corrals <strong>at</strong>op earth-fill hills. During thehigh-w<strong>at</strong>er period, these artificial hillsbecome small islands, each with an areaof 1200 m 2 • The earth-fill hills replacethe traditional "marombas" - raisedwooden pl<strong>at</strong>forms where the c<strong>at</strong>tle arepenned during the flood season. The remainingmarombas <strong>at</strong> J ari will eventuallybe replaced by the earth-fill islands.The cowboy in charge of each island isprovided with a house built over thecorral. The houses have better sanit<strong>at</strong>ionand other facilities than most traditionalfloodplain residents enjoy. The cowboy'swife is responsible for making butterfrom some of the milk. J ari had six ofthe raised corrals as of April <strong>19</strong>86 andplanned to have two more by the endof <strong>19</strong>86.The earth-fill islandsinclude a fish culture scheme still in anexperimental phase. A hole is left in thecenter of each island, cre<strong>at</strong>ing a pond.Excrement from the w<strong>at</strong>er buffalo in thecorral fertilizes the pond, where aqu<strong>at</strong>icplants (known locally as "murure") serveas food for two species of for<strong>age</strong> fish(known locally as "tamu<strong>at</strong>a" and "jijuna").These fish are e<strong>at</strong>en by the commercialspecies (pirarucu" (Arapaima gigas).Research on the fish culture schemehas been underway since <strong>19</strong>83 in a cooper<strong>at</strong>ivearrangement with EMBRAPA.There is also a smallexperimental herd of 50 w<strong>at</strong>er buffaloin the terra firme (uplands) area nearSao Miguel. This oper<strong>at</strong>es under a cooper<strong>at</strong>iveagreement with the Faculty ofAgrarian Sciences of Para (FCAP).Upland caule: Jari currentlyhas 2000 head of bovine c<strong>at</strong>tle interra /irme, mostly near Sao Miguel. Thearea of pasture will expand by 3000 h<strong>at</strong>o take advant<strong>age</strong> of install<strong>at</strong>ions, allowingthe total herd to be augmentedto 7000 head. J ari has a demand for 500-600 head/ month for me<strong>at</strong> supply. A herdof 35,000 bead would be needed tosupply this, including females kept formilk and cheese.The upland c<strong>at</strong>tle herdis no longer being man<strong>age</strong>d for on-sitereproduction. Heifers are bought andf<strong>at</strong>tened. The remaining cows of goodquality continue to be bred, and theiroffspring will be bred, but the firm'swaning interest in the breeding phasemeans th<strong>at</strong> this will fade out over a fewyears. Breeding would require more landand effort.Establishment of newinterplanted stands of pasture with Pinuscaribaea was discontinued in ca. <strong>19</strong>82for a variety of reasons (<strong>Fearnside</strong> andRankin, <strong>19</strong>85). The c<strong>at</strong>tle have sinceTABLE VIIFINANCIAL BALANCE IN JARI'S SILVICULTURE SECTOR (<strong>19</strong>84/85)Receipts:PriceQuantity (US$/ ValuePulp species Market (103 m tons) m tons FOB) (103 US$)Gmelina arborea Export 66 267 17,622Domestic 16 331 5,296Pinus caribaea Export 48 249 11,952Domestic 42 256 10,752Eucalyptus deglupta Export 31 267 8,277Domestic 11 331 3,641214 57,540Production costs(exclusive of debt service) 104,790been removed from all of the previouslyestablished interplanted stands due tothe pine's advancing <strong>age</strong>.J ari's upland c<strong>at</strong>tle pasturesare of the species Brachiaria humidicola,which was promoted throughoutthe Brazilian Amazon by EMBRAPAin the l<strong>at</strong>e <strong>19</strong>70's. An increasing <strong>at</strong>tack ofthe homopteran bug Deois incompleta(known locally as "cigarrinha") hassince led EMBRAPA to recommend An-.dropogon guianensis instead. The bugsare a serious pest on the Beh!m-BrasiliaHighway in Para and on the CuiaMSantarem Highway in northern M<strong>at</strong>oGrosso, but have not yet become a problem<strong>at</strong> Jari. Jari's ranching departmentsays th<strong>at</strong> its Brachigria humidicola pastureshave to be manually cleaned ofwoody second growth every year and replantedevery 4 years.Jari's Wood Short<strong>age</strong>J ari's mill uses 3000-3500 m tons/ day of chips for pulpingwhen oper<strong>at</strong>ing <strong>at</strong> its 750 m tons/ daynominal capacity. Chips required forfirewood have so far been supplied entirelyfrom n<strong>at</strong>ive forest. The balance betweenwood demands and the growth ofthe plant<strong>at</strong>ions is essential in evalu<strong>at</strong>ingthe project's future.A rough calcul<strong>at</strong>ion ofthe growth of the plant<strong>at</strong>ions can begained from the midpoint areas of thepresent complex of each species and <strong>age</strong>class (Table I). Using the midpoint ofLOSS IN SILVICULTURE SECfOR 47,250the yield range for each species (TableII) one can calcul<strong>at</strong>e the approxim<strong>at</strong>eamount of wood growth in the est<strong>at</strong>e'splant<strong>at</strong>ions (Table III). In order to bringplant<strong>at</strong>ion growth and wood demandsinto balance the plant<strong>at</strong>ion area wouldhave to be expanded by 21.4%, assumingthe same present percent<strong>age</strong> of eachsilvicultural species and the present supplementof n<strong>at</strong>ive wood.The wood balance overthe next few years will be critical becauseLudwig planted little in the lastyears of his tenure. The first treesplanted under the new administr<strong>at</strong>ionwill come on line in <strong>19</strong>87. In <strong>19</strong>85 thecompany was racing to obtain enoughwood to keep the mill from stopping.Measures included gleaning previouslyfelled areas for logs th<strong>at</strong> could be usedfor firewood in the power plant and theearly harvest of stands. The mill wooddemand was lower than usual: forreasons unrel<strong>at</strong>ed to the short<strong>age</strong> the pulpmill oper<strong>at</strong>ed <strong>at</strong> below capacity for severalmonths, and then stopped oper<strong>at</strong>ingaltogether for one month duringwhich repairs were effected. 1 1 >The availability of pulpwoodover the <strong>19</strong>86-<strong>19</strong>89 period can beroughly projected (Table VI) based onthe plant<strong>at</strong>ion areas and <strong>age</strong> classes(Table I) and the rot<strong>at</strong>ions and yieldmidpoints for the major species (TableII). Several optimistic assumptions aremade in the projection as estim<strong>at</strong>es ofthe contributions of the species and <strong>age</strong>classes not included in Table II. 1 2 > Theprojection indic<strong>at</strong>es th<strong>at</strong> Jari will have11\JEROERWI JAN- FEB <strong>19</strong>88, VOL. 13 N9 121
enough wood to supply its pulp mill in<strong>19</strong>86 and <strong>19</strong>87, but th<strong>at</strong> in <strong>19</strong>88 and<strong>19</strong>89 there will be a severe shortfall. In<strong>19</strong>89 the est<strong>at</strong>e would only produce halfof its pulpwood needs. The short<strong>age</strong> in<strong>19</strong>89 is approxim<strong>at</strong>ely twice as severeas it would have been if bad we<strong>at</strong>herhad not prevented the est<strong>at</strong>e from burning3000 ha in <strong>19</strong>85.Jari's Financial Situ<strong>at</strong>ionJ ari has achieved a significantimprovement by elimin<strong>at</strong>ing itsoper<strong>at</strong>ing losses. Company oficials sayth<strong>at</strong> in <strong>19</strong>82/83 J ari had an oper<strong>at</strong>ingloss of US$87 million. Oper<strong>at</strong>ing lossesfell to US$23 million in <strong>19</strong>83/84, andin <strong>19</strong>84/85 the firm had neither anoper<strong>at</strong>ing loss nor profit. A small oper<strong>at</strong>ingprofit is expected for <strong>19</strong>85-86. Oper<strong>at</strong>ingprofits and losses do not includethe cost of debt service - the paymentsof interest and principal on money owedto creditors. These costs must be substantial:Jari's debt <strong>at</strong> the time of Ludwig's( <strong>19</strong>82) sale was estim<strong>at</strong>ed to beUS$300 million (lsro E, 21 May <strong>19</strong>86),to which must be added a US$25 millionloan obtained by the new owners in<strong>19</strong>84 (Pinto, <strong>19</strong>86: 210).Jari's oper<strong>at</strong>ing costsare high in part due to its vast infrastructure,including 3500 km of roads,not counting secondary roads in theplant<strong>at</strong>ions. For comparison, the TransamazonHighway route within Ama:z.Oni<strong>at</strong>otals only about 3000 km. Expansion ofthe plant<strong>at</strong>ion area to bring growth andwood demand into balance will requirefurther increasing this infrastructure.Low pulp prices havebeen a major financial strain on Jari.The world pulp short<strong>age</strong> th<strong>at</strong> Ludwigoriginally foresaw raising pulp prices toUS$700/ton in the <strong>19</strong>80's has never m<strong>at</strong>erialized.Instead the pulp market declinedto a low in <strong>19</strong>85. The price ofpulp in <strong>19</strong>86 was around US$400/mton, representing an improvement over<strong>19</strong>85 market conditions but still notallowing the silviculture sector to meetits oper<strong>at</strong>ing expenses from pulp sales.The breakeven pointused as a rule thumb <strong>at</strong> the pulp millis US$450/ ton for all three species. Sincethe price received has been in theneighborhood of US$400/ton, the differencerepresents a subsidy from theother company oper<strong>at</strong>ions, especially thekaolin mine. Even the US$450 rule ofthumb appears to underestim<strong>at</strong>e the realcost of production. The financial sector'sTABLE VlllCHARCOAL DEMAND FOR GRANDE CARAJAS COMPAREDTO YIELDS AT JARIInform<strong>at</strong>ion on Grande Carajas charcoal scheme:Number of pig-iron plants approved: (a)Annual charcoal demand for the pig-ironplants already approved:Mean charcoal demand per plant:Total number of pig-iron plants planned:Conversion efficiency of wood to charcoal(mean of 4 conventional methods):
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