Teak Projections  

A Very Special Opportunity - Older Trees and 30% Discount

    No matter where else you go on our website, please go to A Very Special Opportunity to learn about a once-only opportunity to own precious older tropical hardwood trees at a 30% discount from our regular tree prices.  Some of these beautiful older trees are already more 80 feet tall and 12 inches in diameter.

    You can leap many years ahead toward the final harvest and at the same time save hundreds or thousands of dollars.

Teak

    You are welcome to go directly to the projections below that show the projected growth, harvests and yields from planting 100 teak trees in our plantations. We encourage you to also read the following information because it provides the basis for the projections.

    Of the more than 50 species of precious tropical hardwoods that we are growing on our tree farms, teak is the only species for which sufficient published data exists to make reasonably detailed projections of potential harvests and yields. 

    Now that we have planted more than 2 million tropical hardwood trees on our 15 tree farms, completed thinnings of tens of thousands of teak trees on our farms, and milled nearly 3 million board feet of young teak on the farms, we are able to include in our projections the actual data for the lumber from our own earliest thinnings.

    The projections below therefore reflect our actual results from our earliest thinnings together with historically-based data for the subsequent thinnings and final harvests.

    To better understand the projections in the tables below, you may also want to review In the Field, and When to Harvest.

    Two principal factors generate the profit in growing tropical hardwood trees for harvest - the trees’ growth and the increase in value of their hardwoods as the trees mature.

    A wonderful benefit of fast growing precious tropical hardwood trees is that they keep right on growing irrespective of what the stock market is doing or who is elected.

    The teak growth figures shown in the tables below are from the growth rates that we have experienced to date in our own farms and the growth of other well managed teak plantations on well selected sites.

    The market price of the lumber that the teak trees produce is determined by the dimensions, quality and characteristics of the lumber, which in turn are related to the genetic quality of the trees and age and size of the trees thinned and harvested that produce the lumber. The dimensions, quality, and desirable characteristics and therefore the value or price of the lumber generally increase with the age of the trees.

    As the world’s demand for beautiful tropical hardwoods continues to increase, and as the world’s supply of tropical hardwoods continues to diminish through exploitation, deforestation and alternative uses of the land, precious tropical hardwoods are becoming increasingly scarce and their prices continue upward.

    The tables below are based on tropical hardwood lumber prices increasing at 5% per year (see note 1 below).

    For example, teak lumber from 7 year old trees sells today for approximately $0.65 per board foot . That same 7-year teak lumber, assuming an increase in price of 5% per year, will sell for $0.91 per board foot 7 years from now. And teak from 21 year old trees that would average $3.50 per board foot today, if the prices increase at 5% per year, will sell for $9.75 per board foot 21 years from now.

    So that you can better evaluate different annual increases in teak lumber prices, in addition to the 5% increase in teak lumber prices shown in each of the tables below, we have also included links for each table to show the results at 0%, or no increase, and 10% annual increase in teak lumber prices.

Raleo.  Even though the young teak from the earliest thinnings does not exhibit adult characteristics, it is still very beautiful. After discovering the differences of young tropical hardwoods from the earliest thinnings and the lumber from the more mature trees, and after years of research on how best to maximize the value of that young teak from the earliest thinnings, we started our sister company, Raleo, to utilize and create value for the young lumber. Raleo now produces world-class furnishings and architectural details from the young teak from the early thinnings. You can read more about Raleo on our What’s New page, and on the Raleo website.

Elite Teak Clones.  For our first 15 years in planting and growing tropical hardwood trees, all of our teak was propagated from seed. We are now blessed to have as part of our professional forestry team Pablo Chacon, an expert in plantation genetic improvement. As a result of Pablo's diligent work, we are now planting Elite Teak Clone Trees, teak trees produced from superior parent stock chosen for their rapid growth, straight trunks, and excellent lumber quality.

    We manage our Elite Teak clones on both 14-year and  20-year final harvest schedules. Both our 14-Year and 20-Year Final Harvest Teak Clones are more fully described on our What's New page at 14-Year Final Harvest Elite Teak Clones and 20-Year Final Harvest Elite Teak Clones.

    Projections for both 14-Year and 20-Year Final Harvest Teak Clones are shown below.

    Each of the three tables below shows the projected growth, harvests and yields from planting 100 teak trees in our plantations, with all of the lumber from each of the thinnings and final harvest being sold directly into the local and international markets, with teak prices increasing at 5%² per year.

    Please read the Notes to Projections below the projection for more information and explanations of the assumptions and calculations used in arriving at these projections.

    To be conservative, none of the projections below include the possible higher-value veneer logs from the final harvest.

    The following projections are shown below:

Table 1  20-Year Final Harvest Elite Teak Clone Trees

Table 2  14-Year Final Harvest Elite Teak Clone Trees

Table 3  Teak Trees Grown from Seed 

    In addition to the 5% annual teak price increases shown in the tables below, you may hold your mouse cursor over the 0% link to see the results if teak lumber prices were to remain unchanged for the life of your trees, or hover over the 10% link to see the results if teak lumber prices go up at 10% per year.

    (Because some browsers are set to block special features, you may need to accept this feature by right clicking the ribbon at the top of your Explorer screen for example and accepting the blocked contents.)

    As you review these projections, if you have any questions at all please feel free to call or e-mail. We will be happy to respond.  

 Table 1  20-Year Final Harvest Elite Teak Clone Trees   0%   10%

 (Please scroll to the right to view the entire table)

 Table 2  14-Year Final Harvest Elite Teak Clone Trees   0%   10%

 (Please scroll to the right to view the entire table)

 Table 3  Teak Trees Grown from Seed   0%   10%

 (Please scroll to the right to view the entire table)

NOTE: THE PROJECTIONS IN THE TABLES ABOVE AND THE EXPLANATORY NOTES BELOW ARE PROVIDED FOR YOU TO BETTER UNDERSTAND THE PROCESS OF GROWING AND HARVESTING TEAK TREES. WHILE WE BELIEVE THESE ESTIMATES OF GROWTH, COSTS AND YIELDS TO BE FAIR AND REASONABLE, WE CANNOT GUARANTEE THE FUTURE VALUE OF YOUR TREES, NOR THE LUMBER OR PROCEEDS YOU WILL RECEIVE FROM THEIR THINNING OR HARVEST. IF YOUR DECISION TO HAVE US PLANT TROPICAL HARDWOOD TREES FOR YOU IS MOTIVATED BY THE EXPECTATION OF FUTURE PROFITS, WE ENCOURAGE YOU TO SEEK THE COUNSEL OF AN INDEPENDENT PROFESSIONAL WHO CAN EVALUATE THE REASONABLENESS AND ACCURACY OF THESE PROJECTIONS.

Notes to Projections

  1. The projections in the tables above are based upon the approximate current mill-run teak lumber prices shown below for lumber from the thinnings and final harvest of seed-grown and clone teak trees at the ages shown.

    For two examples, teak lumber from the thinnings of 7 year old seed-grown teak trees is worth today about $0.65 per board foot or $276 per cubic meter on the local market, while teak lumber from 20 year old Elite Teak Clone trees is estimated to be about $3.50 per board foot today, or $1,484 per cubic meter on the international wholesale market.

Seed-Grown Teak Lumber				Elite Teak Clone Lumber
Tree Age	$ per Board Foot	$ per Cubic Meter		Tree Age	$ per Board Foot	$ per Cubic Meter
7	$0.65	$276		6	$0.65	$276
10	$0.75	$318		10	$0.75	$318
13	$3.00	$1,272		14	$3.25	$1,378
17	$3.25	$1,378		20	$3.50	$1,484
21	$3.50	$1,484
25	$3.75	$1,590

Note: Mill-run means the average of all of the qualities of lumber resulting from the milling of the trees, ranging from the very best quality teak from the first log closest to the ground, to teak from the upper logs with knots and other defects.

Note: Lumber from the Elite Clone Teak trees is estimated to be the same as, or in some instances $0.25 per board foot higher than lumber from seed-grown teak trees because of the superior quality lumber from teak clone trees.

    It is also important to note that young teak from the earliest thinnings is quite beautiful and wonderful for indoor furnishings but does not yet have the characteristics of adult teak. Those adult characteristics begin to appear significantly in the lumber from about year 13 trees and increase as the trees mature. (You are welcome to read more in Young Tropical Hardwoods) That increase in adult characteristics is reflected in the teak lumber pricing listed above.

    For the most recent report by the ITTO of current teak lumber prices in the US and European markets, go to Teak Lumber Prices.

  2. The projections in tables above are based upon the price of teak lumber increasing at 5% per year.

    For example, teak lumber from 7 year old trees that sells today for $0.65 per board foot (from note 1 above ), that same 7-year teak lumber, increasing at 5% per year, would sell for $0.91 per board foot 7 years from now. And teak from 21 year old trees that would average $3.50 per board foot today, increasing at 5% per year would sell for $9.75 per board foot 21 years from now.

    So that you can better evaluate different annual increases in teak lumber prices, in addition to the 5% increase in teak lumber prices in each of the tables above, we have also included links for each table to show the results at 0%, or no increase, and 10% annual increase in teak lumber prices.

    Historically, according to the United Nations FAO publication Forest Products Prices, the median export/import prices of teak rose at an average rate of 9.7% per year for the 18 years from 1970 to 1988 (the last year of the report), and 13.2% per year for the last four years of the report.

  3. Both the timing and number of trees harvested for the first three thinnings in the projections are based upon our actual practices here on our plantations, and for the subsequent thinnings and final harvest, on a combination of our experience and the experience of our professional foresters, as well as the latest published silvicultural practices derived from years of others' experience in teak plantations.

   The actual thinnings and harvests of your trees will be determined by our professional foresters, who monitor the growth profiles of your trees in the plantations.

   Please also note that if you elect to have us sell your hardwoods for you, at least six months after any thinning or harvest will be required to mill, dry and grade your lumber and prepare it for the local or international export market. An additional year or more may be required for the earliest thinnings, because young tropical hardwoods are less known, or even unknown, in the world markets.

  4. The projections above include a mortality and cull loss of 10% for our Elite Teak Clone trees and 15% for Teak trees planted from seed. The most likely period of mortality or cull loss is during the first years after field planting. Our foresters will examine your trees frequently during this period and, during the first year, we will promptly replant, at no charge to you, any tree that is not healthy or in any way not growing properly.

  5. The height and diameter growth estimates are based upon growth rates on our farms as well as those obtained in well cared for plantations on good sites in  Central America and the Caribbean.  

  6. For teak, our estimated volume per tree is arrived at by multiplying the basal area of the tree (Pi x (1/2 diameter)²) times the usable height of the tree, and then reducing the result by 35% to account for the taper.

  7. The amount of marketable wood per tree is stated both in board feet, a standard lumber measure used in the U.S., and in cubic meters, a standard lumber measure used throughout the world. One board foot is one foot square by one inch thick (12" x 12" x 1"). There are 424 board feet in a cubic meter of lumber.

   The amounts of marketable wood for the thinnings and final harvest are based upon the calculated volume per tree⁶ and then reduced by the estimated amount of processing waste, which is sawing losses and damage to the logs while being harvested, transported and processed. The inefficiency of smaller diameter logs results in greater sawing loss on younger, smaller trees. Accordingly, we have subtracted a processing waste of 55%, 45%, 40% and 30% respectively for the 6, 10, 14 and 20 year old Elite Teak Clones and 55%, 50%, 45%, 40%, 35% and 30% respectively for the 7, 10, 13, 17, 21 and 25 year old seed-grown teak trees.  

    We may achieve more efficient yields than those projected since we mill everything ourselves right on the farms, using the latest thin-kerf, high-yield bandmill technology.

  8. Gross harvest proceeds, the estimated gross value of the lumber from each thinning and harvest, are arrived at by multiplying the number of marketable board feet per tree times the price per board foot at the time of harvest (see Notes 1 and 2 above) and then multiplying the result times the number of good trees harvested in that thinning or harvest.

   Although we are managing our plantations with the objective of producing veneer-quality logs from the older trees, to be conservative, the projected values in these projections are based only upon the value of sawn lumber the trees may produce and do not include any estimate of premium value which veneer logs may bring once the trees are larger.

  9. Harvest and processing costs are the direct costs of harvesting your trees, milling your logs into marketable lumber, and drying your lumber.

    The harvest and processing costs shown in the tables above are based on our actual harvest and processing costs of $0.29 per board foot, increasing annually at the same annual rate as the projected increase in the price of the teak lumber.

10. Net harvest proceeds are arrived at by subtracting the estimated harvest and processing costs from gross harvest proceeds.

11. The care and management fee is our reward for managing the care and maintenance of your trees and the harvest, processing and sale of your hardwoods. Our care and management fee is fixed at 6% of the net harvest proceeds. We will defer receiving our care and management fee until you have first received the return of the cost of your trees.

12. Net profit per harvest is your estimated net cash flow from each thinning and harvest if you have us sell your lumber, arrived at by subtracting our care and management fee from the net harvest proceeds.

13. Cumulative net proceeds is a running total of your estimated cash flow from the thinnings and harvest of your trees if you have us sell your lumber.

14. The IRR, or internal rate of return, is the calculation of the annual compound return on investment from the projected cash flow if you have us sell your lumber for you, based on the 100-tree price of $4,992 for 20-Year Final Harvest Elite Teak Clone trees, and the 100-tree price of $3,997 for 14-Year Final Harvest Elite Teak Clone trees.  Lower tree prices for higher quantities would result in higher projected IRR's than those shown in these projections.

    For the earliest thinnings, it would be good to anticipate a year or more delay from the time of the thinning harvest until your lumber is milled, dried, and marketed if that is your wish. This anticipated year delay is incorporated into the calculations of the IRR for the first and second thinnings.

    Please call or e-mail if you have any questions at all.

    We would love to grow tropical hardwood trees for you.

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