planbtotrade wrote:
'I never mentioned anything about "total costs to final harvest"'
I didn't say you did, rather I said that's probably what most people think you said. In any case, the article discussed cost to positive cash flow from thinnings, which assumes thinnings are sold from which positive cash flow can be derived. We know TATF hasn't sold many thinnings and hasn't yet achieved a positive cash flow, so the costs to positive cash flow at PanAmerican Woods don't apply to TATF up to this time.
Basically, you've asked two questions: where did all the remaining money go, and why will the future be any different.
First of all, we can place an upper limit on the revenue of trees sold. TATF has said they have planted 2,000,000 trees (but they never said how many they sold; many were planted never to be harvested or in their own account). Anyway, the upper end of your estimated revenue was 3000 tree owners times 1000 trees each comes to 3,000,000 trees sold, which is at least 50% too high and could easily be two or more times the number of trees sold.
As for where all the money went, in addition to the items on your list, TATF also bought land with rain forest on it, land to be planted with trees never to be harvested, as well as land on which they planted trees for their own account. All that land, and planting on it, must have cost a significant sum, but I can't estimate how much because I have no details on any of it.
Of course, answering the question of where the money went just raises the next question: why wasn't that money spent on the care of each tree owners' own trees, or saved for their future care? Nothing in the contracts we signed authorized TATF to spend our money on their trees or on rain forest, etc. (Though nothing in the contracts prohibited it, either. Their contractual obligation to us is the ongoing care of our trees to the same standards as are applied to their own trees.)
That's where the anticipated cash flow from the sale of early thinnings comes in. I have not seen the TATF business plan, but it is inconceivable that it didn't anticipate timely revenue from the sale of early thinnings, and from that TATF would have the money to care for tree owners' trees in their later years. In other words, I suspect that TATF essentially borrowed the money tree owners paid for the later years care of their trees to buy land, etc., expecting to repay that from revenue received selling early thinnings, both of their own trees and with the 6% care and management fees they will charge us, and the fees charged for milling our lumber. Presumably everything would have worked out perfectly well, just as long as there was sufficient revenue from the sale of early thinnings to keep things going. There hasn't been that much thinning revenue, however, and that's where everything started to fall apart.
But, there were and are other options, like bank loans, selling property, selling trees from the Brunners' personal account, selling Raleo's products, selling some as yet unannounced high volume value-added products, or selling new trees. We've seen evidence of a number of these activities at TATF. The final option is to do little but wait for the oldest trees to grow large enough until they have value in the international market.
Those options get to the answer, such as it is, to your second question: why will the future be any different? Whether or not any other option ultimately works, the final fail-safe option of waiting for the oldest trees to be large enough for sale in the international market should always be there. That is clearly not the ideal option, but it should always be available. Meanwhile, there is the possibility, especially given that the recession will eventually end, that some new value-adding processes will eventually come online and be successful, or that the continuing efforts to sell some of the Brunners' older trees, or new trees, or property, or whatever, will be successful. TATF had a cash flow problem before the recession began, but the recession has surely only made it worse. At least now, as the recession is ending, the oldest trees are approaching the age where they should have value on the international market.
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