RAIN FOREST INVESTMENTS

We understand that clients will have individual priorities and long term aspirations. However, we believe the fundamentals remain constant. In order to develop a truly bespoke ownership structure which can deliver on all the above key aspects, we first have to analyse the competition in the market and beat it.

A common theme amongst most overseas forestry brokers appears to be that monoculture ie single species plantations such as teak , agarwood or mahogany is environmentally and socially responsible. This is simply not true - as any forester will confirm – and monoculture is actually detrimental to a forest’s long-term commercial performance.

A native forest consists of a myriad of fauna and flora which support a multitude of species which in one way or another have a knock on effect on a forest’s growth. Single species plantations wipe that out and in turn create a monoculture environment totally reliant on artificial prorogation ie fertilizers, chemicals etc all of which have a potential impact on the quality of the finished timber.

The Asia region has long been regarded as the world’s best area for growing tropical timber species which are native to their shores and command higher prices than artificial plantations established in countries such as South America. The best teak in terms of quality and price is to be found in Myanmar, Burma, Thailand, India and Sri Lanka where the trees are native species. Oxigen Investments plc has been pioneering the development of commercial plantations interplanted with other species carefully selected to benefit each other.

None of our plantations or indeed ownership opportunities are monoculture, a fact we believe makes us totally different to any other commercial tropical forestry plantation company. The plantations include teak which provides a fast growing forest canopy, interplanted with glyricidia, a fast growing tree-like vegetable which puts massive quantities of nutrients into the soil. This benefits the other trees whilst being harvested regularly for cuttings from its branches which are processed into clean burning bio-fuel pellets which provide additional annual income to the forest.

These species then provide the perfect habitat to establish agarwood within six months of planting, as it requires shade and nutrient rich soils in which to flourish. Finally, we establish vanilla on the forest floor along with various food crops such as bananas, pineapple and chillies, all for local food consumption. This not only creates a varied environment for insects and animals , but provides commercial and environmental benefits at all levels.

The Royal Thai Forestry Department provides monthly updates on the price per one metre cubed teak , and other native species based on actual sawn log returns. These figures are also published every two weeks by the ITTO (International Tropical Timber Association). Some plantation operators project incredible returns which may be justifiable, but reflect the prices achieved for the best quality sawn teak at market which in general will only account for a small percentage of what can actually be produced.

The reality is that it is absolutely impossible to predict the market grade of timber that a tree will produce some 15 to 2O years in the future. At Oxigen Investments PLC we therefore use the Royal Thai Forestry Department figures backed up by the ITTO as the basis for all our sawn wood future timber projections, with a very conservative annual growth rate forecast of 2% in the price. This system is simple and transparent and easily verifiable.

Our forecast growth and harvest rates are again based on the Royal Thai Forestry Department research backed up with our own experience from harvesting mature trees and delivering to market. In Sri Lanka we have around 20,000 20 to 24 year old teak which we have just started harvesting and processing. Many other commercial forestry companies have not yet delivered a single tree of their own or their clients to market. Incidentally, we use exactly the same basis for forecasting mahogany returns and growth rates. However, we don’t yet have the benefit of harvesting our own mature stock.

Agarwood which is produced for its non-timber value is a fantastic mix into the forest canopy which has been proven in recent years by The University of Minnesota to provide impressively fast returns. Agarwood stands out in the forestry world where traditional investment is a very long term proposition allowing time for lots of variables to creep in. Agarwood’s value is in the resin it produces as a natural defence mechanism against disease and attack. Agarwood trees can now be injected with a natural organic fungal organism, which means they develop a substantial infection within just one year.