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SpiritWood Corporation |
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History | |
It was July, 1996. Butch Marzan and Ken Eicher were working for Shell PDO in the Middle Eastern desert country of Oman. We had known each other for almost four years and had been discussing what we would do, when we retired from the oil industry. We both understood the value of an honest working relationship, and thought that it was worth considering joining together to form a business venture that would provide us a steady income and allow us to retire and work on our own project. Over the next several months, we discussed and dismissed the ideas of starting a shrimp farm, and a generic fish farm. Both ventures were thought to be too risky and too difficult to manage the unknowns of weather, sea conditions, pollution, etc. If the fish were improperly fed, they would die, along with our funds and our future together. A friend of Butch was a Senior Forester with the Department of Environment and Natural Resources in Manila (DENR). After one of his rotational leave periods, Butch returned to Muscat with several newspaper articles detailing the Filipino Government’s predicament with their rainforests. Out of 18,000,000 hectares (69,400 square miles) of forest some forty years ago, there now remained only 900,000 (3,500 sq. miles). Everyone had come and gone, and left rolling grasslands. We knew we wouldn’t be saving the world any time soon, but thought we may be able to generate a business big enough to support our two families during retirement, and possibly give back some of what our past generations have taken. Butch’s family is filled with farmers of rice and corn, but they had never been involved in tree farming. We formulated an initial five-year plan, which I passed out and discussed with the people we knew in Oman. Butch and I put up $55,000 dollars and we were looking for investors to add in $45,000 to get our 10-hectare (25 acre) project underway. We thought purchasing 10 hectares was the way to go to ensure we controlled the land. We would plant 2,500 trees on each of two hectares per year, to give us 5,000 trees per year for the required five-year cycle. In the times that Butch was away working, his unemployed Brother-in Law would supervise the operations for us. We found out later that Francisco had a degree in Agriculture. By this time, it was December 1996, and I had made my first two trips to the Philippines. Butch had retired from Shell and we had a really serious problem on our hands. I had already raised about $30,000, but we didn’t have any land! The only land we found to purchase was 30 hectares and the price was $80,000. We would have had no money left over for trees, if we bought the land. Every field office of the DENR we called on were unaware of the recently passed land reforms, or the Government’s good intentions of opening up and making lands available to private investors. We just couldn’t get our foot in the door. Luckily, we had Butch’s friend from the DENR office in Manila with us on one visit. Mr. Pete Escano explained our intentions to the local officials and within two months, we had our first 100-hectare parcel in Santa Maria signed up. We were shocked at the size of the land. 100 hectares (247 acres) is the size of land a town would use for over one thousand homes! We really thought the pictures I returned to Oman with would ensure that we would raise the $45,000, so we started discussions with Pete, to use him as our tree planting contractor as he already had his own nursery. I’m not sure exactly when things changed so drastically. It was around May, 1997. Our initial five-year plan had been shattered, and our "dream" of planting 5,000 trees in the first year really did become history. People started sending money. I had either talked them sideways to the point where they would gladly invest so I would change the subject, or, they thought I would leave them alone once they joined the group. WRONG! I kept calling Butch every month telling him to "plant more". He would ask "how many" and I would reply "10,000. No, better make it 15,000". He would just laugh and laugh in disbelief. But, he kept going. During our first year, we ended up splitting the 100 hectares into 2 fifty-hectare parcels, with our own operations shadowing Pete’s. In this period we planted a total of Two Hundred and Fifty-Five Thousand trees! As fate would have it, we started operations exactly at the beginning of El Nino. We lost 34,000 seedlings that first year, but I had negotiated a ZERO mortality contract guaranteeing the survival of the trees for the first year. All 34,000 have been replaced for free as per that contract. We still had very little recognition of our project from local officials and it was not without considerable work that Butch secured over 100 hectares of beautiful land that has become year two’s project. We will have planted almost 300,000 trees when the year is completed in March 1999. The main difference was that we were able to secure one piece of land with three-year old trees already on it. They were leftovers from a previous project. We are sharing these 65/35 for maintaining them and developing the land around them, with a further planting of 60,000 seedlings. January 6, 1999. From these humble beginnings 2 years ago, we have now planted over 500,000 trees. All the investors know what Gemelina Arborea (the paper tree) is now. We have three market places for the trees as feed stock for pulp and paper, chipboard, and later (7-9 years old), lumber. The investment has always been about the short growth cycle of 5 years, and the company strives to plant as many seedlings per $5,000 unit as we can. Year Three will be in the range of 1,700 per unit. Current prices peg the average per tree yield at approximately $22. I have been using $17 to make every effort to be more than fair. Even at only $12 per tree our future harvests of years One and Two are worth $6,000,000, or an estimated yield of $20,000 for a $5,000 unit. Again I want to stress that the growth cycle could be 4 ½ to 6 years depending on the weather. So, why was January 6, 1999 so important? That is the date that the Secretary of the DENR (equivalent of the Minister of Forestry) paid a surprise visit to our first year project site. He brought two Congressmen, the Regional Executive Director (RED), the Regional Technical Director (RTD), and a TV crew with him. They inspected the farmland, the water reservoirs (built for El Nino), the buildings, and asked about our infrastructure. They independently interviewed our staff regarding their treatment and spent almost two hours talking to Butch about the company’s development thus far and our goals. Their comments regarding our excellent care and maintenance of the land and the people, as well as our professional commitment to the project were overwhelming. The Secretary had not even seen the second year project, which has come along even better. We didn’t have to deal with another El Nino and the soil quality is better. Butch is travelling to Manila this week to give him a copy of the progress report from year two, as well as photos, to let him see what we mean by commitment. He is also going to discuss our latest land acquisition in the Province of Quirino. I can now announce that we will be awarded (NOT leasing) approximately 300 hectares for the upcoming year’s projects. That is enough land to plant 3/4 MILLION more trees at our current spacing of 2 meters by 2 meters! At our current planting rate of 250,000 per year, this gives us 3 more growing seasons. You can understand our excitement of knowing where our future lies. We have been awarded this much land because we are the only internationally financed, private enterprise that is pursuing sustainable forestry as a viable solution to cutting down and then abandoning the land. The senior DENR representatives of District 2 have been instructed to give us their full co-operation and support for this project. The only request we’ve had from them is "could we also please plant a variety of Eucalyptus that the Government uses for telephone poles". They are in short supply and yield about 8 times as much money as Gemelina, but take 9 to 10 years to grow. We will, of course, work closely with the local people to ensure all goals are met. Year three has just started and the new land mentioned above is where your investment dollars will be spent to continue our commitment to the goals mentioned before. That is to develop a sustainable, renewable, forestry project based on treating the people well, planting as many trees as possible for the available funds, and ensuring maximum return to the investors on a continuing annual basis. I have enclosed a copy of the organisation chart of SpiritWood as I envision it in two to three years. We currently have 17 full time employees and 5 contract staff. The position of Operations Manager has already been filled, and he will start with Year Three. Francisco supervises planting on each year’s farm to maintain quality control. Thank you for taking the time to read about us, and for sharing the vision of the professional, committed company that you will be investing with. |
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