Posted: Fri May 06, 2011 12:29 am Post subject: Growing Demand for Wood Fibre Could Boost Forestry
Growing global demand for wood fibre will help boost returns for forestry investors in the coming years, claims alternative investment analysis group, AAA (Alternative Asset Analysis).
Boston, MA, May 06, 2011 -- Growing global demand for wood fibre will help boost returns for forestry investors in the coming years, claims alternative investment analysis group, AAA (Alternative Asset Analysis).
A new report from PricewaterhoouseCoopers (PwC) shows that demand for wood fibre is set to grow significantly in years to come. At the same time, PwC claims that paper mills may become defunct as the demand for paper reduces over the coming decade thanks to emerging technologies and less need for paper in the workplace.
"The news that wood fibre demand is set to soar is truly great news for all those investing in forestry. Sustainable forestry is likely to generate particularly high returns on investment as more and more value is put into ethically produced products," explained Anthony Johnson, a partner at AAA and an experienced fund manager and analyst of alternative asset classes.
Bruce McIntyre, PwCís Canadian forestry head, said forestry firms will be producing wood fibre for a number of industries that will be attracted to the product due to its versatility. He explained: "Companies from a diverse array of industries ó energy, utilities, chemicals and potentially many more as biomaterials evolve ó will compete with FPP companies for control of forests, or at least access to their fibre, and the best economic use of the resources they provide."
"China is expected to drive the growing demand for fibre," added Johnson. "The demand is likely to start exceeding supply within long as the appetite for biomass from timber increases," he said.
The European Union alone is set to need as much as 420 million cubic metres of woody biomass each year for its energy needs by 2020. This will lead to a deficit in production of around 200-260 cubic metres, according to PwC. This, according to AAA, will lead to soaring prices, which may result to healthy returns for those who own and invest in the forests.
There are many routes to investment in forestry these days, with some more ethical than others, explained the AAA. It urges prospective investors to examine the opportunities for investment in emerging markets, such as Brazil, through small plantation owners like Greenwood Management. This firm offers the chance to invest sums as low as around $15,000 in sustainable plantations growing timber crops that are not native to Brazil. In turn, these crops adhere to new regulations brought in by the Brazilian government to help protect Brazilís native rain forests.
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