The Panamanian Timber Industry

In one of my first inquiries into the Panamanian Timber industry, I was informed that the industry has “partes...blancas y partes oscuras," literally "white parts, and black parts," referring to the dark, illegal underside of the industry.  According to Professor Herrera, the original regulations of the "Reforma Agraria," the Panamanian agency responsible for land regulation, allowed all local farmers and indigenous landowners to cut one quality tree and one or two lesser quality trees per year for personal use, such as to build a boat or for their own house. However, under a new law presented by a lawyer who had worked for INRENARE, the system of Permisos Comunitarios was created. The new system basically allowed for the same level of consumption, but on a community-wide basis. This change in regulation was supposedly to allow for increased revenues in the community, but in practice, this turned into a mechanism for "practically giving away" large quantities of wood at very low prices. The woodcutters would contract with the community leaders for the rights to large numbers of trees from the community allotment, allowing them to go onto communal lands and harvest large quantities of the most valuable species. The going rate throughout the 1970’s, and 80’s, and early 90’s was $50.00 per tree, for the most valuable timber species, including Caoba (Swietenia macrophylla) and Cedro Espino (Bombacopsis quinatum).^[1]The timber concession system described was the norm throughout the communally owned indigenous territories within the Wargandi, Madungandí, and Embera Comarcas. Professor Herrera identifies the regulatory system that allowed these practices as one of the largest legal loopholes in the whole timber system. He notes that is has been long criticized, but still continues to this day.

The largest timber operations shut down in the 70's, and that those that remain operate at a relatively small-scale. The last "reductos" or remaining sectors of valuable, naturally growing timber species are in the indigenous territories. The large timber companies shut down, in part, because of it was not a well-conceived industry in Panama. First of all, there was not a comprehensive system of reforestation to allow for future harvest. Secondly, even though timber-related legislation has undergone various reforms, it has not kept up with the realities and challenges of the modern world. Legislative reforms were primarily designed to benefit the timber industry, and even that, on a short term basis. It allows the industry to work faster, at lower costs, without paying taxes. Over time, the cost of extracting timber continues to increase due to the growing distances and difficulties of harvesting the trees, as well as the financial limitations imposed by the smaller scales of operation. These factors largely explain why the large scale timber industry had to shut down in Panama. In the 70s, many companies developed and operated for a short period of around five years, extracted as much as possible, and then shut down their operations when they were no longer profitable, or at least no longer as profitable. The current regulations allow for 20 year concessions to allow for greater profitability.

Professor Herrera notes that many of the forestry engineers come from the interior of the country and are versed more in the process of plantation forestry, rather than in tropical forestry which requires a longer term investment. Also coming from an economic standpoint, they are accustomed to looking for short term profits, rather than long term sustainability. Not only do they not understand the workings of tropical forests, but they know even less about the relationship of local communities with these forests. For the forestry engineer, the timber and the land on which the timber is located, is often seen as a national, economic resource to be extracted for the economic development of the state as a whole, rather than as community resource that sustains and defines the community, and requires careful long-term consideration.

Another factor that speaks to the way that Panamanian society views its forests is that the GOP has never developed a comprehensive forest research program. Those that work in the forestry sector in ANAM know what they know only through experience in the field. When I pointed out that the USAID project was providing some of the missing forestry expertise through their independent consultants, Professor emphasized that this missing element was something that not only USAID should be providing, but instead that the GOP should also be taking responsibility. The GOP should have developed a large-scale research institute through the Ministry of Agriculture and the national universities. Instead, he felts that in the next 20 years, Panama may no longer have a commercial timber industry. The government itself treats forestry as a type of mining, where the resources are extracted but nothing is returned.

Although there is an extensive Yale research project on tropical forestry going on at the Smithsonian Institute for Tropical Research (SITR) in Panama, which is producing a wealth of information on tropical forestry, none of this information is being transferred to the industrial sector due to failures in development policy. Although the University of Panama has recently opened a school of forestry, Professor Herrera feels like it may be too little too late. He notes that the circumstances in Panama aren't really favorable now for an extensive forestry program. This might have worked 50 to 100 years ago, when there were still lots of forests available.

ANAM

ANAM is the government agency responsible for… and is a key player in the question of whether timber is harvested sustainably among indigenous communities in Panama. The timber concessions process for timber on communally held land involves the community applying each year for the permits to its allotment of timber for that year. Typically, the communities have subcontracted the rights to these concessions to the local non-indigenous timber industry.

Though ANAM is the government agency that approves these permits, in reality it is a process in which there is very little oversight. Professor Herrera, who worked for INRENARE, the precursor to ANAM, in the 70's, notes that ANAM officials tend to be very cautious in the information that they share, since much of what they do on an individual basis is not necessarily legal. He, along with many others that interviewed, contends that local ANAM officials frequently accept bribes to put their stamp of approval on permits or timber shipments that have not fully complied with national legislation. The timber industry and local woodcutters will gladly pay off a local official rather than go through the mountains of paperwork called for on the books, and in the process opening their own books to inspection and their revenues to taxation.  Ultimately most of the timber harvested from indigenous reserves through the system of "permisos comunitarios" or community permits, escapes taxation and meaningful oversight.