Caption: 6 year old teak trees beside the nursery in Tova, Ra.
Teak (tectona grandis) is a tree that has joined the category of ‘green gold’ for Fiji alongside pine and mahogany because of its high timber value. Teak is a deciduous tree dominant in mixed hardwood forests.
The natural oils in teak makes it water well as termite resistant therefore durable and not given to rot placing it as a highly desirable timber for boats, yachts as well as indoor and outdoor furniture.
Teak trees were first planted in Fiji by the colonial administrators in the 1940s and have since proliferated around the country as trials by the department of forestry until 2006 when brothers Paul and Roderick Evers decided to farm it commercially. Operating as Future Forests Fiji (FFF), the Evers started their teak plantation on leased land in the province of Ra. In 2011 with their plantation at six years-old, the brothers took FFF went public by listing on the South Pacific Stock Exchange.
“The company was able to raise $1.84MM capital from the sale of shares and convertible notes at the Initial Public Offer (IPO) in 2011. This was re-invested into expanding the plantation,” said FFF’s general manager, Masum Buksh.
“As a result of this re-investment, the plantation now covers an area of 230 hectares of teak the oldest of which are around seven to eight years old. Matured trees are harvested between 22 to 25 years.”
Using silviculture methods in the management of their forests, FFF harvest six to seven year old trees as part of the thinning process which creates space for other trees to continue aging. The harvested trees are value added to make items like furniture, utensils and walking sticks as well as other items which are placed as orders.
This thinning process will continue until the trees reach maturity at which point they can fetch upwards of $1,000 per cubic meter for A-grade logs and as high as $8,000 per cubic meter for dressed timber.
“This is a very valuable tree because you don’t have to wait for maturity to make money. When I started with the company last year, we used to sell thinned teak trees to the Fiji Sugar Corporation for $70 per cubic meter as firewood. We decided to lease a machine and employed a local to make various products. So last year, instead of the $42,000 per year we normally made from the sale of firewood to FSC, we made $835,000 from the value added products,” Masum said.
The company has in place a sustainable tree planting program where they ensure that every tree they harvest is replaced.
“There is a huge potential for teak in Fiji because we have the weather suited to growing it. There is also a huge demand for teak in the international market with something like 95% of excess demand. However, it hasn’t been an easy ride for the company. Getting investors was difficult forestry is a high risk business especially at the scale we want.”
The company approached the Fiji Development Bank in 2008 for a loan for the purchase of a tractor, machinery and a freehold property in Tova, Ra where the company’s nursery is located. A second loan for the purchase of two portable sawmills, setup cost for the new mill, and working capital to assist its operations followed in 2011. The mill is expected to be operational sometime in October.
Loans for forestry are offered under FDB’s wider agricultural loans which cater for land purchase and development, purchase of plant, equipment, machinery and seed stock as well as working capital.
In tandem with the setting up of the mill, FFF is working to establish its primary export market in Australia. India and China were also considered but the high freight costs have reoriented that plan to markets closer to Fiji. Once operational, FFF will welcome other local teak plantation owners to sell their logs to them.
“We encourage locals to sell us their teak trees which we can harvest ourselves if they want and we will give them a spot price for it,” Masum said.
With Myanmar (formerly Burma), the world’s largest exporter of teak putting a ban on teak harvesting from 2014, the door is now open to Fiji and FFF to step in and fill that gap in the international market.