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Why invest in Forestry and Land?

A valid question indeed.

By searching the internet you’ll promptly find that the Worlds’ population is increasing at around 210,000 human beings a day. Meanwhile, the net Forest loss worldwide from deforestation is 15,000 hectares a day (30,000 rugby fields).

Said simply: “The projected plantation timber supply is far below the projected global consumption.”

Forecasted shortfalls that we have found for the supply of timber have been done as early as 1995 by Aspey & Reed together with the UN-FAO, showing staggering statistics based solely on the Worlds’ Population. The demand to supply shortfall is expected to reach 25% or two hundred and fifty million cubic meters (250,000,000m3) by 2020. More recent reports by Dr. W.R.J. Sutton projecting potential supply and demand forward to 2050 show the shortfall growing to 33% or two billion cubic meters (2,000,000,000 m3) by 2050 again only based on the human population and assuming that we continue to use the same amount of timber and timber based products as we have done for many years now.

But timber is not a unique solution. Other, generally composite products, can replace timber: steel, aluminium and wood based products can be manufactured into timber replacements. We can tell you that these heavily processed replacements will use at least ten times (10x) the amount of energy to produce a replacement timber product – we’re sure your aware of what has happened to your power bill over the last few years, energy it seems may also be in short supply from traditional methods, so alternative products to timber will probably become less and less competitive.

It seems simple when you consider that more people will need more wood – won’t they? It is probably true too that no other commodity has had such an enormous impact on mankind as timber.

The problem for consumers could be expensive alternatives, coupled with a short supply of timber may indeed drive up prices. Remember too, in New Zealand plantation timbers are considered mature at 28 years old, internationally however, mature timbers can be many decades more, in extreme cases: in excess of a century.

"What returns will I get?" is a common and indeed another important question. As with any investment, in order to calculate the returns, we must look back at what has been achieved in the past. We do this because: if it has happened, it is possible even likely, that it may happen again - history repeating. This exposes a critical floor in calculating returns for ANY investment: past returns have been achieved already and this does not mean that the same returns will be available into the future - more or less return is possible. It is best to consider the returns you may receive for investing with us, or any other financial intermediary for that matter, as possible returns and therefore, should NEVER be an expected return.

That said, during New Zealand's forestry history, the Internal Rate of Return (IRR) can reach 7.1% Real (excluding inflation). While this may not sound like a lot, bear in mind that this Internal Rate of Return is not calculated on the investment you make, rather the rate at which adult timber prices are increasing while the investment grows and matures. Shareholders are entitled to the profits made from each investment company's assets: Forestry and Land along with a pro-rata (per share) portion of any of the investment companies unused funds.

Finally, timber offers its investors a unique opportunity to maximise profits because harvesting may be bought forward or deferred to capitalise on higher prices by taking advantage of forecasted World shortages. The Directors of NZ Forestry & Land Investments Limited are motivated on this point, because they are shareholders of all current and previous offers of shares to the public.