Partnership between Forestry and Agriculture for Sustainable - - PowerPoint PPT Presentation
Agadir, Morocco March 20 th 24 th , 2017 Floresta Atlntica Fund in Portugal: Partnership between Forestry and Agriculture for Sustainable Landscape Finance Carla Dias Wadewitz BBI & Catolica Lisbon School of Business and Economics
BBI & Catolica Lisbon School of Business and Economics (carlawadewitz@gmail.com)
2 The timberland and forest management industry continues to grow as global demand rises and
new uses for timber emerge
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500 1000 1500 2000 2500 2010 2020 Supply Demand
Source: UN-FAQ
(in million cubic meters)
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Timberland has shown a steady and overall high appreciation (low correlation with the economic
cycles), representing the asset with the highest return since 1987
Source: International Woodland Company (IWC)
5 “The inclusion of timberland in a portfolio greatly improves the efficient frontier as, for a given
level of risk, the return is usually always higher”
Source: International Woodland Company (IWC)
6 Successful Investment
Market Conditions Country Conditions Partnerships Risk Management
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eucalyptus globulus provides higher industrial paper/pulp productivity (+40%) than any other species
subsidies up to an average of 75% of the invested value)
Successful Investment Market Country Partnerships Risk Management Pulp & paper industry units
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geographical location of assets; (iii) diversified product segments
power stations)
PBV of 15% relative to the highest market price
Successful Investment Market Country Partnerships Risk Management
9 Solid and high consumption forest industry (pulp, panel, cork and sawmill) National high deficit (imports vs. exports) on roundwood, sawnwood, pulpwood, veneer logs and saw
logs
Low exportation costs, due to high proximity to other large european consumers markets
Source: Ministerio de Industria, Turismo y Comercio. Estadísticas de Comercio Exterior (2002-2007)
Forest products external trade (tonnes) Major forest industry units at Spain and Portugal
Source: Natural Assets
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Source: PricewaterhouseCoopers
Major European players by country, 2012 ( Companies in the world top 100)
22.1
Revenue, 2009 (USD million)
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35.4 5.0
4 4
12.7 6.6
3 3
4.3 5.5
2
2
2
9.4 0.5
1 1
Sweden Finland Portugal UK Norway Austria France Spain Ireland Germany
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Iberian businesses are represented the forestry industry internationally with some of the most
prominent European companies in the sector. There are six Iberian companies among the Top 100 largest companies in the world, of which 29 are European.
11 More than 98% of the forest total area belongs to private owners (FAO, 2010), providing good
acquisition opportunities.
Portugal’s forest land can be acquired at relatively low prices, when compared to other European
countries.
1,6% 88,0% 5,2% 5,1% 500 1000 1500 2000 2500 3000 3500 Public ownership Private owned by individuals Private owned by business entities and institutions Private owned by local communities Thousand hectares
Source: Forest Resources Assessment 2010 (FAO, 2010)
Forest area according ownership
Public Private
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Property acquisition costs
Company taxes Company income tax – 21.00% (2017) Timberland Funds based in Portugal
Forest Grants (CAP of 5M€/SPV)
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October 2007 and it’s main purpose is to promote sustainable forestry development through the commitment
Mission Business
and profitability targets.
partnerships, including public-private, as an innovative business model to foster sustainable forestry management.
Shareholders
5 Private shareholders (59,5%).
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Maritime pine 51% Other land uses 9% Eucalyptus and
8% Oaks 6% Quercus Ilex 5% Agricultural 5% Chestnut 3% Bush 3% Walnut 3% Cork oak 3% Cypress 2% Other 1%
Land Use
15 The production and exploration
based on replanting new stands and the management of existing stands, with special emphasis placed
Tourism-based entertainment and activity related to Nature Tourism, Cultural Tourism in the rural setting, and
activities Forestry by products useful for forestry industries and biomass combustion industries Promoting the production and exploration
woodland resources growing/ava ilable in all the properties Rental of areas for use to others, which does not come in conflict with forest and forest management use (e.g. wind and solar parks)
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Successful Investment Market Country Partnerships Risk Management
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Floresta Atlântica
Certification entities (ex: GFS):
(individual, group, community) Local Communities:
cleaning Local authorities:
and titles
paperwork Scientific community
climate, IT systems)
management Local agents:
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Partnerships with all 60 forestry organisations Transactions were made (purchases and leases) with 377 forest owners over 87% of which have
properties area below the economically viable minimum size
Long-term lease contracts were made with 7 governing boards of wastelands and parish councils
representing about 3,800 counterparts. These communities will receive by 2018 about € 1.7 million in rent and labor
Operating expenses 2008-2018 (forest management, operational managers, firemen, technical support)
in the estimated amount of about € 20.7 million, mainly locally hired
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Risk Management
management of systemic risks (price and demand pattern) and non- systemic risks (fire, pests and diseases)
products, hunting, eco-tourism, mushrooms - are able to pay the forest management costs and the costs of preserving conservation areas for the sustainable forest management standards certification demanded by the industry
forest insurance
Successful Investment Market Country Partnerships Risk Management
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Management Information System
Int’Graal – WinForest is a modular information
management system that has been tailor made for Floresta Atlântica. This system allows for an efficient management of the agriculture and forestry assets,
from this sustainable investment.
The
basis and support
this system is a geographical information and data management
management of the agriculture and forestry assets and is also compliant with the most demanding auditing and certification criteria.
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Investor access
The system can be accessed
authentication process, corresponding to 3 different
information is configured in order to guarantee its integrity and confidentiality.
St Step 2 – Fir
First con
level
St Step 4 – Sel
Selection of
eographical al loc location
St Step1 – Acc
Access through a a de dedicated de desktop connection
St Step 3 – Sec
Second con
le level
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Type of Plantation
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Type of Elevation
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Average Temperature
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Types of properties and fuel
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Fire Risk Map
32 The final evaluation of forest fire hazard is through the integration of two key elements: fire
history and potential propagation.
Fire frequency 1975 - 2007 Elevation Soil
Integrated risk assessment of forestry fire
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London agency that identifies, quantifies, models and finally ‘prices’ risk within forestry investments due to natural hazards such as fire, windstorm, flood, snow and many others. This is for international reinsurers, companies and governments worldwide.
The forensic attention to fire risk as demonstrated in the Floresta Atlântica (FA) phased approach has not been seen in the forest investment sector in the 25 years experience of staff within ForestRe. Overall Assessment by ForestRe: “This is an incredibly sound approach, for Portugal is one of the most forest-fire prone countries. ForestRe have no hesitation in recommending the pre-purchase risk analysis procedures utilised by FA through their consultants; and furthermore in the experience of ForestRe it is without equal in the forest investment sector anywhere is the world.”
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Year
1 2 3 4 5 10 15 20 Average Total
Land Acquisition
Management costs
Insurance
Installation costs
Maintenance costs
Harvesting costs
Revenues - wood
11 485 0 13 955 1 211 25 441
Revenues - land
3 367 160 3 367
CF
7 218
12 148 628 13 192 NPV
2 554 IRR 9.35%
4,000 9,000 14,000 1 2 3 4 5 10 15 20
Revenues - land Revenues - wood Harvesting costs Maintenance costs Instalation costs Insurance Managment costs Land Acquisition
Eucalyptus globulus - plantation
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5,000 10,000 15,000 20,000
1 2 3 4 5 10 15 20 25 30 35
Revenues - land Revenues - wood Harvesting costs Maintenance costs Instalation costs Insurance Managment costs Land Acquisition
Year
1 2 3 4 5 10 15 20 25 30 35 Average TOTAL
Land Acquisition
Management costs
Insurance
Installation costs
Maintenance costs
Harvesting costs
Revenues - wood
675 672 1 944 3 641 5 824 13 516 730 26 272
Revenues - land
3 560 99 3 560
CF
179 1 115 2 187 3 570 12 036 400 14 405 NPV
177
IRR 6.25%
Maritime pine - Greenfield
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Wild blackberry Wild sweet cherry Wild strawberry tree Chestnut tree
Product Kg/ha Price/Kg Potential Revenue/ha
Wild sweet cherry 400 0,80€ 320€ Wild cherry peduncle 10 12€ 120€ Wild blackberry 40 1,60€ 64€ Cypresses branches and leaves 2.500 0,19€ 475€ Eucalyptus leaves (biological) 250 1,5€ 375€ Wild strawberry tree 400 0,8€ 320€ Touristic Hunting Fees 80€ Resin (Maritime Pine) 330 wounds 0,3€ 90€ Pasture (plus royalties on the grants) 30€ Chestnut tree (Chesnutt) 1.750 1€ 1.750€ Chesnutt tree (wood) 180 ton 130-150€/ton (mill gate) Cherry tree (slow growing) 150 ton 180€/ton (mill gate) Private Natural Park Concession Yet to be determined
Irrigated orchards (almond and nuts)
Investment Nucleus Product Area (ha) Price (€/kg) Production (kg/ha) NPV
IRR
Instalacion costs (€/ha) Maintenance Costs (€/ha/year) Initial 10 years Total FUNDÃO nuts 32,1 ha 3,80 € 3 368 2 676 835 € 24,6% 4 749 10 294
15 043
UNHAIS nuts 57,1 ha 3,80 € 4 222 6 363 607 € 29,9% 6 197 10 270
16 468
Sub-Total nut orchard 89,3 ha
3 917
9 040 443 € MOGADOURO almond 23,8 ha 4,30 € 1 850 1 222 366 € 28,4% 7 793 11 493
19 286
PINHEL almond 22,4 ha 4,30 € 1 900 1 643 075 € 21,2% 10 684 8 967
19 650
CASTELO RODRIGO almond 96,7 ha 4,30 € 1 850 5 839 567 € 19,4% 5 946 5 443
11 389
Sub-Total almond
142,9 ha 1 856 8 705 008 € Total irrigated orchards 232,1 ha 17 745 450 €
24,3%
37 Successful Investment
Market Conditions Country Conditions Partnerships Risk Management