1. How does THE FOREST go and how is the price of the treatment after 8 years?
After 8 years or after the completion of harvest, the partnership contract with Harfam has completed. We still cannot inform the price of maintenance and forest cultivation and management for the second/next harvest period as the price of seed, fertilizer and labor for next 8 years cannot be predicted. This is because of the uncertain inflation. But what is certain is that you do not need to pay for land purchase because the land is already available.
2. WHAT TYPES OF TEAK DOES HARFAM PLANT? IS IT GOLDEN TEAK?
The teak type cultivated by Harfam is not Golden Teak. The teak cultivated by Harfam is Solomon Teak which is the result of breeding collaboration with Biotech of BPPT (Agency for the Assessment and Application of Technology) with the inclusion of some of the latest technology. This type of teak has the following characteristics: 1) strong and abundant rooting system so the trees have very high absorption of nutrients and minerals; 2) rapid growth; and 3) having physical properties including wide leaves and straight unbranched trunk. With all the superior properties as mentioned above, within a period of 8 years, the teak trees can grow and reach the A-3 grade (having a diameter of 30cm-39cm, or a circumference of 94cm-122cm). And this type of teak is named HARFAM TEAK.
3. What if the harvest is not the same as what was presented?
Projection remains only a projection or estimation. Nothing in the future can be 100% predicted. This is also what applies to this business, like many other businesses out there. However, our projected profits are based on strong analysis and estimates.
- The needs of teak will continue growing
- The availability of teak keeps decreasing
- Valid data source on the rise of teak price in the market, that is data of Perhutani, shows that in the last 10 years, there was an increase of wood price by 15% on average per year. So, if we take the same number, the average increase of 15% per year for the next 8 years will result in the number that corresponds to the one we presented to the partners. Thus, the projected price is not just a forecast. Our projection of the teak price on the next 8 years can indeed be imprecise: it can be lower or higher. But it is very unlikely that teak price does not increase (it never happened in history that teak prices fell or remained the same within 8 years).
Finally, to keep in mind, this cooperation is a partnership which means that the success of harvest will also be the success of Harfam. Thus, Harfam will definitely make the best with all its skills, knowledge, and experience.
4. IS THE CERTIFICATE CLEAR AND CORRECT?
Harfam is very concerned about the clarity/validity of the land used for partners’ teak forest development. This is because Harfam also has 40% portion of the harvest.
In choosing the land to be used for partners’ teak forest development, Harfam has gone through several stages, including the checking of the permission and validity status of the land.
5. What guarantee will I get when I’ve paid the down payment or PAID IN cash?
Obviously, the partners will get a paper bill from Harfam. Partners will also get a partnership agreement with Harfam that is legally binding both parties. Then upon entering the growing season, which will range in November of the current year (e.g. 2013) to February the next year (e.g. 2014), the forest will start planting.
6. HAVE HARFAM HARVESTED (OR HAD SUCCESS STORY)?
Harfam still haven’t had its first harvest for the partners’ forests. The partnership just began in 2010, which means that the first harvest of partners’ forests will begin in 2018.
7. AFTER THE HARVEST, WILL THERE BE BUYERS?
It is certain that there will be buyers. And it is included as one of the guarantees given by Harfam to the partners. The wood demand is getting higher and higher while the supply is very limited. The warranty is not a promise without foundation. Currently, Harfam has already got a lot of prospective buyers who are ready to buy at optimal prices, including furniture industry, timber exporters, furniture craftsmen, and individuals.
8. Why the harvest IS halved? Doesn’t it mean that Harfam will receive too much?
In this partnership, the partner provides funds to purchase the forest package offered by Harfam. Partners do not need to provide energy and thoughts to do the work of forest development. Meanwhile, Harfam uses skills/expertise, effort and cost to conduct all the process of forest development until the harvest time. Partner does not need to take effort to cultivate, nurture, maintain the security, and harvest the woods. Harfam will do all of these process. So, it is fair, equitable and proportionate if Harfam gets the profit sharing of 50:40:5:5 from the harvest of the forest. And Harfam believes that if all of the forest cultivation and management process is conducted by people who do not have the skill and experience, the investment costs will be much greater and the result will not be as optimal as when it is all conducted by Harfam. This is affected by many factors, such as the good relationships with the local communities which can be included as social cost, the right fertilizer, the recruitments of workers and supervisors, etc.
And what also needs to be noted are the cost for Research & Development done by Harfam as a way to improve the quality of partners’ teak forests as well as the cost of social fundamentals surrounding the forest area, either in the form of direct or indirect social assistance to the people which is beneficial in terms of mutual benefit and security of the forest.
9. WHY DOES HARFAM SHARE THIS BUSINESS TO OTHER PEOPLE? IF ADMINISTERED ALONE, WE THINK THAT HARFAM WILL GET BIGGER PROFIT. WHY HARFAM DOES NOT COOPERATE WITH BANKS?
Yes, that is right. If Harfam does not share this information to the general public or if Harfam expands the business with financing from the Bank, Harfam will get all of the profits. However, it must be noted that the pace of business will not be as fast as when Harfam opens business opportunities to the wider community in the form of partnership. This business model is also performed by major and profitable companies such as McDonald’s, Indomart, Alfamart, etc.
In addition, Harfam sees that this business is remarkable. Harfam goal is to encourage all people to participate actively in the earth preservation. Harfam also feels the responsibility to share this business to the whole society so they can participate and feel the benefits of this business. Thus, the existence of Harfam on this earth can bring real positive impact for the environment and the improvement of the living standards and income of the people.
10. WILL THERE BE A MAPPING of land area THAT HAS BEEN PLANTED IN BONDOWOSO? CAN WE SEE THE MAPPING?
There will be the mapping of all the Harfam forest areas and every partner can see the mapping. However, the mapping of the forest area will be completed after the completion of the planting period and after the completion of the scoping process on partners’ forests.
11. WHY DOES HARFAM CHOOSE BONDOWOSO AS THE FOREST LOCATION? IT TAKES A LONG TIME FOR US TO VISIT OUR FOREST.
Harfam chooses Bondowoso as the location of forest development through field assessments in advance, which includes some factors like land suitability, security, economic value and social function.
- It is actually your benefit because you don’t need to take care of the forest by yourself. Harfam will do all the process needed for you. And to optimize the profits, Harfam will try to keep the cost as low as possible.
- Hardwood plants like teak do not need weekly visits because it doesn’t have visible development. However, if you want to visit the land every week, we are ready to give our services. The report of the forest development will also be sent via post once every year as mentioned in the letter of agreement.
With the development of technology, we take efforts to enable each partner to access their forests via internet. Thus, partners can see the forest online anytime and anywhere. Transparency is our priority in the partnership.
- Since the Dutch colonial era, Bondowoso has been used as the place to plant teak and coffee. It is because Bondowoso has proper rainfall, clear distinction between wet and dry seasons, and hilly demography with appropriate height (less than 900 m above sea level). And based on statistical data, within the past 200 years, there was never any natural disaster occurring in Bondowoso.
- From the economic side, the price of land in Bondowoso is relatively low. Thus, Harfam can keep the cost of teak forest development as low as possible.
- From the social side, given that Bondowoso is the region with lowest per capita income of the average education level in East Java, it is expected that the presence of Harfam and the partners can bring positive impact on improving the welfare and living standards of social community around the forest. So we can easily say that “it is better for us to have a teak forest managed optimally, with the least cost possible, the best experts possible, and the best security possible though the location is not close to our home rather than having a teak forest close to our home but planted on expensive land with more expensive but less optimal management”.
12. WHY ARE THE FORESTS NOT MADE ON THE SIDE OF THE ROAD?
There are several considerations in choosing the location or land:
- Harfam tries to develop and manage the partners’ teak forest with as low cost as possible. Again, this business is not the business of buying and selling land but this is a business of forest development and forest products utilization. Harfam focuses on how to generate the highest value of the harvest from the partners’ forests with as much result as possible but with as efficient cost as possible. The location on the side of the road will certainly have an impact on the increase in the cost of cultivation of the partners’ forests. Harfam strives to keep the forest management cost as low as possible by choosing land with lower prices. Obviously, the selection of this land is still based on the survey and field study in advance, either regarding the land elevation above sea level, the slope, soil pH, rainfall and land contours.
- The land selection is based on Harfam value to utilize unproductive lands and convert them into lands that will give environmental benefits, both economically and socially, one of which is through afforestation.
- The safety factor is also taken into account. If the land is located on the side of the road, where all vehicles have free access to pass here and there, the supervision for forest security will be more difficult and will need greater cost. Besides, the potential theft of wood by outsiders will also be higher.
One of the most important things in the forest cultivation is the access road to facilitate the harvest. Since harvest is not only the interest of the partners, but also the interest of Harfam (as Harfam will also obtain 40% of its profit-sharing), Harfam ensures access road on each of the partnership clusters which will be built 1-2 years before harvest (year 6 and 7) to ensure its security, as mentioned in the partnership agreement.
13. CAN WE SEE AND AUDIT HARFAM FINANCIAL STATEMENTS?
Harfam has partnership relationship with the partners. Both parties are bound by an agreement which contains the Rights and Obligations of each party. Harfam has an obligation to report the income statement to the shareholders of the company. Harfam is not yet a public company which means that Harfam does not sell the shares of the company to the public. Thus, automatically, Harfam has no obligation to report the company’s income statements to the public.
Harfam also has received STPW (Franchise Registration Certificate) which means that this company can franchise its business. To obtain this STPW, a company must have continuous profit, good system, and greet performance within 2 years.
14. THIS AGREEMENT TAKES 8 YEARS TO COMPLETE. THAT IS QUITE A LONG TIME. WHAT IF HARFAM FLEES?
Our goal in giving you the opportunity to visit our nursery and our sample forest sites is to change the paradigm of the society that thinks that all types of investment are vague. Those investments include gold investment, cattle, mining and even plantation. By having a visit in the location, you can directly watch and analyze how Harfam works and that what we are doing is professional and real. There is no reason for us to runaway with your money because:
– The funds are realized in the form of certified land, planted trees, fertilization, maintenance and security of your forest
– Harfam has 50-hectare forests as their own asset. And of course, Harfam still has also other assets in the form of properties.
– We have built this partnership since 2010. Up to 2013, Harfam and partners have cultivated hundreds of hectares of teak forest, created new job opportunities for hundreds of people and participated in stirring the economy through business activities and the taxes paid.
You have to note that Harfam will get 40% of the forest yield. The first harvest will be in 2018 and the yields are very great. It doesn’t make sense if there is a company or party that wants to pass or discard the benefits after spending a long time to build the business with their best. What you must consider now is joining Harfam and enjoying the harvest 8 years from now.