TREE OWNERS NEWS

Fall 2004

Thank You!

    Sherry and I want to begin by sincerely thanking every one of you who are having us grow trees for you! Your wonderful faith and continued enthusiasm make possible everything that we write about in this Tree Owners News.

    From those of you who joined us at the very beginning and must have been guided by sheer faith, to our newest tree owners who have learned about us from other tree owners, from various articles, or from our Tropical American Tree Farms™ website, we thank you all very much for joining us!

Overview

• We are in the middle of another beautiful rainy season. Everything is lush and green, the air is crystal clear, and all of your and our trees are growing vigorously.
   
• Our planting teams are busy planting our remaining land on the Sierpe farm.
   
• At the same time, our thinning teams are hard at work. They have finished thinning the 1992 trebol, nearly completed thinning the 1996 teak, and have begun the first thinning of the 1997 teak. After that, they will thin the 1994 and 1995 nargusta. And then as soon as the rainy season ends, they will move to begin the second partial thinning of the 1992 and 1993 teak and 1993 idigbo.
   
• By the end of this year, Beto and our teams will have felled and milled more than 2 million board feet of beautiful young tropical hardwood lumber from the trees we have planted.
   
• Raleo™ is growing strongly and clearly will be a wonderful benefit to every tree owner, both by creating greater value for the lumber from the early thinnings, and by establishing Tropical American Tree Farms as a high-end source of top quality, exquisitely beautiful tropical hardwoods.
   
• The farms are changing dramatically as we plant trees and protect and reconnect rainforest and other precious habitats. We’ll try to describe the wonderful changes and show you a few pictures, all taken here on the farms.
   
• Our tree prices will be going up October 20th, 2004.

Wonderful Changes

    Most of our earlier newsletters have been about the business aspects of planting, growing, thinning, and milling. Our business model of planting and growing tropical hardwood trees for harvest continues to receive high praise, and for that we are grateful.

We encourage you to visit your trees and
 experience first hand all that you are helping to protect. 
Tree owners hiking to the foot of a majestic
150 foot waterfall on one of our farms.

    In this Tree Owners News, we will try to convey to you how your tree ownership is helping to protect the environment and how amazingly the farms are changing as we plant and protect them.

    As one illustration of how the farms are transforming, a few months ago we posted on our front page two photos of the same area of Campo Real, our first farm, one taken as we began Tropical American Tree Farms, and the second ten years later.

    We have included the two photos below for those of you who have not seen them on our website. The first photo, taken in 1992, not long after we bought Campo Real and before we began to plant, shows large areas that had been previously deforested and, at that time, consisted of eroding, dry pasture.

    The second photo, of the same area of Campo Real but from a slightly different angle, was taken ten years later, in 2002, and shows that almost all of the areas that had been cleared by previous owners are now filled in, either by trees that we have planted or by natural regeneration in areas that we have set aside in complete protection.

1992 - a typical area of Campo Real, our first farm,  before we began to plant  and protect it	2002 - the same area  ten years later

    Sherry and I have the blessing of living in a simple home nearly in the middle of the area shown in the photos, and so we see first-hand every day the dramatic evolution taking place. What was hot dry pasture 10 years ago is now lush and green, shaded by the fast growing, early succession trees that first colonize the regeneration areas - known here by names like guarumo, gallinazo and mayo.

    All of the early succession trees are considered worthless by farmers wanting to keep their pastures cleared. But we see first-hand that these early succession trees shade the soil and drop lots of leaf litter which decomposes to rebuild the soil. These same early succession trees also provide much needed shelter for the wildlife, and their fruits and flowers provide abundant food for the returning and multiplying birds, butterflies, and animals.

Three-toed sloth tasting a leaf in a cecropia tree
in what was only dry pasture before we began

    Ten years ago, as you can see from the 1992 photo, the only apparent animals were the occasional cow that the short, dry grass could still sustain, about one cow for every two to three acres. Now, just ten short years later, the area is lush, green and alive with flocks of returning birds and animals.

    Ten years ago, the most visible bird on the farm was an occasional buzzard. Today, we often see scores of parrots and toucans as they fly in for the night and enjoy the shelter of the new trees, or feast on the natural seeds and fruits of trees that didn’t exist several years ago, or call raucously to one another from the treetops.

    Even more dramatic and an indication of how healthy the land now is, we now see almost daily a large forest bird species that I had not seen before in my 30 years of experience in Costa Rica, the great curassow. The great curassow is a three foot tall, 8 to 9 pound bird that spends most of its time on the ground in the forest. The world’s remaining great curassows are endangered, under great pressure from loss of habitat and hunting. It is a joy to see them again thriving in the areas that we are protecting.

Female great curassow
The return of endangered birds
and animals is wonderful.

    Another animal that I knew of but had not seen before is the paca, a 15 to 25 pound very elusive nocturnal animal that resembles a large spotted guinea pig. Pacas are also under great pressure from loss of habitat and hunting. Now many pacas forage in the underbrush and newly forested areas of our farms at night.

Male paca
Wild animals now thrive on our farms.

    When I wrote above that we have the blessing of seeing the dramatic change every day, it is not only because the birds and animals are returning and multiplying as their habitat regenerates, but because they have figured out that we do not represent danger to them. They have gotten so comfortable that they often walk through our yard or rest in the trees beside our house, and we get to observe their natural behavior up close.

    Many nights pacas come right up to our house to see if we might have a spare banana, and enjoy the fruits that drop from the fruiting trees that we planted nearby. Male pacas have huge heads and powerful jaws and often fight on their hind legs. The females are smaller and more sleek, and some show signs that they are nursing newborn offspring. Sometimes as many as a half dozen pacas come up to visit.

    Raccoons also often come up to the house in the early evening, often napping on our front porch outside the screen door or in nearby trees. One mother raccoon brings every litter up to the house after her babies are old enough to have their eyes open, as if to show us her new family. The raccoons are very mild mannered and some know how to open our screen doors and walk into our house. The mother raccoon is particularly fond of Jake’s (my younger son) house. She opens his back door, walks in, casually looks around, stops on her way through to say hi to Jake or his cat, then opens the front door and walks on out.

    An adult pair of great curassows often walk up to our house in the mornings and afternoons, usually with a juvenile male tagging along, and sometimes pause to look in our front door.

Beautiful butterflies are now
 abundant throughout our farms.

    Herds of white lipped peccaries now forage in the underbrush. Even they occasionally come near the house. And sloths are often seen slowly moving among the upper branches of the trees.

    At night, we often hear, and sometimes see, kinkajous moving from branch to branch through the trees.

    Hundreds of butterflies of all sizes, shapes and colors now flit from flower to flower and brighten the day.

The returning butterflies are a testament
to the healthy environment of the farms.

    Whole groups of coatimundis come by, often stopping to rest on the front porch, or groom each other, or play in the yard. Sometimes there are as many as 30 coatimundis in the yard. They too know we pose no danger. A few occasionally walk right into my office if the screen door is open.

“Bear”

    One coatimundi, the dominant male who we named Bear because of his powerful build, developed a particularly wonderful trust in us. He stayed completely wild and we often wouldn’t see him for months. But when he was in the area he would come by our house and sit up outside my office door to see if I would come outside.

    Male coatimundis fight terribly and Bear would often show up wounded. He would allow me to clean his wounds and remove any ticks. Sometimes he would just want some affection and loved to have his ears and feet rubbed. If there were no other males around that he had to stay alert for, he would even curl up next to me like a puppy.

Bear, stopping by for a brief rest and a
little affection, and Steve happily complying

    We have had the joy of Bear’s visits for more than seven years, but we haven’t seen him now for about six months and fear that a younger male has bested him. If so, we will miss Bear a lot.

Only a Small Example

    It is truly wonderful to know that the changes that we witness in the small area around our home are only a tiny example of the flourishing habitat regenerating and abundant wildlife returning over all 11,000 acres of our farms. You, our tree owners, have made this possible.

    We sometimes are asked why we grow trees for others, why we don’t just keep everything for ourselves. A major part of the answer is that alone we could not possibly do what we are all accomplishing together.

Carbon Sequestration

    The returning birds, butterflies, animals and regenerating habitat are the more tangible, visible benefits of your having us grow trees for you.

    But there is another benefit that scientists are not yet fully able to quantify but seems so logical, and that is what young and growing trees do for the air we breathe. Vigorously growing trees produce oxygen and take carbon dioxide out of the air and convert it to wood.

    Many scientists have concluded that it is very important to not only reduce the amount of carbon that mankind is putting into the air, from burning fossil fuels for example, but that we must also work to remove carbon from the air to reduce man’s impact on our climate.

    In a rough calculation, I believe that the trees that we have planted so far are removing 8,000 to 12,000 tons (that’s 16 to 24 million pounds) of carbon from the air every year. The growing trees convert that carbon to beautiful tropical hardwoods that will be utilized in exquisite furnishings and the carbon will be nearly permanently sequestered or “fixed” in those beautiful furnishings.

    Carbon sequestration is a concept that may not produce the same warm feeling as the wonderful birds and butterflies and animals and rainforest that we are all protecting, but the trees you are growing are indeed helping the world in many ways.

Fiery-billed aracari
Birds thrive on the berries and other fruits
 now abundant throughout the farms

Our Vision

    With the wonderful changes we see on the farms, the intangible benefits to the air we breathe, the much needed employment we are providing, and knowing that the tropical hardwoods that we produce will reduce the pressure on the world’s natural rainforests, we are very motivated to do much more - to plant many more trees, protect much more habitat, provide food and shelter for many more birds, animals and butterflies, produce a great deal more tropical hardwoods that aren’t taken from the rainforest, and create many more much-needed jobs.

     So please continue to tell your friends and family about Tropical American Tree Farms. And if you are not a tree owner, please join us in this wonderful endeavor.

Baby sloth (in the center of the photo) on his
mothers tummy in one of our nargusta trees.

    Together we really can make a difference!

Credit Card

    We are now able to accept both Visa and MasterCard. If you would like to use your Visa or MasterCard to purchase trees, simply go to our website, http:// tropicaltreefarms.com, click on How to Order Trees, then on Voucher in the MasterCard and Visa paragraph, print out and complete the voucher, sign and date it, and fax or mail it together with your completed Tree Order Form which you can also print out from the How to Order Trees page.

    Or if you prefer, simply call our office at 1-800-788-4918 and we will be happy to fax you the voucher and Tree Order Form.

Thinnings

    By the end of this year, Beto and our thinning teams will have milled more than 2 million board feet of beautiful young tropical hardwood lumber from the early thinnings of trees we have planted.

    Our teams have finished the first thinning of the 1992 trebol, nearly completed the first thinning of the 1996 teak, and have begun the first thinning of the 1997 teak. After that, they will do the first thinning of the 1994 and 1995 nargusta. And then as soon as the rainy season ends, they will move to begin the second partial thinning of the 1992 and 1993 teak and 1993 idigbo.

    It is truly gratifying to see all of the beautiful tropical hardwood lumber that these early thinnings are producing.

Thinning Schedule

    As we have performed the many teak thinnings and observed the trees and their hardwoods, we have further refined our teak thinning schedule. We now project for future thinnings, that we will do the first teak thinning after the 7th growing season, the second thinning after the 10th growing season, and subsequent thinnings after the 13th, 17th and 20th growing season, and the final harvest in the 25th year.

Updated Teak Projections

    When we first began Tropical American Tree Farms, we were able to prepare economic projections only for teak because there was no published information about our other species upon which we could rely. That is still true, although over the next several years we hope to have accumulated enough information from our own experience to begin to create projections for our other species.

    Our original projections for teak were based on historical price information, growth and yield data from other plantations, and estimated harvest and processing costs.

    Now that we have completed thinnings of tens of thousands of teak trees on our own farms, and milled nearly 2 million board feet of teak from our own thinnings, we can now include actual data for the lumber, economic yield, and harvest costs for the earliest thinnings.

    Our revised projections and accompanying notes reflect that new information, including a somewhat increased resulting net yield.

    Because we constantly prefer to be conservative, the updated projections intentionally do not include the likely greater economic yield from the higher prices that adult teak is bringing on the world market, nor our forester’s thinking that we may be able to have our final teak harvest earlier than the 25th year.

    Our revised projections also reflect an additional year, for the first, and possibly the second, thinning, for Raleo to utilize the young wood to realize its full value, because the beauty of young teak is not yet widely known. Owners of our earliest plantings have waited much longer as we embarked on establishing Raleo, but by the time we do the first thinning of our most recent plantings, Raleo should be able to utilize the lumber in the year it is thinned.

    Our objective is for Raleo’s beautiful furnishings and Surfaces, crafted exclusively from the young tropical hardwoods from our earliest thinnings, to display first-hand to discerning buyers and specifiers just how beautiful, and therefore valuable, our young hardwoods are. We are working towards the day when the market will pay more for the young hardwoods than Raleo can support paying. From that point forward, the young hardwoods will go directly into the market and not wait to go through Raleo.

Raleo™

    Raleo, our sister company that we formed to create top value for our youngest hardwoods and to establish Tropical American Tree Farms among design professionals and specifiers as an excellent, high-end source of exquisite tropical hardwoods, is moving strongly forward.

    You will now see Raleo furnishings, crafted exclusively of young Tropical American Tree Farms tropical hardwoods, in the finest design magazines in the U.S. - in an article in the May issue of Interior Design Magazine, another article in the May issue of Contract Magazine, and full-page ads in the New York, Florida, and International editions of Architectural Digest and in the beautiful Florida International magazine.

Full-page Raleo™ Twist Collection ad in
Architectural Digest and Florida International magazines

    In May and June we exhibited Raleo furnishings at this year’s top international design shows in the U.S., ICFF, AIA, and NeoCon, and again received wonderful praise and many orders for our Raleo furnishings and Surfaces.

    You may remember that we wrote in our Summer 2003 Tree Owners News that we had exhibited some early prototypes of our Raleo Surfaces at two earlier design shows and received such an enthusiastic response that we concluded that the demand for our Surfaces would have substantially exceeded our production capacity, and because of that we decided to first build up our production capacity and then formally introduce our Raleo Surfaces in mid-2004.

    That is exactly what we have done. Jorge Vargas our General Manager who runs Raleo, doubled the capacity by Spring of this year, and we debuted our Raleo Surfaces at the three international design shows in May and June.

    The response at the shows was overwhelming and Raleo is swamped with orders. Several architects and designers gave us substantial orders for both our furniture and Surfaces, and we signed up a national distributor for our Surfaces who calls on architects throughout the U.S. serving the commercial and hospitality markets.

    Bob Sapan’s showroom at DCOTA that markets our Raleo products in south Florida put our Surfaces panels on display in his showroom and enthusiastically reports that the response is “incredible.” Bob told us that after they installed our Surfaces display, their June, July, and August, normally slower months, were all record months, the best sales months since they have been in business, and that it was all our Raleo furniture and Surfaces.

    We are also already receiving orders from Canada and Puerto Rico, and strong interest from designers in the U.K., France and Italy, and have significant installations of Raleo Surfaces and furniture in the next weeks in Boca Raton, Bal Harbor, Miami, and Los Angeles.

    We have touched only a tiny part of the market and it is very clear that the demand for our Raleo furniture and Surfaces greatly exceeds even our expanded production capacity. So Jorge is now in the process of doubling our capacity again, and will then add a second shift, so that we can accept additional showrooms and representatives.

    In the next year or so, we will then have to move to even larger facilities. In 2001, we bought a 2+ acre parcel near our present Raleo production facility in San José, the last undeveloped piece of land in the area, for future expansion.

    Now that we have a better understanding of Raleo’s huge potential, we are exploring the possibility of putting that parcel on the market and buying a much larger tract in a less developed area outside San José for a combined design/production campus for both our Raleo furniture and Surfaces. We would have more room to grow and have the added benefit of creating employment in a rural area where it is more needed. We will continue to let you know how that vision evolves.

    You can see more of our Raleo furniture and Surfaces designs at http://raleo.com. Many more beautiful designs and products are on the way.

    Building Raleo into a world-class furnishings company that can pay top prices for the young hardwoods from our earliest thinnings and at the same time establish Tropical American Tree Farms as a high-end source of top quality, beautiful tropical hardwoods and create a direct demand for our young hardwoods, is truly a wonderful experience.

    The enthusiastic response of top design professionals from various parts of the world, highly praising, specifying, and ordering, Raleo’s exquisite furniture and Surfaces, all exclusively crafted of young tropical hardwoods grown on our farms, is a wonderful affirmation of the beauty of our Tropical American Tree Farms tropical hardwoods, Raleo’s beautiful designs, and the wonderful benefit that Raleo represents for every tree owner.

Visit the Farms

    One of the wonderful benefits of being a tree owner is coming to Costa Rica to see your trees and enjoy the magnificent rainforests and conservation areas you are helping to protect.

    We have nine tree farms, each with well-mannered horses and comfortable saddles, and saddlebags to carry your cool drinks and even a picnic lunch.

    As a tree owner you are invited to come see your trees and are welcome to visit any of the farms to enjoy their unique beauty and to experience the incredible magic of Costa Rica, away from the rush of tourists.

    Imagine standing among your own tropical hardwood trees, and then riding through an enchanting rainforest, with the sounds of howler monkeys serenading you in the background, or hiking down to the base of a hidden 150 foot waterfall, or relaxing in a small boat exploring miles of river and secluded estuaries.

Tree owners enjoying a beautiful
 waterfall on one of our farms

    Sherry and I encourage you to come visit your trees and experience first hand all that you are helping to accomplish. Please call or send an e-mail to let us know when you are able to visit. Ligia Alvarez, our office administrator, and Luis, Marcela, and Patricia in our Tree Owner Relations department are happy to help you plan a memorable visit to the farms.

Prices Going Up

    We have held our tree prices steady for two years and must now raise them. Our new tree prices for all of our species will go into effect October 20.

Thank you again!

    Sherry and I thank you again for making all of this possible. By growing tropical hardwood trees for harvest, you are doing something beneficial for the world.