A financial evaluation of two contrasting silvicultural systems applicable to Pinus taeda grown in north-east Uruguay

The Loblolly pine (Pinus taeda L.) plantation area in north-east Uruguay was 108 000 ha in 2008. Recent industrial capacity developments have resulted in major structural changes. Silvicultural system selection depends on site productivity, costs, timber prices and public policies. This study aimed to assess economic returns for two silvicultural systems in north-east Uruguay, in scenarios with and without a plantation subsidy: System I, with a short, 12-year rotation, primarily for small logs; and System II, with a longer, 24-year rotation. For System I, the underbark volume was 198 m3 ha-1 (mean annual increment 16.5 m3 ha-1 y-1) and land expectation value (LEV) at a 9.7% discount rate was US$561 ha-1 and US$442 ha-1, with and without subsidy, respectively. System II resulted in 318 m3 ha-1 underbark volume (13.2 m3 ha-1,/sup> y-1) and the LEV was US$860 ha-1 and US$771 ha-1, with and without subsidy, respectively. System I was more profitable than extensive cattle husbandry only when the distance to mill was equal to or less than 60 km and wood millyard prices were equal to or higher than US$27.8 m-3 and US$28.8 m-3 with and without subsidy, respectively. Values for System II, in which the main product was a mix of sawlog diameters, were positive and higher than those for System I, both with and without subsidy. If a company invested in forest plantations without due provision for early silvicultural treatments, such as pruning and precommercial thinning, a high risk of financial loss would ensue. Long-rotation sawtimber regimes similar to System II would be more profitable and offer a lower risk of financial losses. The results suggest subsidy withdrawal in Uruguay should not lead to changes in silvicultural systems; in fact, it rendered regimes designed for low-value wood, such as System I, even less advisable.Keywords: investment, land expectation value, pruning, risk, thinningSouthern Forests 2010, 72(3/4): 163–17