Futuro Forestal in Panama

Here is an interesting business model.

Futuro Forestal is a German-Panamanian forest service company which over the last few years has developed an innovative model of sustainable forest management in the tropics. Futuro Forestal offers its world-wide investors a unique opportunity to own a forest, to invest in a high yield product and to foster ecological and social development in the tropics.

  • Up to 11% internal rate of return per year on a 25-year term from timber sales, seed sales, and carbon credit sales
  • Direct Title Real estate ownership in a tropical forestry operation in Panama
  • No.1 Forest Investment in Latin America (SICIREC, 2003 and 2004)
  • Risk minimization through diverse ecological portfolio (7 primarily native species of fine timber)
  • Institutional cooperation with renowned universities such as the Yale School of Forestry and Environmental Studies and the Smithsonian Tropical Research Institute (PRORENA)
  • Positive ecological impacts: habitat restoration, direct contribution to global warming reduction
  • Positive social effects: long-term employments in poor rural regions, reduction of rural migration and impoverishment

The great thing about a for-profit model is the incentive for replication. If a venture is successful, it will be copied. You don’t have to be innovative or terribly clever, just copy what works in another country, roll it out, and make money.

What is there not to like about Futuro Forestal? For starters, it is run by a husband and wife team. As an investor I don’t like husband and wife management teams. Either they are in cahoots, or they get divorced and the venture is destroyed in the ensuing acrimony.

It would have been nice with three years of audited financial statements on the company’s web site.

Fututo Forestal doen’t really have a management team. If you have a non-performing member of a management team, you can fire him or her, and continue the business with little harm done. If a member of the team leaves the business, life goes on. There is redundancy in the system.

Fururo Forestal has to make a choice between being a small lifestyle venture (nothing wrong with that), and becoming a larger, more ambitious company. If it chooses the latter, it should get a world class board of directors and a proper management team. It can’t do that with its current size, so it would probably have to expand outside Panama. What is has already got is proof of concept and a reference site, and that is the hardest part of starting a new venture. It can use that to build upon.


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