Beginning in 1975, the planting and exploitation of forests was subsidized heavily by the state, which remitted 70 percent of the cost of planting new areas with trees, exempted such lands from taxes, and permitted a 50 percent deduction for tax purposes from the profits generated from cutting the forests. The forestry policy of the military government was a major exception to its free-market approach and stimulated a significant expansion of forested land.

Chile's forested land is highly concentrated in the hands of a few major companies, principally those connected with the flourishing paper industry and with the national oil company. About 90 percent of all the wood harvested comes from plantations that were established, beginning in the early 1960s, on land of poor quality that originally had been cleared of forests for the growing of wheat and other crops. Reforestation, mostly with pine but also increasingly with eucalyptus, has continued at a faster pace than the cutting of the forests, thereby ensuring ample supplies for the foreseeable future (see table 28, Appendix). It was thought that the volume of production could double 1990 levels by the year 2000.

The public sector is playing a drastically smaller role in forestry. This diminution of the public sector's role is the result of the general tendency in the country toward reducing, and even eliminating, directly productive government activities. In 1992 the forestry industry was objecting strongly to the new powers that the Aylwin government was proposing to confer on the National Forestry Corporation (Corporación Nacional Forestal--Conaf) to protect native forests.

Whereas exports of basic--that is, nonmanufactured--forestry products had declined by the early 1990s, exports of manufactured wood products had almost doubled. This doubling of manufactured wood exports meant that instead of exporting raw logs, Chile was increasingly adding value to its forest products and was producing such items as milled boards, pulp, paper, and cardboard (see table 24, Appendix). The main market was Japan, which absorbed 25 percent of the value of exports, followed by the United States and Germany, with 8 percent each. Chile's print industry was enjoying a boom in the early 1990s, supplying books and magazines to neighboring countries, especially to Argentina (which accounted for 75 percent of overseas sales) and Brazil (12 percent). Exports of books and magazines grew by 90 percent in 1992 to about US$70 million.

Under study in 1992 was a bill to regulate Chile's shrinking but still large native old-growth forests, which totaled 7.62 million hectares out of 8.86 million hectares of woodland (the remaining 1.24 million hectares are plantations). Chile's forestry industry has worked mostly on plantations of radiata pine, the raw material used for making pulp. But the country's native forests are in need of management to avoid extinction or indiscriminate harvesting of slow-growing species and the resultant erosions and loss of land for fut17d uture plantations of new species. During 1991, about 107,000 hectares were planted.

Data as of March 1994