Small timber plantations.

[RichardC]

Does anyone know anything of the economics of a block.... "seven acres with 1000 tallow wood trees". I forgot to ask how old they were or even if they were plantation planted or natural.

Googled "tallow wood" and it is a good quality hardwood with first economic return @ 5yrs. That would be the first thinning with a low return I suppose.

What else should I ask when I ring back?

RC

 

[Pablo]

If this is something you are going into yourself, ie not going through a 3rd party, it may be worth it I am not realy sure.

But if you are going through a 3rd party, ie a financial adviser etc., I doubt very much that it would be a good investment.
My parents went into one of these 15 odd years ago where you get 1/2 your money back come tax time and get a pay out in 20 years time, with the money from the thinnings to be used to manage the investment. In a nut shell the money from the thinnings was not enough to cover the costs and it went broke with my parents losing their money. I have also read previously that many of these investments are actually designed to go bankrupt and rob the investers of their money.
Even if this doesn't happen you are likely to be paying way over the price it costs to set up the investment (probably twice as much if not more) by the time the company and the promoter take thier cut.
Also look at the figures, take into account that they have probably made them look better than what they are and if Im right they are probably saying that you only pay $5k (after the tax rebate) for a return of $25k which means you make a profit of $20k over 20 years which isn't really that much when you think about it, you could definitely earn more in a managed share fund by the time you account for compound interest.
Just remember never go into an investment to save on tax and only take un-biased opinions.

If you were going into this investment on your own then just ignore the above dribble.

Cheers Pablo.

 

[RichardC]

Thanks for the reply Pablo but I'm talking freehold. I'm looking for a retirement lifestyle on acreage and while this doesn't have a stream and platypusses (OK I know it should have two "i"s) in it, it's an angle I've never thought of before.

Could easily lack ecomomy of scale tho.

RC

 

[The Y-man]

http://www.dpi.qld.gov.au/hardwoodsqld/1817.html

Harvesting could be exciting - not sure what subbie costs in cutting and transporting would be......

Cheers,

The Y-man

 

[andymack]

Hi RC

I did some research into tree plantation recently. I hope to plant my own sometime soon.

Tallow wood is a valuable timber but I don't know much about it in a plantation etc.

What you do need to ask is what is the diameter of the average tree at 1 metre from the ground. At what height is the first branch. The most valuable timber is up to the first branch (clear wood). Unfortunately, a plantation that is poorly maintained (not pruned correctly etc) can diminish the value of the timber substantially.

The best way to maximise value is have a contractor fell the trees and another contractor with a potable saw mill to mill the trees. Stack the timber correctly and market the timber yourself (seasoned timber will get a premium).

Without looking up Tallow Wood, good timber can attract over $800 cubic metre.

Felling shouldn't cost much, you then a tractor or something to drag the log to a clearing. Milling can be $200 a cubic metre (I think)

If you go the saw mill route, they pay you a stumpage, effectively a royalty, where they pay you per tree and they cut and transport the logs at their expense. It is obviously the easiest way to go but they will give you bugger all.

I'd love to see photos, and what district is it?

 

[RichardC]

Thanks Andy. The Y man's link indicates that you are about right @ $800/m3.

I can see your point about having it sawn and doing your own drying/selling altghough first thinning would be pulped I suppose. Slower than kiln but you would get a good price and a steadier cash flow.

I'll PM you some pics if and when I get them, and the plantation is in the high Atherton Tablelands. Traditional timber country but the Hawke government closed down the industry. I'm trying to remember if it was Beazley who was run out of Ravenshoe by irate millers. He still wouldn't get votes up there. LOL

RC

 

[andymack]

Young hardwood often is pulped as its more difficult to mill. As pulp wont get you very much, depending on dia. of logs (say you had 10" of wood) , you may persevere with trying to mill timber out of it.

Tallow-wood had a greasy nature which makes it an easy wood to work even after its aged. It was very good for making window sills, door sills, chamfer boards etc. I asked the old man about Tallow-wood and he said they used to like making dance floors out of it because of its greasy nature.

I look forward to the photos