Pulp, Paper and Power
How an Industry Reshapes its Social Environment

by Larry Lohmann

first published 1 June 1995

Summary

The drive of the pulp and paper industry towards larger scale and global expansion cannot be explained solely by “economics”. But neither is it being driven by a political conspiracy of powerful masterminds in transnational corporation boardrooms. Social structures sensitive to the needs of pulp and paper elites are built, expanded and improved upon through the political efforts of a multitude of agents with different interests and motivations, working together in an ad hoc, sometimes uncoordinated way against an ever-varying background of resistance. Close attention to this dynamic is crucial to the success of environmentalists’ efforts to reduce the damage done by the industry.

Contents

 

Introduction

In recent years, the expansion of the pulp and paper industry has provoked increasing opposition throughout the world. In Europe, South-East Asia, and South and North America, campaigns are gaining momentum to reduce dioxins and other toxic compounds produced by the use of chlorine in the paper-making process. In Canada, 932 people arrested for protesting against logging for pulpwood near Vancouver Island's Clayoquot Sound went before the courts in the summer of 1993 in the largest mass trial in Canadian history.1 In Indonesia, environmentalists and local people are alarmed at the planned pulping of over 6,000 square kilometres of native hardwood stands on Sumatra and Kalimantan by the turn of the century,2 while the expansion of monoculture pulpwood plantations is rousing opposition from Chile, Brazil and the Dominican Republic to Portugal, Finland, India and Australia.

The response of apologists for the pulp and paper industry to this outcry relies partly on several assumptions about the industrial economy, namely that:

  • Companies do not alter society's goals and needs but leave them untouched; they merely provide wealth, goods and jobs which help society do better what it is doing already.
  • It is the drive to do so efficiently and competitively which causes such firms to increase the size of paper machines and to seek cheaper production sites around the world.
  • Any social and environmental disruption which results from this expansion requires at most some adjustments to the market apparatus or state regulatory systems, not a rethink of the industry's scale, structure or political relationships with the rest of society.

Such assumptions have long been under attack by affected people and critical social scientists. These critics point out that, far from passively responding to consumer demand, public consensus and government regulation, modern corporations have a deep interest in forming and managing them, and that, rather than creating wealth for all, such firms typically survive only through hidden handouts from public coffers.3 In these circumstances, the pulp and paper industry's defence that, through seeking profits, it is merely increasing society's "efficiency" in meeting the pre-existing needs of its members becomes highly questionable.4

The industry's current drive towards larger scale and global expansion cannot be explained solely by "economics". But neither is it being driven by a political conspiracy of unseen masterminds in transnational corporation boardrooms acting with the careless ease of omnipotence. Social structures sensitive to the needs of pulp and paper elites are built, expanded and improved upon only through the political efforts of a multitude of agents with different interests and motivations, working together in an ad hoc and sometimes uncoordinated fashion against an ever-varying background of resistance. Close attention to this dynamic is likely to be crucial to the success of environmentalists' efforts to reduce the damage done by the industry.

Machine Politics

The evolution of pulp and paper technology has always been intertwined not merely with profit but with the attempt of small elites to rearrange structures of power in their favour. For example, although a boom in publishing in the seventeenth and eighteenth centuries had contributed to an increased demand for paper which the prevailing artisanal, rag-based technology could not easily meet, Nicholas-Louis Robert's invention of the forerunner of the modern paper-making machine near Paris in the late 1790s was, by his own account, neither a profit-seeking response to demand for more paper nor an attempt to replace scarce rags with other raw material. Rather, it was an attempt to undercut the power restive paper artisans held at a time of revolution by centralizing paper-making technique in the hands of factory owners.5 It was not until the late nineteenth-century development of commercial techniques for pulping wood, a material which could be harvested at any time and easily stored and shipped in great volume, that the full potential of the new machine began to be realized.

The switch to wood as a raw material reinforced papermakers' reliance on large, highly-mechanized mills -- for one thing, the chipping equipment and stone grinders used to process logs produced too much pulp for small paper mills to absorb.6 Yet the more that the pulp and paper industry invested in huge, wood-adapted pulp and paper machines, integrated with the timber industry and decoupled from any other source of raw materials, the less inclined the trade became to consider any other approach.

Early twentieth-century paper machines tended to be both standardized and profitable. But competition among newspaper magnates in North America and Britain to build ever-bigger paper machines soon escalated. The huge machines became less and less cost-effective: not only were many of them "one-offs", but their huge widths and speeds -- by 1937, machines could produce a kilometre-long sheet of paper 7.7 metres wide in little more than two minutes -- also required sophisticated and expensive controls for efficient operation. As British paper expert A. W. Western remarks:

"no logical reasons can be traced for increasing size to this extent. Labour costs have often been quoted, but machine labour was then, and still is, a relatively small proportion of overall costs. More likely reasons ... were pride and prestige."7

Between 1930 and 1975, as the technological race continued, the cost per annual tonne of a newsprint machine increased at least 40-fold while the price of newsprint itself increased less than 20-fold. Yet the major machine manufacturers' investment in large machine tools had by now made it difficult for them to produce for anyone but the largest paper investors. As Western concludes, building new paper machines:

"became a luxury which could be afforded only by multinational giants or the governments of developing countries, advised by consultants that only scale to this degree could be economic! For the consultants, it was economic: they were now essential for large mill design and coordination."8

Nicholas-Louis Robert's nearly 200-year-old dream of concentrating paper-making power in the hands of plant owners, in short, had been realized with a vengeance. Access to the dominant stream of papermaking knowledge was now restricted not just to capital, but to big capital. For many capital-short Southern societies with interests in meeting their own paper needs efficiently with indigenous materials and technology, the implications were particularly bleak.

Reorganizing Landscapes

Today, 90 per cent of paper pulp is made of wood, either by grinding it up or chipping and boiling it in strong chemicals. Large quantities of fresh water and energy are required for the process, which consumes annually the rough equivalent of the timber that would cover 20,000 square kilometres of wooded land, an area half the size of Switzerland. Paper manufacture is estimated to account for nearly 13 per cent of total wood use, and represents one per cent of the world's total economic output.9

Most of the pulped wood which is used to manufacture newsprint, packaging board and writing paper flows from a small number of sprawling plants, shining with expensive, computer-assisted machinery and costing up to US$1 billion apiece. In the United States, whose world-leading output of 58 million tonnes of pulp per year is supplied by a mere 203 mills, the pulp and paper industry is more capital-intensive than any other.10 New mills in Indonesia, Brazil and Canada are no less capital-intensive, some of them requiring capital investments of US$750,000 or more for each employee.11

The giant pulping machines at such plants have to be run nearly 24 hours a day if the massive debts incurred in their construction are to be paid off on schedule. This reinforces the mills' need for secure access to huge supplies of nearby water and wood. Hence the mills must not only be sited on large rivers, but must also have access to large, more or less contiguous timberlands. Much pulp and paper manufacture in both North and South is thus closely integrated with the timber industry, is sited in countries which are strongholds of industrial forestry practice such as Germany, Sweden and Canada, and tends both to promote and be promoted by government bureaucracies which grant large logging concessions to big corporations.

Pulp mills find it difficult to share the landscapes they occupy with local communities pursuing a variety of agricultural, fishing and subsistence-gathering activities. Large mills work better with simplified, compact populations of factory-friendly trees, for example, than with native woodlands reserved for a variety of uses. They demand the construction of roads or waterways which run straight from cutting site to port or factory instead of a web of slow systems of transport linking one local area to another. They favour the growth of mill towns where everyone works for the industry rather than communities with diverse livelihoods. The ideology of an industry dominated by large mills, finally, tends to be one which privileges a supposedly "global" demand for pulp over varied local demands for individual farm plots, diverse native woodlands, clean water and air, and the maintenance of fine-grained craft practices which make possible local control over native forests and wetlands.

The pulp and paper industry often justifies its preference for large-scale, single-centred systems over many-centred social mosaics by claiming that they help release latent economic "efficiencies". From the point of view of a farmer in, say, South-East Asia, however, the engineering of such centralized systems may well be a fighting matter, entailing uncompensated losses of water, soil, fodder, fish, transport, or livelihood generally.12 For such a farmer, as for the paper artisan made redundant by Robert's paper machine, retrospective talk of "efficiencies" would likely be viewed as anachronistic, a way of writing out of history what are more accurately described as bitter, prolonged political and cultural struggles between radically different social systems.

Influencing Demand

Just as the pulp and paper industry, as organized today, cannot easily fit its production into a social mosaic of locally-organized landscapes, so too it cannot easily accommodate itself to "market demand". What with the easy availability of debt finance, the lack of need to buy into brand names, the sheer scale of each new state-of-the-art mill, and the temptation of many firms to become price-setters, any surge in demand during the last few decades has invariably resulted in more investment in productive capacity than is actually required to meet it.13

One consequence is a savage boom-and-bust cycle. In 1993, for example, after the most recent bout of overinvestment, pulp prices dropped to half of what they had been four years previously,14 leading to rampant losses, cost-cutting, closures, mergers and takeovers. Although prices have now climbed once again to record levels, many industry figures fear that a new round of overspending is on the way. With the enormous equipment costs and long lead times required to bring huge new mills and pulpwood plantations on stream -- over two years and 10-15 years respectively -- it is not surprising that the industry feels growing pressure not only to invest more wisely, cooperate on pricing15 and develop better relationships with buyers, but also to plan demand in a way which might moderate future price dips. As David Clark of the European Confederation of Paper Industries recently told his colleagues, the industry must:

"fight for our future and create our own growth ... total demand has to be stimulated. The alternative, to do nothing, could produce a static or even declining demand with serious implications for the industry, its reputation, its technology and the quality of the people it attracts."16

In this way, large scale becomes a cause as well as an effect of efforts to reorganize society in ways friendly to a few central actors.

Stimulation of paper demand is, however, nothing new, and is not something the industry has to undertake alone (see Box). Ever since wood-based pulps inaugurated an age of cheap, large-scale paper production in the mid-1800s, new commodities -- ranging from paper shirt collars, building materials, bags, toilet paper, drinks cartons, nappies, fax and computer paper, and export packaging -- have been embedding paper use ever more thoroughly into business and household activities.17 In 1991, over 40 per cent of world paper production was used for packaging and wrapping, while only 30 per cent went for printing and writing and 13 per cent for newsprint, with increasing volumes of all three categories going for advertising.18

Tying demand for paper to a broad range of economic activities outside publishing has helped free world per capita paper consumption to expand indefinitely. Rising from .01 kilogrammes yearly in 1910 to 15 kilogrammes in 1950 and around 46 kilogrammes in 1993,19 it shows no signs, unlike per capita sawnwood consumption, of levelling off. "Efficiency" can no longer be plausibly described as, say, "efficiency in producing the medium for the books which society needs", but is increasingly merely an ability to produce as much paper as possible as cheaply as possible.

Unsurprisingly, per capita paper consumption is not a good index of literacy, being perhaps a better indicator of what conventional development economists consider "economic success" (see Table). In 1993, the South plus Eastern Europe, with 84 per cent of the world's people, consumed less than a quarter of its paper and board, while the North plus the fast-growing Asian "tigers", with just over 16 percent of the world's people, accounted for over three-quarters. US citizens, while they consume 43 times as much oil as Indians, consume a full 386 times as much pulpwood.20


Table 1: How "global" is "global consumption"?

Paper consumption, selected countries, 1994
Country Kgs per capita
USA 332
Hong Kong 232
Japan 231
Taiwan 224
Finland 217
Germany 201
UK 197
Australia 167
Italy 143
South Korea 137
Ireland 98
Malaysia 82
Costa Rica 55
Chile 39
Poland 38
Thailand 35
Russia 20
Brazil 28
Bulgaria 23
China 20
Macedonia 12
Egypt 10
Indonesia 10
Lebanon 9
Dom. Rep. 8
India 4
Bolivia 3
Nigeria 3
Viet Nam 1
Ghana <1
Laos <1

Source: Pulp and Paper International, July 1995, July 1994


Surfing on Resistance

Opposition to the pulp and paper industry's plans and operations -- like demand, infrastructure, labour unrest and state regulation -- constitute an important part of the industry's evolutionary environment, one which it is constantly seeking to modify.

Certain types of resistance are fairly easy for large actors in the industry to eliminate or circumvent, simply by redistributing their ample resources from one place to another. By themselves, such types of resistance often even wind up favouring conditions which lead to increased concentration or centralization of the industry and its support networks -- a development which, in the end, may be far from environmentally benign.

In Europe, to take one example, agitation and legislation against the industry's air and water pollution is being treated by a few far-sighted companies not as a political threat but as an economic opportunity. Hoping to transform anti-chlorine sentiment into a huge demand for totally chlorine-free pulp, for instance, the Swedish firm Sodra Cell, has invested in cleaner technology of a type affordable only by the biggest corporations. If companies such as Sodra succeed, they are likely only to strengthen their centralizing hold on land, forest and other resources.

By the same token, honouring the call for more paper recycling is not an unmanageable strain for an industry accustomed for over a century to using waste paper as a raw material and now being given increasing economic incentives to do so. Due largely to environmental pressures, the ratio of waste paper to other raw materials rose from 18 per cent in 1970 to 32 per cent in 1988, and continues to climb (though it has always been high in many Southern countries).21 Yet because recycling is now conducted within a regional or global economic system integrated largely around the interests of a few central actors, it often involves such environmentally dubious practices as transporting huge amounts of waste paper between the US and China.22 The dumping of large amounts of waste on the international market, as happened as a result of recent environmental legislation in Germany, can also easily disrupt small local paper-collection attempts.

Environmentalist resistance to the pulp and paper industry's exploitation of forests in one country, similarly, by itself tends merely to encourage companies with sufficient resources to try to organize fibre production on a hemispheric or global scale. The most striking instance of this tendency is the expanding wood-fibre network centred on Japan.

The growth in Japanese annual paper consumption from 47 to 121 kilogrammes per capita between 1960 and 1970 was largely dependent on developing sources of raw material in the US Pacific Northwest as alternatives to expensive local fibre. But as these sources started, in turn, to become less economically, politically and biologically accessible in the 1980s (due to sawmill slowdowns, domestic competition for wood residues, forest depletion, and, finally, environmental resistance and legislation), Japanese industry consortia began to build up joint fibre ventures in Canada, Oceania, South-East Asia and Latin America -- many of them lavishly subsidized by "foreign aid". By 1989, when a second surge in domestic consumption had brought yearly per capita consumption of pulp and paper to 222 kilogrammes, Japan was importing wood chips or pulp from sources as far-flung as Brazil, South Africa, Fiji, Finland, Thailand and the South-Eastern US. Faced by rural protests in Thailand, and fearing rising environmentalism in Australia and Chile, Japanese companies were also laying plans to secure supplies from the interior of northern Canada, Viet Nam, Siberia, Argentina, Venezuela and West Papua. Today, the average wood fibre embedded in a sheet of Japanese paper or cardboard has travelled more than 6,000 kilometres from its point of origin.23

As native forests are exhausted and local resistance provoked, pulp and paper industries are turning increasingly to industrial tree plantations to furnish large amounts of fresh, uniform raw material on a smaller land base, avoiding conflict with other land uses. Although industrial plantations currently supply considerably less than a quarter of world demand for pulpwood, this proportion is bound to rise, given deforestation, the limitations of recycling (fibres can only be reused a few times before disintegrating into dust), and the resistance of much of the industry to non-wood materials.24

This shift to plantation pulpwood provides more incentives for the industry to move raw fibre production to new regions, especially to the South. In countries such as Brazil and Indonesia, trees such as eucalyptus or acacia grow faster, land is cheaper, and companies are able to benefit from lower-cost labour and severer political repression than in the North.25 All this entails low prices for wood, which, as Robert A. Wilson of the Anglo-French conglomerate Arjo Wiggins Appleton remarks, is "the strategic driver in the industry ... the key competitive differentiator."26

Pulp mills are often integrated with the new Southern plantations. This is not only because it makes more economic sense to combine wood and pulp production than to keep them separate, and to export fibre in the more concentrated form of pulp than in the watery form of wood chips, but also because environmental regulations are looser in the South than in the North, foreign aid subsidies easier to obtain, and consumption, especially in the Asia-Pacific region, likely to grow faster. Thus Brazil, Chile, Portugal, New Zealand and South Africa, none of whom have been traditionally strong in the pulp and paper industry, are now among the top nine exporters of pulp, their principal customers being in industrialized countries. Indonesia, meanwhile, whose production of pulp grew at an average rate of 29 per cent yearly between 1980 and 1991, is already one of the top seven world paper shippers.27

Resistance provoked by this shift to the South, of course, presents the industry with still more problems. Providing it is scattered, however, it can often be handled fairly easily. Pulp or pulpwood businesses in South-East Asia, for example, have blunted community resistance by approaching individuals with money, land, goods or jobs, or by setting up gambling schemes to relieve plantation opponents of their money. More intransigent opponents have been subjected to beatings, murder threats, accusations of treason or Communism, or harassment of their families by government employees or even religious leaders. If resistance to seizures of land for plantations is stubborn yet isolated, small-scale, poorly-coordinated, and out of the domestic or international public eye, military suppression may result; if protests are more widespread and well-coordinated, contract farming schemes may be rolled out instead as a way of gaining local people's active collaboration in raw material production.28

Freedom to Plant

Other sorts of resistance are more difficult to deal with. No paper corporation, faced with coordinated, publicly-visible opposition to the development of large-scale, new industrial pulpwood plantations across large areas of the globe, can buy it off everywhere it arises, smash it completely, or shift its search for raw materials to another planet. Nor can the industry, as presently constituted, countenance an open and persistent discussion of reducing or even stabilizing demand for pulp and paper in industrialized countries. Skewed world paper consumption must remain, for paper executives, evidence not that high consumers are consuming too much but that low consumers are consuming too little.

Just as today's pulp and paper industry cannot acquiesce in existing demand or existing social mosaics, so, too, it cannot simply "surf" on these more threatening types of opposition, translate them into "economic signals", or evade them by shifting operations elsewhere. Rather, its network must actively colonize the society of such resisters just as its network infiltrates societies of consumers or of subsistence farmers.

Here a subtler strategy comes into play: that of divide and conquer. The idea is to discredit or suppress critics; cultivate critics' potential, but as yet uncommitted, allies; and block communication and alliances between the two groups -- for instance, between critics of plantations in the South and their potential allies among environmental organizations in the North. Thus Arjo Wiggins Appleton pulpwood plantation executives O Fernandez Carro and Robert A Wilson urge their colleagues not to target "apparent opposition" if that means "forgetting the vast mass in between: the public". Politics, they continue:

"provides the packaging and the vehicle to achieve the industrial objectives. Success is measured by the freedom to plant fibre crops, recognizing the sum total of all the political forces (in the broadest sense). There are two elements to the political subsystem: the message and the target. The message needs to be short, nontechnical, and fundamental: for example, 'Trees are good. We need more trees not less'. Our objective should be to create and move inside an ever-increasing friendly circle of public opinion".29

In creating such a "friendly circle of public opinion", the industry often benefits from a global reach longer than that of its critics in the South. Industry spokespeople, for example, frequently attempt to seek support from urban or Northern audiences, including environmentalists, by affirming that pulp production has nothing to do with logging natural forests in the South, insisting disingenuously that new trees which have been planted on "degraded" and "unused" land are used instead. Isolated from grassroots groups in the South and from internal industry discussions, most Northern environmentalists have been unable to reply with the facts, namely that:

  • most of the giant new Scandinavian-planned export pulp mills in Sumatra are being fed in their initial stages by mixed tropical hardwoods;30
  • in Chile, Brazil and Indonesia, the way has often been cleared for monoculture pulpwood plantations by logging native forests;31
  • in Thailand and elsewhere, the establishment of plantations on farmland, pasture or commons has often driven the inhabitants to clear natural forests elsewhere;32
  • the industry is little interested in investing in "degraded land" but rather, in the words of Shell International, in "land suitable for superior biological growth rates for those species the market wants" as well as "year-round water" and easy access to nearby processors or ports.33

Engineered Consent and Astroturf Groups

To help colonize democratic discussion and replace it with a more predictable type of interchange, pulp and paper companies and industry associations have also set up public relations (PR) operations in all major national markets. The object is not merely to "engineer consent" -- using such means as advertising, lobbying, purchasing expert testimony, distributing press releases, commissioning books, manipulating journalists, launching opinion polls and creating "community advisory panels"34 -- but also to monitor industry critics, with an eye to weakening their links to other sectors of the public.

In 1993, for example, Finnish consulting firm Jaakko Poyry began publishing a confidential quarterly intelligence report on environmentalist thinking and activities, aimed at a clientele of wealthy companies. Industry-retained PR firms also maintain files on activist groups, their leaderships, methods of operations, anticipated reactions to new products, funding sources and "potential for industry relationship", with a view to finding out "what's motivating them, how serious they are, what they will consider 'success'".35 Such firms advise pulp and paper corporations and their allies on how to offer financial support to environmentalist groups which need funding and "respectability", as well as how to go about putting critical individual environmentalists or former regulators on their payrolls.

PR companies may also infiltrate environmental meetings in the guise of activists or "housewives" to gather information or "guide" discussions; pose as journalists in order to obtain previews of research results which might be damaging to industry; or sabotage promotional tours of books critical of industry. One such firm, the US's Burson-Marsteller -- which, with annual fees totalling over US$200 million, over 2,000 employees, 62 offices in 29 countries, and its own "Environmental Practice Group", is the world's largest PR company -- includes among its clients Scott Paper, TetraPak, Alliance for Beverage Cartons and the Environment, Shell, the Government of Indonesia, and the British Columbia Forest Alliance (a forest industry front group created by Burson-Marsteller).36

The practice of setting up of fake "environmentalist" groups with a pro-industry agenda (including "astroturf" grassroots groups, named after the artificial grass used in some US sports arenas), well-established in some Southern countries, is currently spreading in the North.37 Among the founding donors of the Center for Defense of Free Enterprise, the leading think tank and training centre for "Wise Use" groups, are Georgia-Pacific and Boise Cascade, the world's third- and twelfth-largest pulp and paper firms (see "The 'Wise Use' Backlash"). The ploy of cultivating public hostility towards activists by framing them for various outrages including bombings and corruption -- historically used widely by Southern security apparatuses against local environmentalists, by the Federal Bureau of Investigation against US black, native American, and civil rights movements, and by the UK's MI5 against trade unions -- is likely to be used more extensively in the future against Northern environmentalists as well.38

Creating a Social Environment

Today's large pulp and paper firm, like a biological organism, is constrained by its inheritances -- including immense, unwieldy machines and a reliance on wood fibre -- and owes its survival largely to other organizations with which it has evolved in cooperation or symbiosis (see Box). Like a plant or animal, such a company does not adapt passively to a fixed environment, but, with the help of its allies, constantly recreates it -- undermining forms of power necessary for stewardship of local land while extending the realm of uniform rules of exchange; constructing new financial, physical, legal, and cultural networks by which resources and subsidies can be pumped to central locations and new forms of influence exercised over workers and resisters; recanalizing customs and dreams into forms satisfiable through paper consumption; and attempting to substitute public relations for the risks of democratic debate. Large, destructive technologies, rocketing consumer demand and the growing phenomenon of globalization are products less of "economics" than of politics.39


Box 1: A Web of Actors

Large as pulp and paper firms are -- 50 paper companies today account for half of world production, and the sales of the biggest, International Paper, rank above the Gross Domestic Products of more than 75 countries -- they cannot by themselves open the far-flung sites of production they exploit or capture the subsidies they require. Lending a hand are a flock of other private and public organizations, each with its own interests.

Forestry and Engineering Consultancy Firms

Consulting companies help propose, plan, design and set up pulp and paper mills or logging and plantation operations for the rest of the industry, along the way lobbying governments, finding subsidies and linking the interests of international and national business and governments.

Finland's Jaakko Poyry is the largest such firm in the world, with over 60 offices in 25 countries around the world, an estimated 40 per cent of the forest industry consultancy market worldwide, and a 1994 turnover of US$300 million. Poyry's networks are wide and its record one of constant political machination. In 1994, for example, the firm, although it had no previous experience in India, was selected over 15 Indian bidders to carry out World Bank forestry projects in Kerala and Uttar Pradesh. The officer in charge of Bank forestry programmes in India was a former vice-president of the Jaakko Poyry Group, Christian Keil. India's Inspector General of Forests, A. K. Mukerji, meanwhile, had recently been a guest of Poyry in Finland and was reportedly preparing to open a branch of the firm in India upon his retirement from the civil service.

The better they succeed in using public monies to establish or expand industrial forestry or pulp and paper sectors, the more private-sector work consultants are assured in the future. In 1984, for example, Poyry won a contract from the World Bank to make recommendations for the pulp and paper industry in Indonesia; a decade later, the company was in the thick of an unprecedented boom in massive pulp-related private sector projects on Sumatra and Kalimantan.

Suppliers of Pulp- and Paper-Making Technology

The dominant suppliers of machines to the pulp and paper industries tend to be based in the same Northern countries as the consultancy firms. Finland's Ahlstrom and Valmet-Tampella, for instance, are among the world's leading suppliers of pulping and bleaching equipment, while the Swedish-Swiss giant, Asea Brown Boveri, manufactures power and process control machinery. Most of the hundreds of millions of dollars spent to build and plan the wood supplies for each giant new pulp mill, South or North, winds up in the hands of such suppliers, with the majority share going repeatedly to Scandinavian, Japanese and North American firms and consortia.

Industry Associations and Alliances

Organizations such as the European Confederation of Paper Industries (CEPI), the American Forest and Paper Association, and the Thai Pulp and Paper Industries Association help firms win subsidies from governments, tackle public relations, assess markets, influence environmental regulation, and prevent environmentalists from dividing industry over issues such as recycling and chlorine-free paper production. Sweden's pulp and paper associations, eager to gain more political clout in Brussels at a time when the industry is rapidly internationalizing throughout Europe, were influential in persuading the country to join the European Union.

Bilateral Aid Agencies

While aid departments are driven by conflicting bureaucratic, foreign policy and "foreign aid" goals, their principal function in the nexus of pulp and paper is to "launder" public monies used to pay for the work of Northern corporations in the South. Finland's FINNIDA and Sweden's SIDA, for instance, have bankrolled Finnish and Swedish firms' plantation and pulp and paper mill planning, exports and technical services for countries such as the Philippines, Thailand, Sri Lanka, Nepal, Zambia, Kenya, Viet Nam, Mozambique and Tanzania. Japan's JICA, meanwhile, has provided handouts for Japanese plantation research, planning and trials in Chile, Uruguay, Paraguay, Indonesia, Thailand, Malaysia and other countries, while its Overseas Economic Cooperation Fund has subsidized Japanese corporate wood chip consortia. Without such subsidies, many forestry consultants and pulp and paper equipment suppliers would not survive. Accordingly, bilateral aid agencies often compete fiercely with each other to ensure that their corporations' services are the cheapest offered to Southern elites.

State Investment or Export Credit Agencies

Other official organizations provide additional assistance. When a paper-cycle-related economic recession engulfed Finland in the early 1990s, for example, the country's Premixed Concessional Credit Scheme helped equipment suppliers such as Tampella, Valmet, Sunds Defibrator and Ahlstrom find new outlets in Asia. Annual Finnish machinery exports to Indonesia surged from nil to over US$95 million between 1990 and 1993, while those to Thailand increased nearly fivefold over the same period. Similarly, the state Finnish Fund for Industrial Cooperation is backing the partly state-owned Finnish paper giant Enso Gutzeit in a joint venture to develop a 1,390-square-kilometre acacia pulpwood plantation in western Kalimantan on a site riven by conflicting land claims.

The US's Overseas Private Investment Corporation (OPIC) and Export-Import Bank, meanwhile, are helping to lubricate an inter-governmental deal which will result in the US industry's sending billions of dollars' worth of pulp and paper, logging and other machinery to Siberia in exchange for Russian wood. Britain's Commonwealth Development Corporation (CDC), which draws around 45 per cent of the more than £150 million it invests annually directly from the British "aid" programme and the remainder largely from profits made on aid-budget seed money, has invested in pulpwood plantation companies in Asia and Africa.

Multilateral Agencies

Multilateral development banks (MDBs) such as the Asian Development Bank, the World Bank and the European Bank for Reconstruction and Development also shower taxpayers' money on consultancy, construction and machinery firms. Northern firms, backed by their government bureaucracies, have a particular advantage in competing for these windfalls. US directors of MDBs, for example, have been instructed to impress on the banks the virtues of "one-stop shopping" at US firms, while a satellite industry of consultants -- many of them former World Bank staff or the spouses of current staff -- is on hand to help supply inside information on MDB procurement. MDBs and Northern governments, in addition, hold regular meetings in Northern capitals to help the Banks and prospective Northern contractors get to know each other.

In recent years, industry consultants have received funds from MDBs and other multilateral agencies such as FAO and UNDP to research business opportunities or plan or execute industry-benefiting forestry development schemes in more than a dozen African, Asian and Latin American countries.

National and State Governments

Governments end up furnishing some of the most important subsidies for the pulp and paper industry. In the last decade, for example, the Canadian province of Alberta has bestowed over $145 million in infrastructure gifts and $400 million in debentures on Japanese paper corporations and joint ventures. An additional $47.1 million has been committed by Canadian governments for public relations for overseas forest industries extracting Canadian pulpwood.

Under the prodding of MDBs, meanwhile, Southern governments have set up or augmented state institutions which subsidize the growth of local and foreign commercial elites. Thailand's Board of Investment, for example, provides tax write-offs, technology import exemptions, and rent-free loans to pulpwood or pulp industries whose activities often erode the livelihoods of rural dwellers. As Thai economist Pasuk Phongpaichit notes, such actions fly in the face of economics:

"Economic theory tells us it's all right to subsidize education because it benefits the whole society. But while eucalyptus and pulp and paper industries earn profits for some, they cause problems for society. Therefore, economic theory tells us, they should be taxed. But instead the government does the opposite. This is matter of influence and power".

Many forestry departments, in addition, divert the vast swathes of land over which they have jurisdiction towards industry, and away from their occupants or from other uses. In Indonesia, 70 per cent of whose land is managed by the state forestry bureaucracy, industry is charged as little as US$0.30 per square kilometre per year for the use of plantation land, and plantations are further subsidized with revenue gained from logging.

Costs of land and labour are also kept down in many countries through subsidies provided to military and police forces by local or foreign taxpayers. State university forestry faculties or research organizations -- often run by foresters trained exclusively in industrial forestry in countries such as Finland, Canada and the UK and sometimes even benefiting from direct industry support -- can be relied upon to provide useful lobbying and technical support for commercial schemes.


Sources: Pulp and Paper International; World Resources Institute; The Nation (Bangkok); The Statesman (Delhi); Financial Times; Jaakko Poyry; Finland National Board of Customs; Jakarta Post; Commonwealth Development Corporation; World Bank; UK Department of Trade and Industry; Interforest; Taiga News.



Box 2: Technology

Paper does not intrinsically require huge machines, large technocracies, extensive road networks, intercontinental marketing mechanisms, or the mining of vast amounts of raw material in single locations. China, for instance, still supplies its immense paper needs largely through small local mills which use mainly surplus local agricultural wastes such as straw, support community economies, require no advanced infrastructure to support them, and, like village bakeries, can safely shut up shop temporarily when no one is buying without the proprietors needing to worry about paying off their machinery investments. While effluent treatment is negligible, there are no overwhelming technical or economic obstacles to running such mills cleanly.40 Paper manufacturing expert A. W. Western, moreover, has argued that in India and other Southern countries, "detailed comparisons between the large mill and the equivalent capacity in small mills overwhelmingly favour the smaller unit in economic terms". According to researcher Maureen Smith, there are no purely technical obstacles even to curent US paper and paperboard "demand" being met by a more decentralized network of small- to medium-sized mills using a raw material base of approximately half waste paper and half non-wood crops including straw, hemp, or other regionally-appropriate materials.40


Notes and References

1 MacIsaac, R. and Champagne, A., eds., Clayoquot Mass Trials: Defending the Rainforest, New Society Publishers, Gabriola Island, BC, (Jon Carpenter, Oxford), 1994.

2 Pulp and Paper International (PPI), September 1994, October 1994; Wright, R., "New Markets: New Developments -- Indonesia", presentation at Financial Times conference on World Pulp and Paper, May 1994; Rasmusson, U., Swedish/Scandinavian Involvement in Indonesian Forestry -- The Industrial Forest Plantation and Pulp Mill Sector, WWF, Stockholm, 1994.

3 Such critics include economic and social historians such as Karl Polanyi and E. P. Thompson, economists such as J. K. Galbraith, and a wide range of anthropologists and sociologists.

4 Buchanan, A., Ethics, Efficiency and the Market, Clarendon Press, Oxford, 1985, pp.36-46.

5 Hills, R. L., Papermaking in Britain 1488-1988, Athlone Press, London 1988; Hunter, D. Papermaking: The History and Technique of an Ancient Craft, Dover, New York, 1978; Clapperton, R. H., The Paper-Making Machine: Its Invention, Evolution and Development, Pergamon, Oxford, 1967.

6 Western, A. W., Small-Scale Papermaking, Intermediate Technology Information Services, Rugby, 1979.

7 Ibid., p.26.

8 Ibid.

9 International Institute for Environment and Development, The Sustainable Paper Cycle, draft report for the Business Council on Sustainable Development, IIED, London, 1995; Ayres, E., "Making Paper without Trees", WorldWatch, September/October 1993, pp.5-8; Durning, A. T. and Ayres, E., "The Story of a Newspaper", WorldWatch, November/December 1994, pp.30-32; Wright, R., personal communication.

10 Van Hook, M., presentation at Financial Times conference on World Pulp and Paper, May 1994.

11 Olsson, R., ed., The Taiga Trade A Report on the Production, Consumption and Trade of Boreal Wood Products, Taiga Rescue Network, Jokkmokk, Sweden, 1995; PPI, July 1994.

12 Zerner, C., Indigenous Forest-Dwelling Communities in Indonesia's Outer Islands: Livelihood, Rights, and Environmental Management Institutions in the Era of Industrial Forest Exploitation, unpublished report commissioned by the World Bank, 1992; Lohmann, L., "Peasants, Plantations and Pulp", Bulletin of Concerned Asian Scholars 23, 4, 1991, pp.3-17.

13 Fletcher, H., "The Pulp and Paper Industry: A New Zealand Perspective", in Schreuder, G. F., (ed.), Global Issues and Outlook in Pulp and Paper, University of Washington, Seattle, 1988; The Economist, 14 January 1995; Financial Times, 17 February 1995.

14 Wright, R., "World Pulp Market: Forecasts and Prospects as at Mid-1992", Paper and Packaging Analyst 14, 1993, pp.13-19.

15 Under pressure from newspaper buyers, EC investigators recently launched investigations into alleged price-fixing among newsprint produers. See Financial Times, 27 April 1995.

16 Clark, D., "Editorial", Appita Journal, 47, 3, 1994.

17 Hunter, D., op. cit. 5, p.385.

18 IIED, op. cit. 9.

19 WorldWatch Institute, Vital Signs, Norton, New York, 1994.

20 IIED, op. cit. 9; Pereira, W. and Seabrook, J., Red Ink in the "Blueprint for a Green Economy", CHS, Bombay, n.d.

21 Olsson, R., op. cit. 11; Niku, P., "Worldwide Review of Recycled Fibre", Know-How Wire: Jaakko Poyry Client Magazine 1, 1993. The technical upper limit for this ratio is probably not much more than 50 per cent; because wood fibres become shorter and weaker as a result of recycling, pulp made from waste paper must often be mixed with fresh, long-fibred pulp before being manufactured into paper.

22 Fairlie, S., "Long Distance, Short Life: Why Big Business Favours Recycling", The Ecologist 22 (6), November/December 1992, pp.276-83.

23 Calculated from Japan Paper Association, Pulp and Paper Statistics 1994, JPA, Tokyo; Japan Pulp and Paper 30 (1); Penna, I., Japan's Paper Industry: An Overview of Its Structure and Market Trends, Friends of the Earth Japan, Tokyo, 1992; Marchak, M. P., "Latin America and the Creation of a Global Forest Industry" in Steen, H. K. and Tucker, R. P., eds., Changing Tropical Forests: Historical Perspectives on Today's Challenges in Central and South America, Forestry History Society and International Union of Forestry Research Organizations, New York, 1992; Schreuder, G. and Anderson, E., "International Wood Chip Trade: Past Developments and Future Trends, with Emphasis on Japan" in Schreuder, G., (ed.), op. cit. 13; Japan Tropical Forest Action Network, "Report on Eucalyptus Plantation Schemes in Brazil and Chile by Japanese Companies", JATAN, Tokyo, 1993.

24 Hagler, R., "Global Forest", Papermaker, May 1993, pp.40-46; Hagler, "What is Determining International Competitiveness in the Global Pulp and Paper Industry?", Proceedings of the Third International Symposium, Center for International Trade in Forest Products, Seattle, 13-14 September 1994.

25 Grant, J. et al., Paper and Board Manufacture, British Paper and Board Industry Federation, London, 1978; Axberg, G. N. and Stahl, P. H., "How Much Wood Does Your Forest Yield?" in Know-How Wire, January, 1989, pp.11-13; Graham, Alastair, "Wood Flows around the Pacific Rim: A Corporate Picture", WWF, Cygnet, Tasmania; Shell International Petroleum Company and World Wide Fund for Nature, Tree Plantation Review, Study No. 3: Industrial Wood, Shell and WWF, London, 1993.

26 Wilson, R. A., "Managed Forests: Economic and Ecological Aspects", paper presented to the World Pulp and Paper Environmental Conference, Leningrad, 16-17 April 1991.

27 IIED, op. cit. 9; PPI, July 1994; United Nations import-export figures, 1994; Wright, R., op. cit. 14.

28 Carrere, R. and Lohmann, L., Pulping the South: Tree Plantations in the Third World, World Rainforest Movement and Zed Books, 1996

29 Fernandez Carro, O. and Wilson, R. A., "Quality Management with Fibre Crops", TAPPI Journal, February 1992, pp.49-54.

30 Carrere and Lohmann, op. cit. 28.

31 Ibid.

32 Ibid.

33 Shell and WWF, op. cit. 25.

34 Weyerhaeuser Company, Weyerhaeuser Report 1994, Tacoma, 1995.

35 Public Relations Watch (PRW), Oct-Dec 1993 and Second Quarter 1994.

36 Ibid.

37 PRW, Fourth Quarter 1994.

38 Churchill, W. and van der Wall, J., Agents of Repression, South End, Boston, 1988; New Statesman, 25 November 1994.

39 The author would like to thank Teresa Brooks, Ricardo Carrere, Alastair Graham, John Hanson, Sonoko Kawakami, M.Patricia Marchak, Saskia Ozinga, Ian Penna, Noel Rajesh, Ulf Rasmusson, Sarah Roberts, Maureen Smith, Rowan Tilly, Jeremy Whitham, Alex Wilks, Al Wong, the Heinrich Boll Foundation, the Taiga Rescue Network, and many others for invaluable help.

40 Western, A. W., op. cit. 6; Smith, M., "The Paper Industry: Agenda for Reform", in Rainforest Action Network, Cut Waste, Not Trees: How to Save Forests, Cut Pollution and Create Jobs, San Francisco, 1995; Wong, A., "New Directions in Industry Development and Environmental Protection for Non-Wood Pulp Mills in Developing Countries", Arbokem, Inc., Vancouver, 1992.

 

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