Portugal

Abstract

The evidence provided in this report shows that the Portuguese forest sector has been responsive to demands for its products, not only timber, but also cork and some other non wood forest goods and services. The area of forests almost tripled since the mid of the 1990s and the main cause of this has been that response to market conditions. Given the very high salience of private ownership, private forest owners played a major role in that response, even when there were no supported public policies, which was the case until the 1980s. Private forest owners obviously have not been alone in making up these adjustments to demand. Forest industries have been the essential connecting link between the forests and the final consumers, either in the domestic markets, or abroad. The first jump in expanding the forest resource base was the installation of the cork oak stands in the southern regions, mostly from the mid of the XIXth century until the mid of the XXth century. This was and still remains an export oriented business. It has successfully resisted the arrival of plastics, and is now facing new forms of competition from this material. Again this competition is meeting an active response from the industry and the forest owners, but a lot is still undecided about the end of this game. Pulp and paper is another story of creation of a new forest resource base and a new industry oriented essentially towards exports. Like in the case of cork, the quality of the product has been generally good, but here also new threats are arising. The resource base of the industry is under increasing risk of forest fires and the fundamentals of the Portuguese economy, in recent years, are not favouring exporting business. The wood based panel industry is another case where the forest resources built up by private forestry during the last one hundred years were able to trigger and sustain industrial conglomerates of large international scope. Nowadays the leading group in the world in this industry is Portuguese. The tree species at the base of this industry is maritime pine. This is the species which has been suffering most with forest fires and this is not good news for the industry. However, entrepreneurs here have been able to evolve towards other products and other markets. The rest of the forest industries (sawmilling, carpentry and furniture) are essentially made of small, even very small enterprises relying almost entirely on the domestic market. Rising real incomes and lower real interest rates, until the turn of the century helped these activities. These favourable conditions stopped to hold at the same time as the exposure to foreign competition became more intense. The strong dependence of these industries on the macroeconomic situation of the country is now pushing them towards improvements in labour productivity, at lower levels of employment.