Having decided that you wish to invest in forestry you may find yourself overwhelmed by the choice of companies out there specialising in that field.
Essentially there are two different ways of investing in forestry, directly or indirectly. Direct investments involve the purchase of ownership of the land and the trees grown on that land, either by an individual or a company. Indirect investment on the other hand involves buying shares in an established forestry investment company. While there are pros and cons to both investment types it is generally acknowledged that direct investments generate the higher returns.
Before of course making any decision I have included below some areas you may wish to look into before you go ahead.
Location, Location, Location
Many countries, worldwide offer various opportunities to invest in reforestation with the bulk coming from South and Central America, Australia and New Zealand. It is important to examine the financial and business infrastructure in each jurisdiction, for example: whether the area is well serviced by the infrastructure necessary for the planting, tending and harvesting of the trees. It is also worth noting that once the trees are ready for harvesting they must then be transported for them to be processed. Good transport links are very important and help reduce costs.
Experience, Experience, Experience
This really needs hardly any explanation. Forestry is a very specialised field and therefore the more experienced and expert the manager is then the better the eventual return once the trees are harvested.
Research, Research, Research
Even after making the initial investment regular and comprehensive information should be made available to keep you abreast of all new company information. I find a company newsletter to be the most effective way of establishing this in addition to the company website.
Many forestry investment schemes welcome international investment, indeed it is unusual to find one that doesn’t. In addition there are very attractive tax benefits international investors can claim against the income at harvest. So to conclude, should you be looking for a long term investment then investing in forestry might just be ideal.
