Bringing It Together: An Integrated Forestry Company

We’re pleased to announce that Planting Empowerment and all of our trees in the ground are now one consolidated company. Before, we had set up a separate fund, or vintage, for each of the new plantings because it was the standard operating model for direct investment forestry companies in Panama, and effective for getting us off the ground. We began to realize, though, that at our small scale, it was going to be costly to continue this approach. Combining all of our assets under one company will enable us to raise capital more efficiently, reduce our operational costs and increase our positive affect on our community forestry partners and shareholders.

The consolidation should deliver the following benefits:

• Reduce administrative expenses (only one set of taxes, lawyers’ fees, etc.)
• Increase our ability to obtain debt financing to finance expansion
• Increase liquidity options in the medium to long term for our shareholders
• Increase awareness and understanding of our Equitable Forestry model

We often refer potential investors to the Investing Alternatively website for a description of the different types of forestry investments. Per their description, we are no longer a “Tree Certificate” type of forestry company--where the investors only own the trees on a certain piece(s) of land--but now a “Tropical Timber Company”: investors are shareholders of a fully integrated timber business, and able to benefit not only from the timber produced in the plots, but also any other activity that adds value such as milling, drying, and production of other crops. As we grow, we will continue to increase equity of the business, but also plan to pursue subsidized debt in order to avoid diluting our shareholders’ stakes.

In the end, while the consolidation of the business is important from a financial perspective, it is no less important than the social and environmental returns that it should facilitate for all of our community of shareholders and partners.

Forestry Investment Options

Investors interested in adding alternative investments to their portfolio have a range of options when it comes to forestry investments. Each comes with its own characteristic risks, management style, and type of returns. The website Investing Alternatively does a good job of explaining the types of forestry investments available to retail investors.

Forestry technician stands with a teak tree in PanamaThe site and its descriptions provide an opportunity to describe how our investments are evolving as Planting Empowerment grows. The Forest Investment would be classified as “Tree Certificates” in the site’s definition, i.e. investors own all or a portion of the trees planted in specific timber plantation with a certain “vintage”. While the Tree certificates approach enables smaller investors to access forestry investing, the opportunities tend to be riskier because there is minimal liquidity, meaning the investor can’t exit the investment easily.

Planting Empowerment is in the process of consolidating our funds to operate more like the “Tropical Timber Company” described on the site. This means that we will merge our two original plantations and investors into a single entity. This consolidated company will have a larger capital base and multiple vintages of timber to smooth revenue streams.

We decided to take this route to give our investors more liquidity and regular revenues, and to decrease our administrative expenses from running multiple independent timber funds. Instead of gaining large dividends, investors will benefit from share appreciation and smaller dividends as we reinvest profits into planting more trees and crops.

Over the long term, we believe that operating as a private timber investment company makes sense for our investors and the growth of the company.

As always, before choosing any investment, investors should understand how to choose forestry investments and consider how they fit into their broader financial plans.

2011 in Review

2011 was another year of “growth” for Planting Empowerment, and also marked our five year birthday. Our investors’ trees grew taller and stronger, we improved our operations, added to the Planting Empowerment Advisory Board, and formalized and gained more recognition for our Equitable Forestry model.

Operationally, we continued to develop initiatives to increase benefits to our partner communities. Namely, we began planting staple crops between the rows of trees (agroforestry), to generate returns earlier and increase efficiencies in our operations. We expect the plantains and yams to begin producing yields next year.

In 2012, Planting Empowerment plans to plant another five hectares of trees, bringing our total area under cultivation to 25 hectares (65 acres). We will be working with a former Peace Corps colleague-turned-biochar-expert Alan Foster to jumpstart our program, based on the MIT biochar business plan (PDF) created for us in 2010. We will use the biochar to fertilize our own trees initially, but will possibly sell it to other forestry or agricultural operations in the future.

2011 also marked the year that we formalized our operating model into five principals and gave it a name: the Equitable Forestry model. We were honored to be part of a United Nations Development Program study on Biodiversity in Latin America and the Caribbean (PDF). Planting Empowerment will also be presenting the model at the Yale School of Forestry International Society of Tropical Foresters Annual Conference in January of next year.

Thomas P. Kearney III and Sherif Gamal joined our Advisory Board, adding needed experience in finance and marketing, respectively. Our updated website holds more information for investors and visitors about forest investments, impact investing, tropical deforestation, and rural development. And the Planting Empowerment blog continues to serve as source of trusted information for those interested in forestry and investing in forestry.

As more investors recognize the benefits of responsible forest investing, we’re confident that Planting Empowerment will continue to create positive impacts for our partner communities and surrounding ecosystems. We look forward to working with you towards that goal in 2012.

Darien, Panama trip in January

An investor stands with a young mahogany tree during Planting Empowerment's first investor trip in 2008As we do every year, Planting Empowerment is hosting a group of investors and interested people in Panama to tour the Darien and our operations. This is a great opportunity to learn about Planting Empowerment’s Equitable Forestry Model and see the first hand benefits of your investments.

We are offering trips to the campo (countryside) December 31st-January 15th. As we have already had numerous inquires, don’t hesitate to contact me at amparrucci@plantingempowerment.com if you’re interested in joining.

These trips are always informative and engaging for those involved. The last group to attend, a group of UN climate change negotiators, found the trip to be very relevant to their work.

As a social business, we use these trips to both generate interest in our investments and raise awareness of what those investments support. You’ll learn about the numerous challenges posed by tropical deforestation and see how we’re creating solutions that meet those challenges.

Interested to know what you'll see?

Learn more »