Renava Forestry – Timber plantations
Our first Eucalyptus Plantation was planted in late 2016. We were keen on diversifying our investments in land, but wanted to do so while still creating value instead of just hoping for the appreciation of the land to create our return. Thus we settled on planting Eucalyptus for timber.
From inception, we optimized the project such that out produce would fetch maximum returns when the mature trees were later sold for timber to the logging industry. That entailed having much higher costs than many would consider sensible for the planting of trees, with higher costs per tree over its entire growth cycle than average.
We were also looking to be self-sufficient with regards to poles and timber for our construction needs when we eventually got around to doing Real Estate development, so planting trees gave us multiple exit strategies as an investment and all options were very enticing to us.
Why do we invest in Tree Plantations?
Projected demand of Kenya's wood products
Source: Kenya Forest Service – Get full report here
Our market research indicated that there’s great financial potential in supplying wood for:
- Poles/timber ( for use in fencing, scaffolding, construction, furniture, transmission),
- Industrial firewood (Tea Processors, Textile Industries, Food Processors, and institutions like big schools, etc).
This is against a weak supply due to poor siting, spacing, seedlings, and woodlot management of most private plantations. The overwhelming majority of forest plantations are so poorly done that they fail to return anything worth writing home about (i.e. 6 – 10-year-old Eucalyptus trees whose only application is as ‘fito’).
And that’s before considering the various logging regulations put in place (rightly so) to protect natural forests. And given that the government is behind target on its commitment to attaining 10% and 15% forest cover by 2020 and 2022 respectively, we believe the regulations around natural forests will stay in place and probably even increase…
So what does Renava's Forestry unit do ?
Forestry Contractors & Managing Silvicultural Activities
There’s a growing market for tree products and a reducing supply pool to meet that demand – FACT. But like most businesses, seeing the financial potential is easy but actualizing that potential is the hard part – and you only make money if you do it right.
That is where Renava comes in. We are forestry contractors and through our forestry business, we own and/or manage the silvicultural practice on tree plantations. Our scope of work includes tree planting, herbaceous weed control, fertilization, precommercial thinning & pruning, commercial thinning & pruning, final harvests, harvests for habitat improvement, preservation, road construction, road obliteration, and prescribed fire, etc.
We can work together as:
- Investment Partners – You partner with us on one of our projects,
- Consultants – You contract us to plant and manage a tree plantation on your own parcel.