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  1. #11
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by Timesurfer View Post
    What do we make of these unlikely bedfellows joining forces to create a carbon credit forestry portfolio - Air New Zealand, Contact Energy, Genesis Energy and Z Energy.

    Is this the forestry of the future? I can see it being a boon for marginal landholders, where many have been caught out previously with retirement blocks of forest that become at best break even after harvesting costs materialize.

    It might even tempt me into farming trees.
    First thing I thought is what an unusual alliance. Secondly, I have shares in all these companies. Thirdly, its good that they are forming an alliance and cooperating so they're not competing against one another for marginal land purchases. Fourthly, economies of scale which contracting out large amounts of planting. Looks like a good alliance to me. Got to make a difference somehow and this seems at least as good a way as any other.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  2. #12
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    [QUOTE=Beagle;751578]First thing I thought is what an unusual alliance. Secondly, I have shares in all these companies. Thirdly, its good that they are forming an alliance and cooperating so they're not competing against one another for marginal land purchases. Fourthly, economies of scale which contracting out large amounts of planting. Looks like a good alliance to me. Got to make a difference somehow and this seems at least as good a way as any other.[/QUOTE
    I have a 200 shares in syndicate runs by Forestry Enterprises in Masterton as a LAQC. I had it since the early 90s. The trees are due to be cut down this year and next year. Over the years I have been contributing money toward the upkeep of the trees and I am suppose to be reaping the profit after over 20 years. But sadly the return on trees after expenses are just not worth the hassle not to mention those confusing carbon credit. Not a good investment maybe just for the lifestyle

  3. #13
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    Interesting Jim, I have some Forest Enterprises stuff as well in the Gisborne area and the numbers there seem to stack up reasonably well.
    May I ask which syndicate or area yours is in?

  4. #14
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    Those forest enterprises things were all the rage in the 90's. Sad if it doesn't work out for people. Maybe this syndicate could buy the land after the harvest and replant for carbon offset ?
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  5. #15
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    Quote Originally Posted by sideline View Post
    Interesting Jim, I have some Forest Enterprises stuff as well in the Gisborne area and the numbers there seem to stack up reasonably well.
    May I ask which syndicate or area yours is in?
    it is in Gisborne and something like Hokoroa

  6. #16
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    Quote Originally Posted by Soolaimon View Post
    If I sell the credits now, I have to pay them back after harvest and maybe by then the price of a credit has increased.... I lose again! Replanting is not an option as I don't want to lumber the grandchildren with the ongoing expenses to maintain a forest for a very minimal return.
    Interesting you say that because forestry is quite a consistent return and given the log prices at present I would expect your return to be quite nice. But then again it depends on the region and being only 10 ha you don't quite have the scale in relation to some fixed costs.

  7. #17
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    Quote Originally Posted by ados_nz View Post
    Interesting you say that because forestry is quite a consistent return and given the log prices at present I would expect your return to be quite nice. But then again it depends on the region and being only 10 ha you don't quite have the scale in relation to some fixed costs.
    Here are some rounded figures for you. Over 24 years total costs ie. purchase land and trees, pruning, thinning, rates, insurance, spraying etc. $100k.

    Harvested value of the logs at present = $550k

    Harvest costs, $334k (working with neighbours totaling around 25hcts) Harvest, Cartage, Roading and inviramental costs.

    Sale of land = $15k

    Comes to a return of around $130k after 24 years and that is taxable.


    If I had bought a section in town back then for $40k it would be worth about $350k now, a return of $260k after rates etc. and that would be tax free. (In the meantime )

    I have enjoyed growing the trees and helping with pruning etc. but as an investment...………??
    Soolaimon

  8. #18
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    Quote Originally Posted by Jim View Post
    it is in Gisborne and something like Hokoroa
    Hi Jim,
    I've looked at the figures for Hokoroa - you've probably invested 17-18k and can expect a (taxable) payout of
    around 154k over the next few years, yes?
    Its not too shabby, but of course the numbers in the prospectus in the heydays of the 90's were
    a lot rosier. Looks still like an internal rate of return above 7%.

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