A large number of new forest funds are emerging in response to rising demand for the diversification that forestry investment offers to individuals and institutional investors alike.

A panel of 35 speakers from both industry and government will address the conference over the two days, with a keynote speech from Sandy LaBaugh, of Natural Resources & Infrastructure investments.

The agenda of the conference include special insights on how institutional investors view forestry investment. There is also updates on the REDD+ scheme, conservation finance, sustainability strategies and supply and demand dynamics.

Attendees are able to gain unique insights into why institutional investors are so keen to invest in timber and why the asset class is going from strength to strength is terms of its reputation.

The conference also offers a great networking opportunity for anyone interested in the industry or involved in forestry investment. The event takes place 3-4 May at the Hallam Conference Centre.

The report states that between 2008 and 2010, millions of dollars worth of timber from protected mahogany and cedar trees in the Peruvian Amazon made its way to the US on some 120 shipments. The report did not hold back from blasting those responsible, stating: “Sometimes intentionally, sometimes through sheer negligence, each of the actors and agencies involved in this system are working as gears in a well-oiled machine that is ransacking Peru’s forests and undermining the livelihoods and rights of the people that depend on them.”

The report added that the links between the timber that ends up in US warehouses, and the timber that is felled from Peruvian forests is wilfully obscured. It also claims that the timber was often imported on shipments with fabricated papers in order to ‘launder’ the timber.

With so many sustainable plantations, such as those run by Greenwood Management in Brazil and Canada, producing timber from managed sources, it is shocking that so many US businesses are willing to break the law. They are, of course, also risking incredibly vulnerable natural forests, which need to be safeguarded for future generations for the sake of their homes, livelihoods and the planet as a whole.

The latest Wood Resources international report shows that lumber futures have outperformed all other commodities, with prices gaining 11 per cent in February alone.

Analysts believe that timber could reach prices of $300 per 1,000 board feet by mid-summer. At the moment, it is hovering around $275.20 on the Chicago Mercantile Exchange.

The major strength behind timber prices seems to be the demand from China, which shows no sign of abating, and, if anything, should grow even further, claim analysts. West Fraser Timber Co, which is the largest lumber producer in the US said that the amount of timber being shipped to China “picked up substantially” between the final quarter of 2011 and the first quarter of 2011 so far.

Meanwhile, timber investors, such as those who have invested in plantation land through Greenwood Management’s Brazilian projects, will also be happy to hear the good news straight from the horse’s mouth. Hakan Ekstrom, the President of Wood Resources International, said that the US housing market will also start to increase demand for timber. He told Bloomberg: “The general trend should be upward, with more optimism in the market that housing starts should slowly start to increase.”

The Global Tree Farm Economic Review by RISI has just been released and it has already been welcomed by investors thanks to its positive news about timber demand in China.

Although it’s plain to see that China’s appetite for timber seems pretty insatiable at the moment, some have claimed that it is dropping off. However, this recent report shows that 2011 demand hit record levels and that there was also a 30 per cent rise in the timber demand deficit in China, totalling per 150,000 cubic metres.

The report looks at geographic, political and economical factors that could have an impact on the forestry industry in each country. It found that timber demand is also on the increase in several other nations, including India, which is also experiencing massive economic growth.

The report added that tree plantation schemes, such as the one operated by Greenwood Management, for example, in Brazil, are becoming popular for the production of timber for emerging markets.

The study, carried out at the Paul Scherrer Institute, looked into the impact of certain forest management techniques on the growth of bark in beech tress. Through a series of tests, researcher Nic Meyer and his partner Marco Mina found that the percentage of bark growth varied depending on factors like when they carried out thinning, the timber species used and when they harvested the trees.

The pair came to the conclusion that all these factors can be optimised to reduce the growth of bark by up to 20 per cent. So why is reducing bark growth so important? First of all, it boosts the number of logs than can be produced from each tree, which obviously potentially increases returns for those investing in plantations. Secondly, when bark burns, it emits more harmful materials than regular wood.

“In our previous investigations we had found that the emissions from burning bark had sent all of our test instruments into overdrive,” explained Meyer when talking to environmentalresearchweb.

The optimum thinning technique, according to these forestry experts, is to leave the thinning process until the branches have a reaches between 20cm and 40cm in diameter.

Meyer and Mina are now looking at whether the same techniques can be adopted for the growth of various other species and forestry investors, with their cash in plantation projects such as those run by Greenwood Management in Brazil, will no doubt be keeping an eye on their findings.

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.

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.

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 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.

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.