I'm all for replanting forests, but a 25 year payoff timeframe is way too distant for most individuals to consider. I'd be concerned about forest fires, tree disease/pests and illegal timber poachers chipping away at your investment...and/or a government corruption scenario, with some well-connected lout taking the land from you somewhere along the way and harvesting the trees himself. Difficult enough to hold off for latex in 7 years time from a newly planted rubber concession.
PhnomPenhPost wrote:Playing by the rules ... a novel approach
Sat, 9 August 2014
Daniel de Carteret
It is difficult to imagine that a forest once existed in Kampong Speu’s Omlaing commune. The only evidence remaining is the occasional stump of about 30 to 40 centimetres in diameter that sit among patchy scrub, the only remaining foliage capable of growing in a land that has suffered decades of deforestation.
“We have a very degraded forest,” says Wayne Burton, the CEO of forestry company Grandis Timber, surveying a plot of scrubland on his company’s 9,800-hectare economic land concession, or ELC.
The site was logged in the 1970s, removing all the native forest, Burton believes. Today, the rugged terrain in Omlaing is beginning to make way for agro-industrialisation, largely in the form of maize and sugarcane plantations.
Carefully navigating the bureaucracy of Cambodia’s notoriously messy land rights management, Grandis secured its ELC in 2009, and set about growing a teak forest, a cash crop that won’t reach its full potential for another 25 years, when the trees are fully grown.
“Forestry is very long term, that is why it is hard to get investment,” Burton says.
Is this the teak forest they planted in kompong speu? There have been a few articles about them. Definitely a good investment, as you can easily imagine forests being completely wiped out within 15 years. They wouldn't pay the premium to buy your wood now when they can get wood for cheaper elsewhere, but in 10-15 years the demand (and prices) will be there. I've thought about it before, but like you I find the timeframe too far for a simple investor with very little in terms of capital. But the lumber giants in Canada, Russia and the US make a lot of money... Tree planting is a huge business (also a law). I hate to be "one of those guys", but I think it's a pretty established fact that khmers investors would never have the foresight/patience to invest in something like that. Forestry giants probably wouldn't want to lease land, given the time it takes for trees to grow. It'll take a while, but this guy will be rewarded for his patience and who knows, he might develop a largish rotating schedule by then. Still, Cambodia will always be too small for large scale forestry, but it can succeed with a niche market of specific softwood lumber (chariya, krognoung etc).
I think the lumber giants you mentioned make so much money because of sweetheart deals and financial connections with lawmakers who give away huge concessions on public resources at cut rate prices. Starting off by leasing or buying a plot of barren, deforested land, planting seedlings and waiting 25 years, with all that can go wrong along the way, seems like a sucker's game.
Well, the lumber industry in those countries is hundreds of years old and they've accumulated sizeable plots of land, especially in remote areas (where land is cheap anyways). Lawmakers also recognize forestry as an important part of their economy, so they do help them out (the US erecting trade barriers to protect their industry from Canadian competition despite NAFTA being in place, Canadians trying to keep their dollar low to help out exports and so on). I agree it sounds a bit foolish, but you have to start somewhere. He might be ahead of the herd, but he might also be a bit too early to the show... I guess we'll have to wait and see.