Prospects for commercial tree farming in Colombia

Robert R. Davis,^a,* Rafael de la Torre,^b Frederick Cubbage,^c Bruno Kanieski da Silva ^d

a: International Forestry Consultant, Germantown, TN, USA.
b: ArborGen Inc., Ridgeville, SC, USA.
c: Department of Forestry and Environmental Resources, North Carolina State University, Raleigh, NC, USA.
d: Warnell School of Forestry and Natural Resources, University of Georgia, Athens, GA, USA.
*Corresponding author: E-mail: robert.davis@intforest.com

Citation: Davis RR, de la Torre R, Cubbage F, Kanieski da Silva B. 2024. Prospects for commercial tree farming in Colombia. J.For.Bus.Res. 3(1): 1-33. https://doi.org/10.62320/jfbr.v3i1.43

Received: 30 November 2023 / Accepted: 20 February 2024 / Published: 22 February 2024

ABSTRACT

Over the next few decades, the area of planted forests required to satisfy worldwide demand for fiber, timber, and environmental services will need to increase by tens of millions of hectares (Mha). As no single nation can accommodate this expansion, planting sites in multiple countries must be identified. One prospective location is Colombia, which boasts nearly 26 Mha of land suitable for commercial tree planting, fair-to-excellent growth rates for major industrial species, good professional expertise, seaports on the Pacific and Caribbean coasts, and low-to-moderate land prices. Yet, despite these outstanding assets, tree plantations in Colombia cover only 542 thousand hectares (ha), with almost 90 percent located in three distinct regions: the Andean, Orinoco, and Caribbean. Constraints to commercial tree farming in Colombia include cultural preferences for non-wood products in construction and domestic applications, low capacity for processing industrial roundwood, and lack of reliable wood supplies needed for firms to scale up operations. While land prices are attractive in the remote Orinoco Region, they are considerably higher in more accessible regions, such as the Andean and Caribbean, which are closer to markets, mills, and ports. These factors along with security problems, low levels of formal land titling, and property rights issues in rural areas can complicate operations and add risk to investments in plantation forestry. With land for tree planting at a premium and increasing global demand for wood, fiber, and carbon sequestration, Colombia’s plantation sector stands to profit, provided it can successfully address the barriers to its growth.

Keywords: acacia, carbon sequestration, Colombia, eucalyptus, forestry, growth rates, investment returns, pine, risks, tree planting

INTRODUCTION

Global demand for forest products and services is expected to increase dramatically over the next few decades. Korhonen et al. (2021) and Nepal et al. (2019) estimate that by 2070, between 379 to 475 Mha of planted forests may be required to satisfy worldwide needs for fiber, timber, and carbon sequestration, an increase of 31-64 percent over 2020 levels of 290 Mha (FAO 2020). Moreover, the Trillion Trees Initiative being promoted for climate change mitigation could require as much as one billion ha of land for tree planting, assuming an average planting rate of 1,000 trees per ha (Korhonen et al. 2021).

Identifying suitable planting sites around the world for such a vast area is complex and entails an assessment of many factors in multiple countries. Such variables include the biophysical conditions required for tree growth; investment returns; the governance and regulatory setting; land availability, cost, and tract size; pressure from competing land uses; property rights; transportation, wood industry, and energy infrastructure; and social and environmental impacts. This article explores many of these key attributes in the context of evaluating Colombia’s potential for expanding its area of planted forests to meet future demand.

Located in the northern tip of South America, with over 114 Mha of land, Colombia is situated north of Ecuador and Brazil, south of Panama, and west of Venezuela (The United Nations Statistics Department 2014). The country has as many as 25.9 Mha considered suitable for commercial tree planting (La Unidad de Planificación de Desarrollo Rural Agropecuario [UPRA] 2023). Yet it only has about 542 thousand ha of plantations, consisting mainly of exotic eucalypts, pines, and acacias (MADR 2023). Factors contributing to the relatively small planted forest area include the country’s highly diverse climatic conditions, the broken landscape and rugged topography of the Andean Mountain Region, a small domestic market, the uncertainty of wood supplies needed to support wood industries, a limited capacity for processing roundwood and manufacturing wood products, and cultural preferences, including a preference for non-wood products in construction and other domestic applications (Toro 2017; Office National des Forets–Andina 2018; MADR 2020). Production and investments in rural Colombia have also been constrained for decades due to violence associated with drug cartels, conflicts over land and property rights, and armed struggles with guerilla groups (Segovia 2017; Ariza et al. 2022).[1] Because forestry investments require many years to mature, most investors will seek stable low-risk settings with good governance for their operations and avoid high-risk situations.

Of Colombia’s five major geographic regions, three stand out as being particularly promising for forestry investments: the Andean, the Orinoco, and the Caribbean (refer to Table 1, Figures 1 and 2). Each has unique characteristics that favor commercial forestry as well as its own peculiarities and tradeoffs. Most planting has historically been carried out in the Andean Region, which has reasonably good access to transportation infrastructure and hosts the country’s largest forest industries (MADR 2023). The nearest seaport, however, is about 450 km away from the main planting areas (Google Maps n.d.). Not surprisingly, level high-quality terrain for farming in this mountainous region can fetch high prices, though costs for forestry land run lower (Guadua Bamboo 2023; Castaño 2023).

The Orinoco Region has an abundance of large tracts of land at very low prices in the sprawling Llanos grasslands. The region has good growing conditions for trees and is the focus of much of the country’s recent planting efforts. The Orinoco’s remote setting and limited transportation infrastructure connecting it with the rest of the country, however, increase the costs of shipping raw materials to distant markets and mills, which can impact profits substantially.

Table 1. Suitability of land for tree planting and area planted by regions.

Major geographic regions	Area planted 2022 (Ha)	Total area suitable for planting (Mha)	Percentage of suitable area already planted
Andean	220,206	8.61	2.56
Orinoco	183,341	8.17	2.24
Caribbean	81,122	4.63	1.75
Pacific	56,022	2.29	2.45
Amazon	1,207	2.23	0.05
Total	541,898.00	25.93	9.06

Sources: Suitability data from UPRA (2023). Planted area figures from MADR (2023).

Although the Caribbean Region is not as well established as the other two major regions for forestry, it has a combination of attributes that may make it highly advantageous for commercial-scale tree planting. On one hand, the region is mostly flat with few altitudinal changes; has favorable temperature and rainfall regimes; good access to roads, markets, and population centers; and is relatively close to major ports. On the other hand, prices for forestry land in general run higher in the Caribbean compared to the Andean and Orinoco Regions.

Figure 1. Major regions of non-insular Colombia. Adapted from Florida Institute of Human and Machine Cognition (n.d.).

While security in some areas of the country is more problematic than in others, overall conditions have improved following the 2016 peace agreement between the government and the Revolutionary Armed Forces of Colombia (FARC), and the country is considered to be a favorable location for foreign investment (US Department of State 2021). Investors interested in Colombia’s plantation sector willing to take risks and able to manage its tradeoffs may be able to capitalize on the vast potential of the country for plantation forestry.

Figure 2. Departments of Colombia (Travel Guide of Colombia 2016).

MATERIALS AND METHODS

This article summarizes a review of over 90 sources concerning Colombia and its potential for industrial-scale tree farming. It focuses on the three main planting areas: the Andean and Orinoco Regions, which are strikingly different from each other, as well as the less established Caribbean Region, which also has high potential for plantation development.

Sources include information from journals; websites from government, industry, international institutions, and non-governmental organizations; grey literature; and personal communications from experts in the field. The authors made an effort to identify and utilize only the most recent and best available information. Screening and evaluating information constituted a major part of the work, with primary source documents favored over secondary references. Statistics found to be outside expected ranges were checked and verified, or discarded if they could not be supported with corroborating evidence. In general, more recent statistics were used instead of older ones.

The lead author is a former Senior Forestry Specialist for the World Bank with over 30 years of forestry experience in Latin America and Asia. The second coauthor is a Colombian forest economist and forester with decades of experience in his home country. The other coauthors, both foresters and forest economists, have extensive experience in academic and applied research in forest economics in Latin America and globally with educational institutions, government, international organizations, and private industry. Some of the insights are based on the principal author’s and co-authors’ on-the-ground experiences in forestry in Colombia, neighboring Ecuador and Venezuela, and other countries in Latin America.

RESULTS AND DISCUSSION

Plantation resources

Of the estimated 542 thousand ha of plantations in Colombia, the major species being planted are Acacia mangium (12.5 percent), Pinus patula (10.9 percent), Pinus caribaea (9.4 percent), Eucalyptus grandis (7.8 percent), Tectona grandis (7.4 percent), Eucalyptus pellita (6.9 percent), Hevea brasiliensis (6.8 percent), and Pinus tecunumanii (6.0 percent) (MADR 2023). Eucalyptus urophylla, Eucalyptus tereticornis, Eucalyptus globulus, Pinus oocarpa, Pinus maximinoi, Pinus radiata, Pinus kesiiya, Pinus ayacahuite, Pinus caribeae, Pinus chiapensis, Pinus greggii, and Pinus jaliscana, among others, are known to be planted in lesser quantities, as is Gmelina arborea (MADR 2023; Bartholomäus et al. 1998; Traffic n.d.; Wright and Isaza 1997; SGS South Africa 2018). The Forest Stewardship Council (FSC 2023) reports that the country has 31 chain of custody certificates and 14 forest management certificates corresponding to 212,494 ha.

Growth rates for the species studied were overall fair-to-excellent, establishment costs moderate, and financial returns highly variable, though good-to-excellent returns were found in some situations. Statistics gathered show rotation lengths for major commercial species ranging from 6 to 18 years while mean annual increments (MAI) fluctuated from 7 to 40 cubic meters per ha per year (m3/ha/yr) depending mainly on location and species (Lopera 2020; FinAgro 2018; Castaño 2023; MADR 2006) (Table 2). Plantation establishment costs in Colombia were near the international cost averages calculated by Cubbage et al. (2022), varying from $1,273 to $2,200 depending on the species, region, and number of years of management included in the estimates (Castaño 2023; Braun and Held 2017; Lopera 2020) (Table 3)[2]. Investment returns showed financial rates of return (FRR) from a low of 0.23 percent for P. patula to a high of 14.23 percent for P. tecunumanii (Lopera 2020) (table 4).

Table 2. Growth rates of major commercial tree species in Colombia.

Species	Growth (MAI) (m3/ha/yr)	Rotation (Years)	Location	Source
E. grandis	25 to 40	8	n.a.	FinAgro 2018
E. grandis	35	7	Antioquia Province	Lopera 2020
E. pellita	15 to 20	12	n.a.	FinAgro 2018
E. pellita	30 to 40	7	Vichada Province	Castaño 2023
E. tereticornis	20	8	n.a.	MADR 2006
E. tereticornis	22 to 30	7	Caribbean Region	Castaño 2023
P. patula	18	12 to 18	Antioquia Province	Lopera 2020
	18 to 22	8	Antioquia Province	Castaño 2023
	20 to 26	8	Andean Region	Castaño 2023
P. tecunumanii	28	16	Antioquia Province	Lopera 2020
	30 to 34	6	Meta and Vichada Provinces	Castaño 2023
	35 to 38	6	Antioquia and Andean Region	Castaño 2023
P. maximinoi	28 to 30	14 to 16	Antioquia and Andean Region	Castaño 2023
E. urograndis	35 to 40	7	Andean and Caribbean Regions and Antioquia, Meta, and Vichada Provinces	Castaño 2023
A. mangium	26 to 30	12	n.a.	MADR 2006
E. globulus	15 to 35	15 to 35	n.a.	MADR 2006
G. arborea	20 to 25	10	n.a.	MADR 2006
Tectona grandis	7 to 10	7 to 10	n.a.	MADR 2006
Sources: Data from FinAgro (2018); Lopera (2020); Castaño (2023); MADR (2006).

Table 3. Plantation establishment costs (planting and early management).

Region/Department	Type	Cost (US$)	Years of management	Source
Andean	Softwood/Hardwood	$1,339	3	Castaño 2023
Caribbean	Hardwood	$1,273	3	Castaño 2023
Orinoco	Softwood/Hardwood	$1,390	3	Castaño 2023
Not specified	Eucalyptus	$1,420	5	Braun and Held 2017
Not specified	Pines	$2,200	5	Braun and Held 2017
Antioquia (Andean)	Eucalyptus grandis	$1,805	5	Lopera 2020
Antioquia (Andean)	Pinus patula	$1,557	5	Lopera 2020
Antioquia (Andean)	Pinus patula	$1,441	5	Lopera 2020
Antioquia (Andean)	Pinus tecunumanii	$1,813	5	Lopera 2020
Sources: Data from Castaño (2023); Braun and Held (2017); Lopera (2020).

Table 4. Investment returns for major commercial tree species in the Department of Antioquia (Andean Region).

Species	Growth (m3/ha/yr)	Rotation length (Years)	Establishment costs US $	FRR (Percent)	NPV (US $)	LEV (US$)
E. grandis	35	7	1,805	2.22	-594	-1426
P. patula	18	12	1,557	0.23	-976	-1619
P. patula	18	18	1,441	10.98	933	1244
P. tecunumanii	28	16	1,813	14.23	3362	3362
Sources: Data from Lopera (2020); Cubbage et al (2022). Note: Returns were calculated using an eight percent discount rate. Costs include site preparation, planting, and five years of management expenses. Negative NPVs are associated with plantations dedicated to fiber production. Financial results are positive when trees are grown for multiple wood products.

A systematic strategic-level evaluation of land suitability for commercial tree planting was conducted by Colombia’s Ministry of Agriculture Rural Agricultural Planning Unit (UPRA) and is accessible on its Rural Agricultural Planning Information System website (Sistema de Planificación Rural Agropecuario or SIPRA). SIPRA uses multiple variables to assess suitability, including those for biophysical attributes, social and ecosystem concerns, and socioeconomic factors. In 2023, the results of our query of SIPRA showed a total of 25.93 Mha of land as appropriate for commercial tree planting, of which 7.51 Mha are classified as having high potential, 6.59 Mha with moderate potential, and 11.83 million with low potential (UPRA 2023) (Table 5 and Figure 3). Even if only the sites with the highest potential are appropriate for tree planting, the potential planting area in Colombia is still enormous.

Table 5. Suitability classes for tree planting and area planted.

Regions	Area planted 2022 (Ha)	Total area suitable for tree planting (Mha)	High suitability for tree planting (Mha)	Moderate suitability for tree planting (Mha)	Low suitability for tree planting (Mha)
Andean	220,206	8.61	3.74	2.55	2.32
Orinoco	183,341	8.17	0.62	1.43	6.12
Caribbean	81,122	4.63	2.41	1.30	0.92
Pacific	56,022	2.29	0.71	0.85	0.73
Amazon	1,207	2.23	0.04	0.46	1.74
Total	541,898	25.93	7.51	6.59	11.83
Sources: Data from UPRA (2023); MADR (2023).

The Convention on Biodiversity (n.d.) identified 134 distinct ecosystems in Colombia, underscoring the wide range of conditions and locations potentially appropriate for tree planting throughout the country. This article, however, concentrates on the three main planting areas, as previously mentioned, with the highest potential for industrial tree plantations: the Andean and the Orinoco Regions, where planting programs are well underway, and the Caribbean Region, where large-scale tree planting is still in its early stages but seems to hold good promise.