Timber investment is the fastest growing alternative investment compared to the more typical investments in stocks and real estate. This is largely due to a move away from the volatility of traditional investment markets over the past decade in particular towards a more stable, predictable growth market. Timber investment represents one of the few investment assets that predictably grows over time, making timber investment safe, secure and ultimately extremely profitable.
Timber investment suggestions include building tree nurseries or planting aged tree plantations for clients who are interested in creating mature tree plantations as quickly as possible.
Timber investment programs are offered worldwide for tropical timber projects for exotic species such as Teak and Mahogany. The attraction for investors has been the reasonable return on investment (ROI) compared to potential temperate timber plantation projects. Typically, a Teak timber investment program will begin to return profit in 20 years, while temperate timber projects may take up to 60 years, well beyond the patience of most investors. It’s not surprising then that currently there are no financially viable temperate hardwood plantation investment vehicles available in the marketplace.
Creating a temperate hardwood or softwood timber investment would be the first of its kind and as profitable as a tropical wood tree plantation but harvested in half the time. Tree plantation nurseries grow up to 20-foot tall tree seedlings creating the perfect product for temperate timber investment programs. Depending on the location of the project and the tree species selected, profits could be generated beginning in year 20 for wood pellets, veneer in year 25 and timber in year 30, or the entire project (land together with timber) could be sold anytime after transplant. Approximately 50,000 seedlings can be planted on 100 acres. Timber profits can be shared entirely between the investors in the program. Tree Plantation can be contracted to grow and transplant tree product, procure suitable plantation properties and provide ongoing management of the plantation.
Timber Investment - 15 year old hardwood tree plantation
With over 1,500 individual tree seedling species growing in North America, only a handful are considered valuable for timber investment. Tree Plantation specializes in growing commercial grade tree species chosen for their broad transplant range, value and adaptability to a changing climate.
Tree seedlings can be grown to 15 feet in height in just 6 growing seasons
Timber investment trees can be artificially aged producing 20 year old seedlings in only 10 years
Plantation trees can be harvested much sooner than typical plantations
Tree stems are almost entirely knot-free their entire length which will produce valuable veneer quality clear-grained timber
Tall tree seedlings create instant forests where there were none before
Nurseries propagate hardwoods and softwoods
Tree root systems are trained forming a “root stem” rather than a “root ball”
Root stems allow for rapid transplanting and eliminate the need for guide wire supports
Timber investment clients understand the value and the potential of growing a temperate hardwood and softwood tree plantation. They realize that investing in trees that increase in value year-after-year makes both financial and environmental sense.
1. The Canadian Province of Quebec - the Provincial Government has created a CDN$200,000,000 fund to rebuild their hardwood forest industry where 80 percent of its total workforce has been laid off due to the over harvesting of its number one export tree – Yellow Birch. A large portion of the fund is earmarked for large scale replanting of this species and currently the Government’s only option is to purchase 6 to 12 inch seedlings grown by conventional nurseries. Our 20-foot Yellow Birch tree seedlings would give the Province of Quebec and their depleted forest industry a significant head start towards their reforestation plans.
2. Currently, large areas of the Western United States are experiencing the largest softwood tree kill from a massive infestation of the Mountain Pine Beetle. It has affected an area larger than Ireland with an accumulated loss of trillions of dollars in marketable timber. This is having a devastating impact on the forest industry with lumber mills closing in once thriving forest dependent communities. Introducing hardwoods into these areas could quickly revitalize these communities by creating a viable hardwood industry – the first of its kind in Western North America.
3. In China, a massive undertaking is underway to stop the encroachment of the deserts. In fact, Western China is turning into a massive dust bowl. Desertification now affects fully one-third of the world's population -- and what's happening in Western China represents the largest conversion of productive land to desert anywhere in the world, consuming over one million acres of land each year. The Chinese government is scrambling to stop this process with the planting of millions of tree seedlings with multiple tree plantations and it's not working. The problem is that the seedlings are too small and too young. Just one storm allows the sand to drift over them giving them no chance to get established. Iin Africa, preparations are underway to create a "green wall" of trees from Mauritania in the west to Djibouti in the east, to protect the semi-arid savannah region of the Sahel from desertification. This is a common occurrence all over the world in regions experiencing aggressive desertification. We can supply millions of trees, which are 5 to 10 times taller than tree seedlings transplanted today. Tall Tree Plantation seedlings are better equipped to withstand the blowing sands of an advancing desert and have much a higher probability of survival as well making them ideal for land reclamation projects.
Mine & Oil Sands Land Investment
1. Several large companies such as, Syncrude, involved in the development of the tar sands in northern Alberta, Canada, are frequently targeted by environmental groups for their poor environmental track record. These groups together with the provincial government have generated so much negative publicity that oil companies are finding it increasingly difficult to obtain permits for extraction and waste disposal. This is costing these companies time and money. Some, like Syncrude, have spent millions attempting to reclaim mined lands by planting seedlings that can take up to 80 years to mature. Needless to say, environmental groups and governments are not impressed with this solution. Tall New Leaf tree seedlings would provide companies like Syncrude, a much faster land reclamation solution planting 3 year, 10-foot tall tree saplings every 3 years. The sheer amount of positive PR would enhance a company’s position in the eyes of those who hold the key to rapid site development and bigger profits.
Fossil - Fueled Electrical Generation Plant Investment
1. Coal-fired power stations are major emitters of greenhouse gases (GHG), which according to a consensus of scientific organizations are a major contributor to the global warming observed over the last 100 years. Brown coal emits 3 times as much GHG as natural gas and black coal emits twice as much. Efforts exist to use carbon capture and storage of emissions but these are not expected to be available on a commercial scale until 2025 – and therein lies the problem – and it’s a big one. These plants spend millions to settle violations of the Clean Air Act. They spend millions more on technologies designed to reduce emissions. For example, Kentucky Utilities (KU), a coal-fired electric utility, has agreed to pay a $1.4 million civil penalty and spend approximately $135 million on pollution controls to resolve violations of the Clean Air Act. Needless to say, companies like this are generating incredibly negative PR and governments are reluctant to issue new plant construction and expansion approvals. We can become part of the solution. The planting of thousands of tall New Leaf tree seedlings would cost just a fraction of the millions spent on fines and emissions reduction equipment. Further, some of the pollutants exhausted by the plant such as Carbon Dioxide, are beneficial to the trees growing around the plant. In fact, growth rates would increase by an average of 30% while reducing harmful emissions. There approximately 5,000 coal-fired and 3,000 wood pellet electrical generation plants worldwide - clearly a substantial market for our product.
Wood Pellet Electrical Generation Plant Investment
1. Economic and environmental concerns over fossil fuels are placing many nations including in an enviable position to expand use of wood biomass for energy. A combination of productive forestland, growing population, and wood products industry can help provide a sustainable, diverse and abundant supply of wood biomass much of which is currently un-utilized. As attention is focused on renewable energy, rapidly transplanted sustainable tree biomass plantations created by New Leaf 20 foot saplings is rapidly becoming one of the best developing market opportunities. For example, in Europe, massive amounts of wood pellets are used intensively by wood burning electrical generation plants spread across the E.U. The demand is such that many of the larger plants are creating their own supply of wood by investing in tree plantations as far away as Canada and the U.S. Presently, they are primarily planting softwood species because of their faster growing time compared to hardwoods, however softwoods have significantly lower BTU’s (British Thermal Units), which is a critical consideration affecting their bottom line. New Leaf can supply these companies with 20 foot hardwood tree saplings for their plantations both in Europe and North America which will enable them to dramatically increase pellet BTU’s, significantly shorten their time to harvest, and dramatically increase profits.
Over a 50-year lifetime, a tree generates $31,250 worth of oxygen, provides $62,000 worth of air pollution control, recycles $37,500 worth of water, and controls $31,250 worth of soil erosion.
Tree Nursery ROI
Tree nursery return on investment increases each year as tree seedlings grow in the nursery. Typically, tree seedlings are priced according to age, height and/or species. Hardwoods are typically worth more than softwoods. The chart below shows hardwood tree seedling value each year it grows in the nursery.
Year 1 - 2 foot height @ $2.00 each x 50,000 nursery trees = $100,000.00
Year 2 - 4 foot height @ $5.00 each x 50,000 nursery trees = $250,000.00
Year 3 - 7 foot height @ $15.00 each x 50,000 nursery trees = $750,000.00
Year 4 - 11 foot height @ $35.00 each x 50,000 nursery trees = $1,750,000.00
Year 5 - 14 foot height @ $60.00 each x 50,000 nursery trees = $3,000,000.00
Year 6 - 17 foot height @ $85.00 each x 50,000 nursery trees = $4,250,000.00
Year 7 - 20 foot height @ $120.00 each x 50,000 nursery trees = $6,000,000.00
Seedlings can be sold anytime during a 7-year growing cycle. ROI is based on wholesale prices. Revenue may be substantially higher for retail sales. We can also age tree seedlings right in the nursery. A proprietary process creates 10-year tree seedlings in only 5 growing seasons. Hardwood tree seedlings have an average caliper of 2.5 inches and grow to 20 feet in height. Softwood tree seedlings are 3 inches in diameter and grow to an average height of 15 feet.
After harvest, the entire nursery is replanted beginning a new 7-year growing cycle.
Since the mid 1980’s, timber investment assets have consistently out performed inflation, the stock market and real estate providing a perfect long-term and stable investment alternative.
Tree Plantation ROI
Tree plantation return on investment can be calculated from the first year tall nursery tree seedlings are transplanted. Tree value is calculated by the number of board feet contained within trunk calipers (the diameter of each tree stem). Year 8 tree seedlings have an average caliper of 3” and will continue to build trunk diameter year after year. In year 30 of the project, the average caliper will be between 14 to 24 inches depending on tree species, quality of soil and climate. The following chart shows board foot calculations with monetary valuations for each tree in each growing season. Values reflect a higher price per board foot for veneer quality sawlogs.
Year 8 – 3” caliper x 16’ sawlog = 8.3BF x 50,000 trees = $415,000
Year 9 – 3.5.” caliper x 16’ sawlog = 12BF x 50,000 trees = $600,000
Year 10 – 4” caliper x 16’ sawlog = 16.33BF x 50,000 trees = $816,500
Year 11 – 4.5” caliper x 16’ sawlog = 21.33BF x 50,000 trees = $1,066,500
Year 12 – 5” caliper x 16’ sawlog = 27BF x 50,000 trees = $1,350,000
Year 13 – 5.5” caliper x 16’ sawlog = 33.33BF x 50,000 trees = $1,666,500
Year 14 – 6” caliper x 16’ sawlog = 40.33BF x 50,000 trees = $2,016,500
Year 15 – 6.5” caliper x 16’ sawlog = 48BF x 50,000 trees = $2,400,000
Year 16 – 7” caliper x 16’ sawlog = 56.33BF x 50,000 trees = $2,816,500
Year 17 – 7.5” caliper x 16’ sawlog = 65.33BF x 50,000 trees = $3,266,500
Year 18 – 8” caliper x 16’ sawlog = 75BF x 50,000 trees = $3,750,000
Year 19 – 8.5” caliper x 16’ sawlog = 85.33BF x 50,000 trees = $4,266,500
Year 20– 9” caliper x 16’ sawlog = 96.33BF x 50,000 trees = $4,816,500
Year 21 – 9.5” caliper x 16’ sawlog = 108BF x 50,000 trees = $5,400,000
Year 22 – 10” caliper x 16’ sawlog = 120.33BF x 50,000 trees = $12,033,000
Year 23 – 10.5” caliper x 16’ sawlog = 133.33BF x 50,000 trees = $13,333,000
Year 24 – 11” caliper x 16’ sawlog = 147BF x 50,000 trees = $14,700,000
Year 25 – 11.5” caliper x 16’ sawlog = 161.33BF x 50,000 trees = $16,133,000
Year 26 – 12” caliper x 16’ sawlog = 176.33BF x 50,000 trees = $35,266,500
Year 27 – 12.5” caliper x 16’ sawlog = 192BF x 50,000 trees = $38,400,000
Year 28 – 13” caliper x 16’ sawlog = 221.33BF x 50,000 trees = $44,266,000
Year 29 – 13.5” caliper x 16’ sawlog = 252BF x 50,000 trees = $50,400,000
Year 30 – 14” caliper x 16’ sawlog = 288BF x 50,000 trees = $57,600,000
In year 30, tree height is expected to exceed 50 feet. Continued plantation management combined with specialized pruning techniques will create additional saw logs, which would increase yield and double revenue. For anyone interested in starting a tree plantation, we can give them a significant head start transplanting tall veneer quality tree seedlings.