Governance of forestry transactions in southern Brazil: an analysis based on Transaction Cost Economics

The Brazilian forestry sector plays a significant role in Brazil’s economy. Rio Grande do Sul is the southernmost state in the country, and its forestry sector is a sustainable development activity. Transaction Cost Economics (TCE) is an economic approach that offers an analytical framework for understanding how institutions shape the functioning of agro-industrial chains. This article aims to analyse the governance of forestry transactions in southern Brazil in the light of TCE. The research methodology is descriptive and uses a mixed methods approach. The qualitative stage used semi-structured interviews with key players in the forestry chain. The quantitative part sought to measure the characteristics of farm-level transactions by applying a questionnaire to 24 producers who own forests in 16 cities in southern Brazil. Content analysis (qualitative stage), descriptive statistics, non-parametric hypothesis tests, and logistic regression (quantitative stage) were used as data analysis techniques. The research results show that the largest eucalyptus production areas are used for cellulose production, the sale of which to paper industries is negotiated via contracts. On the other hand, the forestry production of the smaller areas is destined for firewood, whose suppliers trade via the market and transact, as a rule, with end consumers. The logistic regression results indicate that asset specificity and uncertainty are essential in determining the type of contractual arrangement chosen (market or contract). The research highlights the importance of governance structures in the forestry production chain, including how they are chosen and organised.