Looking back 2009 could be considered as a turning point for the forestry sector. During the time of global economic crisis where businesses were losing money regardless of which sector they were in forestry (while taking a hit) was seen as a rock (rather than a tree). In recent months the industry has bounced back better than ever and shows real promise of generating very profitable returns. New investors are encouraged and the entries of investment funds, which seek to inject $4 billion in to the sector, are very welcome indeed.
In addition to the $4 billion already promised, pension funds such as: Previ (Banco do Brazil), Funcef (Federal) and BNDES (National Economic and Social Development) are also investing in this sector. However no numbers have been discussed yet.
The funds will be used in all stages of development, from the buying of the land, to the planting of the trees, to the eventual harvesting and selling of the trees. Naturally this will all take time with the average plantation plot requiring seven to eight years to mature.
“The funds focus on longer terms, because the formation of a forest of eucalyptus, for example, requires at least seven years return. It is a safe investment, long term, with a phased planning, which brings good return,” said Fernando Henrique da Fonseca president of the Brazilian Association of Planted Forests.
The participation of investment funds in forestry plantations is nothing new in Brazil. Today 90% of Brazil’s planted forests are the property of processing companies such as Suzano Papel e Celulose, Eucatex Florestal, Aracruz and Votorantim Celulose e Papel. The remaining 10% of plantations are owned by outsourced companies.
“It is an attractive market, which has a lot to grow and we estimate that even with the influx of investment funds participation grow from 10% to 20%,” analyzes Fonseca.
The growing demand for timber from forest plantations is in part due to greater awareness worldwide of the affects of deforestation on greenhouse gases. In Brazil the government have taken the first steps towards a greener economy and recently passed a law whereby all the steel manufactures have to use eucalyptus charcoal in their factories.
However, even with the planned expansion of the plantation areas in the coming years, the sector is likely to have a supply greater than demand.
“They are high investments that are made in this sector. If we build a new plant, investing $1.5 billion, but needed another $500 million for the formation of new forests, to maintain the operation of this new plant,” concludes Fonseca.
For more information on investing in Forestry please click here
February 18th, 2010 at 5:32 pm
I discovered your homepage by coincidence.
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I will put your site on my blogroll.
February 18th, 2010 at 5:53 pm
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April 4th, 2010 at 3:37 pm
[...] 10:23am 0 comments 1,385 … short films produced by Forest Mountain Voices (FMV), an indigenous …$4 Billion Investment in Brazil's Sustainable Forestry …Looking back 2009 could be considered as a turning point for the forestry sector. During the time of [...]