GROWTH AND YIELD

with some details on rates of return to investors
-the Flor y Fauna plantations-

July 18, 1996
Paul Romeijn, Treemail

This paper is prepared to serve as a reference sheet to those who follow the public debate on the Teakwood programme. It highlights some of the materials on file at Treemail's office.

Although the materials have been compiled and translated with due care, Treemail fully disclaims any responsibility as to the correctness of its contents and refers the readership to the original documents.


OPENING STATEMENTS:

"A timber yield of 1,057 m3 per hectare, that is what Huizinga is going for, and he will attempt to do better still." (Flor y Fauna, in court, on December 7, 1993)

"OHRA has, from the very start in March of 1993, used the range of 20 to 42.5 m3 in its advertising materials." -rotation: 20 years- (OHRAs adjunct Director H. Janssen in Het Financieele Dagblad May 7, 1996)

"In the notably prudent basic scheme the timber yield is calculated at 1,057 m3/ha (!)." (OHRA, in court, on December 7, 1993)


Introduction
CHAPTER 1: The Brochures
CHAPTER 2: Data as presented to Prof. J.C. Centeno
CHAPTER 3: Court Case
CHAPTER 4: Compiled Comments on Flor y Fauna's Projections
CHAPTER 5: The End

topINTRODUCTION

Teakwood: This is an investment programme in teak plantations in Costa Rica. The programme was started in 1989 by Dutch owned Flor y Fauna S.A. who independently sold the projects called Teakwood I-V to Dutch investors until 1993. In 1993 Flor y Fauna was joined by OHRA insurance company and WWF-NL for the plantation projects called Teakwood VI, VII and VIII.

Rainforest Alliance: The Rainforest Alliance is based in the USA. It has certified the Flor y Fauna plantations under its Smart Wood programme in 1995, thus allowing the plantation's produce to carry the 'Smart Wood' label.

Forest Stewardship Council: The FSC was established as a legal entity on October 25, 1995, is based in Mexico, and accredits certifying agencies. As of end of February 1996, the FSC has accredited the first four certifying agencies, including the Rainforest Alliance. This accreditation does not include plantation forestry at the time of writing of this paper.


topCHAPTER 1

The Brochures

1) Teakwood I-V (1989-1992)

      Year
      m3/ half ha
      m3/ha

      8
      15.57
      31.14
      12
      51.54
      103.08
      16
      121.23
      242.46
      20
      473.71
      574.42

      TOTALS
      475.71
      951.42


This yield forecast is after retainment of 5% for Flor y Fauna.

The total yield expectation is therefore at 1,001.50 m3/ha for Teakwood I-V (MAI=50.07 m3/ha).

2) Teakwood VI (as per brochure of March 1993)

This section deals with the official, full-color Teakwood sales brochure which is adorned with a Panda logo under the text 'in collaboration with WWF-NL'. The brochure is entitled "Een investering in een groenere toekomst (An investment in a greener future)". This sales brochure portrays three scenario's, that have two yield expectations.

Example 1 and 2 (mean diameter increment of 2 cm/year)

      Year
      m3/ half ha
      m3/ha

      8
      3.80
      30.40
      12
      10.69
      85.52
      16
      25.34
      202.72
      20
      59.38
      475.04

      TOTALS
      99.21
      793.68


Treemail understands this yield forecast is after retainment of 5% for Flor y Fauna, 5% for WWF-NL and 5% for OHRA.

This total yield expectation is therefore 933.74 m3/ha for Teakwood VI (MAI=46.69 m3/ha).

Example 3 (mean diameter increment of 2.2 cm/year)

      Year
      m3/ half ha
      m3/ha

      8
      4.60
      36.80
      12
      12.93
      103.44
      16
      30.66
      245.29
      20
      71.85
      574.80
      TOTALS
      120.04
      960.32


Treemail understands this yield forecast is after retainment of 5% for Flor y Fauna, 5% for WWF-NL and 5% for OHRA.

This total yield expectation is therefore at 1,129.69 m3/ha for Teakwood VI (MAI=56.45 m3/ha).

The brochure's text, not in the tables on rates of return, contains one reference to the possibility of a mean diameter increment of 1.5 cm/yr. This is portrayed "in the case of a extremely pessimistic scenario". The text in the brochure fails to detail the effects on yield predictions. However, in a presentation in court (see chapter 3), Flor y Fauna provides these details. A mean diameter increment of 1.5 cm/yr results in a total yield of 867 m3/ha (MAI=43.35 m3/ha).

Notes to brochure 2) on Teakwood VI:
The Teakwood VI brochure does not give the data on the first thinnings. These data were derived from the data that were presented to Prof. J.C. Centeno by Flor y Fauna, and as reported in the next section. Because the data provided by van Rossum van Veen (Flor y Fauna's representatives in The Netherlands) to WWF-USA show identical overall growth expectations, these data were used as source to complete the tabes for Teakwood VI-VIII yield predictions for year 8, as above.

In the case of Teakwood VI-VIII, the returns derived from yield of year 8 is for Flor y Fauna.

This brochure, in section 4.2, states that increment projections are arrived at "on the basis of publications and research in the region".

A 1990 base price of USD 450 per m3 of teak is used to calculate the profits for the investors. This timber value is expected to rise, as of 1990, at a rate of 4-8% per year, according to the brochure.

For the calculation of rates of return to the investors, it is assumed that the wood derived from thinnings would fetch the same prices per m3 as the wood from the final cut. This remarkable assumption is highly unusual in forestry. 3) Later advertisements

The yield projections from the sales brochure as described in section 2) of this chapter were never lowered, refuted or withdrawn by any of the Teakwood partners.

However, later advertisements by the OHRA insurance company became less outspoken on the question of yield expectations. In fact, they contain no reference whatsoever to yield expectations. The advertisements only refer to expected rates of return for investors as "14 to 18% ... or more!"

The only reference to anything reminiscent of informing potential investors on yield expectations that are left standing in 1996 are the minimum and maximum values for expected mean annual diameter increment (e.g. in OHRA's magazine 'Vast en Zeker', Spring 1996, on page 8; positioned besides an advertisement as referred to in the previous paragraph on the facing page 9).

The table presents data for the minimum and maximum values for expected mean annual diameter increment and their effect on rates of return to the investors. These range from 1.5 to 2.2 cm per year, and result in returns on investment of 11 to 25%. In agreement with the data provided by Teakwood in their earlier brochure and in court, these values are indicative of an expectation for accumulative log volume which ranges from 867 to 1,130 m3 per hectare.


topCHAPTER 2

Data as presented to Prof. J.C. Centeno

In 1993, Prof. J.C. Centeno was commissioned by WWF-NL to research the economic aspects of the Flor y Fauna plantations. For the purpose, following materials were made available on growth and yield for the plantations to Prof. Centeno.

Yield expectations for Teakwood VI
(according to fax from WWF-NL dated February 2, 1993)

Example 1 and 2

      Year
      m3/ half ha
      m3/ha

      8
      15.20
      30.40
      12
      42.75
      85.50
      16
      101.34
      202.68
      20
      237.50
      475.00

      TOTALS
      396.79
      793.58


Treemail understands that this yield forecast is after retainment of 5% for Flor y Fauna.

The total yield expectation is therefore 835.35 m3/ha for Teakwood VI (MAI=41.77 m3/ha).

Example 2 and 3

      Year
      m3/ half ha
      m3/ha

      8
      18.39
      36.78
      12
      51.73
      103.46
      16
      122.62
      245.24
      20
      287.38
      574.76

      TOTALS
      480.12
      960.24


Treemail understands that this yield forecast is after retainment of 5% for Flor y Fauna.

The total yield expectation is therefore 1,010.78 m3/ha for Teakwood VI (MAI=50.54 m3/ha).

In addition, Prof. J.C. Centeno received a copy of a fax message of April 15, 1996, from van Rossum van Veen (advisors to Flor y Fauna in The Netherlands) to WWF-USA. The figures in this fax provide identical growth predictions as the official brochure for Teakwood VI of March 1993. Year 8 assumptions for yield are 3.80 m3 for 1/8th of a ha, which equals an expectation of 30.40 m3/ha annually for example 1 and 2; example 3 has these respective figures at 4.60 and 36.80.

topCHAPTER 3

Court Case

Before the Court of Leeuwarden, in session on December 7, 1993, OHRA and Flor y Fauna's legal representatives presented memoranda of pleading. In these documents, to the best of Treemail's knowledge, OHRA and Flor y Fauna have provided the most elaborate source of publicly available materials on their justification of growth and yield projections for the Flor y Fauna plantations. In this chapter excerpts from the court memorandum are presented.

Flor y Fauna builds the presentation upon the findings of a bailiff who has measured a few trees. Measurements provide hard data, it is argued. From the bailiff's data, several forecasts are presented in yield tables. Flor y Fauna's lawyer argues at length to show the court that Flor y Fauna considers the following tables to reflect very prudent representations of reality. The Flor y Fauna lawyer F.H.J. van Schoonhoven pleads as follows (excerpts):

"Theories can be good, stories can sound convincing, but is numbers that speak the purest language. Upon Huizinga and OHRA's request, bailiff Groot left for Costa Rica on November 22, 1993, with the assignment to visit a number of plantations and to draw up a report. Bailiff Groot was accompanied on this occasion by one of the few tropical foresters from The Netherlands, Mr. A.J.M. Wouters (Ministry of Agriculture, Nature and Fisheries, department of Tropical Forestry), Mr. W. Kriek (International Coordinator of the Forestry Action Plan) and Mr. H. Voortman (WWF-NL)."

"The measurements were taken from both thinner and thicker trees, to which bailiff Groot observes that the thicker trees were in the majority. With this, bailiff Groot wishes to make it clear that it is not entirely correct to take the mean of all of his measurements, but that in order to determine a more accurate mean this value should be increased."

"The figures and measurements of bailiff Groot are of no value without a correct interpretation. It is important here, to arrive at drawing up a basic scheme of expected timber yields for the nearby and further future. As point of departure the measurements of the bailiff should be taken, from which point prudent calculous follows. The following points of departure are thus formulated on these data, on which the basic scheme is calculated. Already at this point it should be noted that these points of departure are explicitly supported by Mr. Wouters, who gave evidence in a written statement to this effect (EXHIBIT 5)."

"After four years, the average Huizinga [Flor y Fauna's Director; author's note] teak tree in Teakwood I has reached a diameter of over twelve centimeters (calculated by division of the diameters as measured by the bailiff by the number of trees measured). The young teak trees (Teakwood III and IV) are (comparatively) somewhat thicker. For the calculation of the basic scheme this is left out. When corrected for the thickness of the bark the net thickness after three years is put at 10.5 centimeters. Actually, this figure is too low as point of departure now that the better trees (i.e. the ones with the larger diameters) surpass the lesser ones (i.e. the ones with the smaller diameters). (See the official report near the bottom of the penultimate page: "...to which I can further remark, that the thicker trees were predominantly present"). The purer mean thickness will thus be more than the mean of the trees that were measured by bailiff Groot. For the purpose of drawing up the basic scheme this fact will be left out. On top of that, the thinnest trees will be removed at time of the first cut and especially the thicker trees will be left standing. Comparatively, this will result in an extra mean diameter increment, at every cut. This effect will also be left out of the equation."

"The mean height of all the measurements taken by bailiff Groot in Teakwood I, II and IV is 14.3 meters. For the basic scheme we will lower this to twelve meters."

"The current growth will continue (three centimeters per year for the coming four years is a minimum that can be expected). A mean diameter increment of 1.7 cm per year is absolutely too low. This low mean would deny all the added value of future maintenance, fertilization and management. For the basic scheme we will "forget" this added effect and keep the increment at 1.7 centimeter per year."

"The height increment will be curtailed in favor of the diameter increment as a result of a change in the nourishment and fertilization (less P, more K). Even so, the trees will continue to grow at a gross rate of 2-2.5 m per year. As a result, Huizinga expects the trees to be (substantially) higher than 30 m after 20 years. For the basic scheme Huizinga uses a gross increment of 1.1 meters per year. Thus the usable height will increase with 66.6% of 1.1 meter = .77 meter, which is rounded off to the lower value of .75 meters per year."

"Huizinga starts all projects with 1,600 teak trees per hectare (the distance between trees is two and a half meters)."

"Because of the strong initial growth, Huizinga expects that the first cut can be advanced (after year seven). If the current growth continues (and this is to be expected), then it might be that the first cut will take place in two years from now (that is, after year six). This will further increase the yield because the trees that are not cut will receive more space, light and nutrition. (N.B. each cut amounts to 25% of the standing trees)."

"The average height of the Teakwood I trees is already 5 m over what is used as an assumption in the basic scheme."

"The increment of the usable height per tree with .75 meters per year is too conservative. A teak tree can, even during the last years (between age fourteen and twenty), hardly grow any slower than one and a half gross meters per year (=one meter usable height per year)."

"The loss of a total number of trees of 240 per ha will prove to be far too high. At this point it can already be concluded that the loss at the first cut [Treemail notes: the word thinning would be more appropriate, but is never used] is practically zero (a maximum of 10 trees per ha). Huizinga already foresees now that the expected loss at the first cut will be practically zero. For the fourth cut, so Huizinga expects, the loss will also be small. These are the strongest, thickest and most healthy trees from the plantation, that will be cut last. In fact, it is to be expected that the final cut of the thickest trees should not even have any loss whatsoever. For the purpose of the basic scheme, prudent points of departure are taken. The sum total loss of 160 trees per hectare at the second and third cut can be considered as high. Initially, Huizinga assumed a loss of 200 trees for the second and third cut. This appears to be unrealistic, and is therefore reduced to two times 80, which is 160 trees. Finally, the sales value of all the trees that are lost is set at NLG 0.--. This is, it goes without saying, quite different in practice. After all, it is evident that these trees will also be processed and sold. For the calculation of the basic scheme this is left out of the equation."

BASIC SCHEME 1 For reasons of economy of space, the full table is not presented here. The main results are:

  • Diameter at year 20 is 37.7 cm
  • Usable tree height at year 20 is 20 m
  • Total tree loss is 240 trees/ha
  • Total commercial yield is 1,057 m3/ha
  • The table is based on the following assumptions:

  • mean diameter increment is 1.7 cm/yr
  • usable height increment is .75 m/yr
  • trees lost: 40 - 80 - 80 - 40
  • cylinder correction: 25%
  • BASIC SCHEME 2

        Year Diameter Loss Cut Yield
        (in cm) (trees/ha) (trees/ha) m3/ha

        4 10
        5 12.5
        6 14.5
        7 16.5
        8 18.5 10 390 94
        9 20.5
        10 22.5
        11 24.5
        12 26.5 50 350 232
        13 28.5
        14 30.5
        15 32.5
        16 34.5 50 350 491
        17 36.5
        18 38.5
        19 40.5
        20 42.5 10 390 996

        TOTAL 120 1480 1813


    This table gives, in addition to the above, a "usable tree height of 24 m after 20 years".

    This table is based on 4 assumptions:

  • mean diameter increment is 2 cm/yr
  • usable height increment is 1 m/yr
  • trees lost: 10 - 50 - 50 - 10
  • cylinder correction: 25%
  • "The written declaration from Mr. Wouters (see exhibit 5) confirms that all the points of departure are correct and that he can approve of the basic scheme which results in a commercial timber yield of well over 1,000 m3 per hectare. A timber yield of 1,057 m3 per hectare, that is what Huizinga is going for, and he will attempt to do better still. This should be easily attainable."

    Flor y Fanua's legal representative F.H.J. van Schoonhoven then continues with the presentation of a basic scheme 3:

    "In conclusion, more minimal [author's note: yes, that is what is written because the basic scheme 1 has already been depicted as minimal projection of expected yields] assumptions than those used for the basic scheme are not justified by the findings of bailiff Groot. But still, in order to arrive at a scheme with even lower values, the initial diameter is lowered with half a centimeter to ten centimeters (instead of 10.5 centimeter) and the annual increment is lowered to one and a half centimeter (in stead of 1.7 centimeter). The following picture then emerges:"

    BASIC SCHEME 3

    For reasons of economy of space, the full table is not presented here. The main results are:

  • Mean diameter increment of 1.5 cm/yr results 34 cm at year 20
  • Usable tree height at year 20 is 20 m
  • Total tree loss is 240 trees/ha
  • Total yield is 867 m3/ha (MAI=43.35 m3/ha)
  • "From basic scheme 3 it appears that an even further reduction of the already low points of departure lead to a yield per hectare that is within the margins as they were presented in the calculated examples by Huizinga and OHRA."

    -end of court presentation by F.H.J. van Schoonhoven-

    Notes on the data OHRA and Flor y Fauna presented in court:

    The Ministry of Agriculture's report on the Flor y Fauna teak plantations informs that: "In WWF-NL's commission, the FYFSA plantations were checked in 1992, by an environmental consultant (Masterson, 1992), against the Forest Stewardship Councils' Principles."

    Prof. Dr. Ir. R.A.A. Oldeman notes on February 17, 1996 (excerpts):
    "After careful study of bailiff Groot's report on the teak plantations of Flor y Fauna in Costa Rica (Nov. 1993) and the appended declaration of a former student of mine named Ir. Wouters (Dec. 1993), and the derived written memorandum of pleading in a case [Flor y Fauna + OHRA + Huizinga + Natura Bergum] versus van Weezendonk (Dec. 1993), I summarize the value of the joint papers as follows.

    Forty trees out of 2 million were measured, this amounts to one in 50,000. From this, values for mean diameters are calculated within a margin of one tenth of a millimeter (e.g. 12.06 cm). This is comparable to measuring the body length of 300 Dutch people (1 in 50,000) and to determine that the average Dutch person's body length would be 1 meter and 76 cm and 6.2 mm.

  • THE SAMPLING SURVEY IS NO GOOD.
  • THE ERRORS OF MEASUREMENTS ARE NOT RATED.
  • THE SOURCE OF THE MEAN RATED HEIGHTS IS OBSCURE AND THEREWITH THEIR RELIABILITY IS VERY LOW.
  • THE SLIPSHOD USE OF CORRECTION FACTORS AND (SO-CALLED HARVESTABLE) HEIGHTS HAVE INTRODUCED SERIOUS ERRORS INTO THE CALCULATIONS.
  • THE YIELD TABLES, AS INTRODUCED IN THE WRITTEN MEMORANDUM OF PLEADING, LACK ANY, I REPEAT ANY, BEARING ON REALITY.
  • THE ERRORS THAT HAVE BEEN MADE ARE AT THE LEVEL OF SECONDARY FORESTRY TRAINING WHERE, AS A RULE, SUCH ERRORS ARE CONSIDERED UNACCEPTABLE.
  • In conclusion, I point out the substantial damage to the national and international reputation of Dutch forestry and nature conservation, to the credibility of the Dutch civil service as an instrument of policy-, certification-, and project- making, and to the investors who have been lured towards the teak investments through the media; all of this brought about by the OHRA/Flor y Fauna teak affair. The most impacting long-term damage of all will hit the tropical forests. As a result, their preservation will be taken far less serious."

    On the Ministry of Agriculture's report, Professor Centeno notes on June 20, 1996:
    "As late as December of 1995, Flor & Fauna introduced as evidence in a court of law a document from the Ministry of Agriculture of the Netherlands, dated December 28, 1993 [Reference 9], where the MINIMUM expected yield for these plantations is established at 1,057 M3 per hectare during the 20 year rotation period. This implies a MINIMUM mean annual increment of nearly 53 M3 per hectare per year!!
    The same document was introduced as evidence by OHRA to the Reclame Code Commissie in January of 1996.
    [NOTE: This document has proved to be an embarrassment to the Ministry of Agriculture, due to its speculative nature, to its lack of professionalism, and to the inclusion of such an array of elementary mistakes that would flunk first year forestry students at any University]

    To deny now such documented evidence of grossly exaggerated growth rates is a serious miscalculation of the memory and intelligence of the investors OHRA it bound to serve."


    topCHAPTER 4

    Compiled Comments on Flor y Fauna's Projections:

    a) In a letter to WWF-NL and OHRA of November 11, 1995 (which was made public for the Standards Advertising Committee's hearing on May 9, 1996) Flor y Fauna's Pablo Camacho states that:
    "Since early 1995 I have been part time employed by Flor y Fauna. As part of my work for Flor y Fauna I am responsible for collecting growth and yield data of the teak plantations set up since 1989."
    "At the request of Flor y Fauna I have analyzed the growth data from a series of selected sites in TEAKWOOD III, IV, and V that are best comparable with the sites of the TEAKWOOD VI plantation. The initial growth figures for TEAKWOOD VI (planted in 1993) have also been analyzed again using data recently collected."
    "Based on all these data it is my professional judgement that the yield that can be achieved on the OHRA/TEAKWOOD VI plantation will be approximately 700 cubic meters per hectare over the 20 years rotation. Similar growth figures are expected for TEAKWOOD VII, and VIII plantations."
    "I have been informed that Flor y Fauna has indicated a range for the expected yields to range between 400 to 850 m3/ha over the 20 year rotation. Based on the current growth data and the current development of the plantations there is no doubt that the yield prediction of the various stands will fall in this range." -end-

    b) Prof. Centeno comments on June 20, 1996:
    "In its promotional brochure: TEAKWOOD III: AN INVESTMENT IN A GREENER FUTURE [Ref. 11], Flor y Fauna pushed investments in its venture promising unaware customers a total of 950 M3 of tradable timber per hectare in 20 years [equivalent to a mean annual increment of 47.5 M3 per hectare per year, and refers only to the proportion of the timber whose economic value belonged to investors]. At that time Flor y Fauna sold directly to investors, requesting 28,600 US dollars per hectare. The return to investors was highlighted at over 1.6 million dollars per hectare!" -end-

    c) In a message to Prof. Centeno from the Chairman of the Board of the FSC, dated January 22, 1996, and referring to the director of the Rainforest Alliance, it is stated: "He [the director if the RA] informed me that FyF significantly reduced its growth estimates based upon empirical data from the monitoring program..."
    OHRAs adjunct Director H. Janssen denies this in a statement to 'Het Financieele Dagblad (NL's financial daily newspaper) on May 7, 1996. Janssen states: "It is an old misunderstanding ... OHRA has, from the very start in March of 1993, used the range from 20 to 42.5 m3 in its advertising materials."

    d) On January 28, 1996 OHRA's Director of the Board Huesmann informs the Associated Press of The Netherlands, ANP, that: "The yield of the first plots that Flor y Fauna started eight years ago is exactly conform the expectations. Investors that have joined have meanwhile received their first share of the profits [note: to the best of Treemail's knowledge, these first shares of the profits were not yet received by investors at the time of the writing of this paper]."

    e) On March 4, 1996, OHRA and WWF-NL present an 'executive summary' of a report by CCT to the press. The summary presents data on attained growth based on measurements provided by Flor y Fauna. The reported MAI for Teakwood I (at age 6) is given as 17.38 m3/ha, and for Teakwood II (at age 5) as 14.48 m3/ha.

    f) In the Flor y Fauna info-sheet to investors of April 28, 1996, called 'Teakwood Info' the following information can be found:
    "The thinnings for TW I - V are completed, and in TW VI a partial thinning was executed."
    "Thinnings in TW I - VI have produced 65 cubic meters of sawn timber. This yield is not high because it was mainly a purification, which means that all the poorly growing trees were removed. Only the stems with a diameter of > 8 centimeters were sawn. Smaller diameters go to the turnery to be processed into table-legs, chair-legs, lamp posts etc."
    The Dutch language summary of the CCT report informs: "FyF has started storage and maintenance of the trees with a small diameter, which are produced during thinning of the plantations. The tree stems are still waiting for a suitable demand."


    topCHAPTER 5

    The End

    Flor y Fauna's information sheet 'Teakwood Info' of April 28, 1996, informs the investors that the projected date of thinnings has been advanced and that the yield is lower than expected. Thinnings have been initiated for Teakwood VI, according to the same Teakwood Info. This implies that, for Teakwood VI, the thinnings have been advanced from the anticipated year 8 to year 3. This is by no means a small margin!

    The rationale for a possible advancement of the Teakwood thinning schedule is in the case of trees growing faster than expected, according to Flor y Fauna's court presentations. However, according to the information provided in Teakwood Info, this condition is not met. In fact, Flor y Fauna has informed that the yield is lower than expected. At least one alternative rationale for such drastic advancement of thinning schedules as Flor y Fauna now reports for the Teakwood VI plantation is well known in forestry; and this is when the thinnings are primarily required as a phytosanitary measure.

    After having projected timber yields in the order of 1,000 m3/ha in sales brochures for Teakwood I-V and VI, and after having substantiated these figures in court, Teakwood's present attempts at demonstrating that they have never portrayed any other yield range than 400-800, or 400-850 m3/ha remain unconvincing and they are in flagrant contradiction to the very materials that the OHRA itself has presented as exhibit before the Standards Advertising Committee (i.e. the March 1993 sales brochure). The first utterance to outsiders of the latter figure appears to have been by OHRA in a letter to NOVA on November 30, 1995 (see separate agenda).

    OHRA's latest 'infomercial', Vast en Zeker of Spring 1996, repeats the same range of mean diameter increments as those given in the original sales brochure for Teakwood VI of 1993. In forestry, there is a conversion factor named 'form factor' that provides a linear relationship between stem-diameter and stem-volume. Even if this conversion factor is invariably depicted as 'cylinder correction' by Flor y Fauna, the fact remains that this is a constant for any given seed provenance and its value can be found in any serious teak volume table for the provenance of the trees planted by Teakwood (see the full text of the Declaration by Prof. Oldeman of February 17, 1996).

    If the Teakwood trees would demonstrate a decrease of expected yields from 1,000 to, say, 500 m3/ha while maintaining the same diameters, this would imply that the form factor would have halved. This portrayal of calculous is reminiscent of [.....]. Such unusual growing behavior is arguably typical for car antennas and telescopes, but it is not likely to occur with trees, not even with teak trees.

    The Rainforest Alliance's Smart Wood Programme has certified the Flor y Fauna plantations in 1995. This was done on the basis of yield forecasts of 1,001.50 m3/ha for Teakwood I-V (MAI=50.07 m3/ha). In the case of the plantations of Teakwood VI-VIII, the certificate endorses a range from 933.74 m3/ha for Teakwood VI-VIII (MAI=46.69 m3/ha) to 1,129.69 m3/ha (MAI=56.45 m3/ha).

    Basically, only three reports were ever presented by the Teakwood partners in substantiation of the yield predictions. These are: a) the bailiff report of 1993, b) the Ministerial report by Mr. Wouters, and c) the CCT 'executive summary' presented in March 1996 [note: All three reports were produced after OHRA and WWF-NL had joined the programme. The Rainforest Alliance presented its first audit report during the mission of Wouters and the bailiff; according to the Ministerial report that is].

    ad a) The bailiff's report and tables have been convincingly dismissed as statistically invalid and as entirely irrelevant to the formulation of yield projections.

    ad b) The Ministerial report states on page 2 that its conclusions and findings are for the Ministry's internal use only. What is more, two years after its publication, it surfaced that the report had been prepared by the President of Flor y Fauna's Scientific Advisory Board [note: see agenda on main events for details]. As to the author's endorsement of the bailiff's findings, see ad a) above.

    ad c) For the hearing at the Standards Advertising Committee's of July 18, 1996, OHRA has announced that the CCT report has not been finalized, and that it can therefore not present the full text of the CCT report. This does not bode well with regards to CCTs methodology, as executive summaries are supposedly written only after a main text body is finalized. Even so, the executive summary informs: "The company has reported data on teak volume yields and increments higher than those reported for teak in Costa Rica and other countries." According to CCT's 'executive summary', these figures that are higher than anything ever reported, result in an endorsement of an expected cumulative log volume "from some 400m3 to 800m3".

    From this it can be deduced that Flor y Fauna acknowledges that in order to attain growth figures within the range of 400 to 800 m3, cumulative log volume will have to surpass anything ever recorded prior to the presentation of the CCT 'executive summary' in March 1996. Notwithstanding, Flor y Fauna has advertised Teakwood I-V with cumulative log volume projections of 1,001.50 m3/ha. This notwithstanding, OHRA has advertised Teakwood VI with projections ranging from 933.74 to 1,129.69 m3/ha.

    Investors have at no point in time been informed of the staggering magnitude by which 'anything ever recorded on teak growth in Costa Rica or other countries' would have to be surpassed in order to attain such projections. Quite to the contrary: the sales brochure for Teakwood VI assures the investors that the projections are arrived at "on the basis of publications and research in the region".

    At this point, it is relevant to look into the Smart Wood Programme's 'Guidelines for assessing forest plantations, revised draft of October 1993. The chapter 'Generic information and criteria for forest plantations' outlines requirements that have to be fulfilled in order to obtain a Smart Wood certificate: "Growth and yield projections in planning and/or marketing documents are reasonable and based on a combination of scientific literature and documented or practical local experience." However, it is precisely this type of documentation that CCT claims to be non-existent. Is this perhaps the reason why Teakwood has never presented such documentation; not in court, not to NOVA journalists, not to the media, and possibly not even to the Rainforest Alliance as would be required under the Smart Wood criteria for certification of forest plantations?

    On at least three counts, Teakwood can be perceived as having the responsibility to base its yield projections on scientifically valid data:
    1. The text of the Teakwood brochure of 1993, in section 4.2, states that increment projections are arrived at "on the basis of publications and research in the region".
    2. The Smart Wood Programme's 'Guidelines for assessing forest plantations, revised draft of October 1993, chapter 'Generic information and criteria for forest plantations': "Growth and yield projections in planning and/or marketing documents are reasonable and based on a combination of scientific literature and documented or practical local experience."
    3. As the Teakwood contract partners all claim that the Flor y Fauna plantations are managed according to the FSC Principles and Criteria [note: see agenda of main events for details], Flor y Fauna is required to operate within the accredited Smart Wood Guidelines. This is all the more acute, now that the FSC Director T. Synnott has expressed to WWF-NL in a letter of January 30, 1996, that: "The FSC expects to extend accreditation to cover plantations in the very near future."

    Arguably, there is a fourth count by which Teakwood contract partners are bound to base yield projections on scientifically valid data and regional research. This would be out of their shared responsibility and respect towards the investor. But that, of course, remains a matter of perception.

    Treemail urgently calls upon all those involved in the Teakwood debate to consult and adhere to the Society of American Foresters' Code of Ethics. It is a mighty fine document.


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