Reforestation efforts supported by the Government of Costa Rica
The Costa Rican government, in a typically pragmatic approach to the problem, has offered excellent incentives for those interested parties who wish to assist in the reversal of the denuding of the country. For those individuals and their families who wish to invest in reforestation, the government offers tax free returns of dividends in addition to granting the investor the right to live and work here in Costa Rica. The status offered is called "Resident Investor Status", and the applicant, spouse, and children under the age of 18 receive their "cédulas" which are their personal identification booklets.
Tgricultural labor is readily available and responds quickly to training. Costa Ricans are very hard workers, and thus we find excellent value in our labor force. There are few labor unions in Costa Rica, and labor shortages and disruptions are few.
Tt is anticipated that the first commercial harvesting will commence when the trees attain the age of 20-25 years. This is the industry's recognized "cycle of growth". Thinning must take place at established intervals. No commercial value can be expected from the first thinning. It is anticipated that there will be a considerable value to the second thinning. The ultimate value remains in the final harvest.
Note: The objective of any plantation is to have the maximum volume of wood available for harvest at the end of the growing cycle. By means of thinning the remaining trees provide a real increase in volume of wood to be harvested. It is volume of cubic meters not the number of trees that is the objective.
The Risk Factors
1) LABOR RISK: AII fruit trees such as orange, pineapple, banana, macadamia, cashew nut, cardamom, pepper, etc., have fixed harvest times and therefore time specific high labor demand. This can be very risky for the owners of these kinds of plantations. Precious Wood by itself has a daily increment in value just by growing, and as it does not have a specific harvest time, therefore labor risks do not exist.
2) FIRE RISKS: Teak plantations have after the first year no fire risk because the trees are then fire resistant. Furthermore, the tree tops pack tightly and the shade from these trees creates a ground cover that prevents the growth of grass and any other undesirable plants that could be a source of fire.
3) FLOOD RISKS: The natural geography of Hacienda Oro Verde is situated so as to provide a natural drainage system with the exception of two areas which incorporate man-made drainage in order to ensure proper growing conditions.
4) INSECTS: In Costa Rica there has never been an insect attack causing damage to wood plantations.
5) HURRICANES: In Costa Rica there has never been a hurricane on the West Coast.
Tll wood inventories are being rapidly depleted, and none more so than the world's supply of teak. Supply and demand will put ever-increasing pressure on pricing which will, in effect, make historical increases of minimal value. Teak has enjoyed double digit price increases per annum in the past number of years do to the ever decreasing world wide supply.
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