What Does All This Mean for Teak Investors

I was interested in this story after watching the administration battle with Canada over trade regarding lumber, and dairy and other commodities. According to multiple sources, there’s a revolution overtaking the teak industry. Countries that have in the past been major suppliers of teak are in the process of regulating and placing bans on teak logging and exports. This will obviously affect supply which is why it tweaked my interest.

At the same time, Latin American countries are seeing a rise in their own teak production, with several plantations here in the process of filling the void created by the decrease in supply.

TKO Farms, Inc.

TKO Farms, Inc. is a 912-acre exotic hardwood and citrus tree farm.

Almost 60% of the farms overall increase will be dedicated to the exotic hardwoods.

Once planting is complete, the hardwood tree count will be:

  • 106,532 Teak
  • 16,500 Mahogany
  • 5,460 Spanish cedar
  • 763 Zircote

These exotic hardwood trees resemble an annuity, since they grow more valuable and larger as the years go by.

Once the heart wood of the teak has grown enough to occupy the whole diameter of the tree, it reaches its harvesting value. This usually occurs somewhere between 20 to 25 years after the planting. Other hardwoods like mahogany can take an extra 5 to 10 years, which is why teak is what has the real value.

Below is a cool video from the company.

Cash Crops

By the end of 2018, there will be more than 87,000 cash crop trees growing on the farm including Coconut, Soursop, Sapodilla and Citrus fruit. It is from these crops that all current farm income is derived.

After planting, the cash crop tree count will be:

  • 21,500 Coconut
  • 65,00 Soursop
  • 1,700 Sapodilla
  • 1,550 Orange & Lime

Coconut products are highly demanded in the US, especially coconut water. The interest in coconut products is due to many consumers seeking healthy alternatives and functional food products. Coconut has been identified as a “functional food”.

Coconut is also becoming known for its healing benefits, aside from its nutritional content being high. People have realized that coconut has benefits for health, for well being, for having good flavor and taste, and being a very versatile product.

The soursop fruit is known for its medicinal value. It contains certain natural compounds with medicinal benefits, which make it beneficial for the treatment of various ailments. Recently, it has gained popularity due to studies showing that it can kill cancer cells up to 10,000 times more effectively than chemotherapy drugs, without side effects.

Soursop fruit regularly sells in the U.S. for $10.00 per pound and up.

 

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Farm Headquarters

The Plantation

Aerial Map

Over The Plantation

The River

Young Trees

Industry Numbers

 

The Cottages

TKO Farms, Inc. has contracted to build a retreat for the pleasure and use of our investors. Initially, the compound will consist of few quality vacation cottages.  This will give investors the opportunity to enjoy the lovely climate and charming hospitality of Belize, plus the chance to view the project first-hand for many years to come.

 

 

Summary

 

A politically and economically stable nation, Belize recently celebrated its 36th independence day by opening up avenues of tourism and trade to the world at large. Whether one is visiting the country on business or for pleasure, one is sure to feel welcomed by Belize’s warm and inviting atmosphere.

 

The natural teak forests in traditional Southeast Asian teak players have been damaged by extensive logging. This has caused the countries like India, Laos, Thailand, and especially Myanmar to impose regulations and bans on the logging and export of teak logs that have not been processed. Because of this, supplies from these traditional sources of teak have decreased, leading to some dramatic shifts in the teak industry.

 

Even as the supply was decreasing, the demand grew unabated. This forced the industry to turn to Latin American countries and Belize for supply. That’s why it’s such a great time to make investments in the teak industry. Latin America and Belize’s teak plantations are now expected to fill the gap between supply and demand. As of now, there are already more than 220,000 trees either already growing or slated to be planted on the two TKO Farms. Of these, 142,082 are teak.

There’s an excellent case for long and short term investing here, as cash crops will also be providing sustainable revenues immediately.

 

Hardwoods are one of the safest and steadiest growth investments available, protecting an investor in times of inflation and providing returns. In fact, hardwoods have outperformed all major stock indexes over the past 40 years.  They offer a solid return on investment and a hedge against inflation and currency devaluation.

 

Teak is one of the best values with the highest yields in the timber sector. It is a small niche segment which is managed by smaller, privately owned companies versus the big institutional operators.

 

Minimum amortized annual returns of 25-30% and a total return of at least 600% are quite attainable using existing market prices and conditions. A $50,000 investment, whilst simultaneously generating the returns specified, will also increase in value exponentially as the farms are generating revenues. The investment remains a significant and appreciating asset through and beyond the 25 year term.

 

Just like the beautiful climate of Belize, an investment in TKO Farms, Inc. is an opportunity for a rewarding and pleasant experience.

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