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Dear Belmontx;
Please reassure the lady whose email you posted that 15 to 20 year old teak can be sold on the world market - it just commands a lower price than does teak from older trees. Also, plantation teak from Central and South America typically commands a much lower price than does old growth teak from Asia.
My best guess is that teak from TATF's 17 year old trees should be worth ~ $1.50 to $2.50 per board foot on the open market, and teak from TATF's 21 and 25 year old trees should be worth $2.50 to $3.50 per board foot on the open market. These numbers are in 2008 dollars; I expect that the price for Central and South American plantation teak in future years will increase at or slightly above the overall inflation rate. TATF's teak trees are by no means worthless, they're just worth a lot less than TATF led investors to believe.
A1
An Interesting Quote
"The key point is that long-term forestry investments with uncertain returns lend themselves to overly optimistic (and unrealistic) investment projections, which are initially highly attractive but are likely to lead to investor disillusionment and bring the sector into disrepute in the longer term."
Julio Cesar Centeno, 1996
A1
http://www.panamateakforestry.com/English/GTI/controversies.htm
An interesting website.
I recently came across the website of a company that is offering a chance to invest in their teak plantations in Panama. There's some very interesting reading on this site. The company is called Panama Teak Forestry. They're selling shares in their company, rather than teak trees.
http://www.panamateakforestry.com/English/Investments_teak/Investment-Opportunities.htm
An excerpt: "Overall cost per hectare for the land, planting, and management through a complete harvest cycle is estimated at $8,400 per hectare of planted teak."
How much does TATF charge investors for the same hectare of trees?
I'm almost certain TATF uses a 3 meter by 3 meter spacing for their teak seedlings, which works out to 1100 trees per hectare. From TATF's latest order form, the price for this many trees will be 11*($3969 per 100 trees) = $43,659 per hectare - more than 5 times what another teak forestry company believes the true cost is.
Another page of Panama Teak Forestry's website is titled 'Teak Plantation Investment Controversies' http://www.panamateakforestry.com/English/GTI/controversies.htm
On this page, an expert in teak by the name of Julio Cesar Centeno is quoted as stating "[prices per hectare for investors should be] within the $8,000 to $16,000 range, pricing much above that is unreasonable profit taking by the plantation operators."
Centeno made that statement in 1996, so, accounting for inflation, a reasonable price range today would be perhaps $12,000 to $24,000 per hectare.
TATF is not doing its investors any favors.
A1
How much harm has been done by TATF?
On TATF's projections page, the following statement is made:
"Whether planning ahead for future college tuition or for your retirement...we would love to grow precious tropical hardwood trees for you!"
Imagine a couple that believed in TATF's projections, and invested money for their young child's college tuition in TATF a dozen years ago, expecting that the distributions would pay for college. Their child is now about to graduate high school, and this couple has received no distributions at all from TATF. Their child may not be able to attend college because of TATF's awful return on investment.
Heaven only knows how many families there are in this situation, but TATF claims to have over 3,000 investors.
Imagine a couple that believed in TATF's projections, and invested a substantial amount of their retirement savings in TATF a dozen years ago, expecting the distributions to help fund their retirement. It's now time for them to retire, but they haven't received any distributions at all from TATF. They face a life of hardship in their old age because of TATF's awful return on investment.
Heaven only knows how many couples are in this situation, but TATF claims to have over 3,000 investors.
Of course, all investments have risk, and projections are only projections - they're not guarantees.
On the other hand, it's only fair and reasonable for TATF to adjust their projections based on their experience. If you look at note 7 on their projections page, they state
"The 29 board feet per tree shown for the first thinning are our actual results from our first thinning of tens of thousands of young teak trees and is 11% ahead of the 26 board feet in our original projections."
So when TATF found better than expected growth rates for their trees, they adjusted their projections upwards. However, when they discovered they couldn't sell the lumber from their 7, 10, and, now, 13 year thinnings for anywhere near the price they'd projected, did they adjust the numbers downward? They did not!
Do you think this was honest? I do not!!!
It seems to me a lot of damage has been done and continues to be done to many people's lives by TATF's lack of honesty.
A1
More Inconsistencies from Steve Brunner
In post 165, Steve Brunner wrote:
"...we don’t yet know the percentage of the lumber from the 13 year teak thinnings that can go directly into the market, but a decent amount can, meaning it does not have to go through Raleo or our other value added processes."
In his summer 2007 Tree Owners News, he states:
"Some of the lumber from our 13-14 year thinning of Teak may qualify to go directly into the world market – selected heartwood from the first log for example, the log closest to the stump, because the lowest log on the tree has the fewest knots."
It may be true that some of the 13 year old teak can go into the world market, but how much, and at what price?
As I've mentioned in an earlier post, South American teak can be purchased from Premium Wood in Ecuador. (http://www.freewebs.com/mueblespremium/offers.htm) Anyone can obtain a quote from Premium Wood by sending a blank e-mail to
premium1@sendfree.com.
Premium Wood quotes the following prices for teak (in container load quantities):
Grade A (100% heartwood 1 side): $1400/m3 (= $3.30 per board-foot)
Grade B (80% heartwood/20% sapwood): $1100/m3 (=$2.59 per board-foot)
Grade C (60% heartwood/40% sapwood): $800/m3 (= $1.89 per board -foot)
Premium Woods has stated that all of their teak comes from 18 year old or older trees.
If you look at TATF's projection table, they use an estimated selling price of $6.40 per board foot for their 13 year old teak.
The average market price for the 'selected heartwood from the first log', however, is more likely to be the $3.30 per board foot that Premium Wood charges for their grade A wood. This is about 50% of the price TATF uses in their projections table.
I estimate that at most 25% of the 13 year old trees' wood will be 'selected heartwood from the first log', so the amount a tree owner might receive from selling the lumber into the open market is 0.25*($3.30/6.40) = about 13% of what TATF has projected for distributions from the thinning of 13 year old teak. Further distributions from this lumber will have to wait many years until Raleo buys them, as has been discussed previously. Once again, reality falls far short of TATF's projections.
A1
A brief history of Raleo.
Steve Brunner has made much of the role that Raleo will play in providing TATF's projected returns to purchasers of his trees. I thought it might be useful to give a brief history of Raleo. This information is drawn from TATF's Tree Owners News, and Steve Brunner's posts on this board.
Summer 1999 - "... we are starting a new arm of our company, Raleo Design™..." (quoted from Summer 1999 Tree Owners News).
Summer 2001 - "...our plans for Raleo Design™ near fruition" (quoted from Summer 2001 Tree Owners News).
Spring 2002 - "Our Raleo™ production facility in San José is up and running. ... We have received enthusiastic compliments from private early viewings and are very excited to enter the market in late June or early July." (quoted from Spring 2002 Tree Owners News)
Summer 2003 - "Raleo has begun its production and sales of beautiful furniture and art..."
Summer 2004 "Raleo ... is moving strongly forward." (quoted from Summer 2004 Tree Owners News).
Summer 2007 "Raleo's beautiful products are now in luxury homes, condominiums, yachts, and commercial and hospitality installations throughout the world..." (quoted from Summer 2007 Tree Owners News)
Spring 2008 Almost nine years after Raleo was first mentioned, Steve Brunner states (in post 118 on this board)
"in fact in the last 3-1/2 years, starting from zero in mid 2004, Raleo has purchased 338,000 board feet" He explains the apparent contradiction between this statement and his statement in the Summer 2003 Tree Owners News as follows (post 136) "Raleo had begun production and sales in 2003, just as we wrote in our Summer 2003 Tree Owners News, but in retrospect we now realize that it was in a minimal way compared to later." A less charitable explanation might be that Steve Brunner bends the truth to suit his purpose.
So, it's taken 9 years from the date Raleo was first announced for them to purchase only a small fraction of TATF's wood. Many tree owners have waited many years past the date when they were projected to receive distributions from TATF, and they have still received nothing.
In his summer 2007 Tree Owners News, and post 165, Steve Brunner mentions working with a high volume retailer/catalog seller. No details or dates are given. The question is, given the past record of Raleo and TATF, how much faith and hope should you put in Steve Brunner's latest announcement?
A1
Dear JRWATT24;
I must say, you are very easily satisfied.
It appears from your post that you have received a distribution from the seven year thinning of your 1992 teak, but have not received any distributions from your 1993 or 1995 teak. The problem is you have received vastly less than TATF has projected you would receive.
According to TATF's projections, you should have already received payment from the 7, 10, and 13 year thinnings of your 1992 and 1993 teak, and should have received payment from the 7 and 10 year thinnings from your 1995 teak.
So, you should have received $13,771 per 100 trees of 1992 and 1993 teak you purchased, and $4419 per 100 trees of 1995 teak you purchased.
You have actually received ~ $1600 per 100 1992 teak trees you purchased, and nothing for the other trees.
To summarize in tabular form.
Proj. Actual
Dist. Dist
By By
Year Now Now
Trees (per100 (per100 Actual/
Planted trees) trees) Proj.
1992 $13,771 $1,600 12%
1993 $13,771 $0 0%
1995 $4,419 $0 0%
Sum $31,961 $1,600 5%
A useful link...
http://www.ic3.gov/
A1
Dear Steve;
Once again, you're resorting to the selective use of facts.
You have publicly stated that you have planted more than 2 million trees. In my estimates, I used 80% for the percentage of trees that you have planted that are teak. You have said this assumption is grossly wrong, but refuse to provide the actual percentage. In post 165, you discuss at most 400,000 trees (20% of your plantings) that TATF has planted, and say that almost none of them are teak. The problem is that you have not disclosed what the other 1.6 million trees (ie, 80% of your plantings) are. If you really want to convince me, and the other readers of this board, you need to provide a complete accounting, not just use some cherry-picked facts.
A1
Dear Steve;
Your continued refusal to provide any detailed credible information to refute what I have written makes me all the more certain that you have something to hide.
A1
Dear Steve;
If you provide me with the names and contact information of the people who have investigated you, I will be happy to contact them and discuss TATF with them. Until I do so, I cannot possibly comment on others conclusions.
A1
Dear Steve;
My statements are not defamatory unless they are substantially untrue. I believe everything I have stated on this board is substantially true. I have provided volumes of facts to support my position. I am assuming of course, that the information presented on your website is factual, as the majority of information I have used to arrive at my conclusions was drawn directly from TATF's website. As I have stated before, if you provide detailed credible information showing why my statements are substantially incorrect, I will correct or withdraw my statements.
Absent any such information from you, my posts will remain as they are.
In particular, you have said that only a portion of the wood TATF is growing is teak. I have reduced my calculated results by 20% to account for this. If the percentage of trees TATF has planted over the past 16 years that are not teak is different from 20%, kindly provide this information, and I will revise my calculations.
A1
My contact information.
For those readers of this board who may wish to contact me privately, my e-mail address is:
deanwins@yahoo.com
Sincerely,
Dean Barker (A1)
Continuing on from my post #141, I also realized that I could calculate how much lumber from thinnings would be ahead of the thinned lumber from a purchase of 100 teak trees today. These teak trees would have their first thinnings in 2015, so I calculated how many board feet of teak from thinnings ought to have been produced by TATF by 2014. Before I show that calculation, I thought I would quote from TATF's Summer 2007 Tree Owners News
"For new and prospective tree owners, our notes to projections on our website say with respect to distributions that “An additional year or more may be required for the earliest thinnings” because young tropical hardwoods are unknown in the world markets.
For our most recent plantings our assessment is that that note won’t be necessary because Raleo will likely reach the point where it is utilizing the young lumber as fast as or faster than it comes from the farm well before the trees now being planted reach the age of their first thinning. "
Here's my calculation on how much lumber from thinnings TATF ought to have produced by 2014
Tree Number Board Number Board Number Board Total
Ages of 7Yr Feet of 10Yr Feet of 13Yr Feet Board
When Old from Old from Old from Feet
Year Trees Thinned Trees 7 Yr Trees 10 Yr Trees 13 Yr From
Plntd Plntd (Years) Thinned Thin Thinned Thin Thinned Thin Thins
1992 60,000 7,10,13 15,000 4.4E+05 10,800 6.0E+05 9,000 1.1E+06 2.1E+06
1993 170,000 7,10,13 42,500 1.2E+06 30,600 1.7E+06 25,500 3.0E+06 6.0E+06
1994 170,000 7,10,13 42,500 1.2E+06 30,600 1.7E+06 25,500 3.0E+06 6.0E+06
1995 120,000 7,10,13 30,000 8.7E+05 21,600 1.2E+06 18,000 2.1E+06 4.2E+06
1996 70,000 7,10,13 17,500 5.1E+05 12,600 7.1E+05 10,500 1.2E+06 2.5E+06
1997 70,000 7,10,13 17,500 5.1E+05 12,600 7.1E+05 10,500 1.2E+06 2.5E+06
1998 160,000 7,10,13 40,000 1.2E+06 28,800 1.6E+06 24,000 2.8E+06 5.6E+06
1999 170,000 7,10,13 42,500 1.2E+06 30,600 1.7E+06 25,500 3.0E+06 6.0E+06
2000 135,000 7,10,13 33,750 9.8E+05 24,300 1.4E+06 20,250 2.4E+06 4.7E+06
2001 125,000 7,10,13 31,250 9.1E+05 22,500 1.3E+06 18,750 2.2E+06 4.4E+06
2002 125,000 7,10 31,250 9.1E+05 22,500 1.3E+06 0 0 2.2E+06
2003 125,000 7,10 31,250 9.1E+05 22,500 1.3E+06 0 0 2.2E+06
2004 125,000 7,10 31,250 9.1E+05 22,500 1.3E+06 0 0 2.2E+06
2005 125,000 7 31,250 9.1E+05 0 0 0 0 9.1E+05
2006 125,000 7 31,250 9.1E+05 0 0 0 0 9.1E+05
2007 125,000 7 31,250 9.1E+05 0 0 0 0 9.1E+05
Total Trees Planted 2,000,000 Total Board Feet 5.3E+07
multiply by 0.8 to account for non-teak trees. 4.2E+07
More Disturbing Calculations about TATF
I hate to do this to the suffering TATF tree owners on this board, but I've done some more calculations that indicate the situation at TATF is substantially worse than I had thought.
I realized that I could calculate the number of board feet of lumber from thinnings that TATF should have produced by now, using TATF's projections http://www.tatf.com/projections.htm and information from the various Tree Owners News that showed how many trees had been planted per year. Note that the Tree Owners News did not provide the numbers of trees planted for every year, so I had to interpolate for some years. This will lead to some uncertainty in the final number, but not enough to make a meaningful difference in the conclusions that can be drawn from the calculation.
Here's the calculation:
Tree Number Board Number Board Number Board Total
Ages of 7Yr Feet of 10Yr Feet of 13Yr Feet Board
When Old from Old from Old from Feet
Year Trees Thinned Trees 7 Yr Trees 10 Yr Trees 13 Yr From
Plntd Plntd (Years) Thinned Thin Thinned Thin Thinned Thin Thins
1992 60,000 7,10,13 15,000 4.4E+05 10,800 6.0E+05 9,000 1.1E+06 2.1E+06
1993 170,000 7,10,13 42,500 1.2E+06 30,600 1.7E+06 25,500 3.0E+06 6.0E+06
1994 170,000 7,10,13 42,500 1.2E+06 30,600 1.7E+06 25,500 3.0E+06 6.0E+06
1995 120,000 7,10 30,000 8.7E+05 21,600 1.2E+06 0 0 2.1E+06
1996 70,000 7,10 17,500 5.1E+05 12,600 7.1E+05 0 0 1.2E+06
1997 70,000 7,10 17,500 5.1E+05 12,600 7.1E+05 0 0 1.2E+06
1998 160,000 7 40,000 1.2E+06 0 0.0E+00 0 0 1.2E+06
1999 170,000 7 42,500 1.2E+06 0 0.0E+00 0 0 1.2E+06
2000 125,000 7 31,250 9.1E+05 0 0.0E+00 0 0 9.1E+05
Total: 1,115,000 Total Board Feet 2.2E+07
multiply by 0.8 to account for non-teak trees. 1.7E+07
Steve;
As I have stated before, if you can demonstrate that any statement that I have made is false or incorrect, I will correct and/or withdraw that statement. However, you continually refuse to provide detailed information to refute what I have written. Until and unless you provide such information, my posts will stay as they are.
A1
Dear Steve;
In post #130 you stated "Raleo began production and utilizing wood in mid-2004..."
However, in your summer 2003 Tree Owners News, you stated
"Raleo has begun its production and sales of beautiful furniture and art, and from those sales, purchasing tropical hardwoods from our early thinnings."
http://www.tatf.com/htm/tree_owners_news/18_summer_2003.htm
Were you telling the truth in your post #130, or were you telling the truth in your summer 2003 Tree Owners News? It seems both statements cannot be true.
A1
Dear Steve;
First, a few facts that hopefully we both can agree on:
1) In 2008, TATF will produce about 1 million board feet of lumber from its thinnings.
2) In 2008, Raleo will purchase 150,000 to 200,000 board feet of lumber from TATF thinnings.
3) By the end of 2008, TATF will have a stockpile of about six million board feet of unsold lumber from thinnings.
(Please feel free to provide more accurate numbers for the above three items).
4) Taking 1), 2), and 3) above into account, Raleo's purchases of TATF lumber will have to increase very substantially before Raleo is purchasing all of the lumber from TATF thinnings. Until this substantial increase occurs, the stockpile of unsold lumber from TATF thinnings will continue to increase. This several-fold increase in purchases by Raleo may require several years to accomplish, if it ever happens at all.
5) Raleo has made no guarantee to TATF or to TATF investors that Raleo will buy any lumber from TATF.
6) Raleo has made no guarantee to TATF or to TATF investors as to the price it will pay for any lumber it buys from TATF.
My assumption that Raleo would buy a constant 300,000 board feet per year was a simplifying assumption - assuming a constant purchase rate makes the calculation much easier. However, it does not imply that I expect no growth in Raleo purchases. As mentioned in earlier posts, I estimated that Raleo purchased an average of 100,000 board feet per year of TATF thinnings from 2003-2008. I also stated that I assumed that Raleo would purchase 300,000 board feet of TATF thinnings per year from 2009 onwards. I did not expect a step function jump in purchases from 2008 to 2009, followed by no increase after that. Rather, I assumed the purchases by Raleo will grow gradually each year for several years, and then level off, such that the average purchase of lumber by Raleo from TATF will be about 300,000 board feet per year over many years.
You may disagree with this assumption, however, as Belmontx pointed out, you have provided no assumptions or estimates of your own as to how fast Raleo's purchase of TATF thinnings will grow or how long it will take Raleo's purchase rate to equal or exceed TATF's production of lumber from thinnings. These items are of critical importance in determining the projected rate of return for an investment in TATF, and, as such, in the interest of full disclosure, you should have absolutely posted these estimates and assumptions on your website.
I invite you to post a detailed projection of these items, so that everyone on the board can compare your projections and mine, and judge for themselves.
A1
Steve;
If you read my post, the 35 year number came from a calculation based on a certain set of assumptions, which may or may not be correct, as is the case with all assumptions. I think any unbiased reader of my post would appreciate this.
In your post, you state 'If we maintain Raleo's growth rate, which is likely in the near term, and may accelerate, Raleo will be consuming 23 million board feet of lumber by the time the 2008 teak have completed their 7th growing season..."
It's a rather big assumption that Raleo will purchase in 2015 more than 100 times the lumber it's purchasing today. You are free to make your assumptions, and I am free to make mine. The readers of this forum are free to draw their own conclusions.
A1
Steve;
In my posts, I have stated clearly that I was using assumptions, and estimates in my calculations. The starting point for these calculations, estimates, and assumptions is the information you have listed on your website. I have provided substantial detail in my posts. If you have concrete information that demonstrates to my satisfaction that any of the details in my posts are incorrect, please provide this information, and I will correct these details. If changes in these details substantially alter the results of my calculations, or the conclusions I have drawn from my calculations, I will change my conclusions and calculation results as well.
Absent any concrete information from you that errors exist in my posts, I will leave them as they are.
A1
Steve;
Please provide a detailed reply showing which of my facts, assumptions, and calculations are incorrect. I will be happy to correct any errors in my posts, but will not make any corrections solely based on your unsupported assertion that my facts and assumptions are 'grossly wrong'
A1
Steve;
The facts I used in my analysis came primarily from your website. I have supplemented these facts with calculations and assumptions to arrive at my conclusions. I believe these calculations and assumptions to be fairly accurate - far more accurate than the projections you have posted on your website. Of course, you could provide the actual, complete, and accurate set of facts yourself, but I'm sure you won't do that, as you would prove my basic point that you are grossly overstating the likely returns from an investment in TATF.
In regards to the one specific item you mentioned, I wrote:
'Board Feet of TATF Thinnings Purchased Per Year By Raleo 2003-2008 100000'. This clearly states 'Per Year' The total purchases I'd assumed in my calculations is 600000 board feet from the years 2003-2008 (6*100000 = 600000).
In your reply, you say that Raleo has purchased 338,000 board feet in the past 3 1/2 years. This works out to very close to 100,000 board feet per year, which is the number I had assumed.
A1
Actually, I made a mistake!!
In post 113, I calculated that TATF should have paid out $11.8 million by now to the people who bought their trees, as compared to the $0.85 million Steve Brunner says they have paid. The situation is actually much worse. My corrected calculation shows that TATF should have paid out $43 million to investors by now. According to TATF's projections, they should have paid out fifty times as much as they have actually paid.
The calculation is as follows:
According to the projections on the TATF website, http://www.tatf.com/projections.htm, they will pay out $1615 per 100 trees purchased after the seven year thinning, $2804 per 100 trees purchased after the 10 year thinning, and $9352 per 100 trees purchased after the 13 year thinning. These projected payouts have been unchanged on TATF's website for many years.
So for trees that have undergone all 3 thinnings, they should have paid out $1615 + $2804 + $9352 = $13771 per hundred trees. For trees that have undergone their 7 and 10 year thinnings, they should have paid out $1615 + $2804 = $4419 per hundred trees. For trees that have only undergone their seven year thinnings, they should have paid $1615 per hundred trees.
The numbers are tabulated below:
Year Trees Thin- TATF TATF
Planted nings Proj Proj
Pymt Pymnt
Per 100 By
Trees Planting
Year
1992 60000 7,10,13 $13,771 $8,262,600
1993 170000 7,10,13 $13,771 $23,410,700
1994 170000 7,10 $4,419 $7,512,300
1995 120000 7,10 $4,419 $5,302,800
1996 70000 7,10 $4,419 $3,093,300
1997 70000 7 $1,615 $1,130,500
1998 160000 7 $1,615 $2,584,000
1999 170000 7 $1,615 $2,745,500
Sum: $54,041,700
How much should TATF have paid out by now?
Answer: $11.8 million
Steve Brunner has stated that TATF has thus far paid out $850,000 in distributions to people who bought TATF trees. I thought it would be interesting to calculate, based on the projections on the TATF website, and the number of trees planted per year, which can be found from the tree owners news (also on the TATF website), how much TATF should have paid out by now.
Assuming 80% of the trees planted from 1992 through 1999 (the last year from which it's reasonable to expect distributions by today) are teak trees, my calculation indicates TATF should have paid out $11.8 million to investors by today. This is almost fourteen times the amount TATF has actually paid out. TATF makes no projections for the non-teak trees, so it's not possible to include those trees in the calculation.
A1
Carpet;
It's quite possible that TATF has paid out $850,000 to its early investors (those who purchased 1992 and 1993 teak trees). My posts were referring to my calculations of projected returns if you buy teak seedlings from TATF today.
A1
What rate of return will you have if you Buy 100 TATF teak seedlings today?
I've already established that the time for Raleo to buy the thinnings will be extremely long (see post 106), so I decided to calculate the rate of return assuming all lumber is to be sold into the open market. The calculation is tabulated below.
Tree No. Number Useable Tree Volume Useful Value/ Value Gross Hrvst Net Mgmt Net Cum.
Age Trees Trees Tree Diam. Per Board Useful Per Hrvst Costs Hrvst Fee Profit Net
Bef Cut Height (In) Tree Feet/ Board Tree Profit Profit Profit
Harvest (ft) (ft3) Tree Foot
0 100 -4,796 -4,796
7 85 25 20 7 3.2 19.2 $0.50 10 240 0 240 0 240 -4,556
10 69 18 25 9 6.6 43.7 $0.75 33 590 0 590 0 590 -3,965
13 42 15 32 11.5 13.8 91.4 $0.95 87 1,302 411 891 0 891 -3,075
17 27 10 35 14 22.4 161.6 $2.12 343 3,429 565 2,864 0 2,864 -211
21 17 6 39 16.5 34.7 270.9 $2.83 767 4,600 731 3,869 232 3,636 3,425
25 11 11 41 19.5 51.0 397.7 $3.30 1,313 14,446 2,406 12,040 722 11,318 14,743
How long will it take for Raleo to buy your TATF thinnings?
Answer: About 35 years!!!
If you buy 100 Teak seedlings from TATF today, how long will will it be until Raleo buys the lumber from the first thinnings of your trees (which will occur when the trees are 7 years old)?
I thought I'd calculate this time, based on information in the Tree Owners News, which are on the TATF website. Some of the numbers are estimates, but the calculations give a reasonable idea of how long you'd have to wait.
Board Feet from 1993 TATF Thinnings (harvested by 2002) 600000
Board Feet Produced by 2004 2000000
Board Feet Produced Per Year from TATF Thinnings 2002-2004 700000
Board Feet Produced Per Year from TATF Thinnings 2005 onwards 1000000
Board Feet from TATF Thinnings Produced by end of 2008 6000000
Board Feet of TATF Thinnings Purchased Per Year by Raleo 2003-2008 100000
Board Feet of TATF Thinnings Purchased Per Year by Raleo after 2008 300000
Stockpiled Lumber from TATF Thinnings by 2015 (Board Feet) 10900000
Years after First Thinning of 2008 Teak Trees Required for Raleo to Purchase Lumber from Thinning 36.33333333
Note that the calculation does not include the 7 years required for the trees to be ready for their first thinnings. So, if you purchased 100 Teak seedlings from TATF today, you should expect to receive payment for the lumber from your first thinnings in 2051!!! This calculation takes into account the fact that Raleo will buy TATF lumber in the order it was produced.
The key variable in the above calculation is how much TATF lumber from thinnings Raleo buys in the future. I've assumed that Raleo will buy 3X the amount of TATF lumber per year as Raleo has apparently bought per year in their first 6 years of operation. Even if Raleo buys 1 million board feet of TATF lumber per year from 2009 onwards (10X their current purchase level), you'd still have to wait for six years after the first thinning of your 2008 Teak trees (thirteen years total) for Raleo to buy the lumber.
A1
Steve - Stop Lying!!!
Steve, in your post you wrote:
'Our first-thinning teak distributions equal $1,623 per original 100 teak trees, which is actually a tiny bit above our projections'
You conveniently forget to mention that you projected your first cash distributions to occur 7 years after an investor had purchased seedlings, but many, such as LBL, have waited 15 years and still not received any cash distributions from your company.
Lying by omission is still lying.
A1
Another chat board with unhappy TATF customers.
All;
Here's another chat board I've found with unhappy TATF customers. I've encouraged them to post on this board as well.
A1
http://www.homediscussion.com/showthread.php?t=155849&page=2&highlight=tatf
Belmontx, I agree with you 100%
Steve Brunner is not, and has not, presented an honest and reasonable picture of the likely returns from an investment in TATF.
The actual return seen by investors in TATF has been far below the returns projected by Steve on TATF's website, but he does not post any numbers on the actual returns.
It's exceedingly dishonest to continue to project returns that are far higher than those seen by prior investors in TATF.
Brunner talks about how Raleo will be able to buy lumber from TATF thinnings for much higher than the market price, thereby justifying his projections. What he doesn't mention is that to keep up with TATF's wood output, Raleo would have to increase its purchases of TATF wood by more than 2000% above current levels. The likelihood of this happening is very low.
Steve - stop misleading people!!!
A1
Steve;
Thanks for your reply. I have to say however, that your reply seems in conflict with some of the statements you have made in your 2007 Tree Owners News, a portion of which I've reprinted here
"For each thinning they [TATF foresters] review all of the trees and mark every single tree to be thinned. It is an amazingly time-consuming process as they go through every field and evaluate all of the trees to determine their degree of competition, as well as which trees are likely to later produce the greatest quantity of high-quality lumber, and which trees should be eliminated to allow the superior trees to continue their growth.
They determine the desired remaining percentage using a number of evaluations, including the rate of growth, the crown closure, and the basal area per hectare. In each thin they mark the smallest and least desirable trees to be removed and leave the largest and best to remain for later harvest."
Steve, you informed me that my trees had been thinned in July of 2007. If in fact the above very thorough process was carried out before my trees had been thinned, it seems to me that you would already have the information I requested (mean diameter at breast height, and mean tree height).
A1
1BL;
Please share your experiences. I would be very interested to hear them.
Thanks,
A1
Avan;
Welcome to this board! Please keep us updated on your experiences with TATF.
A1
Bobwins;
Thanks for the info. Makes me wonder why EPM share price has moved so little as gold has taken off.
A1
One problem that I see with EPM is that they've hedged 443,000 ounces of gold production at $574 per ounce. This amounts to the first three years of production from the mine. So, it's not surprising their share price hasn't risen with the increase in the price of gold. It has moved up a bit with the recent increase in copper prices, as the mine's copper production is unhedged.
A1
Dear IPK;
Please refer any other purchasers of TATF trees you know to this board, and encourage them to share their experiences. In this way, we can all learn, and help each other improve our investment results.
Thanks,
A1
Dear Steve;
I certainly don't expect you to measure every single tree. However, you don't need to do that. Measuring a sample of 5-10% of the trees should be enough to establish the average size of the trees in a given plot. This is basic information that I would expect any well-run forestry operation to be able to provide.
Further, my unhappiness was in regards to the lack of response to my question. If TATF doesn't have the information I requested, you should respond with an e-mail saying that you don't have it, rather than not responding at all. I waited over two months for a meaningful response to my questions (as opposed to a simple acknowledgment that my e-mail had been received) - this is far too long!
A1
Oxigen Investments looks like another lousy investment
After seeing the post by I_Bayliss on this board, I checked out their website. Their projections are vastly optimistic. In their projections, they claim that they can sell lumber from 6, 10, 14, 18, 22, and 25 year old trees. In this respect, they're similar to TATF, who claim they can sell lumber from 7, 10, 13, 17, 21, and 25 year old trees.
The reality is that there's almost no market for teak trees younger than 15 years old, and most buyers prefer lumber from trees at least 20 years old. The price that can be gotten for lumber from young trees is very low. If you doubt this, read TATF's Tree Owners News. For example, in the summer 2007 Tree Owners News, they state:
'The age at which the wood becomes adult varies from species to species. Teak for example begins to exhibit adult characteristics at about 15 years of tree age. Some of the lumber from our 13-14 year thinning of Teak may qualify to go directly into the world market – selected heartwood from the first log for example, the log closest to the stump, because the lowest log on the tree has the fewest knots.
After the trees reach an age that the hardwoods have the internationally recognized characteristics, the lumber can be dried and sold directly into the market without any additional processing required.
Prior to that age however, unless the young lumber is put to a higher value use, it can be only sold at a low price on the local market, if at all'
http://www.tatf.com/htm/tree_owners_news/20_summer_2007.htm
Without the revenue from the early thinnings, an investment in teak, or other tropical hardwoods, is much less lucrative than the projections at both TATF and Oxigen would lead you to believe.
Investor Beware!!
A1
Dear IPK;
My experience is very similar to yours. TATF was eager and diligent in responding to my e-mails before I invested, but after they had my money, the story was very different. My most recent request for information (about the size and condition of my trees) was on Oct. 17. I received a reply acknowledging my request, and promising to 'respond shortly' on Nov. 15th. It is now the 22nd of December, and I still haven't received the information I requested. I'm sure Steve Brunner will come up with another pleasantly worded excuse to this e-mail, but excuses are not a substitute for results.
IPK, please keep the board updated on your experience with TATF, as I will.
A1
Bob;
My understanding is that with a small mines permit, they can only mine 72000 tonnes/fiscal year. They can set the end of their fiscal year for the mine whenever they want, but once they've set it, they have to stick to it. So, they can mine the initial 72k tonnes, declare the end of the fiscal year, and mine another 72k tonnes in the second fiscal year. The problem is what happens after that. If they still only have a small mines permit, they have to wait to the start of the 3rd fiscal year to do any more mining.
At 1000 tonnes/day mill capacity, they should reach the 72000 tonne limit by February or March, depending on how fast they can ramp. They can then end the mine's fiscal year, and start the next fiscal year. They should reach the small mines permit limit for the second fiscal year by June or July. If they haven't received a regular mine permit by then, they'll have to stop mining until they receive a regular mine permit, or until the 3rd fiscal year starts, whichever comes first. In this case, in regards to the regular mine permit, no news is definitely not good news.
A1