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  • Archive for December, 2009

    Lean green forestry

    2009 - 12.16

    Investing in forestry has become more topical of late with growing pressure on forestry plantations to increase yields and  protect natural forests by reducing the rates of deforestation. There is a noticeable surge in interest  in the Genetic Modification(GM) of forestry species.  Genetic Modification of agricultural crops has been practiced for many years, for various crops of commercial importance. However, with respect to forestry, despite the numerous investigations being performed in the sector, there are no commercial plantings of GM forestry within many of its species. Several experiments in the laboratory and field are being conducted in several countries and some successful trials have been announced by the forestry companies themselves. Reasons of commercial sensitivity keep these kind of news announcements to a minimum no doubt within the competing forestry businesses.

    In no particular order, here are examples of countries involved in GM forestry

    Belgium was the first country to field test GM trees in 1988.

    United States  has the largest number of trials with GM trees is performed in the USA. In excess of 300 field experiments have been or are being conducted.

    Chile – Research is focused on Pinus Radiata and Eucalyptus consortium of multinational companies such as GenFor (joint venture between Canada’s Silvagen, American Interlink and Fundación Chile).

    China- More than one million GM Populus have been planted since 2002

    Germany – At present, there are experiments being conducted in experimental fields at the Universities of Freiburg and Tübingen.

    Israel – experiments have been conducted with Populus, Eucalyptus and Pinus, aiming to obtain higher cellulose content, faster growing trees and superior fibre properties.

    Japan – many species have been genetically engineered by Japanese scientists, including eucalyptus, Japanese cedar, poplar and acacia.  Some of the field experiments have been conducted in Japan, whilst others have taken place in Vietnam and Indonesia.

    Brazil – The field experiments include studies with genetically modified eucalyptus, engineered for rapid growth, reduction and modification of lignin for pulp production, improved wood quality and tolerance to herbicides. These experiments have been conducted mainly in the states of Sao Paulo, Minas Gerais and Rio Grande do Sul

    Focising on Brazil for a moment, all experiments which involve Genetic Modification, both in the laboratory and in situ on the plantation must have relevant authorisation from the regulatory bodies.  The National Technical Commission on Biosafety (CTNBio), established in 2005, provides advice to the Federal Government in the formulation, updating and implementation of the National Biosafety on genetically modified crops including forestry products. The authority is responsible for establishing the technical standards of safety and technical advice concerning the protection of human well being and the environment.

    The transformation of forestry species depends on the “in vitro”  cultivation of the trees in the laboratory. However, the technique can be seen as an important ally to the breeding programs of forest species. Due to slow growth, long periods of life,  sexual incompatibility and seasonal cycles of growth, changes in developmental stages over the years, wood formation and adaptation of long-term environmental variations, the traditional breeding takes tens of years for trees with superior characteristics to be naturally selected before being used for cloning in forestry plantations.

    An successful of GM example to be cited is Genolyptus project, whose objective was to evaluate the genome of Eucalyptus and isolate genes of economic interest. The forest species that has been most researched in the field of genetic transformation are the Poplar and Eucalyptus and main characteristics are genetically engineered (i) reduction or alteration of the reproductive cycle, (ii) modification of plant architecture, (iii) manipulation of lignin and cellulose, (iv) resistance to diseases and pests, and (v) tolerance to herbicides and abiotic stresses.

    Since its creation, all institutions and public or private companies who wish to do research laboratory or field of GMOs, must submit a formal request for registration of laboratories or field trials, following high standards of biosecurity. After the trial, the Commission may or may not grant the request for the experiments. Several applications are submitted each year for forest species, especially species of the genus Eucalyptus, which are reviewed and judged.  Among the companies that have already obtained permission for field trials with GM trees in Brazil are Suzano, International Paper, ArborGen, Alellyx Applied Genomics and Monsanto.

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

    Forestry investments still strong in the UK

    2009 - 12.10

    An article regarding forestry investments in the United Kingdom was  in the Business Scotsman last week which reported that the UK forestry market has avoided the financial downturn which engulfed the economy.  It cited the fact that average forestry values have risen by more than eighty percent in the last five years.

    The article quoted Mr Crispin Golding of  UPM Tihill, a company which harvests and markets more than eight million tonnes of timber each year. His comments were at the launch of the Forest Market Report in Scotland.  Mr Golding stated,  “Investors not only appreciate the timber aspects of forests but also the wider credentials of forestry, for example as a source of sustainable bio energy, a green asset and a place to sequester carbon,”

    The Forest Market Report focuses on the major forestry transactions in the timber industry and it highlighted the growing interest in biomass from forestry investors in Scotland.  The costs of woodland  per hectare this year has maintained its strength despite the general economic malaise and reduction in housing/land values.  Forestry plots in the size bracket of  25 to 50 hectares  have firmed their values with prices reported to be almost £6000 per hectare,   a figure which is 40 percent higher than in 2007.  The report continued to say that economic conditions had surpressed timber demand, with particular reference to the construction sector,  which had clearly been in a steep decline over the last eighteen months.  The Foreestry Report also pointed out that the weakening of the pound against many of the worlds major currencies  had  helped to  keep domestic timber supplies competitively priced.

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

    Growth of acacia, casuarinas, eucalyptus and poplar

    2009 - 12.09

    There will be a significant need for investments in forestry in India as demand levels for timber are rapidly rising and,  although India possesses many of the world’s  most valuable commercial timbers (eg Teak, Rosewood, Sandalwood),  a strict conservation policy is currently in force which severely restricts forestry  harvesting.  Indias industrial demand for timber has risen from 58 million cubic metres in 2000 to almost 85 million cubic metres in 2008,  and forecasts suggest this demand  will increase further to reach 150 million cubic metres in the next ten years.

    India still remains a net importer of forestry products and its wood manufacturers prefer to import the timber in log form to supply its domestic industries. The majority of India’s forestry imports are from Malaysia, Indonesia, Nigeria, Ghana,  Brazil, Panama, Costa Rica, Ecuador and New Zealand.

    Indian wood panel industry requirements are mostly met by plantation-grown forestry although natural forests still supply them to a lesser extent.  Significantly,  forestry plantations of eucalyptus,  poplar, casuarinas and acacia are rapidly gaining public approval and the by product of preventing illegal felling from state forests must be welcomed by all environmentalists.

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

    Carbon still remains within harvested timber

    2009 - 12.07

    Expectations are high amongst the forestry investment community from the most significant meeting on climate change this decade from the Copenhagen summit, which aims to reach a global agreement for both developed and developing countries to reduce greenhouse gas emissions.

    Representatives from New Zealand are trying to acheive significant rule changes regarding forestry at the climate talks. The Kyoto treaty failed to take into account that much of the carbon that is presently claimed to have been released from the forestry,  still actually remains within the timber of the final wood product. Since there are now systems available to audit this, the minister for New zealand climate change, Nick Smith says the rules must recognise the fact.  He re-stated New Zealands commitment to reduce their carbon emissions by between 10 to 20 percent of 1990 levels.

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

    UK company invests in forestry/biofuels

    2009 - 12.01

    Forestry investment and investment in biofuel production,  particularly in developing countries in South America (as a result of the ideal climate/ growing conditions there) is encouraging local economies to thirve.  Also the recent strong emergence of  the bio fuel industry is  drastically reducing deforestation  in the region due to the actual value of forests in relation to the role they can play in CO2 reduction. Managed forestry plantations are becoming ever  more attractive to investors such as Viridas, a United Kingdom based  forestry/bio fuels company.

    The  British  biofuel developer has recently staged a  share placing to finance a new forestry based, biofuel production  in Brazil. The cash raised from the share placing will go towards the acquistion of a forestry plantation

    As we are gradually recognising here, biofuels are demonstrating an increasingly clear tendency to replace carbon heavy  fossil fuels as they are produced from the by-products of the forestry industry.

    Martin Brink,  one of the company directors at Viridas  stated the company aim was to “take advantage of the growing European Union demand for compliant sustainable biodiesel and biomass sourced from a dedicated energy crop.”

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