Consumption and production of paper and paperboard in the twenty Latin-American republics, 1935-461

By the Staff of the Division Forestry and Forest Products

¹ The data used in this study were obtained mainly from the following sources: World Paper Consumption, 1927-1938, (U. S. Dept. of Comm., Burl of For. and Dom. Comm., May 1941); Pulp and Paper Trade Statistics of the Other American Republics, 1938-1941 (U. S. Dept. of Comm., Burl of For. and Dom. Comm., 1944); Industrial Reference Service, Part 6: Forest Products (U. S. Dept. of Comm., Burl of For. and Dom. Comm.,. various releases between 1944 and 1947). Population estimates were taken from: Monthly Bulletin of Statistics (Statistical Office of the United Nations, July 1947, No. 7). Latin-American 1945 and 1946 imports, except for a few instances where official statistics were at hand, were assumed to be approximately equal to Canadian, United States, Swedish Finnish, and Norwegian exports- to these destinations.

DURING the period 1935-46 the consumption of wood pulp products increased more than 30 per cent in the twenty Latin-American Republics. Since the level of imports remained relatively constant, the increased consumption was accounted for by increased domestic production. It is an interesting fact, too, that though the absolute level of consumption increased, the increases slightly more than kept pace with the population growth.

Assuming that the immediate past can be used as an indication of the immediate future, if there are further appreciable increases in consumption they will probably be the result of increased domestic production, both of wood pulp and of pulp products. It is suggested that as the level of consumption rises to and remains at a sufficient degree to support pulp product industries, such industries will be established. The forest resources of Latin America are rich and the knowledge of how best to utilize them is slowly being gained.

Consumption

At the present time the consumption of paper, paperboard, and converted paper products in all Latin America is on a relatively low level, varying from 6.0 to 6.6 kilograms per caput over the period 1935-46. Although these figures are higher than the estimated averages for the Middle East, Africa, or Asia, they are considerably lower than the 1937 estimate of 17 kilograms and the 1946 estimate of 25 kilograms per caput for Europe, the 56 and 40 kilograms per caput consumption for the same years in Australia, or the record average of approximately 107 and 143 kilograms per caput in the United States.

As shown in Table 1, there is considerable variation among Latin-American countries in the use of paper and paperboard, Argentina having the highest per caput consumption (19 kg. in 1945-46) and six countries having less than 1 kg. It is significant that for the twenty republics as a whole, per caput consumption has been steadily, if slowly, rising. Despite the fact that several countries have been forced recently to limit importations of paper, there is strong evidence pointing toward a continued increase in per caput consumption.

TABLE 1 - ESTIMATED CONSUMPTION OF PAPER, PAPERBOARD, AND CONVERTED PAPER PRODUCTS IN LATIN AMERICA

Country	Consumption			Consumption per Caput1
	1935-37	1939-41	1945-46	1935-37	1939-41	1945-46
	Average	Average	Average	Average	Average	Average
	(Thousand metric tons)			(Kilograms per caput)
Argentina	290	302	273	23	23	19
Bolivia	2	3	2	0.6	0.9	0.5
Brazil	144	167	212	3.7	4.1	4.6
Chile	35	46	53	7.6	9.8	9.8
Colombia	17	23	25	2.0	2.6	2.5
Costa Rica	2	2	2	3.0	3.1	2.7
Cuba	42	63	70	10.1	14.8	14.6
Dominican Republic	n.a.	2	3	n.a.	1.2	1.5
Ecuador	1	4	3	*	1.4	0.9
Guatemala	2	3	2	0.7	1.0	0.6
Haiti	n.a.	0.3	1	n.a.	*	*
Honduras	1	2	1	*	*	*
Mexico	90	100	176	4. 8	5.2	7.9
Nicaragua	1	1	1	*	*	*
Panama	n.a.	3	5	n.a.	5.0	7.4
Paraguay	n.a.	n.a.	n.a.	n.a	n.a.	n.a.
Peru	16	19	26	2.7	3.1	3.8
El Salvador	2	2	3	1.2	1.1	1.5
Uruguay	21	27	26	10.1	12.6	11.6
Venezuela	5	14	19	1.4	3.9	4.4
TOTAL OR AVERAGE	671	783	903	6.0	6.5	6.6

n.a. = Figures not available.

*The figures for consumption are not sufficiently accurate to justify the computation.

¹ In calculations of consumption per caput, the population data used were estimates for the years 1937, 1.939, and 1945.

For all countries the estimated apparent average annual consumption² rose by 35 per cent between 1935-37 and 1945-46 (from 671,000 metric tons to 903,000 metric tons). It is noteworthy that during this period the amount of paper and paperboard imported remained almost at a constant level of a little more than 400,000 metric tons. Consequently the over-all increase in consumption was entirely accounted for by the principal paper- and paperboard-producing countries of Argentina, Brazil, Chile, Cuba, Mexico, Peru, Uruguay, and Venezuela.

² Apparent annual consumption has been taken to be domestic production plus imports. By using an average for two and three years the disturbing effect of advance purchasing and delayed deliveries has been minimized. In addition, fluctuations of consumption because of changes in business conditions have been reduced.

It can be seen from Table 1 that between 1935-37 and 1939-41 consumption increased approximately 112,000 metric tons and between 1939-41 and 194546, 120,000 tons. Undoubtedly, if-export supplies of paper had been available in greater quantities during 1945-46, the figures for apparent consumption during this period would have been considerably greater. For not only was it necessary for importers to meet demands for current consumption but they also had the problem of building up depleted inventories. During this period foreign exchange was generally available for the importation of paper and, in particular, of newsprint.

Requirements

The use of paper and paperboard products forms an essential, if unobtrusive, part of the total commodity consumption needs of a country. In Latin America, as the low per caput consumption figures prove, the use of paper has never been excessive and generally speaking has not been applied to luxury needs. The requirements of newspapers are urgent both because of the importance of world news and because of the larger numbers of readers resulting from increased educational facilities. Requirements for public and private documents, for elections, for the recording of vital statistics, for education, and for sanitary purposes are all on a level of highest essentiality. We generally fail to realize fully the quantity of paper and paperboard required for the packaging of food and industrial products, a need which will increase further with the advent of commercial shipments by air. In Latin America almost the total quantity of paper used by commercial businesses and by manufacturing enterprises can be considered essential. And at the present time, because of the shortages in tinplate for cans and in jute and cotton for bags, if multiwalled paper sacks were not available, some urgently needed sugar, cement, lime, and other commodities could not be safely moved.

The industrial developments which are continuing to take place in Brazil, Cuba, Colombia, Mexico, and other countries have been recorded in detail in many publications. With a knowledge that this industrialization has taken place, bringing with it new and significantly larger demands for paper and paperboard, it is surprising to note in Table 1 that, while total consumption has increased 120,000 metric tons between 1939-41 and 1945-46, per caput consumption just barely increased. In other words, consumption just kept pace with the growth in population. It is possible, of course, that the estimated increases in population may be slightly in error and, if the actual population increase is smaller, consumption per caput might be slightly larger. However, the possible changes involved would not be important. Because there has been no significant increase in the figures for per caput consumption, in spite of the known factors leading to increased demand, it is logical to assume that current consumption levels approximately represent essential needs, or the "hard core" of demand which cannot be greatly lowered without harm to the economy of the countries involved.

Consumption related to per caput income

Estimates have been made of the per caput income of all but one of the Latin-American countries.³ Recognizing the approximate nature of the data, we have used them only as a means of securing a subdivision into two groups, one for countries having a relatively high per caput annual income (more than the equivalent of $100 per annum) and the other for countries having a low per caput annual income (less than $100). For these two groupings per caput paper and paperboard consumption has been determined.

³ Basic Data on the Other American Republics (Co-ordinator of Inter-American Affairs, Washington, D. C., late 1944), p. 171.

Group	Per Caput Consumption of Paper and Paperboard
	1935-37	1939-41	1945-46
	Average	Average	Average
	(Kilograms)
Average per caput income more than $1001	8.1	9 0	8.5
Average per caput income less than $1002	2.9	3.2	4.3

¹ Argentina, Brazil, Chile, Costa Rica, Cuba, Uruguay, and Venezuela.

² Bolivia, Colombia, Dominican Republic, Ecuador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Peru, and El Salvador.

It is not advisable, with the data available, to attempt to relate the consumption of paper and paperboard products with variations in per caput income. It is sufficient to demonstrate that there is a marked relationship between per caput income and per caput paper consumption. We can safely say that where there has been a rise in the per caput income, as has happened in Mexico for example, there will be a corresponding rise in per caput paper consumption. We would ordinarily expect to find the largest increase in the per caput consumption group of the highest income grouping. This is not the case, for the figures show that in the immediate past per caput consumption of paper and paperboard has had the greatest increase in those countries where the income level was lowest. In part the explanation is undoubtedly due to an increase in income in these countries and its expenditure on paper and paper products in preference to other items.

Consumption related to literacy

In most countries of Latin America newsprint accounts for a considerable portion of the paper and paperboard consumption. For this reason it is interesting to determine the relative consumption of paper and paperboard when the countries are grouped in accordance with estimates of the rate of literacy.⁴

⁴ Loc. cit.

TABLE 2. - ESTIMATED COST OF NEWSPRINT IN LATIN AMERICA

Country	Newsprint Consumption			Relation to Total Paper and Paperboard Consumption
	1935-37	1939-41	1945-46	1935-37	1939-41	1945-46
	Average	Average	Average	Average	Average	Average
	(Thousand metric tons)			(Percentage)
Argentina	155	141	90	53	47	33
Bolivia	1*	2*	1	50	67	50
Brazil	55	50	85	38	30	40
Chile	20*	19*	26	57	41	49
Colombia	6	7*	7	35	30	28
Costa Rica	1*	1	1	50	50	50
Cuba	13	15	19	31	24	27
Dominican Republic	n.a.	0.5	0.3	n.a.	25	10
Ecuador	1	2	2	n.a.	50	67
Guatemala	1	1	1	50	33	50
Haiti	n.a.	0.1	0.2	n.a.	33	20
Honduras	0.5	0.4	0.2	50	20	20
Mexico	25	31	57	28	31	32
Nicaragua	n.a.	0.5	0.2	n.a.	50	20
Panama	n.a.	2	3	n.a.	67	60
Paraguay	0.4	0.3	0.1	n.a.	n.a.	n.a.
Peru	8	10	10	50	53	38
El Salvador	1	2	2	50	100	67
Uruguay	12	12	14	57	44	54
Venezuela	0.8	4	5	16	29	26
TOTAL OR AVERAGE	301	301	323	45	38	36

n.a. = Figures not available.
* Includes some printing paper.

Group	Per Caput Consumption of Paper and Paperboard
	1935-37	1939-41	1945-46
	Average	Average	Average
	(Kilograms)
Rate of literacy less than 50 percent	1.5	2.1	2.2
Rate of literacy more than 50 percent	7.6	8.3	8.4

The figures indicate that there is a definite relationship between the rate of literacy and the amount of paper and paperboard consumption. While it is true that the rate of literacy is related to per caput income levels, the figures show that paper consumption in the grouping of countries having a rate of literacy 50 per cent or higher has been from four to five times as great as the consumption in the other countries; in contrast, consumption in the grouping of countries having more than $100 per caput income was approximately two to three times the lower per caput income grouping. This indicates that the rate of literacy might well be the more important factor in paper consumption. As has been mentioned before, great strides are being made toward increasing the rate of literacy and one expected consequence will be the increased consumption of paper.

Consumption of newsprint

Average annual consumption of newsprint in Latin America has varied from 45 per cent (1935-37) to 36 per cent (1945-46) of total paper and paperboard consumption.⁵ Because of the world-wide shortage

⁵ For comparison, in the United Estates in 1939 newsprint accounted for approximately 22% of total paper and paperboard consumption and in 1945, 17%.

Of newsprint it cannot be said that its relative decline in the consumption picture is due to the rising use of other paper and board products. In fact, while this actually accounts for the percentage decline during this period, it is very likely that, had the supplies been available, the use of newsprint would have maintained its relative place and perhaps would have increased.

In Latin America as in many other parts of the world, newsprint is used for many other. purposes than for newspapers. Because of the fact that it is the least expensive paper, it is also used as a wrapping paper, as a printing paper, for school notebooks etc. Because of the limited average income, newsprint must serve the needs of Latin-American consumers as a substitute for the higher priced papers they cannot at the time afford.

During the early thirties there was considerable international price competition in newsprint. With adequate foreign supplies available, the press in many countries opposed tariff barriers and this, together with the prospect of small profits and possible losses on the large capital requirements, presumably discouraged the growth of domestic newsprint mills. At the present time newsprint is manufactured in Argentina, Brazil, Chile, and Peru, but only in Brazil and Chile does domestic production constitute as much as approximately 40 per cent of domestic consumption. In Argentina production now accounts for about 6 per cent of present consumption and in Peru, 10 per cent. In Brazil domestic production of newsprint is expected to increase, as a new paper and pulp mill has begun production of newsprint.

Of particular interest is the considerable drop between 1941 and 1945-46 of newsprint consumption in Argentina (141,000 metric tons to about 90,000 tons). In part this may be accounted for by the fact that during the war Argentina's supply of newsprint from Northern Europe, its principal supplier, was limited, and Northern Europe has been unable to resume shipments on the prewar scale.

Import requirements

Aggregate average annual imports of approximately 400,000 metric tons of paper, paperboard, and converted paper products have not changed much during the time intervals under consideration. The principal grade of paper imported has been, and will continue to be, newsprint. It is estimated that during 1945-46 import requirements were distributed among the principal grades as follows:

Type of paper	Percentage
Newsprint	65
Book, printing, and writing papers	10
Paperboard, including boxes and cartons	9
Wrapping papers, including bags	6-7
Tissue and sanitary papers	4-5
Converted paper products	4-5
Other papers	2

The domestic paper-making industries are protected from foreign competition by import duties. This is not an unusual international practice. Paper products were among the first manufactured products receiving tariff protection in the United States. With tariff protection only that portion of a country's needs in excess of local production will be imported, except for qualities of paper which cannot be made profitably and for small quantities of paper imported for "prestige use."

In countries producing paper, there is a sizable demand for imported coated papers, check or safety paper, special bond papers, sanitary papers, and cellophane. There is a small demand for special industrial papers such as condenser tissue, abrasive paper backing, cable paper, etc. Import demands can be stimulated for such specialties not domestically produced as building papers, wet strength paper, the newly developed water and weather resistant containerboard, and converted paper products such as cups, towels, display paper, carbon paper, business forms, etc.

There is and will continue to be a market for high grade paper similar to that made domestically, particularly where the quality of the locally produced product does not approach the quality of imported papers, as for example in sanitary papers. Also; upon many occasions it will be desirable for business to use the best quality paper available, e.g., for letterheads, for invitations, for special editions of books, for legal documents, etc.

Production

The production of paper in Latin America has been primarily from imported wood pulp. This is a natural consequence of a lack of favorably situated supplies of woods which are now economically profitable for conversion into wood pulp. Coniferous woods, from which most wood pulp in the world is made, are not available in Latin America in sufficient quantities or in sufficiently accessible localities. It is only recently that advances have been made in the manufacture of wood pulp from broad-leaved trees. However, little is known concerning economic conversion processes with respect to the species found in Latin America. While paper and paperboard are being made in Peru from bagasse, this method has not to date been adopted in other countries.

If the consumption of paper and paperboard continues to rise, it will become profitable for more countries to manufacture their own paper requirements. In time, given the demand for paper, many of the difficulties in pulping native woods will be adequately solved and we may expect an increase in the production of domestic wood pulp.

During the war, in almost every paper-producing country in Latin America there was a lack of high-grade raw materials. To extend the available supplies, lower grade materials such as waste paper and vegetable fiber pulp had to be used. In addition, it was not possible to get adequate supplies of desired repair parts or to secure better paper-making machinery. The fact that many of the paper machines in Latin America were no longer modern contributed to the lowering in quality of the paper produced. However, the need for paper was so great that all which could be produced was sold. The procurement of newer paper-making machines and the return to wood pulp of prewar quality should result in the production of better paper.

The increase in paper and paperboard consumption in Latin America as a whole is almost wholly accounted for by the increase in domestic production of the principal paper-making countries shown above. The growth of the industry during the past ten years is striking, aggregate production for the period 194546 being almost double production during 1935-37. Local production has more than kept pace with consumption. It is now estimated to equal more than half of total consumption, as contrasted to 38 percent of total consumption during 1935-37.

The production of paper and paperboard in the principal producing countries is even now still in the initial period of growth. Although Argentina, Brazil, and Mexico have been producing paper and paperboard for a considerable number of years, the papermaking mills in Chile, Cuba, Peru, Uruguay, and Venezuela were only established after 1930. The present period of growth appears to be strong and vigorous, and shows very little sign of diminishing. The in creased growth of the industry has of course brought with it increased employment and increased pay rolls.

TABLE 3. - ESTIMATED PRODUCTION OF PAPER AND PAPERBOARD IN SELECTED LATIN-AMERICAN COUNTRIES, 1935-46

Country	Production			Production its a Percentage of Consumption
	1935-37	1939-41	1945-46	1935-37	1939-41	1945-46
	Average	Average	Average	Average	Average	Average
	(Thousand metric tons)			(Percentage)
Argentina	83	132	150	29	44	55
Brazil	87	110	150	60	66	71
Chile	20	34	37	57	74	70
Cuba	7	24	20	17	38	29
Mexico	46	51	92	51	51	52
Peru	1	5	14	6	26	54
Uruguay	2	9	9	10	33	35
Venezuela	1	6	6	20	43	32
TOTAL OR AVERAGE	247	371	478	38	50	56

The following numbers of pulp and paper mills are listed for 1947:⁶

Argentina	21
Bolivia	1
Brazil	45
Chile	10
Colombia	2
Cuba	3
Guatemala	1
Mexico	17
Peru.	3
Uruguay	4
Venezuela	3
TOTAL	110

⁶ Lockwood's Directory of the Paper and Allied Trades, 1947 (Lockwood Trade Journal Co., Inc.: New York 19, N. Y.)

The mills in Bolivia, Colombia, and Guatemala do not use imported wood pulp and presumably make paperboard from waste paper? used paperboard boxes, straw, and bagasse. Their annual production has not as yet been very great.

The war did not permit paper and pulp mills to put into effect all the plans which they may have made to modernize or to add to their plants. Operations, on the whole, were quite profitable, and it is said that many companies were able to set aside funds for improvements or additions to their plants. While specific details are known concerning some proposed plans for improvements and concerning plants actually completed and now in operation, the over-all picture since 1941 can best be summarized by Table 4, which shows exports of pulp and paper-making machinery and parts from the United States.

Machinery imports

It should be kept in-mind that the figures shown above include essential repair parts for day-to-day operations and that there have been marked increases in prices during 1945-46. Undoubtedly, however, the larger amounts shown in the table represent capital improvements in the form of purchase of new or used machinery, and these additions to capital investment have meant, or will mean, increased output capacity. These figures can be used as an approximate guide to the course of domestic production in 1947 and in 1948. Therefore, marked increases in production can be expected in Brazil, Chile, and Mexico. Moderate increases in production are likely to occur in Argentina, Cuba, and perhaps Venezuela.

TABLE 4. - UNITED STATES EXPORTS OF PULP AND PAPER MILL MACHINERY TO SELECTED COUNTRIES IN LATIN AMERICA, 1941-47

Country	1941	1942	1943	1944	1945	1946	1947 Jan.-July
	(Thousand dollars)
Argentina	6	14	2	...	...	35	72
Brazil	268	507	565	220	395	646	481
Chile	39	24	18	25	57	126	106
Cuba	8	15	7	3	30	96	43
Mexico	251	117	174	163	711	966	911
Peru	76	86	28	51	25	11	13
Uruguay	1	3	10	...	4	4	6
Venezuela	2	6	12	6	1	37	27
TOTAL	651	772	816	468	1223	1921	1659

The large shipments of pulp and paper machinery to Brazil, Mexico, and Peru during the years 1941-45 explain how it was possible for their paper and paperboard production to reach 1945-46 levels. In 1946 and in 1947 the record shows large shipments of machinery to Argentina, Brazil, Chile, Cuba, Mexico, and Venezuela. Since some of this machinery will create new wood pulp-producing facilities (As noted below, it is difficult to purchase wood pulp at present.), undoubtedly there will be an even greater increase in Latin-American paper and paperboard production.⁷

⁷ Of great interest is the exportation of kraft (sulphate) wood pulp by Mexico to the United States beginning in May 1947.

Outlook

Paper-making mills can be divided into two broad groupings: those which manufacture wood pulp which they themselves use to make paper (called integrated mills) and those which purchase the wood pulp (sometimes called market wood pulp) needed for their paper-making operations. At the present time there is a world shortage of wood pulp for sale and there is small prospect of supplies equaling demand in the immediate future:- The lack of an assured source of supply of wood pulp is one of the major obstacles preventing the establishment of new nonintegrated paper mills. For this reason most new mills in Latin America will tend to be integrated paper mills unless they have been able to make stable arrangements for domestic or foreign wood pulp supplies.

Because of the large capital investment in a paper-making mill, it is customary to operate it 24 hours a day. Of course, lack of adequate supplies or lack of a market for its products may dictate another course of operations differing from those yielding a maximum return on investment. Therefore, if management cannot foresee a period of uninterrupted operations it is likely to lay aside its plans for the erection of new mills.

As world economic conditions improve, there will continue to be a market for the important products which Latin America provides the world. Under such circumstances, industrialization will proceed at a rapid pace and Latin America will become a still greater market for the products of other nations. Industrialization, with respect to the paper industry, may mean that, except for newsprint, some day in the future many countries will be able to provide for their own needs. However, import needs for specialty and prestige products may be greatly expanded. Latin America's imports of paper-making machinery and parts, and of machinery for converted paper products, may very well exceed in value any possible decline in the value of paper imports.

Still further increases in capacity for paper making are right now in the process of being created. The outlook is for the utilization of this new capacity, at the expense of reduced imports if necessary, and a still further increase in consumption to keep pace at least with population growth. All the signs point toward increased per caput consumption. If immediate past history is repeated, expansion of domestic production will also take place.

Latin America has shown that it possesses the initiative to start new enterprises and has known how to obtain foreign capital and technical assistance when needed. It has a rich bounty of forest resources, and progress is being made insuring beneficial utilization Under these circumstances the future growth of the pulp and paper industry appears assured.

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