Prime Forestry plants for people, planet and profit

The demand for certified hardwood has been rising rapidly. Prime Forestry Group

A Zurich company, active in the timber market, is trying to convince investors that money actually does grow on trees.

Investors who’ve had their fingers burnt with stocks and property can buy saplings in Panama, and reap the returns when the trees are fully grown.

Investors do not put their money into the company itself. They buy teak trees that grow in Prime Forestry’s plantations.

“We have 3,000 hectares, at the moment,” says the group’s deputy chairman, Carol Franklin. “These plantations are certified by the Forest Stewardship Council (FSC), which guarantees that the trees are grown sustainably and that the employees are treated properly.

“We sell the trees when they are still small in lots of 1/10 hectare. After seven, ten and 14 years, some of these trees are felled because the others need more room and after 20 years the entire plantation is felled,” she told swissinfo.

Damage

The idea is to promote sustainable harvesting, and to reverse some of the damage caused by deforestation of the world’s remaining rainforests.

A lot of 1/10 hectare costs €3,200 (SFr4,869) at present and includes about 111 trees. After 20 years, each lot can be expected to produce a harvest of about 40 cubic metres of timber, the group says.

Prime Forestry anticipates that rate of return will be in the range of eight to 14 per cent, depending on price developments in the teak market.

“The investor buys the trees for 20 years and after seven, ten and 14 years, as well as after the final harvest, gets 85 per cent from the sales. The other 15 per cent goes towards the maintenance and service of the trees,” Franklin explained.

No rot

The company is concentrating on teak in the initial phase because of its weather-resistant characteristics. It virtually never rots which makes it one of the most sought after and valuable types of commercial timber.

To ensure that the investment doesn’t collapse, burn down or fall victim to pests, the company insures each tree for the first five years of its life.

“After that, the trees are more or less immune against fire, bugs and any kind of illness. And the plantations are on the Pacific coast where there are no tropical storms,” Franklin told swissinfo.

The plantations in Panama are managed by a Swiss forester who works with between 150 and 250 local people, depending on the time of the year and the planting season.

Above average

“These people live in the area of the plantations, most of them with their families, and we make sure that they are paid an above-average salary,” says Franklin.

“The FSC – the certification body – sees to it that the trees are not only grown in an ecologically correct manner but that the employees are well paid and well looked after.”

The FSC also ensures that there is room for local woods on the plantations too, as well as space for wild animals. “When after 20 years the trees are felled, we make sure the trees are replanted,” says Franklin.

swissinfo, Robert Brookes in Zurich

Key facts

Certified plantation teak wood represents only 2% of the world’s tropical timber yield.
The market for FSC-certified tropical hardwood is growing rapidly.
Prime Forestry made a profit of €421,015 last year on total revenues of almost €6 million.

In brief

Investors buy teak trees, which the Prime Forestry group cultivates on plantations in Panama.

The plantations are certified by the Forestry Stewardship Council, which ensures that the trees are produced sustainably and that workers receive good pay.