Australian forestry investment schemes present the next gateway after commodities for people to take advantage of the growth in Asian markets, the head of agribusiness at a large financial institution said.
The Asian regions’ demand for fine paper and paper products, as the economy develops will drive this opportunity, according to Macquarie Capital Products executive director Anthony Abraham.
“The more economically developed you are the more paper you will use. So as China increases in GDP per capita and the economy grows it’s consumption of paper will increase as well. This will be the same for Indonesia and India,” he said.
“It places forestry right at the forefront o the Asian development story.”
However Australian forestry has an added advantage due to its geographic location, according to Abraham.
“We export most of our stuff out of Geelong and when we compare it to South Africa and South America, Geelong is 16 shipping days up into the key ports compared to 24 and a half and 30 days,” he said.
Having a lower number of shipping days gives local forestry schemes a substantial competitive advantage with tight shipping capacity that has seen vessel charter costs jump from $10,000 a day to $70,000 a day.
This gives the underlying investment in a forestry project added appeal on top of the well publicised tax benefits, Abraham said.
Furthermore Macquarie has modified its forestry investment offering to make it more attractive by allowing people to place their money in its Eucalypt Project as well as a separate Timber Land Trust.
The structure allows investors to benefit from the growth in value of the timber as well as the appreciation in the value of the associated land.
