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    Teak offers highest yields for timber investors

    2009 - 09.11


    Timber investments are some of the safest and steadiest available, with teak in particular offering one of the best values and highest yields in the timber sector, according to a Panama-based expert with 25 years of experience in the timber investment industry.

    Jeff Duda notes that timber “protects an investor” during times of inflation, and he points out that teak forms a niche segment of the timber industry which is managed by small, privately-owned organisations rather than bigger institutional operators.

    Writing in NuWire Investor, the president and managing director of Panama Teak Forestry advises anyone considering a timber investment to investigate the data a given company uses to calculate return on investment.

    “Such data may include price per unit and growth rate,” he observes.

    “Teak is a commercial wood, which means the price per unit is pretty well fixed at different sizes and ages of the stand, and at different points of being processed,” he continues.

    Potential timber investors are warned against companies which claim to be able to grow trees “faster than anyone has ever grown a teak tree over the past 1,000 years”, as they are likely to disappoint over time.

    Duda recommends using a growth rate of 10 to 12 cubic meters per year for teak, concluding that a final harvest yield of 200 to 220 cubic meters per hectare after an average of 25 years is “a good conservative estimate”.

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