The latest Timber Price Indices have been published showing that timber prices are still rising, thanks to growing demand in Asia and Europe.

The latest figures have been welcomed by timber investors, who are keen to see that predictions of timber prices continuing to increase over the coming months, are grounded in realism.

The figures showed that coniferous standing sales averaged at £14.77 per cubic metre for the year to the end of September 2011. During September, standing coniferous sales in the UK had increased by 16 per cent on the same month year before.

In the six-months to September 2011, softwood sawlog prices had increase by an impressive seven per cent, further adding to the reasons for timber investors to crack open the Champagne. Softwood, is, after all, what makes up the vast majority of timber sold in the UK.

For those looking to put their money in forestry a bit further afield, they can invest in plantations run by Greenwood Management in Brazil. These offer investors the peace of mind that only an ethical investment option can provide, as well as a truly effective way of diversifying their investment portfolios.

It’s no secret that we have been singing the praises of forestry as a great way to make money for some time now and it seems that farmers in Ireland are catching on to the trend as well.

According to a recent article in The Corkman newspaper, a growing number of farmers in the Republic of Ireland are turning to forestry to increase their income. Some claim that planting up their farmland with trees is proving extremely profitable thanks to growing timber prices.

Helen Mahon of SWS Forestry, based in Clonakilty, has been giving keen newcomers to forestry some tips on how to turn farmland into tree-growing land. She explained that one of the reasons why farmers are keen to swap to forestry is that once the trees are planted, the business is much less labour intensive than growing animals or crops for food. She added that there are also government grants in place to help people turn their land over to forestry for free.

Farmers will then receive a premium each year for 20 years to compensate for the income they would have received through farming during that period.

The farmers then, of course, get to start bringing in an income from selling timber from mature trees on a cycle system, through which sustainable practices can be ongoing and highly profitable.

A similar model is being used all over the world, such as by our sponsor Greenwood Management in Brazil, where they grow fast-growing plantations on behalf of their investors. It’s easy to see the attraction for the Irish farmers and for those investing in sustainable forestry.

InvestCom has announced that it is dropping the cap on investments in its new Green Forestry Investment product, helping people to invest more money in Brazil’s vulnerable rainforests.

It is not just the rainforests that benefit from this fund, the growing carbon credits market means that investors increasingly see returns on their investment in valuable standing trees.

A statement from InvestCom said, “We are concerned about both the dire state of the world’s rainforests and our customers’ financial needs, and therefore we have dropped the investment cap for Green Forestry Investment, providing our clientele a means to combat against the dieback of rainforests and satisfy the planet’s demand for timber.”

Those who are already clients of InvestCom will also benefit from a special rate on this long-term Investment option. Interest rates for the investment stand at 2.1 per cent and InvestCom assures customers that there are no extra hidden charges or fees.

There is more and more money to be made simply by investing in standing forests over a long period of time. Forested regions are beginning to bring in cash for developing countries as they receive payment for offsetting carbon emissions made by more developed economies.

Greenwood Management offers a very different way of investing in the Brazilian forestry industry by offering the chance to buy up sections of plantation land that are then managed sustainably by Greenwood. Returns are based on how the trees sell once they reach maturity and ROI is expected to exceed return from equities and other traditional investments.

The demand for timber is being boosted by the growth in China’s Gross Domestic Product, according to a new report from FIM services.

The report argued that timber is increasingly a global market as countries like China and India joint the major markets for forestry products. Robert Daniell, a consultant at the firm, said, “Due to high freight costs, timber was usually shipped to only the nearest country in the past. But timberland is becoming an increasingly global market, spurred by growing demand particularly from the BRIC countries.”

He added, “By 2015-16, China’s fibre gap, for example, is predicted to be equal to the equivalent of Canada’s 2009 total timber harvest.”

In terms of investment, an article by Investment and Pension Europe (IPE) claims that timberland investments have outperformed commercial property, gilts and UK equities for the past ten years. This is based on figures from an IPD forestry index.

The article continues to talk about the tax efficiency benefits of investing in forestry – there is no capital gains tax to pay on money made as a result of trees growing.

Mr Daniell added that investing if forestry has the added bonus of being able to hold off on selling the asset if prices have fallen: “It is also an asset backed investment and in times of low timber prices you simply let the trees grow and harvest later.”

He concluded that the outlook for timber is very positive as a result of the global boom in demand for commodities, particularly form emerging economies.

Demand from China has not only pushed up demand from large forest product exporters like Brazil. According to new figures from the country’s Ministry of Agriculture and Forestry (MAF), demand from the world’s most populous country has significantly driven up the value of forestry exports from New Zealand.

The value of the forestry exports from New Zealand in the year to the end of March rose by NZ$ 800 million to NZ$ 4.4 billion. This rise was mainly driven by the increase in log exports to China, which is eager to buy up raw materials for building to allow its economy to continue to grow.

In the first quarter of 2011 alone, some 1.7 million cubic meters of logs were exported from New Zealand to China – up 44.5 per cent on the same month in 2010. India is another market that is importing logs in huge quantities to feed growing demand for construction. In the first quarter of 2011, exports to India increased by a huge 157 per cent to 0.4 million cubic meters of timber.

Although the greater demand from emerging economies has been welcomed, the rising prices are also being felt domestically and local construction industry slow-downs are adding to the pressure on the country’s producers.

“As a result, some mills have closed or down-scaled since the December 2010 quarter, and some remaining saw millers have reported to MAF that they are questioning their future viability in the industry,” explained Andrew Doube of the MAF.

Although some workers have been laid off as a result of sawmills closing, there is some positivity that local demand will increase when the rebuilding after the Christchurch earthquake really gets going. Doube explained, “There is a general expectation that there will be increased demand for processed wood products once the post-quake rebuild begins.”

Demand for Brazilian timber products are also on the up thanks to increasing demand from emerging economies in Asia, including China, India and Japan following its own devastating earthquake in March. As a result, forestry investment firms such as Greenwood Management are likely to see plenty of demand for their mature stocks.

Over the years forestry has slowly been recognised as a very important commodity due to the value it can generate through its many uses.

It is a key source of revenue for many governments around the globe. In particular in Brazil the plantation forestry industry has generated over R$10 billion in taxes in 2007, which in turn created over 4 million jobs.

The most popular trees grown on plantations in Brazil are eucalyptus. These trees originally came from Australia but have adapted to grow faster in Brazil (35m³/ha/y). They are also being grown with less success in Portugal at a rate of 13m³/ha/y and Canada at a rate of 5m³/ha/y. So it is no surprise then that Brazil’s success is becoming a benchmark for the rest of the world.

Planted forests are more efficient than native forests and act as a carbon sink while they are growing. What makes them attractive to potential investors is that there is a demand from companies cashing in on the public desire for environmentally friendly products. These companies are looking for forestry projects who can offer to conserve natural forests, increase energy efficiency and improve air quality.

Strangely despite this demand for planted forests there is actually a deficit of forestry plantations in Brazil and this is increasing. There is hope for the planted forestry industry though with the recent government crackdown on illegal logging and the creation of a law that forces all real estate companies to prove that they are using legal wood.

Currently there are approximately 5.3 million hectares (0.62% of its territory) of planted forests in Brazil. Of this number there is at least 1 million hectares of old plantations with low productivity.

So taking into account the government benefits, the demand for forestry products and the low competition, there is a real opportunity here for an investor to capitalise in this fast growing industry.

The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Timber please click here.

The Forestry Commission is due to begin testing on a new quality assurance scheme for tree planting programmes, intended for carbon sequestration. With the demand for such projects increasing the Forestry Commission said that there needs to be a standard by which to measure their effectiveness and to ensure that real benefits are being achieved.

The new scheme named the Woodland Carbon Code will undergo a six month pilot phase that is designed to test its effectiveness before it is officially launched in early 2011.

In order to comply with the code organizations must show that the projects are sustainably managed to national standards. They must also show that they use standard measures for the volume of carbon that will be sequestered, this must be independently verified and meet all transport criteria issues.

Tim Rollinson, director general of the Forestry Commission, said that the Woodland Carbon Code will “encourage more investment in tree planting in the UK”.

“There are now many commercial schemes that encourage individuals and businesses to contribute to tree planting to help compensate for their carbon footprint. But before investing in projects, people want to know that schemes will actually deliver what they claim,” he added.

The announcement of this scheme comes just a few days after research printed in Science magazine found that the ability of the world’s plants to absorb carbon dioxide has dropped  in the last decade.

The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Brazil please click here.

According to the International Monetary Fund, Brazil has recovered from the global financial crisis faster and sooner than other economies. Brazil is at the enviable position for sustainable growth and again according to the IMF Brazil’s economy is estimated to grow at a healthy 7.1% this year.

This level of growth represents a sustainable pace that is unlikely to generate the rapid inflation that has plagued this part of the world during the past economic expansions. In terms of inflation rate the IMF has predicted a Brazilian inflation rate of 5.8% during the remainder of this year. This may appear a tad high, at least compared to US standards but it is actually quite modest if compared to past inflation trends in Latin America.

What makes Brazil so enviable is that Brazil’s growth is attributable to not only strong natural resources development and export growth but also to domestic consumer demand. This domestic consumer demand is increasing as Brazil’s population continues to improve their economic status and living conditions.

By expanding credit the Brazilian financial sector is appropriately supporting growth and the economy as a whole is profiting from heavy capital inflows coming from abroad.

So the question is, how does an individual investor make a small fortune from the opportunities presented from Brazil’s good fortunes?

The answer to that is very cautiously. For all the good news coming out of Brazil it is still an emerging market. However, there are a number of different approaches to access opportunities in Brazil in both an easy and cost effective way.

Of those various options I have listed below three of what I consider to be the safest and most secure ways of investing in Brazil.

1. Bonds are a good place to start and some brazilian bonds can be bought in dollars by individual investors. In addition many emerging markets bond mutual funds have considerable positions in Brazil as well.
2. Investing in forestry plantations is not only very profitable with average annual returns of 10%-14% but also very environmentally friendly. Companies worth looking at for more information are The Phaunos Timber Fund, Greenwood Management and Cambium.
3. ETF’s like I-Shares EWZ, tracks the MSCI Brazil index and can provide investors with broad access to the Brazilian economy.

The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Timber please click here.

A timberland investment is essentially an investment in a forest. This can be a natural old growth forest or a man made forestry plantation. More often it is the latter that is chosen as a timberland investment. In the world of finance these types of investments provide a natural way to diversify holdings.

There are a lot of advantages to timberland investments, to begin with there is the potential rising demand for specific wood types such as eucalyptus, also as the trees mature they gain in value. In addition there is also the routine rise in value of both trees and land.

According to finance experts a timberland investment can have a negative correlation to some paper investment options. In other words investors can balance gain and loss situations by pursuing timberland holdings, which act as a kind of natural ‘hedge’.

As with any other kind of investment investors should display due diligence when checking that the value of what they are buying is just as high as what they are paying for it. For a reliable and trustworthy forestry management specialist it would be worth having a look at Cambium, Greenwood Management and the Phaunos Timber Fund. Each of which have an excellent reputation for safty and security of investments.

There are many reasons for choosing to invest in a timberland; some investors are betting that over time, rising demand and value will produce steady, moderate gains. Others are hoping that the value will suddenly spike and produce quick, high returns. However, regardless of reason, professionals have pointed out that diversification of holdings including timberland shows durability over time, especially in volatile markets.

The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Timber please click here.

A potent sign of Brazil’s new economic status is the $14 billion loan it made to the International Monetary Fund, during the global financial crisis last year. This represented an amazing reversal of fortune as Brazil was facing its own financial crisis just eleven years prior. Brazil was forced to devalue its currency and ask the IMF for a $42 billion loan, which was one of the biggest ever rescue packages given out by the lender.

Now, while the developed world worries about stunted economic growth and excessive debt, Brazil is flying an abundance of the former and very little of the latter.

“We were one of the last countries to go into the global crisis,” Luiz Inácio Lula da Silva, Brazil’s president, told the Financial Times shortly after his country lent the money to the IMF. “And we have been one of the first to come out.”

This year alone the Brazilian economy is expected to grow by 8% and in some areas it is expanding by as much as 10%. Unemployment is at a record low and the country’s net debt at 42% of GDP is at a level which would make much of the developed world green with envy.

A result of all this good fortune is the flood of foreign capital flowing into Brazil, just last year the central bank imposed a 2% tax on short term capital inflows to attempt to stem the boom. This proved largely ineffective as the real continued to strengthen.

Compared to the rest of the developed world Brazil seems to be the only silver lining in a sky of thunder clouds. Emphasising this is the fact that on the same day that the EU agreed to a rescue package totalling $1,000 billion to save the crisis in Greece from affecting the rest of Europe, Brazil’s finance minister Guido Mantega dismissed Europe’s problems.

“Europe was asleep,” he told a group of investors at an FT conference held at the neo-classical splendour of the Copacabana Palace Hotel in Rio de Janeiro. “But its crisis is not going to hurt Brazil’s economy. There may be some turbulence in financial markets. But it will pass.”

The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Brazil please click here.