Plantation Forestry Investments Spreading to Emerging Markets

Aug. 29, 2008 - PRLog -- For pension funds and university endowments, returns to investments in forestlands, including plantations, have been superior to all other asset classes over the past 20 years.  According to industry experts there is between US$10 billion and $15 billion in fund allocations seeking a home in plantation forestry investments. “Until recently, 90% of institutional investments in forest lands were in North America, and investments outside of North America were largely restricted to three “safe” markets of mainly New Zealand, Australia, and Uruguay,” said Dennis Neilson, Director of DANA Ltd. of Rotorua, New Zealand. “However, today, pension funds and other forestland  investors are becoming much more adventurous, entering new emerging markets in Latin America, as well as Southern Africa, Eastern Europe, and even China and Southeast Asia. Many investors have little knowledge of the end-use markets for plantation forest crops, many of which may be exporting their fiber in woodchip form to overseas markets for pulp, wood products, or even biomass energy.”

“Until recently, many investors have shied away from investing in existing, or in developing new plantations in Asia due to limited availability of land, bureaucratic and expensive processes to acquire land and to some questionable government and judicial practices. However, in the last few years we have seen increasing interest in Asian investments, and the recent opening of investor company offices in Asian centers”.

Neilson notes that, “Now, almost every week we see announcements of new forestland investments in emerging markets.”

Neilson is one of the organizers of the Third International Pulpwood Resources and Trade conference, which seeks to bring together the various players in the plantation forestry value chain: investors, plantation forestry companies, woodchip exporters, equipment suppliers, transportation experts, and end-users such as pulp companies and others.

“The woodchip trade in the Pacific Asia region is at record levels in 2008,” said Neilson, “despite ocean freight costs also being at unprecedented highs. Now the woodchip trade is starting to boom in the Atlantic region as well, with a real tug-of-war developing between European and Asian markets.” Neilson attributes the rapidly expanding trade into the Europe region to serious and probably chronic resource constraints in Southern Europe &Turkey; and plans by Russia to price its own wood out of the critical Scandinavian market by applying prohibitive export taxes from 2009.

The Pulpwood Conference, which will be held in Singapore in October, is expected to host major resource owners, wood fibre traders, end users, shipping companies and other players from both markets, with more than 200 participants from more than 25 countries anticipated.

The Third International Pulpwood Resources and Trade Conference will be held Oct 19-21 in Singapore, at the Grand Copthorne Hotel. For more information on the meeting, see the meeting’s web page, www.pulpwoodconference.com

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Conference focused on plantation forestry investment and international markets for woodchips and biomass