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  • forestry investments.

    After a less than happy investment with Forestlands,i am wondering if anyone has had an investment with Forestry Enterprises.
    Have an investment available at the moment for a period of 20 years.
    Approx 10k up front followed by a further approx 11k over the 20 years.

  • #2
    Wouldn't touch it. IMO lumber prices in NZ are propped up high, VERY high which reflects the high cost of building in NZ. All it would take to change this is a move like what happened to the NZ auto industry pre 1980s. You know many countries around the world can produce wood products (LVL, plywood, etc) at far lower prices than the basic lumber sourced in NZ. Plywood in Canada that is over half the price of NZ plywood? Once these protectionism issues stop - watch out!

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    • #3
      I cant even see the future one month or one year out with shares. Puts me right out of forestry investment.

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      • #4
        I have had a number of successful forestry investment.
        I say successful as this was mainly due to the timing of my purchases and harvest timing coincided with the bust and boom cycle the industry is famous for.
        However I can see trouble ahead and lots of it.
        Currently China takes 75% of our export logs however with the new silk highway being developed in China has opened up their market for better access to Russian logs.
        Right now the log rail link between China and Russia is being completed.
        Russia can produce logs for a lot cheaper than NZ due to having less capital requirements for land, huge scale and they have billions of acres ready to harvest.

        I like forestry as an enduring investment but one must be realistic and watch the changing macro environment carefully especially with commodity investments.

        IMO the forestry industry in NZ is going to fall on very hard times......after all it's always about supply and demand and we have a distinctive disadvantage due to the capital outlay for land and our distance to our major market.......China

        perhaps the mod should put this thread in a forestry investment thread.....after all it is the 3 rd largest export earner for NZ
        Last edited by snapiti; 12-07-19, 10:41 AM.

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        • #5
          I red where ARBOR could be in the poop.Shareholders very unhappy.
          Forestry investment for me is out of the question but would get involved again if i owned my own land.

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          • #6
            all my forestry investment have been direct ownership in land and trees.
            Has to be like this for diversifying the investment and keeping control of the timing of harvest.
            I can see some tears coming for those who are invested in the many schemes that came out in the 90's as in many cases the poeple with the control have other interests to consider and unfortunately this involves conflicts of interest

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            • #7
              I have to say that 2 smart lads and a moose came up with an interesting scenario this morning.
              The new road link from Russia to China comes as no surprise as they have been building it since 2014.
              Given our government is actively preaching the 1 billion tree program and subsidies which will only gain traction whilst the forestry industry outlooks remains positive it is no consequence only months before the new China link to Russia opens that our government has been indicating that the price cap for carbon credits may be lifted......currently capped at $25
              I very much suspect this was done so if the price of logs fell away they had some ammo to continue to encourage more tree planting.
              Without trying to get into the whole carbon credit debate, which I have some experience with, I do believe some of the smart money maybe investing in carbon credits in the belief the government will remove the price cap if log prices go down just to make sure they can encourage more planting and in the hope they don't end up with egg on their.
              Last time the log price fell off and stayed off millions of seedling remained unsold and got ploughed back into the earth cause no one wanted to plant trees.
              I think we maybe headed in the same direction.
              Could be a very good time to buy carbon credits but can also understand why some would compare them to bitcoin
              Recently I have been fortunate to have gained a Shane Jones hand out to encourage me to plant tree's that I was going to plant anyways.......all I had to give in return was a promise I would not claim carbon credits for the new plantings for 6 years (which I had no intention of doing anyways)
              thanks Shane......your dah man

              Although I do have some new forestry plantings it is only a fraction of what I use to own and in this particular instance the land it sits on is the real investment.
              Something one must consider is forestry is very expensive to insure against the most likely way of destroying your investment.....that is wind damage.
              It is so expensive most smaller players, say under 100 hectares, don't have it.
              With climate change upon us therefore more frequent and violent storms one has to question if the main risk involved with any business is to expensive to insure against just how risky is it going forward.
              Interesting to note most insurance companies no longer offer wind insurance for trees.
              Last edited by snapiti; 12-07-19, 08:26 PM.

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              • #8
                Fark me imagine being in the middle of having your block logged (remembering you have waited 25 to 30 years to cash in) only to be getting a few $ per tonne after cost.
                I can tell you $ 85 a tonne is what the ave all in costs are for harvesting so with the average price for logs @ $105 your returns are about $11,000 a hectare.
                The industry will shut down quickly if log prices dip anymore.

                The current price of $105 ave gives the forest owner a return of about 4% before tax over the 25-30 year term

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                • #9
                  Yes... cheaper European logs by rail to china now take 16 days to arrive..

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                  • #10
                    Originally posted by mcdongle View Post
                    Yes... cheaper European logs by rail to china now take 16 days to arrive..
                    yes and not only that is the pine beetle is having a bigger impact on forest in Russia and Europe.
                    Pine/ spruce beetles have always been in these countries and Canada as well but to keep them in check and avoid the spread they require cold winters to kill a high portion of Lavae.
                    Climate warming has been there best friend as many vast areas of forests in Canada, Russia and Europe have been experiencing warmer winters.
                    The spread of the beetle has been huge and forestry managers in the effected countries know once they have an infestation they have approximately 2 years before the trees die in the newly infested area and a dead tree is worthless
                    So they log a newly infested area at any cost hence why volumes of lumber from Europe and Russia are piling into China via the new silk roads/rail links.
                    Very very bad for NZ forestry inc

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                    HLG

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