do you have anything on burmese tea

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Subject: Re: do you have anything on burmese teak???

jcenteno@xxxxxxxxxxxx wrote:
> 
> ,
>                     _________________________________
> 
>                           TRADERS OF ILLUSIONS
>                     _________________________________
> 
>                            Julio Cesar Centeno
> 
>                               July 16, 1996
> 
> A serious controversy has been raging in The Netherlands, regarding
> public investments in teak plantations. Several companies are involved,
> with total sales approaching half a billion dollars. The validity of promises
> made to investors has been questioned on TV and newspaper reports.
> The case involves several ministries, an important insurance company in
> the country, and the World Wide Fund for Nature. The Dutch
> parliament has questioned several ministers three times on the issue, and
> the intervention of the Central Bank has been requested. The case has
> been brought to the attention of HRH Prince Bernhard. Here is an
> account of the story behind the news.
> ________________________________________________________
> NOTE:
> 
> The full version of this article, including graphs, will be available as a
> feature article in ENN [Environmental News Network], from July 29:
>                http://www.enn.com/
> 
> It will simultaneously be available from the Malaysian Timber Council's
> Web Page:
>                http://www.mtc.com.my
> 
> And from the following addresses:
> >From Friday July 26:     http://www.vr.nl/treemail/traders.htm
> 
>                          http://www.infobahnos.com/~kiekens/
> ________________________________________________________
> 
> INTRODUCTION
> 
> The green market is in. People want to purchase goods and services
> proven to be kind to nature, good for the environment, socially
> responsible. Refrigerators and aerosols friendly to the ozone layer.
> Agricultural goods from "organic" sources. Cosmetic and medicines from
> "natural shops". Cars that minimize the emission of harmful gasses into
> the atmosphere. Wood products from responsibly managed forests.
> 
> Consumers are also becoming better informed. Many can perceive the
> hollow substantiation behind many marketing and policy slogans, and are
> increasingly demanding genuine commitment to the fundamental
> principles upon which they are supposed to be based.
> 
> A significant proportion of the consumption of wood products in some
> European countries has for long been based on the exploitation of
> forests in the tropics. The destruction of forests in this part of the world
> has become a major international concern. In an attempt to avoid the
> historical, political and international dimensions at the root of this
> problem, some have attempted to blame it on the production of industrial
> timber in tropical countries.
> 
> Discriminatory boycotts against tropical timbers have thus been promoted
> by "responsible" environmental groups in some European countries,
> under the esoteric assumption that blocking the international trade of
> tropical timber would save forests in the tropics from destruction. Others
> have tried to achieve this same goal through the establishment of
> regulatory mechanisms, meant to discriminate against the use of tropical
> timbers in public works. In other countries curious agreements have been
> established between government, industry and environmental groups, to
> impose discriminatory and unilateral conditionalities to their imports of
> tropical timber products. All in the name of nature, and the protection of
> tropical forests.
> 
> In The Netherlands this trend has taken peculiar dimensions. The Dutch
> come second only to the Japanese in per capita consumption of tropical
> timber. For nearly ten years they have tried to define a coherent policy
> towards tropical forests and the tropical timber trade. In 1991 the
> government adopted a policy according to which only tropical timber from
> "sustainable sources" would be imported, starting in 1995. Despite its
> discriminatory nature, and its open contradiction with international trade
> regulations, this policy was reinforced in mid 1993 with the "tropical
> timber covenant", involving the government, the timber industry, WWF
> and other NGOs. According to the covenant, only sustainably produced
> tropical timber would be imported into The Netherlands after 1995.
> 
> This unilateral decision was in contradiction with the Year 2000
> agreement subscribed by The Netherlands at ITTO, and was paralleled
> to the introduction of the principle of apartheid in the international trade
> of timber products. The Netherlands was strongly criticized by tropical
> countries during the negotiations on forest at the United Nations
> Conference on Environment and Development [UNCED]. It was also
> exposing itself to being summoned at GATT [now WTO] for infringing
> international trade agreements, and for discriminating against developing
> countries, in addition to possible retaliatory measures by key tropical
> trading partners. The government decided to withdraw its policy in
> November of 1994.
> 
> The local office of the World Wide Fund for Nature [WWF-NL] now
> proposes to reduce in half the national consumption of all timber
> products, including paper products, within five years [5]. The government,
> part of industry and an array of NGOs insist that all timber imported into
> the country, particularly tropical timber, must be certified as coming from
> "well managed" sources. This is expected to happen "voluntarily" in the
> immediate future [a couple of years]. Some NGOs dictate that all such
> certification must necessarily take place through the Forest Stewardship
> Council. Industry proposes that a seal of approval by the new
> KEURHOUT FOUNDATION should suffice, to guarantee that timber
> products sold within the Dutch market come from well managed forests.
> 
> Despite the highly unrealistic proposal to reduce national consumption
> of wood products in half in the immediate future, there is a concern that
> there may soon be a shortage of "green" timber. One way to overcome
> this potential problem is the establishment of "well managed",
> ecologically responsible plantations. In the tropics, of course.
> 
> What to plant? Fine timbers, naturally. This is  what the Dutch market is
> accustomed to, after centuries of extraction and trade of the finest
> timbers from the finest forests on Earth. Among these fine timbers one
> clearly stands out, for its beauty, strength and durability; for the versatility
> of its applications; for its dimensional stability under a wide array of
> environmental conditions; for its natural resistance to weathering and
> biological attacks; and for its ability to grow well in plantations: Teak.
> 
> Although not devoid of risks, Teak plantations also happen to have a
> good potential to become a profitable business. A pioneer was needed
> to show the way. And so it happened. A Dutch entrepreneur bought a
> piece of land in Northern Costa Rica to grow and export flowers to The
> Netherlands. Soon he discovered nearby a teak plantation, established
> by a couple of North American adventurers, with a peculiar system to
> encourage investments from the general public, particularly from
> American tourists visiting Costa Rica. And so the first new-age teak
> plantation was established by a Dutch owned company in Costa Rica:
> Flor y Fauna.
> 
> Flor y Fauna soon found two highly convenient partners: a well known
> and reputable insurance company by the name of OHRA,  and the Dutch
> office of the World Wide Fund for Nature, WWF-NL. The details of how
> investments in this plantation has been promoted to the Dutch public
> have already been well documented [1,2,3,4].
> 
> Plantation started in 1989. By 1993 the Dutch public had invested over
> 200 million dollars in 3,000 hectares of plantations. Others soon wanted
> a share of the pie. And so, under the shade of Flor y Fauna and OHRA,
> at least ten other Dutch companies started their own teak plantation
> businesses, most of them in Costa Rica. Oscar Arias, an honest
> President and Nobel Price winner, who had ruled the country a few years
> back, had declared the country in "forestry emergency". This decision
> was prompted by the dramatic and widespread destruction of the
> countries natural forests in previous years. The new wave was to reforest
> the land, with national policies strongly encouraging investments in the
> sector.
> 
> THE DUTCH PUBLIC
> 
> Investment in teak plantation was promoted amongst the general public
> in The Netherlands through well orchestrated campaigns, which not only
> highlighted rates of returns on investments from 15% to 25% a year.
> They also tapped on the sensitivity of the Dutch public to environmental
> and social concerns. A parallel was made between investments in
> "green" trees, the creation of wealth and badly needed jobs in poor
> developing countries, the "reforestation" of the tropics, the "alleviation of
> pressure" on natural tropical forests, plus the bonus of a pretty good
> profit.
> 
> It all looked too good to be true. In almost all cases, the huge rates of
> return promised to investors were unfortunately construed on highly
> unlikely projections on the yield and price of the timber to be produced.
> The forecasts upon which the success of these forestry projects had
> been built had little to do with technical knowledge and professional
> judgement. They had been largely based on speculation. The Dutch
> public soon became the victim of traders of illusions.
> 
> THE SPECIES
> 
> Teak [Tectona grandis] is a tree original from an area encompassing
> parts of India, Thailand, Myanmar [Burma] and Laos. It seems to have
> been introduced to Java in the 14th century. Some scientists consider
> this part of Indonesia as part of the original range for the species. It has
> performed well in plantations not only in its South-East Asian original
> range, but also in other parts of Asia, in Africa and Latin America.
> 
> The total area under Teak plantations is today estimated at 3 million
> hectares. Good growth and high quality is associated to deep and well
> drained alluvial soils, rich in calcium; an annual precipitation from 1,500
> to 2,500 millimeters, and a marked dry season of 3 to 5 months with up
> to 50 millimeters of rain.
> 
> Teak has been cultivated for centuries in the tropics. There are
> references to plantations established in India in the early 1800s, and in
> tropical America about 100 years later. Although it is not devoid of
> silvicultural and management difficulties, it may be fairly said that it is a
> well known timber species, relatively benign and successful to grow in
> plantation environments in the tropics.
> 
> GROWTH PATTERNS
> 
> The growth and quality of Teak in plantations is largely dependent on
> seed provenance, soil conditions, topography and drainage, rainfall,
> temperature, humidity, and management techniques. Although a wide
> range of growth patterns have been recorded in different part of the
> world, they all tend to fall within a well defined range  [Figure 1].
> Nevertheless, there are many cases of poorly established and managed
> plantations with growth levels below the low estimate indicated in this
> figure.
> 
> The "mean annual increment" is a convenient technical term which could
> be considered a measure of the productivity of a plantation. It is the
> average annual growth at a given age. At the age of 20 years, for
> example, a reasonable estimate for the cumulative amount of timber from
> a teak plantation, on good soils and under appropriate management,
> taking into account what has been extracted, could vary from 180 cubic
> meters per hectare, to 400 M3 per hectare. This is equivalent to a mean
> annual increment from 9 to 20 M3 per hectare per year, and does not
> imply that the same growth rates can be applied at other ages of the
> same plantation. These figures also include non-tradable timber,
> particularly from the first thinnings. Only under highly exceptional
> circumstances, isolated figures as high as 22 M3 per hectare per year
> have been reported or can be inferred from literature references for that
> age [see Figure 1].
> 
> The behavior of Teak in plantations is rather well defined, and although
> there is room for variation and experimentation, it is highly speculative
> to assume that a new plantation will outperform the highest world yield
> records by  50% to 200%, as has been the case. This is particularly
> worrisome when there is an absolute lack of credible substantiation of
> such projections, and when the interest and credibility of the general
> public is at stake.
> 
> One of the teak plantation projects promoted among the general public
> in The Netherlands, FORESTALES INTERNATIONAL, for example,
> speculates that its teak plantations can achieve a net growth of 950 cubic
> meters of tradable timber per hectare in 20 years. This is equivalent to
> 47.5 M3 per hectare per year as mean annual increment, about three
> times what should be normally expected [Figure 1].
> 
> Another company, GLOBAL GREEN, promotes investments based on
> the production of 700 to 900 M3 per hectare. The GREEN FUND sells
> to the public in The Netherlands and Germany, based on a projected
> yield of 480 M3 per hectare as the product of the final harvest, at the age
> of 15. This is equivalent to 32 M3 per hectare per year of mean annual
> increment, or about twice what would be considered good growth at that
> age. If the necessary intermediate harvests were to be included, the total
> projected yield would be far higher. No such data was available at the
> time this paper was prepared.
> 
> TROPECO presents a harvesting schedule with a final cut at year 20,
> and several not clearly defined thinnings in between. Only from the final
> cut a total of 320 to 460 cubic meters of sawn timber is expected. It is
> upon these figures that financial returns to investors are projected. This
> implies that, only from the final cut, the company expects from 640 to
> 920 M3 in the form of logs. The product from the necessary thinning
> could duplicate these figures.
> 
> TECA VERDE offered returns based on a projected yield of 1,350 M3
> per hectare in 20 years. It later introduced a drastic correction to this
> figure, bringing it down to 436 M3 per hectare. Another company, EURO
> GREENMIX FUND, projects a more acceptable yield: 388 cubic meters
> of roundwood per hectare in 20 years. Unfortunately, it also pretends that
> it will be able to convert these logs into sawn timber without losses, to
> produce 374 cubic meters of sawn wood per hectare. It is upon this
> figure that financial returns to investors are based. In actual practice, in
> the conversion from logs to sawnwood a net loss of 40 to 50 percent is
> to be expected.
> 
> There is only one clear exception to this trend of unsubstantiated and
> severely inflated growth rates: the AMAZON TEAK FOUNDATION. It
> operates based on an average yield of 370 M3 per hectare under a 25
> year rotation, equivalent to a mean annual increment of 14.8 cubic
> meters per hectare per year. This is in the middle of what is considered
> a normal range for teak plantations on good soils and under appropriate
> management [Figure 1].
> 
> The case which has been mainly exposed so far is that of the company
> FLOR Y FAUNA, now involving the insurance company OHRA and
> WWF-NL. This exposure was triggered by a special broadcast in one of
> the most respected television news programs in The Netherlands: NOVA,
> aired on  November 23, 1995.
> 
> For the plantations established during the first four years [1989 to 1992,
> under the names Teakwood I to V], according to the corresponding
> brochures and publicity material, Flor y Fauna assumed it would achieve
> the production of 1,000 M3 per hectare in 20 years, with a mean annual
> increment of 50 cubic meters per hectare per year [6]. These projections
> have never been substantiated. Neither have they been modified. The
> economic ownership of the trees in most of these plantations was sold
> to the public under such allegations.
> 
> Nevertheless, the controversy has centered on the plantations
> established in 1993 [Teakwood VI] and subsequent years, due to the fact
> that they formally involve the insurance company OHRA and WWF-
> Netherlands. Teakwood VI promotional brochure [7], published jointly by
> Flor y Fauna and WWF-NL, is based on the production of 933 to 1130
> cubic meters of timber per hectare, 85% of which is for investors. This
> is equivalent to a mean annual increment from 46 to a 56 M3 per hectare
> per year.
> 
> After the critical exposure of this case through the NOVA television
> broadcast, and the subsequent press coverage, yield projections have
> been considerably modified. Nevertheless, they remain highly
> speculative. On November 30, 1995, a few days after the program,
> OHRA wrote to NOVA that the new expected yields were from 400 to
> 800 m3/ha over the 20 year cycle, "without doubt", according to  their
> scientists [Figure 2]. The huge magnitude of this range seems to indicate
> the improvisation and lack of reliability in the projections themselves. It
> also seems to indicate that it was considered convenient to maintain the
> upper end of the new range within original projections, while sinking the
> lower end to less than half of its initial estimate, so that it would touch
> realistic levels of production [see Figure 2].
> 
> At a press conference on March 4, 1996, OHRA produced a highly
> unusual collage of separate paragraphs of a report by an organization in
> Costa Rica by the name of Centro Cientifico Tropical [CCT]. OHRA calls
> this collage a "summary" of the report [8]. Strangely enough, the report
> itself has never been made available, raising doubts about the real
> nature of its findings. In this highly unusual "summary", CCT seems to
> estimate that Flor y Fauna's plantations will produce 527 to 725 cubic
> meters of tradable timber per hectare at the age of 20 [at least 12 years
> in the future].  It is not indicated how this estimate was made, or how it
> is substantiated. The "summary" does highlight that conclusions are
> based on data supplied by Flor y Fauna. Nevertheless, the report
> suggests that a mean annual increment ranging from 26 to 36 M3 per
> year at the age of 20 is to be expected, far lower than the original
> estimates by Flor y Fauna and OHRA, but still considerably beyond what
> would be very good growth for a teak plantation at that age [Figure 2].
> 
> There would be no concern with these figures if the related investments
> were solely those of the companies involved. But the "economic
> ownership" of the trees is sold to the general public, who is normally
> unaware of the technicalities involved, and who lack the necessary tools
> to judge the validity of the projections in question. The general public
> tends to base its decisions on trust and credibility in the organizations
> encouraging them to make such investments, including the insurance
> company OHRA and WWF. The Dutch public is thus led to believe in
> highly speculative projections on growth and price trends, and in
> consequently inflated rates of return. The impunity with which this has
> happened is partly due to the remarkable hands-off position taken by
> government regulatory officials, and the silent complicity of the Dutch
> forestry profession.
> 
> PRICE TRENDS
> 
> The high rates of return promised to investors are not only a
> consequence of unjustifiably high projections on the yield of timber to be
> expected, but on equally exaggerated projections on the prices at which
> such timber could be sold. There are several flaws associated with these
> figures. One refers to the high base price from which they are projected.
> Another is the assumption that the base price and its projections apply
> equally to all the timber to be produced, to the timber from intermediate
> harvests, as well as from the final cut. Yet another possible flaw refers
> to the unusually high yearly price increments assumed to take place
> within the next 20 years, from 5% to 10% a year.
> 
> The base price used by most of these initiatives ranges from 450 to 500
> dollars per cubic meter standing in the forest, or as log by the road side.
> This price can hardly apply, for example, to the production from the first
> couple of thinnings, scheduled to take place within the first 4 to 12 years
> in the cases mentioned in this report.
> 
> The products derived from each thinning have in fact their own price
> structures. They are also meant for different markets and end-uses.
> These differences are so marked that they could best be considered as
> different products [Figure 3].
> 
> The base price for 5 to 8 year old poles should optimistically be
> estimated between 50 and 80 dollars the cubic meter in the round,
> mainly for consumption in the local market. It tends to increase only
> slightly with time. While 25 year old logs could fetch as much as 400
> dollars the cubic meter, depending on form, length and quality. Their
> price tends to increase more rapidly with time [Figure 3].
> 
> The unfortunate combination of high yield and high price projections end
> up in highly unlikely rates of return. This is nevertheless a key factor
> motivating most of the investments made by the general public in such
> projects.
> 
> CONCLUSIONS
> 
> There is a marked need to establish plantations in many a tropical
> country,  using a variety of species, to produce industrial timber, to
> protect watersheds, to reclaim degraded lands, to produce firewood and
> other forms of energy, and to improve the productivity and economic
> viability of agro-forestry practices. Teak is a precious timber which
> performs well in plantations. The establishment of industrial teak
> plantations ought to be encouraged, specially through joint ventures
> involving private interests from both industrial and developing countries.
> 
> The productivity and price trends of teak from plantations is high enough
> to guarantee a profitable business without further speculation. What is
> mostly needed is good seed sources, appropriate soils and topographic
> conditions, good drainage, appropriate heat, humidity and precipitation,
> and good management. Under such conditions, successful projects can
> and should be established, with rotations preferably from 25 to 40 years.
> 
> The present turmoil in the Dutch market is necessarily transitory. It will
> raise awareness of what needs to be done to avoid similar situations on
> a far larger scale in the future. It highlights the need for an efficient and
> transparent regulatory framework when the interest of the general public
> is involved. It brings to the surface the double standards applied by
> certain groups to forestry projects in the tropics, and the obsessive
> concern of some environmental groups with corruption in tropical forestry
> practices, while ignoring what is going on in their own backyard.
> 
> Hopefully these cases will also awaken the forestry profession into a far
> more active participation in development projects of this nature, whether
> related to plantations of Teak, Eucalyptus, Acacia or other species, or
> whether related to the management of natural forests. There is an ethical
> and professional responsibility involved in cases of this nature which
> should not continue to be avoided, no matter how difficult this may prove
> in practice for the parties involved.
> REFERENCES
> 
> 1]. Centeno, J.C: TEAK CONTROVERSY FLARES UP IN THE
> NETHERLANDS.  Posting to Internet, February 05, 1996.
> 
> 2]. Centeno, J.C: TEAK STING. Posting to Internet, Feb. 19, 1996.
> 
> 3]. Centeno, J.C: WORLD RECORD ON TEAK GROWTH: TRUTH
> OR TRICKERY? Posting to Internet, March 12, 1996.
> 
> 4]. Centeno, J.C: THE ELUSIVE CREDIBILITY OF FOREST
> MANAGEMENT CERTIFICATION CLAIMS. June 20, 1996.
> 
> 5]. Wereld Natuur Fonds: NAAR EEN HOUTBARE WERELD.
> WWF-Netherlands, 1995.
> 
> 6]. Flor y Fauna: TEAKWOOD III: AN INVESTMENT IN A GREENER
> FUTURE.
> 
> 7] Flor y Fauna & WWF-NL: TEAKWOOD VI: EEN INVESTERING IN
> EEN GROENERE TOEKOMST. March 1993.
> 
> 8]. Centro Cientifico Tropical: TECHNICAL AUDITING ON THE
> GROWTH AND YIELD PROJECTIONS FOR Tectona grandis
> PLANTATIONS ESTABLISHED BY FLOR Y FAUNA S.A. Costa Rica,
> Febrero 26, 1996.  Summary of the Report.
> ______________________________________________________
> Dr. Julio Cesar Centeno is a forestry specialist from Venezuela. He
> was one of the key negotiators of the International Tropical Timber
> Agreement, at the United Nations Conference for Trade and
> Development [UNCTAD], Geneva, serving for several years as
> spokesman for tropical countries. Has served as forestry advisor to the
> Secretariat of the United Nations Conference for Environment and
> Development [UNCED 92], as Director of the Latinamerican Forestry
> Institute between 1980 and 1990, as professor of the Graduate School
> of Forestry at the University of the Andes, Venezuela, and as member
> of the Board of Directors of the Forest Stewardship Council. Has
> represented Venezuela at multiple international negotiations on
> forests, forest industries and timber trade.  Was invested by Prince
> Bernhard of The Netherlands with the Golden Ark Award for his work
> in the forestry sector. Serves as a member of the Governing Board of
> SGS-Forestry in Oxford, United Kingdom, as acting vice-chairman of
> the TROPENBOS Foundation in The Netherlands, and as an
> international forestry consultant.
> _______________________________________________________
> PO Box 750
> Merida - Venezuela
> Fax: +58-74-714576
> E-mail: jcenteno@xxxxxxxxxxxx
> _________________________
> _____________________________
> JULIO CESAR CENTENO
> PO BOX 750
> MERIDA - VENEZUELA
> FAX INT +58 - 74 - 714576
> EMAIL: jcenteno@xxxxxxxxxxxx
> _____________________________