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How do you plant 1 billion trees a year? With drones, of course

How do you plant 1 billion trees a year? With drones, of course | Timberland Investment | Scoop.it

Instead of doing surveillance or carrying out military missions, the drones from BioCarbon Engineering are taking on a decidedly more progressive task: planting trees and reversing deforestation.


Drones, or unmanned aerial vehicles (UAVs), have taken off in popularity recently, with hobbyists and professionals alike using these small remotely-guided devices for everything from delivering packages to surveying wildlife populations, but one startup has a very ambitious plan for their drones, and one that could have a huge positive impact on global deforestation.


"We are going to counter industrial scale deforestation using industrial scale reforestation. Destruction of global forests from lumber, mining, agriculture, and urban expansion destroys 26 billion trees each year. We believe that this industrial scale deforestation is best combated using the latest automation technologies." - BioCarbon Engineering


BioCarbon Engineering, based in the UK, has developed a system of planting trees with drones, at just a fraction of the cost (15%) of traditional reforestation methods, and at a speed that manual planting can't match - up to 10s of thousands of trees planted per day - and aims to plant 1 billion trees per year using this technology.


This approach, using an industrial-scale reforestation method, isn't quite ready for prime-time, but its prototype, which won £20k in funding from the Skoll Centre for Social Entrepreneurship last year, is expected to be built into a fully functioning platform by the end of the year.


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Private Forest Owners Aging, Parcels Shrinking

Private Forest Owners Aging, Parcels Shrinking | Timberland Investment | Scoop.it
The age of forest landowners across the country is increasing and the size of parcels they own is shrinking ? and that has state, federal and private experts fearing for the long-term health of millions of acres of American woodlands.

The concerns of forestry professionals are more subtle than the typical worries over large-scale development: as the parcels of land get smaller the people who own them might not have the same commitment to the forests as the previous landowners.

"Our alarm bells are starting to go off, not because landowners are suddenly older, but because it's been going on long enough now that we are really beginning to see the impacts," said Mary Sisock, an assistant professor of extension forestry at the University of Vermont, who has worked on the issue across the country.

Owners of smaller parcels are less likely to invest in a forestry management plans, and managing for wildlife is more difficult than on larger plots, Sisock said. And once the land gets cut up it's more likely it will be developed, and once developed there's no chance it will ever again be a working forest, she said.
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Timberland Investment Fees and Returns

Timberland Investment Fees and Returns | Timberland Investment | Scoop.it

This post includes excerpts from Forisk’s timberland investment research and Brooks Mendell’s September 2014 presentation at the “Who Will Own the Forest?” conference in Portland, Oregon. The complete presentation is available here.


During the ten-year period from January 2004 through December 2013, annualized returns for timberland investments – both direct ownership (8.4%) and equity plays in public timber REITs (9.4%) – outperformed the broader stock market (5.2% for the S&P 500). Basically, timberland investments provided the desired stability and diversification through a distressing economic cycle.

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The table above includes data from 11 TIMOs covering 11.9 million acres of private timberlands in the United States. The analysis separates commingled funds, which pool investments from multiple investors, from separate accounts, which manage funds from specific institutions separately. The “net” returns subtract all investment management advisory fees, including paid and unpaid performance incentive fees.

 

The implied annual fees are consistent with Forisk analysis of prospectuses and contract structures, which find that TIMO incentive pay representing an “overage” or “carried interest” of 10 to 20% above a hurdle of 7 to 8% nominal is common. In addition, the implied fees are consistent and in line with ranges reported by Mercer at WWOTF for other non-timber asset classes. Specific to timberland, Forisk research found average total fees from 2005 through 2012 of 84 basis points.

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Some Nuggets from Potlatch's Q2 2014 Earnings Call Transcript

Some Nuggets from Potlatch's Q2 2014 Earnings Call Transcript | Timberland Investment | Scoop.it

Paul Quinn - RBC Capital Markets
Okay. And then Mike you mentioned a number of timber sales that you’re taking a look at right now, is that -- would you describe the current market as more sales out there and what’s the general flavor in terms of competitive pressures?


Mike Covey - Chairman and CEO
I think that especially the southern timberland market is as competitive as it’s ever been at least in the last five years or six years that I can remember. Certainly since the downturn, I think we are seeing higher prices and more competitors than we’ve ever seen both from the suite of weak competitors as well as (indiscernible). And there are only a handful of properties for sale. There is -- I don’t know by handful there is probably half a million acres on the market and half a dozen transactions. So they are small, there is not many of them and they are extremely competitive.


Paul Quinn - RBC Capital Markets
I think that increased competition has pushed up transactions values. I mean we really haven’t seen that many transactions. I mean there was one closed I guess the Catchmark sale in Q1 that was over 2000. Is 2000 an acre now sort of the new norm in the US now?


Eric Cremers - President and COO
Well, the price per acre heavily depends on stocking and quality of the timber and proximity to markets. So it’s hard to just pick one number, but certainly the large Plum Creek transaction with (indiscernible) and the Catchmark transaction that was completed in Q1, those were approximately $2000 an acre which have been higher than what we’ve seen in the past. But you could also see something trade for $1500 an acre which might be an extraordinary price if it was poorly stocked. So it’s hard to say that 2000 is new norm.


Mike Covey - Chairman and CEO
Paul, I think part of what’s driving those higher prices that we are seeing is there is more conviction that there is going to be a housing recovery in the U.S. If you look at forward demand for lumber going up 4, 5, 6 billion board feet a year. Almost everybody agrees that’s got to come from the U.S. south. So price curves for saw logs in southern yield pine continue to strengthen. And with more conviction of there being a housing recovery, it’s pushing discount rates down. Those two combined factors and what’s driving those higher values.


Paul Quinn - RBC Capital Markets
Okay. And we are seeing some price appreciation in different parts of the U.S. south on the pine saw log side, but you are not seeing any in Arkansas. Is it more to do with just the growth versus drain ratio in that -- in your jurisdiction?


Eric Cremers - President and COO
It’s probably that, the growth versus drain, as well as just the dynamics of the sawmill and plywood capacity, that’s installed in the area. Ad I think as you go to coastal and central Georgia, the Carolinas, North Florida, parts of Texas there is just a more robust market for lumber and plywood producers than is south central Arkansas where we’ve seen a fair amount of idle capacity.
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Collin Mings - Raymond James
Okay. All right. And then just one other follow-up, just on the share repurchase. I’m just curious, I mean, some of your peers have gone as far as offered a specific trigger point on the share price that they see where they might get more aggressive. And I know that’s probably not something you guys would love to do but just can you talk a little bit more about maybe the dynamics where as you alluded to where that’s kind of the bottom of your capital allocation priorities. What might happen or what way you might see the move that up the stack a little bit?

Particularly just give me some of the challenges as Mike you alluded to with how competitive it remains for Timberland acquisition. And again as I look your stock trading at discount to NAV, it seems like there is some value there and repurchasing your own timber, if you will this type of discount?


Mike Covey - Chairman and CEO
Well, we don’t dispute. We certainly believe, we traded at a discount to NAV and certainly in this market, perhaps buying our own trees through our own stock is one of the more attractive alternatives that we have for the use of capital, but I also think the landscape related with people who do share buybacks that have not got that right in hindsight.

And our board has been very conscious about that. And I think it’s just as a matter of priority, kind of work through and said capital allocation to our wood products business, dividend increases and acquisitions are higher priorities in share back. That’s not that we’re going to rule them out but they are just at the bottom of the stack. Well, when moving to the top of the stack, obviously is a major retraction. I think in our share price for whatever reason -- for the below NAV than it is today and then certainly we do revisit with board.

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Jack D Bridges's curator insight, July 24, 2014 9:03 PM

Considering the Potlatch discussion of the "competitive" timberland markets in the US Southeast, let's turn to a similar issue: Why are large investors ignoring or overlooking the Lake States timberland market? 

 

Sam Radcliffe of P&C (www.prentissandcarlisle.com) has addressed this before, but it's an interesting issue. For starters: 

 

1) The wood basket as a whole has nearly no export markets, unlike the PNW and SE, which give the regions a better margin of safety during recessions / times of lower domestic demand / pricing. S. Radcliffe could probably quantify this fact, but let's just say for those who do not defer harvests during recessions--or owners exposed to closing mills / poor pulp demand / or delivery economics--it matters.

 

2) Due to demographics, on aggregate, HBU values are typically lower in the Lake States (though, not always) Why? In the Lake States, almost 40% of timberland ownership is comprised of state, county, or federal agencies; in the SE wood basked, that number drops to 5.5%. (source: http://www.keweenaw.com/pdffiles/2nd-2014.pdf, page 2).

 

So, this complicates things for owners of timberland in the Lake States; it can weaken HBU potential for certain properties (timberland is abundant for recreation, due to the ample state / national forest lands open to the public); conservation easements become tougher to "sell;" since forested buffer zones are abundant; demographics precludes raw or recreational land values from reaching prices seen in other timber regions (Pope Resources land outside Seattle; Plum Creek's lands near Gainesville, etc.).

 

3) Despite no export markets, and lower average HBU potential, high-grade Northern Hardwood sawtimber (Hard Maple, Cherry, Walnut, etc.) is a valuable commodity. And yet, Northern Hardwood wood baskets are generally not as well understood by investors. This is S. Radcliffe's point from his excellent presentation, found here: 

 

http://www.myminnesotawoods.umn.edu/wp-content/uploads/2013/12/TIMOs-REITs-the-new-face-of-industrial-forestry-v2.pdf

 

(I think Sam is spot-on about this--and I suggest reading more of his writing on the subject.)

 

But I digress...so the industrial and institutional marketplace for Lake States timberland is smaller, while in the SE and PNW there are more players chasing fewer assets. This, in turn, impacts prices accordingly.

 

These are just 3 brief reasons why investors (and industrial owners, like Plum Creek, Rayonier, and others) overlook the Lake States. What could change this? 

 

Since I've invested in the Lake States region personally, and for others for quite a long time, this issue is something I kick around a lot. From my perch the answer is simple: A region wide effort by timberland stake holders, green power advocates, and policy makers, to develop infrastructure to support biomass for power generation. 

 

Now, this will draw cries from those who argue biomass is impractical or even uneconomical in many cases. Without subsidies or federal support, perhaps. But, many "new" industries with some tangible benefits for all (cleaner air) get a nudge from the public--as long as the 'support' has roots in economic reality, and doesn't completely pervert sound market principles. 

 

This is not a new idea, either. In the recent past, several projects proposed building $12M+ pellet plants (fed by wood waste, tree tops, etc.) which would then supply regional power generators. Unfortunately, the energy suppliers had no incentive to spend huge sums retrofitting their plants to support a more carbon-friendly raw fuel, without incentives from state & federal agencies. So, no tax breaks to help ease the blow of capital costs = no new revenue stream for timber companies / crews to use waste = no joint ventures to build scalable pellet plants.

 

My question is this: Where is the initiative among the timberland / forest products crowd to invest in making this a reality? It would create a few jobs, take waste products and turn them into fuel, and help reduce the amount of coal burned by Lake States power concerns. 

 

It's easy to see why this hasn't happened, though. The effort involved to create a modest economic impact--even for areas that could use ANY boost in jobs--would be great. And, while the forest industry in the Lake States punches at a decent weight ($32.9B in size), it tends to carry a very quiet stick on the federal level. In other words, states like California tend to lead the agenda in areas like this; Michigan & Wisconsin, not so much. 

 

Barring a big shift in investor perception and behavior, without more revenue streams (more, not less mills; more environmental market activity like mitigation banks or carbon credit sales), it's hard to see how the Lake States timber markets will attract more capital. For now, we will just have to be content with the returns that biology, sound management, and opportunistic purchases provide.

 

May Mr. Dangerfield RIP--the Lake States don't get no respect, either.

 

JDB

Further Reading:

 

http://www.prentissandcarlisle.com/assets/PCnwslttr_2QTR-14.pdf

 

http://bluesource.com/news/view/Blue-Source-and-The-Forestland-Group-Register-Largest-Carbon-Project-with-California-s-Cap-and-Trade-Program

 

A look at Lyme Timber III--and how Lyme generates returns for investors--

 

http://www.thegiin.org/cgi-bin/iowa/resources/profile/18.html

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Landowners Monetize Timber for Carbon Credits with Improved Forest Management Plan

Landowners Monetize Timber for Carbon Credits with Improved Forest Management Plan | Timberland Investment | Scoop.it

For most of recorded history, the value of trees has been quantified monetarily in terms of what you can get for them at the mill, or their worth off-the-stump. With the emergence of both the voluntary and compliance carbon markets, trees now have a new monetary value measured by how much carbon they sequester.


In particular, the recent Cap-and-Trade legislation of carbon in California has created a market where large landowners throughout North America can generate additional income from their trees, and do so without cutting them down.
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Improved Forest Management Plans can be an ideal source of income for landowners who have had a light touch on their timber, and are particularly well suited to hunting clubs and folks who would like to see their timber standing for aesthetic or other purposes.
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What if my property is under easement? This is generally not a problem. Carbon projects can provide another income stream for properties that are currently under easement and are a great way to offset expenses like taxes or other land expenses.


Can I still cut my timber? This question arises in most every conversation regarding carbon sequestering projects. The answer is yes. Just because you are monetizing timber for carbon credits doesn’t mean there aren’t still options for harvesting some trees and generating multiple and varied sources of income on your property...

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JUMP START - Qualified Forest Program sees major gains in first months of operation

JUMP START - Qualified Forest Program sees major gains in first months of operation | Timberland Investment | Scoop.it

A revamped state program which gets more private lands into timber production, ensures more forest planning and offers tax incentives to landowners has seen great gains over its first few months.

The Qualified Forest Program encourages private property owners to manage their forestlands in an economically and environmentally sustainable way according to site-specific forest management plans. In exchange for enrolling their property in the program, landowners receive exemptions from local school operating taxes and the uncapping of the taxable value of property if the land changes ownership.
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The new program lowers application fees, requires specific elements for forest management plans, doubles the amount of land private property owners can enroll, requires planned timber harvests to occur within three years and does not require public access to private land.
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"The total acres that are enrolled in the program...for the 2014 tax year would be 147,824 acres," Harlow said. "About a 58 percent increase in the amount of acres that were in the program under the previous legislation."
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State Sen. Tom Casperson, R-Escanaba, said lawmakers are hoping to extend a June 5 deadline for landowners to transfer from the Commercial Forest Act program to the new Qualified Forest Program, sparing property owners a financial CFA withdrawal penalty.
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The increased timber production under the program helps balance the amount of timber harvested on private, state and federal lands.

MDARD officials said no increased timber harvest is expected on federal lands, while state harvests are yielding roughly the same amount of timber being produced each year. Meanwhile, private lands are estimated to be producing up to five times the amount of timber annually harvested.


The Delta County Conservation District said 43 percent of the U.P., or 3.6 million acres, is owned by non-industrial private property owners. A Michigan State University survey of such landowners found only 20 percent of the state's 11 million acres of private forestlands are actively managed.


"We have reached a point in time that if we're going to keep our forest resource healthy, across all ownership patterns, we're going to have to get more from the private landowner," Rick Lucas, a veteran forester for Osceola, Lake and Mecosta counties, said. "And I think the QFP program will indeed hit the mark in that regard."

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Weyerhaeuser's CEO Hosts Investor Meeting (Transcript)

Weyerhaeuser's CEO Hosts Investor Meeting (Transcript) | Timberland Investment | Scoop.it

Some snippets:


So let me start with Timberlands. As I mentioned earlier, we have some of the finest timberlands in the country, and we consistently produce leading EBITDA per acre owned, whether you look at it on the West or in the South, while always managing this asset on a sustainable basis. Now with that said, we think we can do more. And as we look at our Timberlands operations through the lens of operational excellence, we've identified somewhere in the neighborhood of $50 million to $70 million of opportunities to drive our relative performance. This includes opportunities in trucking and hauling, this includes opportunities in harvesting, pruning and thinning and finally, merchandising our logs and make sure they're going to the right place. Some of this will be new stuff that we haven't done before, but some will be just doing what we've done better, but having the commitment and the discipline to get it to the bottom line.


Above and beyond, what we're doing in operational excellence is, of course, our Longview Timber acquisition. We are now on schedule to get $22 million of synergies from that acquisition by year-end 2014. And just to remind you, that's our -- original goal of $20 million. In addition, we believe that on an ongoing run rate by the end of 2014, we should be in on a run rate of somewhere in $175 million to $185 million of EBITDA annually out of that business on a run rate.


So what the chart is meant to do on the right-hand side is tally up. We've got a lot going on in our Timberland operation, as I just walk us through. So what the -- this won't be exactly right and different parts will move different places, but it's just to give you a sense. But starting in 2012 at the base, as Patty is going to share with you, and as we've already started to see, we anticipate that log prices are going to continue to go up. Based on that alone, we think our earnings or our EBITDA in this business will improve by 40-plus percent 2012 into the 2016 to '18 timeframe. Above and beyond that is what I just said in Longview Timber, again, by the end of this year, we think we will be at a run rate of $175 million to $185 million of EBITDA from that acquisition. And then on top of that, of course, is the operational excellence, which will take some time to ultimately get to the bottom line.
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So now, I'd like to walk through that market outlook in more detail. So as I said, we think that we have very positive trends for our products going forward. We expect higher demand in both -- in prices and demand for U.S. timber and wood products as a result of the recovering housing market, growing offshore demand, as well as the Canadian timber supply shortage.
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Housing has started to recover, but we are still very much in the early stages of the housing recovery. While the exact shape of the recovery is difficult to predict, there's really no disagreement that the overall direction is up.
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Housing has started to recover, but we are still very much in the early stages of the housing recovery. While the exact shape of the recovery is difficult to predict, there's really no disagreement that the overall direction is up.
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Now Weyerhaeuser timberlands are very well balanced between the West and the South from a geographic basis. You can see on the West that prices have already risen rapidly for our prime Douglas fir logs. This is a result of that robust export market that we just talked about on the previous slide, as well as housing starting to recover. By contrast, you can see in the South that prices have been relatively flat. That's because the South is more of a domestic housing play with very little export. But we expect that as now housing continues to recover and the supply of Canadian lumber further constricts, that we will start to see log prices move in the South as well. Also, those are very positive for Weyerhaeuser's log and lumber business.


Talking a little more about the constraints in Canada. You can see on the left-hand side of the chart that back in the last housing cycle, at the peak of the cycle, Canadian lumber accounted for just under 35% of the U.S. lumber market share. However, because of the damage that has been done by the Mountain Pine beetle in British Columbia, and British Columbia is the largest lumber producing province in Canada, so that, combined with the fact that the provinces in Eastern Canada have restricted their harvest as well, Canadian lumber has and will continue to lose share of the U.S. market as housing continues to recover. We would expect that by 2015 that, that share will drop to 25% from just under 35%, and will drop another 5% by 2020.

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Modern Money Trees

Modern Money Trees | Timberland Investment | Scoop.it

Most investment funds that own Woodlands make their money when the trees are cut down and carted off. Ecotrust ­Forest Management, based in Portland, Ore., also profits from the natural habitat left untouched in the forest. The small fund harvests trees far more selectively than in traditional forestry and then picks up additional income by selling everything from ­carbon credits to brush undergrowth for floral arrangements.


Ecotrust’s CEO, Bettina von Hagen, believes the approach renders woods more resilient—both ecologically and financially. Since inception in late 2004 through the end of 2012, her Ecotrust Forest Fund I, with $30 million under management, notched average gross returns of 10.6% per year through December 2012, according to third-party ­appraisals. The fund’s fee is 1.25%.


Like most timberland funds, Ecotrust calculates its returns by toting up the cash from trees that were cut down for wood and the appreciation of the land and the trees still growing on the property. But this fund also receives ancillary benefits from tax credits. In comparison, a commonly used timberland index produced an average annual return of 8.17% during the same time frame.


Ecotrust’s investors include some high-profile names like the Packard Foundation and Patagonia founder Yvon Chouinard.

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Lyme airs plans for Schoodic property; biking, hiking trails, camping possible

Lyme airs plans for Schoodic property; biking, hiking trails, camping possible | Timberland Investment | Scoop.it

A Hanover, N.H.-based company that purchased 3,200 acres of forestland on the Schoodic Peninsula last year to help conserve it from development is drafting a plan for how the property might be used.

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According to a prepared statement released by the company, an unidentified philanthropic family foundation has purchased an interest in the “critical” property to ensure it is conserved, that there is permanent public access to it, and to help plan what sort of improvements might be made. The family foundation wishes to remain anonymous, according to the statement.

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Forest management for a changing world

Forest management for a changing world | Timberland Investment | Scoop.it

When it comes to devising a forest management strategy, recommendations for rotation lengths, thinning years and thinning intensities are usually made. However, a new EU-funded study from Finnish researchers now suggests that in light of uncertain growth and economic conditions, these methods may no longer be the most effective.


Writing in the journal Forestry, Timo Pukkala and Seppo Kellomäki from the University of Eastern Finland explain that forest management should adapt to changing situations, in particular the uncertainties surrounding tree growth and timber price.

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Results show that an increase in tree growth rate under climate change does not strongly affect the optimal management if the timber price is fixed. However, when timber prices vary, it is usually beneficial to delay clear-felling, irrespective of the presence or absence of a climate-induced trend in tree growth. It is also beneficial to distribute the incomes more evenly among different cutting events when risk and risk aversion increase.

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'The study showed what clever forest landowners already know. When future round wood prices and uses are unknown, the landowner should continuously have several tree species and timber assortments in his forest. Growing only spruce in even-aged stands is risky business. We hope that our study will promote diversified forest management, leading to diversified forest structures,' comments Timo Pukkala.



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Sino-Forest's founder Chan resigns in management shakeup

Sino-Forest's founder Chan resigns in management shakeup | Timberland Investment | Scoop.it

Embattled Chinese forestry company Sino-Forest Corp (TSE:TRE) announced major personnel changes Tuesday, including the resignation of the company’s founder, Allen Chan.

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Hancock, Boise mum on expiring forest contract

Hancock, Boise mum on expiring forest contract | Timberland Investment | Scoop.it

On Dec. 31, a guaranteed wood-supply contract originally inked between Boise Cascade Company and Forest Capital Partners that in 2012 was assumed by new landowner Hancock Timber will expire. Included in that massive, multi-state purchase were 148,000 acres of land in northern Wallowa County that for decades had been owned by Boise Cascade.


Representatives from Boise Cascade and Hancock Timber declined to comment about the contract situation, but Hancock Timber’s La Grande-based regional manager, Joe Justice, said the two firms will continue to do business with each other.
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Justice, who was hired by Boise Cascade in 2000 and has remained working on the same 300,000 acre “tree farm” in Northeast Oregon and Southwestern Washington as ownership has changed from Boise cascade to Forest Capital and now Hancock Timber, says a common misconception about those changes in ownership is that personnel making on-the-ground decisions on that large tract of land, half of which is in Wallowa County, changes with ownerships. “Walk in our office today,” says Justice, “and you’ll see many of the same faces as those working during Boise Cascade’s ownership. Local land knowledge is very important.”


One major difference between the ownership of Forest Capital and that of Hancock Timber deals with actual owners of the property. In essence, a large pool of investors owned Forest Capital, which owned the property and distributed earnings on investment proportionally. Hancock Timber, with land holdings all over the world, operates on a different business model, says Justice. Individual investors in Hancock Timber own individual tracts of land, and there are eight such investors that own land in Wallowa County. And yet those landowners are not individuals, but in most cases large pension funds that are reimbursed for investments according to earnings made off the individual tracts of land they own in Wallowa County.


Although Justice wasn’t at liberty to answer questions that delved into proprietary information matters, he did address Hancock Timber’s worldwide policy about cutting 2 percent of its holdings annually, forming a 50-year crop rotation, and whether that policy is being followed in northern Wallowa County.


Justice repeatedly stated that 2 percent of 300,000 acres is a large amount of timber to be cut in one year (6,000 acres to be exact) and, in his opinion, local worries on the matter arose from a circumstance of so many acres being clear-cut within sight from Highway 3, in northern Wallowa County. That area from Hancock’s purchase included an inventory of trees that needed to be harvested.

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Altered Forest Tree Composition Not Due To Global Warming

Altered Forest Tree Composition Not Due To Global Warming | Timberland Investment | Scoop.it

We can blame man for the altered composition of Eastern forests, but not climate change, according to a researcher in Penn State's College of Agricultural Sciences.

Forests in the Eastern United States remain in a state of "disequilibrium" stemming from the clear-cutting and large-scale burning that occurred in the late 1800s, contends Marc Abrams, a professor of forest ecology and physiology. And since about 1930, the Smokey Bear era, aggressive forest-fire suppression has had a far greater influence on shifts in dominant tree species than minor fluctuations in temperature.

"Looking at the historical development of Eastern forests, the results of the change in types of disturbances -- both natural and man-caused -- are much more significant than any change in climate," said Abrams. "Over the last 50 years, most environmental science has focused on the impact of climate change. In some systems, however, climate change impacts have not been as profound as in others. This includes the forest composition of the eastern U.S."

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China plans to establish strategic timber reserves over 14 million hectares by 2020

China plans to establish strategic timber reserves over 14 million hectares by 2020 | Timberland Investment | Scoop.it

In order to balance timber supply and demand and guarantee national timber security China plans to establish, by 2020, strategic commercial timber reserves over 14 million hectares in 25 provinces including Guangxi, Guangdong, Hu’nan, Sichuan, Guizhou, Yunnan, Inner Mongolia Autonomous Region, Liaoning, Jilin and Heilongjiang, ITTO reported.


Of the 14 million hectares, 4.5 million will be new plantations, 5 million will be improvement of existing mature forests and a further 4.5 million hectares will require intensive management of young and maturing forest. The aim is to create a base yielding an annual average volume of around 142 million cubic metres.


According to the China National Timber Strategic Reserve Production Base Plan (2013-2020), 1.87 million hectares will be established in Guangxi Province to yield 13% of the target production.

Sam Radcliffe's insight:

For context, 14 million hectares is nearly twice the combined acreage of the four major timber REIT's -- Plum Creek, Potlatch, Rayonier and Weyerhaeuser.

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Phaunos Timber Fund Appoints Stafford Timberland As Asset Manager

Phaunos Timber Fund Appoints Stafford Timberland As Asset Manager | Timberland Investment | Scoop.it

Phaunos Timber Fund Ltd Tuesday said it has reached a deal with Stafford Timberland Ltd to manage its portfolio of assets, after Stafford suggested some changes to its portfolio after conducting a review.


Stafford was initially employed to carry out a strategic review of Phaunos' assets, and has now completed its review. The main findings of the review included the finding that recent falls in log prices in China could hit the fund's cash flows in the second half of the year, and it should seek to exit some of its higher- and medium-risk assets on its portfolio.
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The review also found that Phaunos has interests in good quality timberland assets in Matariki, Aurora Forestal and Mata Mineira, which make up 56% of the fund's neta sset value in total and represent a good base from which to build the portfolio. However, 36% of the portfolio is made up of higher-risk assets, a bigger proportion that would normally be expected in a balanced timberland portfolio.


Stafford also warned that Phaunos is reliant on a relatively small number of mature timberland assets for annual cash flows and these assets are subject to export or single product market risk. There are several assets whose valuations are subject to significant uncertainty and a forced liquidation value could be more than 30% below the December 2013 net asset value, it added.
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[Phaunos] said it will pay [Stafford] an annual management fee of 0.35% of the market capitalisation of Phaunos shares, payable quarterly in arrears.

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Plum Creek embraces mixed-use forestry in its 865,000 acres of North Woods

Plum Creek embraces mixed-use forestry in its 865,000 acres of North Woods | Timberland Investment | Scoop.it

An improving housing market should help Plum Creek Timber Co. sell more of its timber in Maine and could also jumpstart its controversial plan to create up to 975 luxury second homes and two resorts near Moosehead Lake.
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In Maine, Plum Creek's combined real estate-timberland focus has put the company in the spotlight from Day 1 of its 1998 purchase of 905,000 acres from Sappi Fine Paper for $180 million. That sale and others fueled public alarm about the potential of Maine's North Woods becoming subdivided and no longer a working forest. More recently, its 2006 real estate proposal for the Moosehead Lake region put the company at loggerheads with the Natural Resources Council of Maine and two other groups in a protracted legal battle that eventually was decided in Plum Creek's favor in 2012.
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Things are looking up for Plum Creek's operations in Maine, Doty says, for all the reasons that the national company cited in its 2013 annual report. An improving housing market is creating greater demand for spruce, fir and hemlock used for structural lumber, eastern white pine for interior finish and hardwoods for flooring. Timber exports are growing, driven largely by demand from China. And Canada's timber production, historically 45% of North America's output, is shrinking due to beetle infestations in both its eastern and western timberlands.
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Sustainability is very much a guiding principle for Plum Creek, says Doty, noting that in 1999 it became the first company in the nation to be certified for managing all of its lands according to standards set by the Sustainable Forestry Initiative. Those standards are updated every five years to reflect the latest science and best practices and Plum Creek undergoes recertification on a rotating basis by region every three years for the 19 states it operates in.
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Alan Hutchinson, executive director of the Forest Society of Maine, gives Plum Creek high marks for "making a concerted effort to hire the right people and undertake structural changes" in its forestry practices within the 363,000-acre Moosehead Lake conservation easement that FSM has overseen since 2009. That easement, finalized in 2012, is held by FSM, which puts the land trust in the watchdog role of making sure Plum Creek practices responsible forestry and abides by the numerous conditions spelled out in the agreement.
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Doty says Plum Creek, like the rest of Maine's forestland owners, is keeping a close eye on the budworm infestation in Quebec, which has defoliated 8 million acres in that Canadian province and is moving southward toward New Brunswick and Maine. The voracious pest, whose population historically has exploded every 40 years or so, feeds on spruce and fir needles and developing buds during its caterpillar stage. During Maine's last outbreak, which lasted from 1970 to 1985, more than 20% of Maine's fir trees were killed.

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Wisconsin court: Managed forest land can't be leased

Wisconsin court: Managed forest land can't be leased | Timberland Investment | Scoop.it

No one can lease managed forest land for recreation regardless of whether it's open or closed to the public, a state appeals court ruled Tuesday.


Wisconsin's managed forest program gives land owners substantial property tax reductions if they agree to manage the land in a sustainable way. Enrollees must designate whether the land is open or closed to public recreation; owners who keep the land open get larger tax breaks. State law prohibits leasing such land for recreation.


Wayne Lautenbach, who manages closed managed forest land in Door County's town of Liberty Grove for owner Wayne Logcrafters, LLP, was cited last year for leasing the land to a hunter for $750. A judge found him guilty this spring and he was assessed a $750 fine plus court costs, said Door County Assistant District Attorney Joan Korb.


Lautenbach argued on appeal that state statutes only prohibit leasing open managed forest land. He also argued the statutes are unconstitutionally vague because they don't provide notice that people can't lease closed property for recreation.

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Phaunos terminates investment management agreement with FourWinds

Phaunos terminates investment management agreement with FourWinds | Timberland Investment | Scoop.it

Phaunos Timber Fund has reached agreement by mutual consent to terminate its investment management agreement with FourWinds Capital Management with immediate effect. The company has established a new subsidiary, Phaunos Boston, through which it intends to manage its assets.


The majority of the employees of the FourWinds Capital Management group (the FWCM Group) who have been responsible to date for the day to day management of the company’s portfolio of assets will be offered employment with Phaunos Boston with immediate effect.

The subsidiary will initially be led by Mason Browne, formerly director of timber operations at FourWinds. Property management of the company’s wholly owned assets will continue to be carried out by local management teams in the countries in which they operate.
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The board has entered into a consultancy agreement with Stafford Timberland to provide a review of the company’s timber assets in close consultation with Browne and his colleagues. Stafford Timberland, which is authorised and regulated by the Financial Conduct Authority in the UK, is a global timberland investment organisation that manages approximately USD1.4bn in timber assets worldwide on behalf of institutional investors. The board expects to announce the results of Stafford Timberland’s review with the company’s annual results for the year ended 31 December 2013, in April 2014.

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WeyCo looking to boost harvests of former Longview Timberlands

WeyCo looking to boost harvests of former Longview Timberlands | Timberland Investment | Scoop.it

Weyerhaeuser Co. is planning to increase the timber harvested in its former Longview Timberlands property to meet rising export and domestic demand, company officials said Friday.


In their quarterly earnings call with investors, company officials said the 645,000 acres of the former Longview Fibre Co. timberlands in Washington and Oregon are in a prime location to supply its West Coast properties, including the lumber mill and log dock in Longview.


Officials added that they believe they can increase log and lumber output on the lands by taking immediate advantage of timber that is mature enough to harvest.


“We’ll be accelerating that harvest because of the maturity of that forest,” Patty Bedient, Weyerhaeuser’s chief financial officer, told analysts.


Federal Way-based Weyerhaeuser announced its $2.15 billion purchase of Longview Timberlands LLC June 16 from Toronto-based Brookfield Asset Management. The sale was finalized earlier this week. With the purchase, Weyerhaeuser increased its timber holdings in the West by 33 percent, to 2.6 million acres.


Company officials say they don’t expect income from the additional timberlands to offset a seasonal dip in log export sales expected in the current quarter. Log export prices are expected to fall because of seasonal construction slowdowns in China and Japan, Bedient said.


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Student keeps an eye on fund's timber investment

Student keeps an eye on fund's timber investment | Timberland Investment | Scoop.it

Kentucky Teachers' Retirement System, Frankfort, enlisted some Wildcat help this summer in overseeing its timber investments.


The $14.8 billion pension fund started an internship program with the University of Kentucky that saw forestry major Cory Ashby travel the Southeast U.S., monitoring and working on the system's 121,000 acres of timber that it co-owns with the University of California Board of Regents and which is managed by Molpus Woodlands Group.

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TD Bank Group announces new support for North American forests

TD Bank Group announces new support for North American forests | Timberland Investment | Scoop.it

TD Forests will bring together the bank’s longstanding community programs relating to forest conservation and education under one canopy. The initiative will also include a major conservation program to protect critical forest habitat across North America. This will be linked to TD’s commitment to reduce its paper usage by at least 20% by 2015 – customers have told the bank that paper reduction is important to them. Through TD Forests, the bank will also protect forested areas equivalent to the paper it uses.

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