Investing in Teak Plantations and Farms 101

The Teak Tree (tectona grandis) is a tropical hardwood that grows to a height between 150 and 160 feet, with a trunk diameter of 6-8 feet, and is predominantly found in Thailand, Burma, and Indonesia. Optimal growing conditions for the teak tree include well-drained, alluvial soil, and an elevation below 600 meters. High quality teak is produced in soil that is deep, flat, well drained and rich in calcium. A mean annual temperature of 77 to 86o F (25 to 30o C) and healthy rainfall are also factors in teak production.  It is essential that the teak plantation receive around 5 months of dry season because too much moisture will result in a sappy, low-quality wood. Negative characteristics such as lower average density, lesser quality color, poor texture, and a loss of strength are a result of too much precipitation.

Teak trees have large, “papery” leaves, which contain the same oil that makes teak so unique, and valuable. As teak matures, it produces an oil that makes it resistant to rot, fire, and insects. Aside from its practical applications for the life of the teak tree, teak oil is also what makes teak so desirable as a commodity. From outdoor furniture, to boat decks, to railings and porches, teak’s durability has made it a lasting staple in outdoor applications. Teak has been used for thousands of years in the production of ships and housing, but industrialization has put a huge strain on the world’s existing teak forests. In fact, it is believed that the last old growth teak forests, located in Burma, have been cut down.

Though teak may no longer be prevalent in its places of origin, governments in Central America are welcoming and even incentivizing the planting of teak forests. Truly an irreplaceable hardwood, teak’s growth in value has outpaced traditional markets and other sought-after asset classes, exemplified by the Harvard Endowment’s 10% investment in timber. The best way to learn about these remarkable trees is to visit a plantation or talk to representatives from Hardwoods Unlimited, one of Central America’s premier timber companies.