Smart Money Magazine, October 16th, 2001:

"The best reason to invest in timberland is the simple fact that trees grow. Silently and unattended, the average North American forest produces about 8% more timber every year. But the forest isn't just a no-cost factory; it's also a profit-spinning warehouse. As trees get larger, their value increases. Consider southern pine: Wood from 12-year-old trees is used for pulp, and a cord sells for about $20. When those same trees are 24 years old, they're saw timber, worth perhaps $60 a cord. These are beguiling numbers, but it gets better. Though timber prices fluctuate, research indicates that real prices for timber have steadily risen for more than 100 years — better performance than any other commodity (with the possible exception of fish). Why? Think of it this way: Timber isn't like oil, where new discoveries expand supply. There are no hidden timber deposits, and demand is robust. Despite substitutes as diverse as steel, plastic, hard-disk storage and CDs, people still want wood and paper." 

Bloomberg Wealth Manger, January 2002:

"How can investors be so certain of returns? 'One key factor that drives the investment is biological: trees grow.'"

 ". . . compared with oil and gold, for example, whose value can be affected by new finds, 'we know where all the world's forests are.'"

"Indeed, as an asset class, timber - a renewable resource with constant product demand - stands out as a remarkably stable investment."

"Clients inclined toward socially responsible investing will find even more to like in timber . . . Forests take greenhouse gasses out of the atmosphere as they grow and replenish the earth's supply of oxygen."

"Timber's qualifications as a solid investment are too impressive to dismiss."

"One key advantage timber managers have that other commodity managers don’t is the flexibility to decide whether to harvest the commodity in any given year. The two- to five-year window for harvesting trees gives a timber manager some leeway in the timing of market cycles. With this so-called option value of timber, owners can leave trees in weak price regions “on the stump”.

The Economist of February 5th, 2007:

"Average annual returns on timber—meaning managed preserves that are eventually harvested—have outstripped those from leading global stock indices, property, oil and gold for the past decade."

ITTO: Report on the review of the US market for tropical timber products of July 27th, 2007

"According to US customs data, the average value for imported temperate hardwood sawn wood rose from US$ 250/ m3 in the 1st quarter 2004 to a record US$ 375/ m3 in the 3rd quarter 2006. Tropical sawn wood prices on average increased from US$ 550/m3 to US$ 740/ m3 over the same two-year period (Figure 5.8). Two of the major tropical species imported to the US, jatobá from Brazil and mahogany from Peru, have experienced very different price trends during the past two years. Prices for jatobá declined modestly during 2006 and are currently averaging US$ 550/ m3 according to statistics collected by ITTO. Mahogany sawn wood prices on the other hand, have gone up more than 50% since early 2004 and reached over US$2 ,200/ m3 in the 4th quarter 2006."

Will tropical hardwood continue to be so attractive?

The demand for high valued tropical hardwood is primarily for its beauty rather than its utility. Replacements are often found or developed for items of utility as prices rise, but never for items of beauty as history has shown. Furthermore, the world consumption of tropical hardwoods has multiplied about 25 times in the last four decades. At the same time, the world's tropical rainforests are being destroyed at the rate of 35 to 50 million acres each year. At the present rate of tropical deforestation, the world's remaining tropical rainforests will vanish in just 30 years and along with them the world's supply of tropical hardwoods. India and China emerging as new world economic-super-powers further increase the demand. As a result the prices of tropical hardwood continue to increase, making planting and growing tropical hardwood trees for harvest a uniquely profitable opportunity. Detailed calculations of potential gross return of an investment in mahogany trees with us is provided here.
 

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