From the Field

Darrell Fox COO Hawaii Legacy Hardwoods 

June 3, 2011

The month of May saw the successful completion of this year's planting.  It was very rewarding to see the new seedlings rapidly double in size as their roots anchored to the earth. Our planting approach utilizes a powered auger to make a hole sized to the seedling's biodegradable peat pot.  The soil was compacted around the pots and mulch was used to provide protection and moisture retention.  Initial fertilization was done to augment the soil.  Finally the seedlings were "watered in" to insure good mechanical attachment to the surrounding soil.

Crews are currently creating 100 tree groups, recording their GPS coordinates and RFID tag numbers.  We have been augmenting our database program to streamline the tree unit commissioning procedure.  This process will be completed in the month of June and Certificates will be on the way to Tree Owners. 

Upon completion of Tree Unit assignment we will start cataloging the remaining trees as part of our Legacy program.  New software has been developed to collect the GPS location and RFID numbers for our Legacy partners.  Newly installed mapping software will put this data at our fingertips.

In a very real way May wrapped up a very successful year.  All attention is now focused on the next crop of trees.  We are laying out the foundations for two new nursery buildings that will more than double our capacity.  Mapping of the 2011 planting area is underway and new equipment has been ordered to allow us to prepare sufficient land to plant every seedling our expanded nursery capacity can produce.

We have been partnering with other native plant nurseries to provide seedlings for other trees that are components of native Hawaiian forests.  These seedlings will be used to fill in all of the areas not planted in our koa establishment program.  They include such trees as Mamane, Naio and Sandalwood.  Native understory vegetation will be planted throughout the Legacy program areas as soon as canopy cover permits.  To see the process of brining an ecosystem back to life is one of the great rewards of being a part of this project.  Thanks to all of our tree owners and legacy partners for making it possible.

Forest Carbon Emerging as an Asset

Class in Sequestration

T.M. Potter & M. Jones 

May 13, 2011

In the Regional Greenhouse Gas Initiative (RGGI), the first mandatory cap-and-trade effort in the United States, electricity generators producing more than 25 megawatts can incur a noncompliance penalty equal to three times the generator's excess of CO2 emissions. In addition,non compliant emitters are subject to state-specific penalties.

In California's cap-and-trade system, the penalty for noncompliance under the state's Air Resources Board (ARB) Health and Safety Code requires surrendering allowances to cover

four times the amount of excess emissions, and/ or imprisonment and up to $100,000 in fines.

The enforcement provisions further stipulate that if a covered entity fails to surrender a sufficient number of compliance instruments, it constitutes a separate violation for each required

instrument not surrendered. In addition, each day or portion of a day after the compliance date

that each required compliance instrument has not been surrendered also constitutes a separate

violation. Therefore, to minimize liability, large-scale emitters must thoroughly understand the requirements of existing and newly forming greenhouse gas (GHG) programs and should be open to innovative solutions that reduce liability in the future.

Risk mitigation strategies include improving technology to lower emissions and purchasing the right mix of allowances and/or offsets allowed in different proportion in various regulated programs. Environmentalists, market pundits, and regulators agree that offsets significantly lower the cost of compliance. As a result, it is no surprise that utilities and third-party speculators (e.g., funds and private equity firms) are taking orders and contracting supply....

This article is copy write protected, for a complete version contact  bmaler@hawaiianlegacyhardwoods.com or your HLH representative.

The Daily Crux: You've done a tremendous amount of research on timberland investing over the years... and you've been a big proponent of this idea. What is so special about timberland?

Steve Sjuggerud:  Yes... I've literally been all over the world researching timberland investing. I've spent hundreds of hours on it. I've recommended many timber stocks to my readers over the years. And I've personally invested in timberland. 

There's a long list of reasons why investing in timberland is a great idea... and consistently produces big returns.

First of all, trees grow year in and year out. Trees in good growing regions in the U.S. grow at 6%-8% per year. They grow through recessions. They grow through wars. They grow through stock and real estate crashes. They grow through everything. They give you built-in investment growth that isn't guaranteed with a stock.   

Click here to read more on this article   

Exporters of timber and timber products in Malaysia have expressed concern over rising prices of  crude oil and the effect on freight rates. Shipping costs to destinations such as Europe and North America have been rising. According to exporters, any further increases freight rates may result in significant timber price increases and a loss of competitiveness.

MOU to expand Sandalwood forest area in Karnataka

The state of Karnataka is the largest producer of sandalwood (Santalum album) in India.  However, as a result of illegal logging and smuggling, sandalwood in natural forests is under threat of extinction and imports from other tropical countries are needed to meet the demand in India.

In order to revive the state's sandalwood production, the Forest Department, local industries and farmers have entered into a MOU to expand the area for sandalwood production to 2,000 acres in the state of Karnataka.  In addition, the state government has removed the 50% tax on profits from sandalwood production.

China's trade in wood products expanded in 2010

Statistics from China Customs show that the total value of trade of wood products in 2010 reached US$67,608 million, up 27.7% on 2009.  Out of the total trade, imports accounted for US$30,546 million, up 37.2% while exports were US$37,062 million, up 24.5%.

Log imports surged

In 2010, China imported a total of 34 million cu.m of logs valued at US$6 billion, up 22% in volume and 49% in value compared to 2009. Imports of softwood logs were 24.27 million cu.m in volume and US$3.2 billion in value, accounting for 71% and 53% of the total log imports respectively.