyptus and 25 000 ha
under other species.
Of the 72 000 ha belonging to the paper
industry, 67 percent are planted while the remaining 33 percent
comprise natural protection forest.
Research to enhance forest plantation focuses mainly
on forestry practices, vegetative reproduction, eucalyptus genetic
mapping and micro-propagation. The aim is to obtain trees that
will produce wood that is ideally suited to the production of
pulp and paper. The resulting benefits extend beyond production
and include lower use of chemicals in the pulp plant, less energy
and less effluent to be treated before release, making it therefore
an increasingly eco-efficient production cycle.