GROWING HIGH VALUE TIMBER

Planting African mahogany (Khaya senegalensis) provides you with the opportunity to earn good income from producing high value timber.

African mahogany is very close in color, texture and weight to a native tree called Beng (Afzelia xylocarpa). It is at times difficult to tell the two timbers apart. The current
price (as of March 2017), of Beng timber is generally USD700 per m3 for a log and USD1300 per m3 for sawn timber.
African mahogany is known in Cambodia as Kandoeng damrey and the timber sells for a similar price to Beng.

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SUSTAINABLE FORESTRY IN EMERGING MARKETS OF SOUTHEAST ASIA
Tropical Southeast Asia is an emerging market for sustainable plantation forestry investment. Our strategy is to focus on certified plantation forestry with an
emphasis on technological and silvicultural improvements and a rigorous approach to environmental and social values and good governance. Cambodia and
Thailand are ideally situated to take advantage of the market.

LARGE PLANTATIONS
If we look back ten years ago, the US and European markets were the center of demand for wood products, including both pulp and paper and lumber for housing
construction. Today China is the largest importer of logs and lumber and rivals Japan as the largest importer of hardwood woodchips. That has created a restructure
in international timber markets and the rise of Asia as the primary source of demand growth. There has been a systematic shift in world timber supply from
harvesting extensive natural forests to intensively managed timber plantations.

When we look at future supply, natural forest harvest of timber will be flat or slightly declining and all incremental supply will come from plantations, primarily in the
Southern Hemisphere and tropics. That means if all supply will come from plantations and all incremental demand will come from Asia, then timber plantations
located in Asia supplying Asian demand would seem to be a good investment opportunity.

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FARM FORESTRY
Farm forestry means the incorporation of commercial tree growing into farming systems. It can take many forms, including timber belts, alleys and widespread tree
plantings. Farm forestry can provide farmers with an alternative source of income. It can improve agricultural production by providing shelter for stock and crops and
can provide substantial environmental benefits such as salinity control. Plantations, strategically placed in the landscape, are recognised for their importance for
sustainable production and improved soil, water quality and salinity mitigation, carbon and biodiversity benefits. Investing in growing trees will assist in developing
new export and value-adding industries, and contribute to regional economic development.

Farm forestry is not a new concept. Tree planting was practiced in ancient times in Asia. The Chinese
cultivated fruit trees from at least 2000 BC, and during the early part of the Chou Empire (circa 1100
BC to 256 BC) the Emperor established a forest service with the responsibility for preserving natural
forest and reforesting denuded lands. Subsequent Han and Tang Dynasties (208 BC to 256 AD)
encouraged people to plant trees important for both food and timber production. In the Sung Dynasty
(420 AD to 589 AD) direct planting of tree seeds for reforestation was widely practiced, and public
land reforested by farmers became the property of the farmer. Monographs were also prepared
describing methods of planting and protection of the Tung tree (Aleurites sp.), bamboos, and other
woody species.

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HDM AGRICULTURE CO LTD NURSERY
Tree nurseries are a key success factor in many forestry and agriculture development interventions. HDM Agriculture has built a large-scale commercial nursery
operated with mist and fogging systems and has the capacity of producing up to 1 million plants annually.

The company has produced plants from trees of good form that are available for sale now. The company has established stocks of selected clones of mahogany
trees and from mid 2017, these clones will be in production ready for sale late 2017.

View of HDM Ag.s Greenhouse HDM Ag. President Greg Hooker in Shade House with mahogany plants ready for sale
Greenhouse with clonal plants
in production

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THE PROCESS
Growing Mahogany is not difficult and HDM Agriculture can provide ongoing advice and training to Growers.

First: The land is cleared and ploughed and the planting lines are marked ready for planting the trees

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PLANTING
The recommended rate of planting is in rows 4 meters apart and at intervals of 4 meters along the row. At this spacing, total trees planted per ha is 625
trees. This rate may vary depending on site conditions.

Planting rows

4 meters
4 meters

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LOOKING AFTER YOUR TREES
Proper management is essential to achieving the best possible yield. Fertilizer needs to applied to each tree especially in the early years. The branches need to be
pruned up to 6 meters so the tree can develop a strong clear trunk.

Example of pruned trees Mature tree without lower branches

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HARVESTING YOUR TREES
The trees are harvested in 3 stages:
1. When the tree trunk is at least 20cm in diameter, every second tree along the row is removed. This is called the first thinning. These logs can be sold and could
yield approx. 0.1 m3 of timber per tree, or 31.25 m3 per ha.
2. When the tree trunk is about 35 40cm in diameter, every second tree along the row is removed. The logs from the second thinning should yield approx. 0.75
m3 of timber per tree or 117.25 m3 per ha.
3. The final trees are harvested when they reach about 60cm in diameter, the logs from the final harvest should yield about 1.5 m3 per tree or 234 m3 per ha.
Total yield per ha approx. 383 m3 of timber.

Actual yields may vary from these figures, tree management, climate, rainfall and fertiliser applications are all important to obtain a good yield.

Shown below is the Lucas Portable Sawmill. These machines are designed to suit the harvesting of both hard and soft timber species, and can be operated on any
terrain. The versatility of these mills provides operators with the ability to cut both small and large boards to specific dimensions, whilst minimising wastage.

Mahogany timber
grown in Cambodia

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SUMMARY
The recommended planting rate per ha is 625 trees.

When the trees reach over 20cm in diameter, 312 trees per ha are harvested and total yield could be approx 31.2 m3 of timber.

When the trees reach over 40cm in diameter, 156 trees per ha are harvested and total yield could be approx 117.0 m3

When the trees reach over 60cm in diameter, the final 157 trees are harvested and total yield could be approx 235.5 m3.

Total approx yield per ha: 383.7 m3

Actual yields will vary according to site conditions, rainfall and height.

African mahogany timber is similar in weight, color and texture to the native Beng timber and generally sells for a similar price to Beng timber for both log and
sawn timber.

The current (March 2017) price in Cambodia for Beng and African Mahogany timber is USD700 per m3 for a log and USD1300 per m3 for sawn timber. Prices do
vary between the different Timber Millers.

The fluctuation of the price of timber is subject to changes in supply and demand and therefore these prices are given as a guide only.

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 HDM AGRICULTURE CO., LTD
20C St 18, Toul Sangke, Phnom Penh

Contact
Dr Ngor Botumchan
Vice President

Ph: 012 828889

Email: info@hdmacl.com
Website: www.mahoganycambodia.com
Facebook: www.facebook.com/MahoganyCambodia/

HDM AGRICULTURE COMPANY LTD