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What are the tree investment risks for clients?
Crowdfunding risks for tree buyers.

Buying trees from Better Globe is similar to making a social impact investment, but how are the risks managed?

For investors that become clients and buy trees and Donation Packages significant profits are promised by Better Globe. On this page we will take a closer look at the most important risks attached to the promised returns and how risk management is prioritized.

Trees have historically been very good investments and in the case of Better Globe you also get to help others while earning a significant return. Customers and investors drive social change forward in East Africa by doing good for the communities living there while also caring for the environment of the world. But as with any other promise of gaining something in return there are some risks involved.

How are risks associated with diseases, insects and animals addressed?

Better Globe Forestry collaborates with Kenya Forestry Research Institute, a governmental organization and Kenya's leading research centre for forestry and natural resources, and have full access to all their research. In addition the tree plantations are overseen by world leading forester for dryland forestry Jan Vandenabeele, who is also Executive Director for Better Globe Forestry Ltd. and Technical Editor of Miti Magazine.

Other important partners in terms of productivity and pest control are Kenya Forest Service, The World Agroforestry Centre and Gent University in Belgium. Gent University are helping to develop an In Vitro protocol for the Mukau trees and have also sent students to Better Globe Forestry's tree plantation for practical experience.

Better Globe Forestry has now more than 10 years of experience growing trees under challenging conditions and all the technical competence in place to deal with the risks addressed above. And because of their close relationship with the community, local farmers take extra care so that animals do not damage the trees.

How are the risks of fires and theft addressed?

Trees in plantations are generally at very little risk from fires, which is far more common on plains and in natural forests. Guards are in place 24/7 to both prevent fires and any possible attempt of theft. The distance between the trees makes it difficult for a fire to spread, but even so firebreaks (increased space between trees free of flammable objects) are in place where needed as an extra security measure.

Apple mango plantation at Nyongoro Ranch in Lamu district, at the northern end of the Kenyan coastline

At the Nyangoro site Apple mango (image), Mukau, Acacia Senegal and Casuarina are planted

In over 10 years there have been no incidences of fire and trees are planted in 3 different regions, thus spreading any potential risk. By planting in drylands and supporting the local communities Better Globe have a very good relation with the local farmers, which greatly reduces the risk of arson as well.

Is political instability or conflicts with the local population likely?

Kenya is one of the more politically stable countries in Africa and the other countries Better Globe Forestry are likely to expand to in the future, such as Tanzania and Uganda, are also considered stable countries. As trees are planted in different countries any type of political risk is greatly diminished. For now however the trees are planted in Kenya with support from the Kenyan government.

Better Globe Forestry’s mission is to support the local communities and they provide many benefits to them without competing for arable land. Better Globe Forestry also consult the local communities and have an ongoing dialogue with them opposed to pretending to have all the solutions themselves.

A forestry company in Africa would typically obtain fertile, arable land for fast and easy growth and quick returns, which is the complete opposite of what Better Globe Forestry is doing. Another uncommon strategy is that the timber will be produced locally in the future, which will help provide more jobs and keep more of the value creation in the country opposed to shipping the trees for processing elsewhere.

With all the support given, particularly when customers buy the Donation Package, it is safe to say that Better Globe Forestry has a very good relation with the local communities, and they are likely to be on good terms with them far into the future.

Is bankruptcy a risk?

In the highly unlikely scenario that Better Globe Forestry goes bankrupt, which we imagine is very difficult as they are debt-free and run in a manner that ensures profitability, there are legally registered documents in place that secures the ownership of the trees to the clients.

When you buy a tree it is yours, but cared for by Better Globe Forestry. A repurchase agreement is in place to ensure that the company can buy the trees at a promised minimum price after 20 years. When you buy a tree up to 3 trees are actually planted to ensure the annual returns and the promised buyback price. One Mukau tree is planted as a backup by the company to ensure the buyback price and a cash crop tree is planted to generate produce that can be harvest for profit.

In the eventuality of an unforeseen bankruptcy customers have to organize to sell the trees. With all the large investors in Scandinavia who have bought trees over many years you can be sure there will be no lack of people who are willing to take on that challenge.

Are there any risks attached to price and demand?

Growing demands for tropical hardwood

Growing profits by reducing deforestation and poverty

Trees are a finite resource and in particularly those suitable for the production of tropical hardwood products. Before Better Globe Forestry started to plant Mukau trees (Melia Volkensii) large scale in Kenya the native tree species was on the verge of extinction.

Now they are recovering fast and by identifying some of the trees with the best genetics a cloning (not to be confused with gmo, this is a natural process used for centuries) protocol for In Vitro production is under development. Today the genetics of 100 especially selected “supertrees” are in use for seedling production.

Over the last 50 years it is estimated that as much as 60 percent of the world's forests have disappeared according to the Food and Agriculture Organization of the United Nations (FAO). Rainforests in South America and Africa are amongst those that have seen and continue to see significant losses.

We are now finally realizing the urgent need to preserve forests and biodiversity, but at the same time emerging economies are ensuring the continued and growing demand for tropical hardwood. Traditionally trees have grown with about 5 percent per annum in value over the last 100 years or so and have done very well compared to other investments.

The increasing demand for tropical hardwood and the limited supply are likely to drive up prices even further in the future, there are already clear signs of that. Using today's values the raw timber of a 20 years old Mukau is estimated to have a price of at least €209, which is €39 above the return payment promised in 20 years.

Better Globe trees are also likely to become very attractive to environment friendly markets as they will be sustainably harvested and are socially responsible products. It is a far cry from trees that are harvested from forests and contribute to deforestation and biodiversity loss.

As you can see in the illustration below the quality and characteristics of the Mukau wood is very good compared to other tropical hardwoods. Test production of different wood products shows great promise, as for example the parquet wood used as the background image for the Mukau quality measurements.

Quality measurement Mukau, American Mahogany, African Mahogany, Teak

Better Globe AS are selling trees on behalf of Better Globe Forestry through a form of crowdfunding and have also said that any additional increase in the tree price will benefit their customers, which in case could be a significant addition to the returns paid as the trees are repurchased after 20 years.

How are risks attached to water shortages addressed?

Better Globe Forestry is well prepared for the task at hand with one of the world's best foresters leading their activities. The tree species used are also well suited for the dry climate, in particular the Mukau trees and the Acacia senegal trees are drought resistant. The Apple Mango trees are planted in one of the less dry areas, but still dependent on drip irrigation and special care.

Many different strategies are however utilized for water catchment, water management and erosion control that also help bind more water to the soil. In adition to be a leader in dryland forestry Better Globe Forestry also has access to the shared knowledge of very competent partners. And the more trees that are planted, the more water will also bind to the soil and trees in great enough numbers may also help attract more rainfall in the area.

Before Better Globe Forestry starts the tree planting operation feasibility and environmental studies are conducted. Access to water is naturally part of these evaluations and if no other option is available wells and boreholes can provide water.

We have also had questions about the use of groundwater and how boreholes may affect groundwater levels in the future. It is then important to keep in mind that even though this is an issue many places around the world, the water that Better Globe Forestry is using is not wasted on long showers and swimming pools. They are regreening dry and unproductive lands and the trees they plant help to counteract desertification and erosion, ultimately binding far more of the water from rainfall to the ground.

Tree buyers benefits

There are many benefits of becoming a client of Better Globe. So much so that we have spent a whole page to create a benefits overview that covers anything from what the company has on offer, all the good they do, and some of the unique benefits of getting involved through our web portal.

However, when comparing trees and Donation Packages to a social impact investment through regular financial institutions there are some crucial benefits worth mentioning when considering the risks involved on both ends.

When you become a tree owner you own a biological asset that grows every day regardless of what happens in the financial sector. Over time currencies have come and gone and the economy has had it’s ups and downs the last few years. Now there is again talk about a new financial crises because of China’s decline in GDP in 2015, making it the slowest economic growth in 25 years for the country. Around the world economic commentators are starting to ring the alarm bells, and seemingly with good reason.

Buying trees comes with a different set of risks than most other investments and therefore represent true diversification. The returns are higher than found most other places and as we have shown the risk management is quite extensive and well prepared. And compared to stocks that may reach zero value the same negative result for the trees is highly unimaginable. In total you are likely to have a more secure financial future by also saving some of your money in trees from Better Globe.

Group photo of tree investors and customers visiting Better Globe in Kenya

To the left is the first group of customers that visited Better Globe's plantations in Kenya in 2008, and on the right side the last group from August 2015, which also resulted in a video presentation. In the image from 2008 you see Kenya's Vice President Kalonzo Musyoka holding Rino's book against corruption called "Put Integrity First" together with the Norwegian Ambassador to Kenya, Elisabeth Jacobsen.

Better Globe has paid its customers on time annually since 2010 when the first cash crop trees came of age. Better Globe Forestry have also shown their operations to around 130 customers who have visited the plantations during 7 annual study trips, and so far everything is working well. There have been some setbacks of course, one was the planting of Jatropha trees for biofuel, which turned out to not be feasible and the trees had to be uprooted in the end. But this did not affect the returns promised to customers and investors.

Similar to a social impact investment customers and investors around the world can buy trees and Donation Packages with high returns compared to potential risks. Another upside is that there is no minimum purchase requirement, you can save money in trees buying as little as a tree per month if you want. Regardless of how many Donation Packages or trees you choose to invest in you become part of the solution for the future and you take steps to secure your own financial future. Saving money in trees is good for you, for East Africa and for the world.

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