Price per hectare

In the plantation forestry business the planting costs per hectare are of course an important factor determining the likelihood to make (a decent) profit. If the establishment costs are too high, or the price per hectare asked from the investor is too high, it is very difficult if not technically impossible to make a reasonable profit with the investment.

Too high price per hectare

In general it can be said that most of the companies offering plantation forestry investments in The Netherlands in the years between 1990 and 2010 have asked investment prices per hectare that were way too high. Prices per hectare typically ranged from around € 20,000 to € 30,000 per hectare. A large percentage of these investments were needed for covering the expensive sales machinery. These expensive sales organizations were needed to sell investment products, that basically were bad propositions, to large numbers of relatively unsophisticated smaller investors. In comparison to the investment levels in larger plantation forestry companies, enjoying sufficient economy of scale and sufficient professional know how, these prices per hectare were 4 to 10 times too high.

Reasonable price per hectare

"To realize a reasonable level of future profits with establishing timber plantations, the investment should be in the (broad) range of € 1,000 to € 5,000 per hectare. And this can indeed be found to be in general the case in the world of well established and stable plantation forestry companies world wide." - Popko van der Molen (Sicirec Group)

Scanning the present day offerings on the timber plantation investment markets, this price level per hectare can serve as a useful first filter to distinguish the "suspect" cases that require more thorough investigation before investing can be considered.