Forum Archive Index - January 2004

["David & Jill Stevenson" <djstevo@quicksilver.net.nz>]

It is very difficult to attempt a rule of thumb per acre price of standing timber as the principal forestry companies use complex formulae for their forests.Valuations would incrementally increase from year of planting to valuation date. Because they practice reafforestation allied to economic felling the overall valuation would be a reflection of composite factors over the maturity period of growth.

   Fletcher Forests sold to a consortium 106,000 hectares  ( I have seen varying figures for the total) for $725 million . 71,000 hectares was sold as freehold  and the balance was leasehold ex the Government and ,I think, a variety of primary Maori interests  with the attendant complexities that type of tenure involves.. Because of differing nature of tenure it is difficult to arrive at a uniform standard price . CAH is putting up 330,000 hectares for tender.

 

   As a guide, neighbouring Kaingaroa Forest of 150,000 ( approx. 50% of CAH Holding)  has been estimated to be convertible from stump situation to pastureland at $11,500 per hectare. Good quality dairy farms are selling for $20,000 per hectare . Because of low returns on export Logs the premium factor of dairy farming potential is becoming more significant in valuations of what was once  primarily forestry investment.

 

   I have not supplied you with the arithmetic of an answer but trust some of the above might help you proceed.

 

     David Stevenson