Innovations in Forestry Technologies

Technical innovation in forestry—the art and science of growing trees—can improve timber yields at a rate of from 1.3-3.1%/yr, depending on species and region [see our SFTIC presentation]. Most of the innovation underlying these gains has come from investments made either by integrated forest products companies or by government agencies.  Forest products companies are dis-integrating their timberland, and, as a consequence are no longer interested in investing in such technologies. Government agencies increasingly focus on non-timber ecosystem services of forests, and are therefore de-emphasizing timber-related R&D.  This has left a gap that private timberland investors can exploit. 

The investment opportunity centers on the development of improved genotypes and the management systems adapted to take advantage of the improved varieties.  The basic investment thesis is to substitute capital for land and time.  Rather than simply investing in the technology—as a venture fund would do—we see far greater value being created by investing in the underlying timberland assets and applying proprietary tree-growing and processing technologies. 

One example of this investment strategy is the GreenWood Tree Farm Fund (“GTFF”), a partnership between GreenWood Resources (www.greenwoodresources.com), IFIA and Malkin & Co.  GTFF focuses on intensively managed poplar plantations in Oregon and Washington, and takes advantage of GreenWood Resources proprietary poplar varieties and expertise in intensive plantation management.   Collins Companies (www.collinscompanies.com) is an investor in GTFF and is our manufacturing and sales partner.  IFIA is working to identify other such opportunities for investors.