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Farmers identify the hidden fortune in tree investment to create wealth

Mr Vincent Otieno arranges timber at his Kisumu yard

Mr Vincent Otieno arranges timber at his Kisumu yard

When Patrick Siele lost his job as a banker, he did not imagine that trees would be his refuge from financial turmoil.

Mr Siele was not only sent home four months after being employed, he was also denied severance pay in what he says were unclear circumstances.

The business administration graduate was just beginning to be financially stable and shouldering the responsibilities of his young family, and news of his termination hit him hard.

He used the little money he had to ferry his family and belongings to his Koitalel home in Bomet County, and once home, Mr Siele had to find a new source of income to continue being the breadwinner for his family.

He walked around the family land surveying the trees he had planted in his childhood while searching for that brilliant idea that would change his dire situation.

While admiring how big some of the trees had grown in a short time, a business idea struck him — the trees could be an immediate solution to his joblessness.

“I looked for a power saw immediately and brought down three mature cypress trees,” he says.

He cut each tree into four blocks, each worth Sh15,000 and sold them to a local plywood company. He immediately pocketed Sh180,000, which he used to pay school fees for his children and the rest to set up a shop for his wife.

Mr Siele’s love for trees has continued to grow since. He is currently tending two hectares of various tree species. Eucalyptus tree are, however, many since they are early maturing and have a ready market.

“Trees can save a situation. I call it unmonitored investment,” he says adding that trees require negligible attention after planting so long as they are watered and protected from predators.

Perhaps Mr Siele’s love for trees is only matched by that of Vincent Otieno, whose father was retrenched back in the 1990s.

The manager of the Sh4 million Charl-Yie General Enterprises in Kisumu said the business began as an effort to help the family earn a livelihood after his father lost his job.

It kicked off with Sh30,000 in capital, which was used to buy trees. Four-year-old trees sold for Sh4,000 each would fetch Mr Otieno’s father profits of up to Sh20,000.

The business quickly took off, with most buyers being real estate investors and carpenters in Kisumu. The trees were split into various sizes and shapes, depending on their intended use.

Having seen the potential, Mr Otieno and his father dedicated two hectares of their farm to trees.

The age of a tree dictates its use and price. A tree aged between three and four years can be sold for Sh4,000 and is usually used for firewood while one aged between five and eight years is sold for Sh6,000 and is mostly used to make poles.

“This can translate to profits of between Sh1 million and Sh6 million per acre, all from an initial crop of tree seedlings that can be bought for about Sh5 each,” he says.

However, Otieno says the business has not grown as fast as they expected because of heavy demands on its coffers from the family.

“Family upkeep and every structure put up in our compound is out of the tree farming and timber projects. Investment in our buildings alone is close to Sh7 million” he said.

The company hopes to strike a deal with farmers where it will help farmers plant trees and manage and harvest them. It also plans to set up a tree processing factory.

Tom Otieno, an investment consultant, says it is more economically viable to invest in tree farming than real estate.

“If you compare an investor who spends Sh2 million to acquire a plot in town and put up rental flats and one who uses the same amount to acquire a remote piece of land and plant trees, the latter would get better profits at lesser cost and involvement,” he says.

He says farmers would not worry about putting food on the table or paying for secondary education for their children if they planted one acre of trees “each time a child is born”.

-Business

 

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