Growing and processing of intensive forest

Project summary

A project for growing an intensive forest on the territory of Ukraine with an area of one hundred hectares.
The volume of investments is 1110000 thousand US dollars
The project is designed for an intensive forest planting and growing period of at least five deforestation cycles every 6 years, with a full return on investment and a net profit of $ 3,474,600 in the first 5 years.
The minimum total net profit from five generations of a one-time planted forest over 30 years, taking into account the return on investment and payment of taxes, will amount to 20 million 100 thousand dollars, with a constant income of more than 4 million dollars, once every six years.
The creation of a joint venture for the cultivation, harvesting and sale of timber on the territory of Ukraine and trade for export is considered, with the distribution of profits - 50% investor, 50% contractor partner.

BUSINESS IDEA
The study of the market for the processing and sale of forest of this category leads to the conclusion that the demand of the consumption market has increased by 6% every year, and becomes especially relevant against the background of legislative changes to restrict the cutting of state forest lands in Ukraine and other countries of the European Union and Asia.
The implementing partner, having experience in the selection of agricultural land and expansion of borders, for agricultural enterprises in Ukraine, undertakes the obligation to select the required plot of land corresponding to the parameters of soil quality: groundwater, acidity, bonitet and other necessary indicators. Also, consultations were held with producers of seedlings, corresponding to the climatic conditions of the region, for the purchase of planting material. The executing partner organizes soil preparation, planting of seedlings (62.500 thousand pieces), provides all the necessary measures for technical cutting and processing, protection, organization of an irrigation system on the site, selection of a more profitable contract for sales and logging.
Additional super-profit from the planned revenue can be obtained by creating your own trademark for partial processing of wood into boards, beams, products, etc., thereby increasing the planned profitability from 50% to 200% of the profit.

PRODUCT DESCRIPTION
Intensively growing forest, popularly Adam's tree, in the international classification as (Paulownia Clone). It is a fast growing tree with high beneficial characteristics and properties. A straight trunk without knots, reaching a height of 20 meters in 6 years, with a diameter of 30-45 centimeters, which allows you to grow a large volume of high-quality forest in the shortest possible time. Stress resistance of this type of tree to frost and hot temperatures makes it possible to grow it in our climatic zones with a sufficient temperature reserve. Its use in all branches of construction, furniture industry, household items, toys, musical instruments, yachts, surfboards ... gives a huge market for the sale of the produced raw materials in the world markets. The high characteristics of density, environmental friendliness and energy efficiency of wood, allow already three to four years after planting a forest to make felling for the manufacture of pellets, using the firebox of boilers and stoves. Thereby accelerating the possible return on investment.

FINANCIAL PLAN
The financial plan is calculated taking into account the minimum renewed tree generation of 5 growth cycles (taking into account the calculations according to the standard technology of tree growth from 5 to 7 cycles), the removal of three hundred cubic meters of round timber from a hectare of land, and the minimum wholesale cost in the unprocessed timber market - $ 150 per cubic meter

INITIAL COSTS
- purchase of a land plot by OSG in ownership, or a farm, with the transfer of the purpose of land to the category of growing industrial crops
-preparation tillage
- purchase, installation, connection of the irrigation system
- purchase of seedlings, delivery
- mini tractor + planting equipment
-marking the perimeter and planting seedlings
-construction of a temporary security point and a warehouse
- cargo-passenger transport
-meteo - station, drone
-generator, hand tool
- fuels and lubricants
the total number of primary investments is equal to 956000 $

CONSTANT COSTS FOR THE FIRST 6 YEARS
- salary project security and maintenance
- current maintenance and depreciation costs
- felling and logging
total for operating expenses for the first 6 years - 144,000

TAXES
on a simplified system, they are paid in the amount of 5% of the profit and amount to:
- the total amount of expected profit over 6 years 4,500,000
- the sums of investments and fixed costs for 6 years 966,000 + 144,000 = 1110000
- balance to pay tax 3,608,000 - (5% tax)

net income from primary forest sawing 3,484,600
It is worth drawing your attention to the fact that the subsequent generation of the forest reduces the total expenditure part for 6 years to 144,000 thousand, and increases the net income, taking into account the payment of tax, to the amount of 4,137,700 thousand dollars.

RISKS
The risks of this project are considered up to a maximum of 5% of forest losses in the first year of seedling growth, which is confirmed by studies of forest producers and companies selling seedlings. These losses in the long term are offset by the annual increase in wood prices, and partial or complete processing of round timber provides a sufficient margin in excess of profit for the enterprise. Also, the value of land is an asset of the company, and it grows in value annually, and when the land market opens in Ukraine, its value will increase significantly.

Looking forward to cooperation
Ovcharenko Vladimir , Ovcharenko Alexander
+380 99 053 63 20
+380 67 720 56 46
Gmail: c.c.kr.abota@gmail.com