Timber Business is Unique

Wood is the third most traded commodity in the world after crude oil and gas (€ 200 billion/year). While the production of raw gas becomes scarce, many business opportunities are available in the field of forestry. The World Bank Commodity Price Index shows that there are only 3 commodities having increased sale value over a period of 10, 20, and 100 years: Gold, Oil and Wood. Although gold still has good performance, the performance was not too good in the long span, between 1979 and 2004. Oil prices also tend to frequently fluctuate due to speculation in the future.

HTRG comparison underlines that investment of best quality wood outperforms the S & P 500 in the last half century, both in terms of profits and volatility. And a portfolio combined with wood works better than a portfolio without wood. Over time, wood grows with the increasing volume; this increased volume develops into several categories of value (from biomass to Industrial Plantation Wood that has been sawn into plywood). And you can enjoy the increase of the price of each unit of those categories in the long term.

(When someone raises a sheep, he will get the lambs continuously from time to time, but the lambs will not turn into cattle and sheep prices will probably remain the same. When someone manages whiskey shop over the years, the value of whiskey that has aged decades may turn into a better category, but will not increase the content/volume of the whiskey. Gold will not turn into a platinum or increase its weight.)

Timber Business is Unique

(When someone raises a sheep, he will get the lambs continuously from time to time, but the lambs will not turn into cattle and sheep prices will probably remain the same. When someone manages whiskey shop over the years, the value of whiskey that has aged decades may turn into a better category, but will not increase the content/volume of the whiskey. Gold will not turn into a platinum or increase its weight.)

Wood is the only business that grows by itself, grows naturally, and is not affected to any economic situation. Therefore, timber stocks tend to be in the best performance when stocks and bonds are generally depressed. And even timber prices are not too affected by the economic downturn compared to most other assets. You can delay the harvest of timber, with the confidence that your assets will bring (double) benefits in the near future. The case is different in the production process of a copper mine or oil well. You cannot postpone the production because if you do you will not get the benefit. You probably are one of the few people who find businesses in the field of innovative technology excel only for a while but the timber business will give different qualities and long-term security. Wood is an amazing business that will make you feel relaxed. And wood is a competitive product with high demand within 30 years

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Timber business is one of the long term businesses with the possibility of high profits. Over the last few decades, the demand for timber is increasing along with the increase of world population. The increase in wood market is also affected by the economic changes, one of which is the fact that China and India are now the country of consumers (consumer market) in the recent years. This confirms that there is a correlation between population growth and timber demand. There is no prediction of a decline in the demand of wood if we consider the world population in the next 30-60 years.

On the other hand, there is no doubt that the production of natural tropical forests will decline, according to REIDD, due to the incentive not to cut timber from the World Organization Bureau, law enforcement, and reforestation. But the preservation of the world’s forests will not be able to meet the demand of woods due to the rapid world population growth

 Another reason is that because the compensation of planting new forests can only be harvested within a period of 25-30 years. If in the next 30 years there are many people who know about this wood business and decide to plant trees and become your competitors, all those people are actually not your competitors because they plant after you.

Wood is also a renewable source. You cannot avoid the addition of CO2 but with your wood you can absorb CO2 generated by the businesses of other people. It means that wood business offers you to protect the world’s climate while at the same time it also gives you very nice profit projections for the long term.

However, timber business also has its risks. Therefore, in order to avoid these risks, you can count on experienced consultants like Harfam.