Feasibility Of Teak Production For Smallholders In Eastern

FEASIBILITY OF TEAK PRODUCTION FOR SMALLHOLDERS IN
EASTERN PANAMÁ
BY
DANIELLA K. ZANIN
Submitted in partial fulfillment of the requirements for the degree of
MASTER OF SCIENCE IN FORESTRY
MICHIGAN TECHNOLOGICAL UNIVERSITY
2005

The project paper, “Feasibility Of Teak Production For Smallholders In Eastern Panamá”
is hereby approved in partial fulfillment of the requirements for the Degree of MASTER
OF SCIENCE IN FORESTRY.
SCHOOL OF FOREST RESOURCES AND ENVIRONMENTAL SCIENCES
SIGNATURES:
ADVISOR: ____________________________________
Dr. Blair D. Orr
DEAN: ____________________________________
Dr. Margaret R. Gale
DATE: ____________________________________
ii

PREFACE
A great education awaits the young, wide-eyed, idealistic environmentalists from
the United States. I know it for myself and I have seen it in my fellow, fresh-faced Peace
Corps Panamá volunteers. Having been educated in the United States, we are
conditioned to fight for all environmental causes by striving to email our congress people
and excel as environmental stewards by spending a couple extra bucks to buy the
environmentally friendly household cleaning supplies instead of those filled with
phosphates that can lead to the destruction of …...
The experience of living in a third world country and working shoulder to
shoulder with people struggling for survival will bring focus to anyone that craves to
know what can actually be done to help and where to start. Initially, this can lead to
severe depression and anxiety realizing that your infinitesimal existence will really have
no profound affect on reversing environmental destruction in the world. However, once
this is acknowledged, the forever-tainted volunteer can reach great levels and be finally
useful. It is like the saying, “Once you understand that you know nothing is when you
first begin to understand”.
I know that this sounds sarcastic although I am really not. Peace Corps was quite
a humbling experience for me. I learned a lot about myself when not trapped in the box
of comfort we find when we are at home. Panamá did become home eventually and my
community, my family. Kate Lincoln said it best, “At first, you think Peace Corps is
going to be an adventure everyday then you realize you are just living”.
Peace Corps Panamà Haiku
By Daniella Zanin
Neapolitan ice cream
topped with bittersweet chocolate.
Owwww wahh!*
* (Panamanian saloma)
iii

TABLE OF CONTENTS
LIST OF FIGURES……………………………………………………………… v-vii
LIST OF TABLES………………………………………………………………. viii-ix
ACKNOWLEDGMENTS……………………………………………………….. x
CHAPTER ONE: INTRODUCTION…………………………………………… 1
CHAPTER TWO: STUDY OBJECTIVES……………………………………… 4
CHAPTER THREE: BACKGROUND OF PANAMÁ………………………….. 6
CHAPTER FOUR: TEAK……………………………………………………….. 21
Teak in the world …………………………………………………………. 25
Teak and markets…….. ……………………………………….………….. 39
CHAPTER FIVE: SMALLHOLDERS IN PANAMÁ…………………………… 42
CHAPTER SIX: METHODS AND DATA……………………………………… 47
CHAPTER SEVEN: RESULTS AND DISCUSSION…………………………… 67
CHAPTER EIGHT: CONCLUSIONS AND RECOMMENDATIONS…………. 94
LITERATURE CITED…………………………………………………………….. 98
APPENDIX….……………………………………………………………………... 106
iv

LIST OF FIGURES
FIGURE 3.1: MAP OF CENTRAL AMERICA HIGHLIGHTING THE COUNTRY OF
PANAMÁ…………………………………………………………………………..……..7
FIGURE 3.2: MAP OF THE NINE PROVINCES OF PANAMÁ AND THE SAN
BLAS TERRITORY……………………………………………………………………..10
FIGURE 3.3: INDIGENOUS EMBERÁ INDIANS IN IPETÍ, EASTERN
PANAMÁ………………………………………………………………………………..11
FIGURE 3.4: SLASH AND BURN AGRICULTURE IN EASTERN PANAMÁ…….19
FIGURE 4.1: PLANTATION TEAK WOOD IN PANAMÁ………...………...…...….21
FIGURE 4.2: CROSS-SECTION OF A PLANTATION GROWN TEAK LOG WITH
ITS DARKER HEARTWOOD…………………………...……………………………..24
FIGURE 4.3: ZONES OF LIFE FOR EASTERN PANAMÁ…………………….……28
FIGURE 4.4: HOLDRIGE’S ZONES OF LIFE CLIMATE CLASSIFICATION FOR
EASTERN PANAMÁ……………….………………………………………………..…29
FIGURE 4.5: NEWLY PLANTED TEAK SEEDLING...…………...….……………..31
FIGURE 4.6: DESICCATION OF UNPROTECTED TROPICAL SOILS..………..…34
FIGURE 4.7: TEN-YEAR-OLD TEAK STAND WITH NO THINNING…...………..38
FIGURE 5.1: A SMALLHOLDER AND HIS FIELD IN PANAMÁ……...……..……44
FIGURE 6.1: REDUCTION IN INITIAL COST OF FENCING WHEN LAND IS
SQUARE AND CONNECTED………………………………………………………….57
FIGURE 6.2: NET PRESENT WORTH EQUATION FOR COST ANALYSIS……...63
FIGURE 7.1: NET PRESENT WORTH RESULTS USING VARIOUS DISCOUNT
RATES FOR THE DE CAMINO ET AL GROWTH TABLE WITH THE DE VRIEND
WEEDING REGIME FOR ONE HECTARE…………………………………..……….69
FIGURE 7.2: NET PRESENT WORTH RESULTS USING VARIOUS DISCOUNT
RATES FOR THE DE CAMINO ET AL GROWTH TABLE WITH THE KEOGH
WEEDING REGIME FOR ONE HECTARE…………………………………………...70
v

FIGURE 7.3: NET PRESENT WORTH RESULTS OF BOTH DE VRIEND AND
KEOGH WEEDING REGIMES FOR THE DE CAMINO ET AL GROWTH TABLE
WITH AN ELEVEN PERCENT DISCOUNT RATE FOR ONE HECTARE………….70
FIGURE 7.4: NET PRESENT WORTH RESULTS OF BOTH DE VRIEND AND
KEOGH WEEDING REGIMES FOR THE DE CAMINO ET AL GROWTH TABLE
WITH A FOURTEEN PERCENT DISCOUNT RATE FOR ONE
HECTARE………………………………………………………………………….....…71
FIGURE 7.5: NET PRESENT WORTH RESULTS USING VARIOUS DISCOUNT
RATES FOR THE ALFARO GROWTH TABLE WITH THE DE VRIEND WEEDING
REGIME FOR ONE HECTARE…………………………………………..…………….72
FIGURE 7.6: NET PRESENT WORTH RESULTS USING VARIOUS DISCOUNT
RATES FOR THE ALFARO GROWTH TABLE WITH THE KEOGH WEEDING
REGIME FOR ONE HECTARE………………………………………………………...72
FIGURE 7.7: NET PRESENT WORTH RESULTS OF BOTH DE VRIEND AND
KEOGH WEEDING REGIMES FOR THE ALFARO GROWTH TABLE WITH A NINE
PERCENT DISCOUNT RATE FOR ONE HECTARE……………….……….………..73
FIGURE 7.8: NET PRESENT WORTH RESULTS OF BOTH DE VRIEND AND
KEOGH WEEDING REGIMES FOR THE ALFARO GROWTH TABLE WITH A
TEN PERCENT DISCOUNT RATE FOR ONE HECTARE……………………...……73
FIGURE 7.9: NET PRESENT WORTH RESULTS USING VARIOUS DISCOUNT
RATES FOR THE BERMEJO ET AL GROWTH TABLE WITH THE DE VRIEND
WEEDING REGIME FOR ONE HECTARE…………………………..……………….74
FIGURE 7.10: NET PRESENT WORTH RESULTS USING VARIOUS DISCOUNT
RATES FOR THE BERMEJO ET AL GROWTH TABLE WITH THE KEOGH
WEEDING REGIME FOR ONE HECTARE……………………….…………………..75
FIGURE 7.11: NET PRESENT WORTH RESULTS OF BOTH DE VRIEND AND
KEOGH WEEDING REGIMES FOR THE BERMEJO ET AL GROWTH TABLE WITH
A NINE PERCENT DISCOUNT RATE FOR ONE HECTARE……………………….75
FIGURE 7.12: NET PRESENT WORTH RESULTS OF BOTH DE VRIEND AND
KEOGH WEEDING REGIMES FOR THE BERMEJO ET AL GROWTH TABLE WITH
A TEN PERCENT DISCOUNT RATE FOR ONE HECTARE………………………...76
FIGURE 7.13: NET PRESENT WORTH RESULTS OF BOTH DE VRIEND AND
KEOGH WEEDING REGIMES FOR THE BERMEJO ET AL GROWTH TABLE WITH
AN ELEVEN PERCENT DISCOUNT RATE FOR ONE HECTARE……………..…..76
vi

FIGURE 7.14: MANUAL AND CHEMICAL WEEDING COSTS TABLE BASED
UPON THE DE VRIEND AND KEOGH WEEDING REGIMES……………...……….80
FIGURE 7.15: COSTS OF KEOGH AND DE VRIEND WEEDING REGIMES BASED
ON MANUAL OR CHEMICAL WEEDING…………………………………………...81
FIGURE 7.16: A DISCOUNT RATE OF ELEVEN PERCENT WITH THE DE
CAMINO ET AL GROWTH TABLE CAN MAKE A PROJECT FEASIBLE WITH THE
MANUAL WEEDING METHOD………………………………………………….…...82
FIGURE 7.17: NET PRESENT WORTH RESULTS USING VARIOUS DISCOUNT
RATES FOR THE ALFARO GROWTH TABLE WITH THE DE VRIEND WEEDING
REGIME FOR ONE HALF HECTARE…………………………………….…………..83
FIGURE 7.18: NET PRESENT WORTH RESULTS OF SCENARIO TWO PRICES
WITH THE DE VRIEND WEEDING REGIMES FOR THE ALFARO GROWTH
TABLE WITH BOTH AN EIGHT PERCENT AND NINE PERCENT DISCOUNT
RATE FOR ONE HALF HECTARE……………………………………………………84
FIGURE 7.19: NET PRESENT WORTH USING VARIOUS DISCOUNT RATES OF
ALFARO GROWTH TABLE FOR ONE HECTARE……………………..………….…86
FIGURE 7.20: NET PRESENT WORTH USING VARIOUS DISCOUNT RATES OF
ALFARO GROWTH TABLE FOR TWO HECTARES…….…………………………...86
FIGURE 7.21: NET PRESENT WORTH OF SCENARIO TWO PRICES FOR
ALFARO GROWTH TABLE OF ONE AND TWO HECTARES ON A PER HECTARE
BASIS…………………………………………………………………………...……….87
FIGURE 7.22: ALFARO PROJECT FEASIBILITY WITH NO LAND COSTS……...90
FIGURE 7.23: ALFARO GROWTH TABLE: DISCOUNT RATE CHANGES FOR
NO LAND OR FENCING COST…………………………………………………….....91
FIGURE A.1: HOPPUS FORMULA………………………………………………….119
FIGURE A.2: BRERETON FORMULA……………………………………………..120
FIGURE A.3: THE DIFFERENCE BETWEEN THE HOPPUS AND BRERETON
FORMULAS……………………………………………………………………………120
vii

LIST OF TABLES
TABLE 3.1: CENSUS 2000 OF INDIGENOUS POPULATIONS IN PANAMÁ……....9
TABLE 6.1: INFORMATION NEEDED FOR A TEAK PLANTATION FEASIBILITY
STUDY……………………………………………………...……………………….…..47
TABLE 6.2: GROWTH TABLES……………………...…………………………….…51
TABLE 6.3: TEAK IN COSTA RICA WITH GOOD MANAGEMENT INCLUDES
PROPER WEEDING, PRUNING, AND THINNING. WITHOUT PROPER
MANAGEMENT, TEAK PLANTATIONS RESULT IN SMALLER HEIGHT AND
DIAMETER GROWTH………………………………………………………….……...52
TABLE 6.4: TEAK SALE IN IPETÍ OF TREES WITH NO PAST MANAGEMENT..53
TABLE 6.5: PROPER MANAGEMENT OF A TEAK PLANTATION IN COSTA
RICA RESULTS IN OPTIMUM DIAMETER AND HEIGHT LEVELS…………….54
TABLE 6.6: TWO DIFFERENT WEEDING REGIMES……………………...…….....60
TABLE 6.7: COMPARISON OF THREE DIFFERENT THINNING SCHEDULES
AND THE NUMBER OF TREES THINNED PER YEAR…………………...…….…..62
TABLE 6.8: PRICE LISTS OF TEAK TIMBER PRICES IN EASTERN PANAMÁ
IN US DOLLARS……………………………………………………………………..…64
TABLE 6.9: A SENSITIVITY ANALYSIS IS PERFORMED ON THE VARIABLES
IN THIS TABLE TO FIND IF THERE ARE DIFFERENCES IN NET PRESENT
WORTH THAT WILL AFFECT PROJECT FEASIBILITY…………………..……….66
TABLE 7.1: PRICE TABLE WITH FOUR PRICE SCENARIOS USED IN THIS
REPORT TO QUANTIFY RETURNS ACCORDING TO SMALL END DIAMETERS
FROM THINNINGS AND HARVESTS……………….……………………………….68
TABLE 7.2: TABLE OF PROJECT FEASIBILITY FOR EACH GROWTH TABLE
WITH BOTH WEEDING REGIMES. BLACK AREA SIGNIFIES PROJECT
FEASIBILITY FOR ALL THREE GROWTH TABLES. GRAY AREA SUGGESTS
THAT A MAJORITY OF GROWTH TABLES MAKE FEASIBLE PROJECTS……..77
TABLE 7.3: TABLE OF PROJECT FEASIBILITY FOR EACH GROWTH TABLE
WITH BOTH WEEDING REGIMES FOR ONE HALF HECTARE OF LAND.
BLACK AREA SIGNIFIES PROJECT FEASIBILITY FOR ALL THREE GROWTH
TABLES. GRAY AREA SUGGESTS THAT A MAJORITY OF GROWTH TABLES
MAKE FEASIBLE PROJECTS…………………………………………………...…….85
viii

TABLE 7.4: TABLE OF PROJECT FEASIBILITY FOR ONE HECTARE AND TWO
HECTARES USING THREE DIFFERENT GROWTH TABLES. BLACK AREA
SIGNIFIES PROJECT FEASIBILITY FOR ALL THREE GROWTH TABLES. GRAY
AREA SUGGESTS THAT A MAJORITY OF GROWTH TABLES MAKE FEASIBLE
PROJECTS………………………………………….………………………………..….88
TABLE 7.5: FINANCIAL COMPONENTS OF TEAK PRODUCTION WITH THOSE
COMPONENTS WHICH MAY BE ZERO COST OR REDUCED COST IN
ITALICS………………………………………………………………………….…...…89
TABLE 7.6: NPW OF ALL THREE GROWTH MODELS WITH NO LAND OR
FENCING COST FOR ONE HECTARE. BLACK AREA SIGNIFIES PROJECT
FEASIBILITY FOR ALL THREE GROWTH TABLES. GRAY AREA SUGGESTS
THAT A MAJORITY OF GROWTH TABLES MAKE FEASIBLE PROJECTS……..92
ix

ACKNOWLEDGMENTS
I owe many people and institutions in the United States and Panamá my sincerest
thanks for their time, support, and encouragement during the research process. I would
like to thank my Peace Corps APCD, Jason Cochran, for ideas and contact information
and volunteers Lian Carl, Murry Streetman, and Shane Mathias for their assistance while
in country. I also would like to thank Peace Corps Panamá, Jean Marc Verjan, Ecoforest
S.A., MIDA, ANAM, Roslyn Laing, Jose Valderrama, Pablo Guainora, Efrain Moña,
Manuel Ruíz, Yerdo Ruíz, and Chariano Tocamo for providing me with information,
costs, and prices of teak production in Panamá. Above all, I wish to thank Ing. Eliacer
Perez for being a good friend and an excellent teacher while I lived in eastern Panamá. I
can only hope that all Peace Corps volunteers find a competent counterpart like I did.
I would also like to give thanks to all members of my graduate committee
including Peg Gale, Susan Martin, and Ciro Sandoval. I wish to thank the town of Ipetí
Emberá for accepting me as a member of the community and giving me the experience of
a lifetime. Mostly, I would like to thank Blair Orr for his dedication to his students, all
his extra time, his countless stories, and his pragmatic view of the world that gave me a
good sense of reality. You are truly an incredible teacher and not a bad office partner.
To my mom, dad, sister, brothers, family and friends, I want to thank you all for
your cards, positive energy, and support over the last three years. It made the lonely
times not as bad knowing that you were all there for me. Then, to the guy who really
makes my life worthwhile, Jonathan Pereira, I do not know how you did it but you held
out and waited for me and I am so grateful for your love, support, and friendship always.
x

CHAPTER ONE
INTRODUCTION
The development of new teak timber sources is encouraged by many countries
because of the declining supply of teak from natural forests. Panamá is a prime example
of a country that has similar climate to native teak forests and large investment
companies have produced economically viable teak within a twenty to thirty year span.
However, many smallholders in eastern Panamá are growing teak without prior
experience and knowledge of profitability.
My decision to investigate smallholder teak production began after attending a
poorly managed teak (Tectona grandis) sale in the indigenous community of Ipetí
Emberá in eastern Panamá where I lived for twenty-five months during my Peace Corps
Service. The sellers were neither organized nor aware of the “big business” involved in
marketing an exotic plantation species and ended up losing money on the sale. The
buyers exploited the Embera’s ignorance for their own benefit. The Emberá felt
victimized and soon their frustrations turned to anger and they were determined to cut
down their plantations.
Land is precious to a smallholder who must manage it to survive. Smallholders
cannot afford to risk their survival on long-term projects that will not result in sustenance
or income. Government incentives and large profits have been the impetus for
corporations and large landholders to plant teak in Panamá. Neighboring smallholders
have seen the timber sales and believe that teak is profitable thus, employing part of their
valuable land for this long-term endeavor. However, smallholders are planting teak in
Panama without the assurance of an available market for their product. There is currently
1

no domestic market in Panamá, international markets will only be receptive to teak that is
of good quality. Smallholder’s inexperience working with this exotic timber questions if
a reasonable profit can be expected.
I recognized that most smallholders did not manage their teak plantations
adequately. During the years that they grew the unmanaged teak the land could have
been used for a more profitable venture. Literature affirms that unmanaged teak
plantations will result in a loss of time and money. Unfortunately, a smallholder often
acquires knowledge of what are merchantable trees after the resulting loss of time and
money. It is a long trial and error period. Consequently, health, family, and land may
deteriorate with loss of income. This report may help to persuade the government of
Panamá either to create teak plantation management classes that can be promoted by
extension workers through the Ministry of the Environment (ANAM) and the Ministry of
Agriculture (MIDA) or to dissuade smallholders from planting teak altogether. If
education is not provided then it is easy to say that smallholders will ultimately fail in
making a profit and, in the meantime, suffer the consequences of unsuccessful land
production.
Education and knowledge, however do not assure a profitable project. Plantations
are a long-term investment with a large initial cost without a guaranteed return until later
commercial thinnings and harvests. Even if smallholders have the knowledge to manage
a plantation this does not mean that they have the initial capital needed to begin and
maintain one. Without necessary funds, optimum yield scenarios cannot be achieved
because best management practices usually have high investment costs. Commercial teak
yields will suffer without correct management practices.
2

Throughout the research process I developed a class to aid in plantation
management and basic business skills. Not only were the people in Ipetí frustrated with
growing and selling teak but, in most provinces the people felt the same. I extended my
Peace Corps service for the sole purpose of traveling to other sites in Panama to teach
smallholders the basic skills in planting, pruning, thinning, harvesting, and sale.
3

CHAPTER TWO
STUDY OBJECTIVES
The purpose of this study is to determine the feasibility of teak production for
smallholders in eastern Panamá. Primary and secondary data are used in this study to
determine critical factors necessary for smallholder teak production in eastern Panamá.
Primary data are based upon participant observation and unstructured interviews.
Secondary data are derived from published literature, yield tables, growth tables,
management scenarios, and international measurement formulas. This provides the
necessary background for understanding teak management and how it differs between
optimal management and management in eastern Panamá. A sensitivity analysis is
performed to determine feasible projects. Feasible projects are defined as those that
result in positive net present worth.
In Chapter Three, general country information for Panamá is provided. Basic
information covering country demographics, geology, history, economy, agriculture, and
natural resources is reviewed. Lastly, I discuss rural life and smallholders in eastern
Panamá.
Chapter Four discusses the biology of native and exotic teak and the differences
in wood quality. Then teak in the world and its management is discussed and compared
to teak and its management in Panamá. The chapter concludes with a discussion on
global teak markets.
Chapter Five defines a smallholder in Panama and her or his reasons to plant teak.
Government reforestation incentives and Law 24 are discussed to identify how they effect
4

the smallholder. Lastly, problems that smallholders face with teak production are
acknowledged.
In Chapter Six I discuss the specific methodology used for this feasibility study. I
explain both my primary and secondary data in detail and how they were analyzed.
These data include rotation lengths, growth tables, commercial yields, costs associated
with proper management, cost analysis, and prices paid for teak in eastern Panamá. The
chapter ends with an explanation of a sensitivity analysis and how it will demonstrate
project feasibility.
Chapter Seven illustrates the results of the study. First, prices derived through
statistics are discussed. Then, all analyzed data are reviewed to find if teak production is
sensitive to specific variables. Lastly, a summary of all analyses is explained.
Chapter Eight discusses the conclusions and recommendations of the study. I first
discuss my results and summarize my main findings. The study’s conclusions are then
compared to existing literature. Finally, recommendations are given for potential future
projects and study for both government extension agents and international aid
organizations.
5

CHAPTER THREE
BACKGROUND OF PANAMÁ
The Republic of Panamá is located in Central America, bordering both the
Caribbean Sea and the Pacific Ocean, between the countries of Colombia and Costa Rica
(Figure 3.1). This S-shaped country is situated between 7° and 10° north latitude and 77°
and 83° west longitude with its highest elevation at 3,475 meters. Though only slightly
smaller than South Carolina, Panamá encompasses 77,082 square kilometers of land. Its
length stretches 772 kilometers and is between 60 and 177 kilometers in width. Panamá
is a country rich in nature, culture, and history (CIA World Factbook, 2005).
Geology
The Isthmus of Panamá was formed between eleven million and three million
years ago during the Pliocene by plate tectonics and sedimentation caused by the melting
of the Antarctic ice caps (Vermeij, 1991; Coates, 1997). The bodies of water separated
by the Isthmus now take on different characteristics. The Caribbean waters are warm
with very low nutrients and heavy rainfall. The nutrient-rich Pacific however, does
experience variable ocean currents caused by the Equatorial Counter Current and strong
trade winds. The Pacific is affected by El Niño every three to eight years which results in
dramatic rainfall, sea temperature changes, upwelling, and increases in biological
productivity (West and Augelli, 1966). While both oceans have been separated, the
isthmus created a land bridge between North and South America. This allowed the
exchange of flora, fauna, and humans between continents, which is known as the Great
American Biotic Interchange (Webb, 1997).
6

Figure 3.1: Map of Central America highlighting the country of Panamá (University of Texas)
7

Climate
The climate of Panamá is tropical and humid. The northwestern coast and
mountain ranges have high humidity with 297 centimeters (117 inches) of annual rainfall
without a distinct dry season. This contrasts with the southern and eastern parts of the
country that do have a well defined dry season and an annual rainfall of 65 inches (165
centimeters). The rainy season, called “invierno” (winter), occurs from April to January.
“Verano” (summer) or dry season stretches from January through March. Average
annual temperatures in coastal areas range from 23 to 27 degrees C (73 to 81 degrees F).
In the higher, interior regions, temperatures are a little cooler, averaging about 19 degrees
C (66 degrees F) (Instituto Geográfico Nacional Tommy Guardia, 1988; West and
Augelli, 1966). With the archipelago of Bocas del Toro as protection, Panamá is the only
country in Central America that is outside of the hurricane belt (Garwood et al, 1979).
Population and Administrative Divisions
Panamá has an approximate population of 3,000,463 (July 2004 est.) people.
Mestizos make up about 70% of Panamanians, West Indians about 14%, whites about
10%, and Indians about 6% (CELADE, 2003). There exist seven indigenous groups in
Panamá (Table 3.1).
8

Indigenous
Tribe Population
Ngöbe 170,000
Kuna 62,000
Emberá 22,000
Buglé or Bokota 18,700
Wounaan 7,000
Naso 3,300
Bri Bri 2,500
Total 285,500
Table 3.1: Census 2000 of indigenous populations in Panamá (CELADE, 2003)
Panama’s nine provinces from east to west are the Darién, Panamá, Colón, Coclé,
Herréra, Los Santos, Veraguas, Chiriquí, Bocas del Toro, and the territory of San Blas
(Figure 3.2). There are also five indigenous reservations (comarca): Kuna of Madugandí,
Kuna of Wargandí, Kuna of Kuna Yala, Comarca of the Embera-Wounan, and the
Comarca of the Ngöbe Buglé. Spanish is the country's official language, but English and
indigenous dialects are spoken rather widely.
9

Figure 3.2: Map of the nine provinces of Panamá and the San Blas territory (University of Texas)
10

Comprising more than one-third of national territory, the Darién, the largest and
most sparsely populated of the regions, extends 120 kilometers east of Panamá City to the
Colombian border. In addition to the province of the Darién, eastern Panamá includes the
Comarca de San Blas and the eastern part of Panamá Province (Figure 3.3). The land
closest to the Canal and Panamá City is called the Central Isthmus. The Central Isthmus,
with a width of about 100 kilometers, is the densely populated historical transportation
route between the Atlantic and the Pacific and includes most of Colón Province. Located
between the continental divide, Central Panamá lies to the southwest of the Canal and is
made up of the province of Coclé, Veraguas, Herréra, and Los Santos. Veraguas, Herérra,
and Los Santos are occasionally referred to as the Azuero. The Azuero is home to the
country's largest rural population. Central Panamá is the agricultural and cattle ranch
center of Panamá. Unfortunately, mass deforestation has left the Azuero with a relatively
long dry season and a desert in Herréra (Partridge, 1984).
Figure 3.3: Indigenous Emberá Indians in Ipetí, eastern Panamá
11

The remaining part of the Pacific side of the divide is taken up by Chiriquí
Province. The second largest and second most populous of the nine provinces, Chiriqui’s
population has a particular sense of regional identity. A native of Chiriquí can be
expected to identify herself or himself, as a Chiricana(o). With limited accessibility,
Atlantic Panamá, which includes all of Bocas del Toro Province, the Caribbean coastal
portions of Veraguas and Coclé, and the western districts of Colón, is home to only five
percent of the population, and its only important population concentrations are near the
Costa Rican border where banana plantations are located (Gandásequi, 1980).
History and Government
Though considered a part of Central America, Panamá has been considered part
of South America culturally, physically and politically. Early Mayan populations
inhabited most of Central America. However, in Panamá an ancient population who
spoke Paya-Chibcha languages, not immigrants, had lived in or near present-day
locations for at least 10,000 years (Coates, 1997; Booth and Walker, 1989). The Chocó,
two groups in eastern Panamá called the Emberá and Wounaan, speak Paya-Chibcha
languages. These two groups are still considered the least acculturated peoples in Middle
America (West and Augelli, 1966). Physically, eastern Panamá has a northwestern prong
of the Andes, characterized by low mountain ranges along the Caribbean and Pacific
shores with a low basin occupied by the Chucunaque River. Eastern Panamá,
northwestern Colombia, and northwestern Ecuador are widely characterized to be of the
same biogeograhic region, with similar flora and fauna (Gentry 1986; Dinerstein et al,
1995; West and Augelli, 1966). Politically, Panamá was considered part of South
12

America because it did belong to Colombia after it received its freedom from Spain in
1821. As a result of the 1830, 1831, and 1840 uprisings, and fifty uprisings between
1850 and 1903, Panamá finally won its independence from Colombia (Weil et al, 1972;
West and Augelli, 1966).
Rodrigo de Bastidas was the first European to see the coast of Panamá when he
landed briefly in the Darién, a name that was once applied to the entire isthmus, in 1501.
Vasco de Núñez de Balboa was the conquistador credited with finding the Pacific Ocean
by crossing Panamá on foot in 1513 and establishing a trade route overland between both
oceans. Balboa is considered a unique conquistador because he refrained from wholesale
slaughter, torture, and indiscriminate enslavement. Nevertheless, slaves from Africa
were eventually brought in because the Spaniards and the disease they brought from the
Old World killed off much of the indigenous population (Weil et al, 1972). Balboa is
venerated in Panamá by having his face and name on the local coin currency also called
the Balboa.
During the colonial period, Panama was important as a major trade route between
east and west. The idea of a canal through Panamá was first mentioned in the 16th
century, but the engineering skill and technology to build it were not yet available. In
1879, the Frenchman Ferdinand de Lesseps, builder of the Suez Canal, began
constructing a canal in Panamá but failed, the laborers suffering 22,000 deaths from
malaria and yellow fever. Years later, the U.S. purchased the rights to the French project,
but without the permission of Colombia. With U.S. assistance, Panamanians declared
independence from Colombia in 1903. That same year, John Hay and Philippe Bunau-
Varilla drafted a treaty granting the U.S. control over the Canal Zone and made Panamá a
13

protectorate of the U.S. with a guarantee of independence. A provision of the treaty
granting the U.S. rule over the Canal Zone until the year 2000, as well as the right to
intervene in Panama’s internal affairs, led to much friction between the two countries.
Panama was taken over by a military government in 1968 by General Omar
Torrijos who is credited as one of the great leaders of Panamá. After the death of
Torrijos in an airplane crash on July 31, 1981, Panamá suffered at the hands of the
ruthless, self-appointed dictator, Manuel Noriega until 1989 when U.S. forces intervened
and ousted him by force (West and Augelli, 1966; Weil et al, 1972). Panamanians have
controlled the Canal since December 31, 1999 at 11:59pm and all U.S. military personnel
have left the Canal Zone. Martín Torrijos, the current president of Panamá is the son of
the former leader Omar Torrijos.
Panamá is a republic with a constitutional democracy. The chief of state and head
of government is the president, who is elected for a five-year term by popular vote.
Suffrage, which is 18 years of age, is universal and compulsory. The legislative branch
of the government is the Legislative Assembly, and the judicial branch includes the
Supreme Court, superior courts, and courts of appeal. Panama’s laws are based on a
system of civil laws (West and Augelli, 1966; Weil et al, 1972: CIA World Factbook,
2005).
Economy
Panama’s economy is based on commerce, banking, and its internationally
oriented service sector. In 1985, 73% of the gross domestic product of Panamá was due
to its internationally oriented service sector, which is the highest such percentage in the
14

world. This service sector includes the Panamá Canal, the Colón Free Zone, Trans-
Panamá Pipeline, insurance, container ports, flagship registry, medical and health, and
other business. Panamá has the lowest average annual rate of inflation in Central
America. Inflation has remained relatively low in recent years, and growth has been
steady. Inflation rates were 7.1 % in the 1970s, 3.7% in the 1980s and recently have
reached an all-time low of 1.4% (consumer prices) for 2003 (Meditz and Hanratty, 1989;
UNICEF, 2005; CIA World Factbook, 2005). Low inflation rates in Panama are the
result of “dollarization” which eliminated the need for a central bank. Panamá unifies its
currency with the United States, which has a relatively stable economy and imposes no
barriers to the movement of money or prices, wages, and interest rates (Friedman, 1973;
Meditz and Hanratty, 1989). The lack of money creation and exchange rate manipulation
has kept Panama economically stable.
The Panamanian banking center, originally created in 1970, is revered for its
international stature. Between 1990 and 1994, assets and deposits doubled, reaching
US$31.7 billion and US$25.9 billion, respectively. The privileged location and business
climate of the country, as well as the competitive services provided by its 110 banks,
continues favoring investors of all countries.
Since 1914, the Panamá Canal has been Panama’s largest source of economic
activity and the essence of its identity as a nation. The hand-over of the Canal and
military installations by the U.S. has given rise to new construction projects. GDP growth
for 2000 was about 2.3% compared to 4.0% in 2005. Though in 2003 Panama had one of
the highest gross domestic products (GDP), 12.9 billion dollars (GDP of $4,317 per
capita) in Central America, the distribution is skewed and about 40% of its population
15

lives in poverty. The majority of population in the countryside have incomes of less than
one-third of those in Panamá City and Colón. In the 1970s the richest 20% received
61.8% of income whereas the poorest 20% only received 2% of income. The
unemployment rate surpassed 14% in 2002, but this is mostly unskilled labor. There is a
shortage of skilled labor in Panamá. The 1986 World Bank Study claimed that
unemployment was Panama’s “gravest economic and social problem” (World Bank,
1986). In early 2003, Panamá entered its first free trade agreement (FTA) with El
Salvador and later concluded negotiations on an FTA with Taiwan. Panama also is
negotiating FTAs with its Central American neighbors and with the United States
(Meditz and Hanratty, 1989; UNICEF, 2005; Wikipedia, 2005; Esser, 2004).
Agriculture and Natural Resources
The economic policies of General Omar Torrijos from 1968 to 1978 were aimed
at controlling the rising growth of the urban economy and channeling resources to the
poor populations outside of Panama City and Colón. This greater economic and social
integration started with the goods sector. Land reform was advanced and cooperative
farming was promoted. The policies that Torrijos introduced altered the distribution of
income, with the richest twenty percent of the country receiving fifty percent of the
income, the second quartile receiving twenty to twenty-three percent of the income, the
third quartile receiving five to nine percent of the income, and the fourth quartile
receiving three percent of the income. Torrijos’ changes brought more resources to the
poor. Unfortunately, cooperative activity shifted once again to solitary farming soon
after the death of Torrijos (Meditz and Hanratty, 1989).
16

Agriculture received little attention until the twentieth century. The flow of goods
from Europe and North America prevented agricultural development. By the 1980s
agriculture was barely developed beyond indigenous techniques (Meditz and Hanratty,
1989). Because all business centered on the Canal, money and investment never entered
the countryside. However, with the capability to trade, Panama exports copper,
mahogany timber, shrimp, hydropower, bananas, melons, and sugar.
There are 7.7 million hectares of land in Panamá. Total arable land cultivated for
crops that are replanted after each harvest approximates 7.36% of total land. Permanent
crops are crops like coffee and fruit trees that are not replanted after each harvest and
account for 1.98% of total land. All other land includes permanent pastures, forests and
woodlands, built areas, roads, and barren land and accounts for 90.66% of total land.
Twenty-five percent or 186,000 hectares of Panamá is in protected areas (CIA World
Handbook, 2001).
Forests function as the lungs of the world by producing oxygen and sequestering
carbon. There are approximately 3.1 million hectares of natural forest remaining in
Panama (around 40% of total land area), of which over half is mixed deciduous forests.
The soil in rainforests is very thin and erodes quickly when exposed to harsh tropical sun
strong rains, and inappropriate agricultural or pastoral activities. Most areas classified as
cultivable are considered so on the assumption that farmers will practice conservation
methods, although many do not. About 2,000 hectares of Panama’s forest are destroyed
each week by industry, loggers, and farmers (Quinn, 1997; Meditz and Hanratty, 1989).
17

Rural Society and Eastern Panamá
The extension of the Pan American Highway into eastern Panamá coincided with
the Bayano hydroelectric dam construction in the 1970s (Wali, 1989). The Pan-
American Highway created access to a region that was once only reached by canoes and
boats where the indigenous tribes of the Wounaan, Kuna, and Emberá and black
populations lived. The paving of the Pan-American road has been beneficial to the
indigenous and black populations as a new transportation route to sell goods however, the
new road also brought in more migrants and industry (Nelson et al, 1999).
Since the 1980s, migration of campesinos (Latino peasant farmers) from central
Panamá has been the greatest cause of deforestation in eastern Panamá. The most
frequent cause of rainforest loss in Panamá is the migration of campesinos from
deforested and heavily eroded areas to forested areas. Campesinos slash and burn forests
to use for traditional agriculture or, more often, cattle ranching (Figure 3.4). These
harmful practices leave the land more susceptible to fire (Uhl and Kauffman, 1990). The
problems are exacerbated by government incentives that provide loans and free technical
assistance. National banks also provide credit to construct new roads in remote areas
opening up the forests to logging exploitation and more migration. Soon after the soil
deteriorates, the campesinos once again migrate to new, forested lands (Torrealba, 1996;
Meditz and Hanratty, 1989).
18

Figure 3.4: Slash and burn agriculture in eastern Panamá
Recent scarcity of agricultural land has made land titling necessary. Insecure
tenure is a severe constraint to improved technology and commercial crop production.
However, the cost of titling land has been too expensive for most subsistence farmers
(Meditz and Hanratty, 1989).
The Agrarian Reform in 1963 recognized a total of 1800 peasants’ rights to land.
Unfortunately, most plots were too small to support the families who practiced swidden
agriculture. Then in the 1970s Panamá tried a new land reform on a collective farming
system borrowed from Chile. However, most collectives were not successful, especially
in areas where smallholdings predominated (Meditz and Hanratty, 1989).
Daily survival overwhelms most smallholders, limiting their ability to plan for the
future. Yields from agricultural production have diminished over time because of soil
problems caused by unsustainable agricultural practices such as erosion and shortened
fallow periods. Additionally, smallholders do not have an adequate supply of household
labor to farm all their landholdings and therefore, the farmer and her or his family can
19

only cultivate a small piece of land. Most smallholders in eastern Panamá find jobs
working as day laborers for loggers, cattle ranchers and medium to large-scale farmers.
Farmers no longer need to plant a field for survival because wages can easily be
acquired as a day laborer. Still, most smallholders annually plant portions of their fields
with rice and corn for family consumption and sale. If they are not using all of their land
for farming, some smallholders can utilize their landholdings for long-term investments.
Smallholders have begun to reforest parcels with exotic plantation species for profit,
especially with teak.
20

CHAPTER FOUR
TEAK
Teak, Tectona grandis (L.f.), Verbenaceae from the Verbena Family, is one of the
most valuable tropical woods in the world (Figure 4.1). Because of its strength,
straightness, workability, and resistance to many pests and diseases, teak is used as a
standard to which other timbers are compared (Bhat, 1991; Weaver, 1993; Pandey and
Brown, 2000; Kumar et al, 1997; Keogh, 1979; Parameswarappa, 1995). The Spanish
name for teak is “teca”. Both the Burmese and Greek translate this word to “carpenter’s
proud” (Béhagel, 1997; de Vriend, 1998, Bhat and Ok Ma, 2004).
BIOLOGY
Figure 4.1: Plantation teak wood in Panamá
Teak is one of the best known tropical woods in the world. This large broad-
leafed, deciduous tree ranges from 30 meters in height with a girth over one meter on
good sites to twelve meters in height on poor sites. It develops a tall cylindrical bole and
21

has a buttressed trunk at maturity. Leaves reach up to 50 centimeters in length and 25
centimeters in width (Weaver, 1993; Keogh, 1979; Bentancourt, 1987; Ross, 1959).
Teak grows naturally on over 23 million hectares in India, Laos, Myanmar, and
Thailand and has been naturalized in the Philippines, Java, Indonesia and some of the
smaller islands in the Indonesian Archipelago. It grows between latitudes from twenty-
three degrees north to ten degrees south with temperatures ranging from 16º to 40º
Celsius. It requires an altitude between sea level and 1200 meters and rainfall of 500 to
5000 millimeters per year (Pandy, 1996; Pandey and Brown, 2000; Weaver, 1993;
Keogh, 1987; Bermejo et al; 2004; de Camino et al, 2002).
Highly productive sites generally have higher rainfall. A dry period is still crucial
for teak’s development; teak grown without a dry period has weaker timber. Thus, teak
requires monsoon climates with a distinct dry period of at least three months (Ghosh and
Singh, 1981; de Vriend, 1998; Keogh, 1987; de Camino et al, 2002; Chaves and Fonseca,
1991).
Teak grows best on fertile, well-drained, alluvial soils with a neutral or slightly
acid pH. Limiting factors include shallowness, hardpans, waterlogging, compaction, or
heavy clays with low contents of calcium, magnesium, and phosphate (Weaver, 1993).
Growth is stunted when the slope is above 20 percent or elevation exceeds 1000 meters
(de Camino et al, 2002). The best sites for teak have a soil depth of 90 centimeters or
more and are located on medium to flat slopes at the base of a mountain or in valleys
where there are no strong winds (Pandey and Brown, 2000; Keogh, 1987; Chaves and
Fonseca, 1991).
22

Teak is a cross-pollinating species with monoecious flowers that are 45 to 60
centimeters long. Occasionally, self-pollination occurs but germination is poor (Weaver,
1993). In Panamá, flowering initiates between ages five and eight. This occurs at the
beginning of rainy season and the fruits mature during dry season (Chaves and Fonseca,
1991). Germination is a plant’s ability to initiate reproduction. Teak seeds are larger in
areas that are more humid. Larger fruits have more seeds and positively increase
germination numbers (Weaver, 1993). Also, scarification is used in Costa Rica to speed
up germination (Chaves and Fonseca, 1991; Ramírez, 1999).
Teak is a coppicing species. Coppicing benefits smallholders who might not have
the funds available to purchase more seeds, especially after a fire. Teak, however does
use up much of the soil nutrients and unless fertilized the coppicing sprouts can be
stunted and susceptible to disease (Weaver, 1993; Hase and Foelster, 1985).
Wood quality
Wood strength is correlated with wood density. Therefore, heavier timbers have
greater strength. What makes teak so special is that it is a strong timber given its light
weight (Bhat, 1991). Teak is an admired wood because of its straight grain and ease of
use. Furthermore, teak has a high aesthetic value and is used to produce flooring, lumber
for shipbuilding, interior and exterior furniture, musical instruments, containers for
corrosive chemicals, and general carpentry (Weaver, 1993; Keogh, 1979, 1987; Bermejo
et al, 2004; de Vriend, 1998).
Perhaps the most important aspect of teakwood is its durability. Teak has been
known to last over 700 years in dry climates and decades when in contact with the ground
23

(Tint, 1995; Bhat, 1991). It is resistant to most pests and fungus because the heartwood
contains an extractive called sesquiturpine (Oteng-Amoako, 2004). Because of their long
service life, teak products are used in construction that requires long-lasting wood (Bhat,
1991; Weaver, 1993; Pandey and Brown, 2000; Keogh, 1987).
Teak grows more rapidly when it is young (Keogh, 1979, 1987; Kumar et al,
1997). Faster growth in teak is associated with a higher heartwood percentage (Bhat,
1995)(Figure 4.2). Heartwood formation starts at age six and continues to form rapidly
when teak is young (Ross, 1959). To produce heartwood, a longer rotation is more
important than how slowly it grows (Bhat, 1998b). This can be beneficial to a small
landowner who wants a substantial return within a short period of time.
Figure 4.2: Cross-section of a plantation grown teak log with its darker heartwood
Even though heartwood is sought after, the sapwood in teak is not necessarily
useless. With treatment, sapwood can be more resistant to pests and fungi than
heartwood (Oteng-Amoko and Lawler-Yolar, 1999). Still, end-users prefer heartwood
and teak is managed to favor its growth (Bhat, 1998b; Keogh, 1987).
24

Natural-forest teak is still the most desired teakwood in the world. The British
Royal Navy will not use any other teakwood except that from natural forests in
Myanmar. Unfortunately, native teak is in limited supply. This has encouraged the
creation of teak plantations (Oteng-Amoako, 2004; Pandey and Brown, 2000; Manger,
1995).
Plantation teakwood is physically different than that of natural teakwood. Color,
grain, and texture are inferior in plantation teak. Furthermore, plantation teak is found to
have a higher proportion of sapwood (Oteng-Amoako, 2004; Sarre and Ok Ma, 2004;
Bhat and Ok Ma, 2004; Bhat, 2000; Bhat et al, 1998a, Bailleres and Durand, 2000; de
Vriend, 1998; Krishnapillay, 2000). However, plantation teak’s strength in comparison
to natural teak is debated. Keogh (1987) claims “plantation grown teak is in no way
inferior to that obtained from indigenous areas in India or Burma”. Additionally, Bhat
(1998b) says that “wood density and mechanical properties are independent of growth-
rate and fast-grown trees of ring porous species have higher heartwood and strength”.
Still, most plantation teak, because of its small diameters, will never be able to reach the
same quality and prices as does natural-forest teakwood.
TEAK IN THE WORLD
With the ever-increasing demand for this high-quality wood, more people than
ever want to take part in the teak plantation industry. Plantations, in general, have been
established in most developed countries to cover dwindling stocks of natural forests
(FIRA, 1996). Similarly, teak is a plantation species that can aid a developing tropical
25

country to augment diminishing hardwood forests. Teak plantations can now be found in
most tropical countries (Pandey and Brown, 2000; Bermejo et al, 2004; Keogh, 1979).
Plantation Teak and Native Teak
Plantation teak establishment began in countries where it occurs naturally. It was
not until the late 1800s that teak plantations were introduced to countries outside its
native area (Pandey and Brown, 2000; Keogh, 1979; Weaver, 1993). Teak is now grown
in many tropical countries.
Teak was first brought to Trinidad from Burma in 1880 but not established in a
plantation until 1913. Ninety-two percent of the plantation teak is in tropical Asia with
43% in India and 31% in Indonesia. Tropical Africa holds 4.5% with most plantations in
Côte d’Ivoire, Nigeria, Sierra Leone, Tanzania, and Togo. The Caribbean, Central and
South America have 3% of global teak plantations in Trinidad and Tobago, Costa Rica,
El Salvador, Panamá, Columbia, Ecuador, Venezuela, and Brazil. Most teak producers
export the logs, processed timber, or final products globally. The number of countries
now producing teak has risen in the last decades. Future trends show increasing
production of teak in plantations (Weaver, 1993; Bhat and Ma, 2004; Pandey and Brown,
2000).
Teak in Panamá
Panamá, located between 7.5º and 10º North latitudes, is three degrees south of
teak’s naturally occurring range. However, teak grows well in Panama’s climate. Teak
was brought to the Summit Botanic Gardens in Panamá in 1926 with a seed provenance
26

from Sri Lanka. The teak from these gardens provided most of the seed for Central
American and Caribbean teak (de Camino et al, 2002; Picado, 1997).
Growth depends on site quality, plantation density, management, and age of trees.
Sites are classified according to their growth potential. Keogh’s (1979) regional site
classification chart for Central America states that teak will attain a mean top height of
nearly 30 meters on the best sites (Class I) and twelve meters on the poorest sites (Class
IV). Highly productive sites will have a dominant height of 21.7 meters in ten years.
Sites with a dominant height lower than 18.1 meters at ten years are classified as low
productivity (de Camino et al, 2002; Kumar et al, 1997; de Vriend, 1998).
Site quality describes how well a plant or tree will grow in a specific location. In
1956, Holdridge and Budowski distinguished more than a dozen life zones in Central
America. These life zones were further subdivided into associations of land use or
vegetation cover and local environmental conditions affected by altitude. The four zones
of life for eastern Panamá are: Tropical-Dry Forest 15%, Pre-mountainous Humid Forest
27%, Tropical Humid Forest 44%, and Pre-mountainous Very Humid Forest 14% (Figure
4.3)(Adames, 2001).
27

Pre-
Mountainous
Very Humid
Forest
14%
Tropical Humid
Forest
44%
28
Tropical Dry
Forest
15%
Pre-
Mountainous
Humid Forest
27%
Figure 4.3: Zones of Life for eastern Panamá (Adames, 2001)
To define a plant’s growth requirements Holdridge (1971) developed a
classification system to examine the impact of climate on natural vegetation. Rainfall
and biotemperature (based on the growing season length and temperature) are measured
to classify broad vegetation categories. Eastern Panama’s climate classification is 62%
sub-humid with approximate average annual temperatures of 24º C (75º F), 36% humid
with average annual temperatures above than 24º C, and 2% humid with average annual
temperatures below 24º C (Figure 4.4). The average annual precipitation is 2300
millimeters with an average dry season of three months and an average annual
temperature of 26º C (Adames, 2001).

~24ºC,
sub-humid
62%
< 24ºC
humid
2%
29
> 24ºC
humid
36%
Figure 4.4: Holdrige’s Zones of Life Climate Classification for eastern Panamá
(Adames, 2001).
Teak’s growth variability is dependent on soils, altitude, and climate. Out of all
of these, climatic factors are the most important. The main climatic variables are annual
rainfall and humidity (Pandey, 1996). If the goal of the plantation farmer is to produce
commercial logs then it is important that the climate variables for the region match those
required for optimum teak production. Eastern Panamá meets teak’s physiological
requirements for climate, temperature and altitude.
Eastern Panamá has three main soil groups. Soils derived from igneous rock that
are found closer to the mountains in the San Blas and Majé mountain ranges tend to be
more acidic and low in fertility but more resistant to erosion. The second group
originates from sedimentary rock. These soils are high in organic material and fertility
but limited by relatively high erosion. Unless already eroded, they can sometimes be
found on slopes of at least 30%. The last major groups found in eastern Panamá are the
alluvial soils. These soils found in the floodplains close to the major rivers and
tributaries are known for their fertility and depth but may become waterlogged (Adames,
2001).

Teak requires deep, fertile and well-drained soils that range between a neutral to
acidic pH (Chaves and Fonseca, 1991). Teak’s soil requirements are satisfied in eastern
Panamá. However, seasonal field conditions should be considered. For example, if a site
is susceptible to waterlogging during the year or if an area is already highly eroded and
will not satisfy specific nutrient requirements then another site should be chosen (Keogh,
1987).
Teak Management
Optimum silvicultural prescriptions for Panamá are not yet available because of
teak’s short history and limited growth analysis in the country. Occasionally, it is
necessary to make use of Central American and Caribbean information in the short term
when information specific to Panamá is not available (de Camino, 1997). Management
prescriptions are therefore based on the mix of information that best fits Panamá.
Teak seeds have acclimated to the soils and climate in Panamá. Through the seed
division of the Ministry of the Environment (ANAM) in Panamá, special landraces are
used and sold throughout the country. This division has tested recently introduced seed
provenances of excellent varieties from Tanzania and Thailand. However, these seeds
have responded poorly outside their native area. Introduced teak landraces specifically
adapted to this region are the best seed provenances to use (Ramirez, 1999a; Krisnapillay,
2000; Sarre and Ok Ma, 2004; Bermejo et al, 2004; Kaosa-ard, 1998).
Planting happens at the onset of rainy season. Teak may be planted by directly
sowing the seeds, with containerized seedlings, or with bare-root nursery stock (Figure,
4.5). Planting depths of at least 25 centimeters are required for seedlings. For a
30

plantation, it is not recommended to sow directly because of high mortality rates and
added labor costs. Instead, containerized seedlings have a higher survival rate because of
their developed root systems. However, stump plantings (root and shoot pruned plants)
can be most effective. In Central America, seedlings are planted in beds where they grow
for one year. When seedlings reach one and a quarter to two centimeters in diameter and
five to fifteen centimeters in height with roots fifteen to twenty-five centimeters in length,
stumps are then cut. These can be transported over large distances, are quicker to plant,
and their growth is more vigorous (Chaves and Fonseca, 1991; Weaver, 1993; Keogh,
1987; Bentacourt, 1987).
Figure 4.5: Newly planted teak seedling
Growth rates that exceed an average of twenty cubic meters per hectare per year
over twenty years are unlikely to be encountered (Romeijn, 1999). Growth rate tables for
Central America have many discrepancies and errors. The translation of growth rates
based on experimental plots to field conditions has been inadequate (Varmola and Carle,
2002). This has led people in many countries to believe that growth rates will be higher
than what is physically possible under field conditions. Most practicing foresters in the
tropics would be content to encounter an average annual growth rate of ten to fifteen
31

cubic meters per hectare per year over twenty years on all their plantation sites (Arias,
2003; Centeno, 1997; Pandey and Brown, 2000).
Management practices vary depending on whether teak is grown on short or long
rotations. An important feature of all teak yield tables is the early peak of mean annual
volume increment (MAI), generally between six and twenty years (Pandey and Brown,
2000). Rotations of more than twenty-five years show internal rate of returns lower than
12%, rotations of less than twenty-five years have higher internal rates of return (de
Camino et al, 2002).
Strength and heartwood density of young teak trees are not inferior to older ones,
thus rotation age can be shortened. Panamá has rotations between twenty and thirty years
with an ideal final stocking of 200 to 300 stems per hectare (Chaves and Fonseca, 1991).
Estimates of annual average increases are 1.3 centimeters in diameter, two meters in
height and twelve cubic meters per hectare. The total volume at 25 years is estimated as
300m³/ha and the commercial volume as 250m³/ha (Moran, 1998). Teak in Panamá
reaches 200 m³/ha in twenty years on the best sites (ANAM, 2004). The financial
rotation age does not depend on maximum volume productions, but on the value of the
final product (Bhat, 1998b; Bermejo et al, 2004; de Camino et al, 2002; Keogh, 1979).
The number of seedlings to plant depends on a combination of the desired final
product and initial investment costs. Literature provides information on spacing that
ranges from one meter by one meter to an irregular spacing of three meters by six meters
(Alfaro et. al., 1997; Schmincke, K.H., 2000; Pandey and Brown, 2000; Miller, 1969;
Meza, 2000; Ola-Adams, BA. 1990; Keogh, 1987; Miller, 1969). According to most
literature and personal interviews, the most common spacing for initial planting is three
32

meters by three meters or 1,111 trees per hectare (Bermejo et al, 2004; de Camino et al,
2002; Chaves and Fonseca, 1991).
The closer the spacing of teak, the more expensive are the establishment costs
with seedling purchase and planting labor. Nevertheless, higher stocking allows for early
mortality rates without a decline in later stand quality and provides an opportunity for
selecting the better individuals during thinning operations. This silvicultural treatment
aids in early selection that can release the better individuals to achieve better growth rates
(Pandey and Brown, 2000).
Wider spacing reduces initial investment costs. However, the wider the spacing,
the more weeding and pruning needs to be done during the initial years. Over the long
run, costs will be about the same as closer spacing except that the costs for plantations
with wider spacing will be spread out over the first five or six years (Keogh, 1987;
Anoop et al, 1994).
Diameter at breast height (dbh) and specific gravity increased with increased
spacing between trees while merchantable height, stem volume and basal area decreased.
No matter which spacing is chosen, it is of utmost importance that the land be managed
properly. Stocking rates and management will affect commercial growth (Ola-Adamas,
1990; Bhat, 1998b).
Teak is shade intolerant. It is sensitive to root competition and requires full light
for proper development (Troup, cited in Romeijn, 1999; Weaver, 1993). Straight,
commercial teak is contingent upon keeping the stand free from competition. When teak
is first planted, an entire hectare or more of land is cleared. Also, because native flora
competes with teak, weeding is mandatory in the first four years until the closure of the
33

canopy finally shades out any understory. However, during future thinnings the
understory will regenerate but, by this time, the teak should be large enough to not be in
danger of competition. This new understory can be beneficial to protect the soil from
erosion. One of the weeding regimes suggests that cleaning should be done three times in
the first year, twice in the second year, and once in the third and fourth years (Keogh,
1987; Romeijn, 1999). Another weeding treatment demands cleaning twelve times in the
first two years, and twice in the third, fourth, and fifth years (De Vriend, 1998; Alfaro et
al, 1997).
Teak needs a deep, porous and nutrient-rich soil to grow. With unprotected soil
from heavy weeding, the hot tropical sun, fire, and heavy rain, erosion is inevitable
(Chaves and Fonseca, 1991). Hot tropical sun desiccates bare soil and heavy rains leach
out nutrients (Figure 4.6). This can cause stunted growth in teak plantations.
Figure 4.6: Desiccation of unprotected tropical soils.
34

Erosion is a problem within teak plantations. Extensive erosion occurs when teak
is planted on a hillside. It is recommended not to plant on hillsides with more than a 20%
slope. To prevent heavy erosion, spacing on a hillside should be set wider apart to allow
an understory to grow. Plantation fires are caused by uncontrolled field burning set by
farmers practicing slash and burn agricultural techniques. Fire lanes can be cut to protect
a stand from fire (de Camino et al, 2002; Chaves and Fonseca, 1991; Keogh, 1987;
Herrera Durán, 2001).
Disease is not pervasive in teak, however problems still do exist. Leaf-cutter ants
Atta spp., have attacked many teak plantations. They can be controlled with organic
deterrents or chemical pesticides. After fire a tree is more susceptible to fungal attacks.
Therefore, preventive methods are necessary to protect the stand from fire and damage.
Wind damage is another problem that can ruin a teak plantation. Dense stands thinned
too late and plantation edges are affected by wind damage. Shallow roots from trees that
have recently been released can create conditions where blow over or breakage occurs.
To offset wind damage, good site selection and timely thinning is important (Keogh.
1987).
Pruning is required to keep the teak trunk free from knots that reduce quality and
to increase its merchantable height (Keogh, 1987; Briscoe and Nobles, 1966). It is best to
prune teak before the branches get too thick and produce large knots. Teak should be
pruned directly after it has produced leaves. This will decrease the number of new
branches and stems that form on the bole (Chaves and Fonseca, 1991; Schmincke, 2000).
Consequently, labor costs are saved with timely pruning.
35

Three prunings are recommended (Cordero 1996; Perez, 1996). The first pruning
should take place between ages two and three when the majority of trees reach five
meters in height and have a diameter of six centimeters. On average, half of the total
height of the tree should be pruned. Anything more can damage the total photosynthetic
capacity and, consequently, growth will slow (Alfaro et al, 1997). The second pruning
should take place in the fifth year or when the trees reach ten meters in height. The last
pruning should remove 60% of the total height when a tree reaches twelve meters or
seven years.
For optimum development of a stand, thinning is essential. Thinning is a
silviculture treatment to reduce size differences and increase stand uniformity.
Fertilization is not needed to increase the diameter growth of trees, instead timely
thinning is recommended (Keogh, 1987; Bermejo et al, 2004).
Thinning is based on the number of trees in a hectare and the rotation age.
Thinning should start at the onset of competition (Redes, 1998). Indicators of
competition include the touching of crowns and mortality of lower branches. This
competition occurs when trees reach seven to nine meters in height when planted with
three by three meter spacing. Three to five thinnings are the average number based on
optimum Central American growth rates (Bermejo et al, 2004; Alfaro et al, 1997; de
Camino et al, 2002). The first two thinnings should reduce the number of trees by 50%;
thereafter thinning is based on basal area (Miller, 1969; Redes, 1998; Pandey and Brown,
2000). When basal area is used, thin when the plantation reaches 20 to 25 m²/ha and is
reduced to 14 to 17 m²/ha (Krug and Ruiz, 2003). The first thinning does not usually
result in merchantable material and should be considered a sanitary cut to get rid of
36

unhealthy or damaged trees. Thinning is not as important when teak matures because it
does not need as much growing space. This occurs approximately when teak reaches age
twelve (Keogh, 1979, 1987; de Camino et al, 2002; Kumar et al, 1997; Schmincke, 2000;
Alfaro, 1990).
Most smallholders do not want to thin because of additional costs with no returns.
Also, most do not have the technical knowledge of teak management and see a loss in
their investment. Thinnings, though, are not by definition a harvest. Instead a thinning
favors growth of the best individuals (de Camino et al, 2002; Varmola and Carle, 2002).
Unfortunately, with no thinnings during the first ten years, the smallholders end
up losing the tree’s productive potential (Figure 4.7). In the short term, there is a limited
supply of better quality logs. In the long run, this competition results in small diameter
classes that reduce the price each log can generate. Also, if trees are shaded for too long,
any type of management cannot rescue the tree’s growth potential. Under these
circumstances it is best to cut the stock and to start all over again. The consequence of no
thinning is low to negative financial returns (Keogh, 1987).
37

Figure 4.7: Ten-year-old teak stand with no thinning
If the utilization of thinnings and pole-sized wood improved financial conditions,
teak plantation owners would benefit. Early returns from these first thinnings would
motivate smallholders to manage their stands for optimal growth. Since there is no
international market for these small sizes, it is necessary to create a domestic market.
Costa Rica uses teak from plantations first thinnings to produce furniture parts and small
flooring boards. Products such as broom handles, glue-edged boards, edging strips,
furniture, and doors have been made from thinning materials. A domestic end-product
market is needed to take advantage of these early thinnings (Krisnapillay, 2000; Pandey
and Brown, 2000; Keogh, 1987; Bermejo et al, 2004; de Vriend, 1998).
Forest plantations in the tropics have failed due to natural causes or human error.
Unforeseen occurrences are the risks involved when working with a natural resource.
These include natural catastrophes, insect infestations, weather phenomena, and fire.
Human error can be avoided with careful planning and with consideration for distance to
the market, infrastructure and transportation costs, site quality, and financial constraints.
38

Also, short term gains based on intensive selective logging reduce the long term financial
gain. To obtain a reasonable financial gain, it is pertinent to thoroughly understand all
variables included from production to sale and the projected market for teak (Schmincke,
2000; Weaver 1993; de Vriend, 1998).
TEAK AND MARKETS
In 2000, global roundwood production of teak reached 1,795,000 m³.
Roundwood and sawn timber exports accounted for just over 400,000 m³ (ITTO, 2003a).
The main exporter of teak is Myanmar because it does not have export restrictions as do
other southeast Asian countries. The biggest importers and manufacturers of teak are
India, China, and Thailand (Pandey and Brown, 2000). India, however, has banned
felling and has put restrictions on extraction from natural forests in many of its states.
These restrictions have reduced native teakwood supply to the global market, which
ended up raising the real prices (Alfaro et al, 1997).
The demand for most tropical timbers has increased. In 2003 real prices for most
primary tropical timber products and species increased, as timber was in short supply. As
well, world trade volume grew by 3.2% in 2002 and is expected to rise in the near future.
The growth rate of real prices was approximately one percent (Bose and Saigal, 2004;
ITTO, 2003; de Vriend, 1998).
Supply and demand and the quality of plantation teak can be an estimate of its
economic viability in the future. Important factors include the costs involved over the
lifetime of a stand, growth rates, and market prices. Since native teakwood is the most
expensive teakwood in the world, plantation owners will need to improve plantation
teak’s quality to ensure similar prices (Bhat and Ok Ma, 2004).
39

The timber industry employs grading standards to set prices. Grading qualities
include thickness, width, length, and grade (color, strength, straight grain, free of
sapwood, and knotless). The value of teak is based upon natural teak forests because of
its superior quality. The lower quality plantation wood currently has a lower price than
the natural forest. Experts estimate that these are temporary factors and as soon as the
new plantations begin to produce higher quality teak, the gap will disappear (Alfaro et al,
1997; Bhat, 1998b; Oteng-Amoako, 2004; Robledo, 2004; de Camino et al, 2002; de
Vriend, 1998).
The quality of plantation teak in the marketplace may be at risk because of the
increasing number of countries now planting and harvesting plantation teak. If teak is of
low quality, this will affect the financial viability of the producing teak plantation.
However, implementation of best management practices will give owners the knowledge
of optimal management tools to produce high quality plantation teak and compete in the
global market (de Vriend, 1998; Tint, 1995; Bhat, 1998b; Bhat and Ok Ma, 2004; Oteng-
Amoako, 2004).
The World Trade Organization and NAFTA have recently opened borders for
more free trade. Even before the Uruguay Round, tariff rates had already been reduced
substantially. Since India removed its import-licensing requirement in 1992, it now
imports large quantities of teak logs to make up for domestic restrictions on teak felling.
With lower or no tariff rates, the global timber trade is expected to soar (Barbier, 1995;
Pandey and Brown, 2000; de Camino et al, 2002).
Recent regulations have been developed to aid developing countries. Some
developing countries have already restricted their primary log exports to encourage
40

domestic processing. This may slow a country’s participation in the current global timber
market. However, trade in forest products has shifted towards value-added processed
products. By adding value before export, developing countries will be able to increase
the monetary value of exports and their GDP (Barbier, 1994; Oteng-Amoako, 2004).
The World Trade Organization (WTO) is designing new restrictions to protect the
environment. Even though their implementation is speculative these restrictions include
quantities of logs permitted to leave a country and green certification. Only four out of
thirty-five countries that export teak have internationally recognized certification. If
countries involved with the WTO accept these restrictions, they will cause a reduction in
the supply of teakwood to the international market (Barbier, 1995). Nevertheless,
individual countries have started incentive programs to encourage entrance into the new
global market (ITTO, 2003b; Pandey and Brown, 2000; Keogh, 1996).
41

CHAPTER FIVE
SMALLHOLDERS IN PANAMÁ
Farmers today need to pay for clothing, transportation, their children’s education
and other expenses. One strategy is to diversify agriculture systems to balance times
when certain crops are more valuable than others (Beets, 1990). As a result, a farmer will
have security in the case of an insect infestation on one crop or a decline in the market
prices for another. Perhaps a good form of economic diversification is to plant teak.
In 1969 teak plantings in Panamá reached 650 hectares. In 2003, over 35,000
hectares had been reforested with teak. This has been mainly an effect of “Ley 24” or
“Law Number 24” (ANAM, 2004; Keogh, 1979). Ley 24 was created on November 23,
1992 along with the Executive Decree Number 89 on June 8, 1993 as a force to promote
reforestation in Panamá for a 25-year period ending in 2017. This reforestation incentive
was developed as a consequence of the heavy deforestation in the country. Private
investors used these incentives and have reforested over 55,000 hectares (ANAM, 2004;
Ramirez, 1999b).
To receive incentive benefits, the proprietor must present a stamped and signed
paper detailing the project and provide certification of a personaría jurídica. A
personaría jurídica is a group recognized by the Panamanian government with the ability
to work on national and international projects that handle money. The group must consist
of at least twelve members and receive certification in organizational project training,
leadership training, and accounting classes. The personaría jurídica is then recognized
as a small non-governmental organization (NGO). The NGO is required to supply a
reforestation plan elaborated by a professional forester if they are going to reforest more
42

than two hectares. In addition, those with projects of more than 100 hectares need to
present a map with a scale of 1:50,000 and the annual budget for imports and costs for the
project (Ministerio de Hacienda y Tesoro, 1993).
The fiscal incentives for the reforester include waived import duties on
machinery, equipment, and value added products along with waived income tax on land
costs. In 2001, the total fiscal sacrifice of the state reached $40,354,325.00.
Additionally, all foreigners who invest a minimum of $40,000 into reforestation projects
receive an investor class immigrant visa. As a consequence, these private investors have
affected the rising costs of land. Only 27% of all registered reforesters are receiving
these incentives. This means that most registered and all non-registered reforesters are
not receiving any of the benefits from these incentives (Suira, 2002; ANAM, 2001;
Pandey and Brown, 2000; de Camino et al, 2002).
Reforestation projects create benefits not only environmentally but also, socio-
economically by employing local communities. The environmental benefits are
understood but actions are usually based upon monetary concerns instead. For example,
while native trees are still being over-harvested in the ongoing deforestation, most of the
trees used in Panama’s reforestation are exotic species. Unfortunately, this will
eventually cause a shift away from native plants and animals. These projects are
nonetheless profitable and financial analysis results show that teak is the most profitable
reforestation species in Panamá (Suira, 2002; de Camino et al, 2002).
The adoption of teak in Panamá has trickled down to the smallholder. A
smallholder is the head of a farm and usually the head of the household. A smallholder
owns, rents, or squats on land that measures from a half to five hectares in total (Beets,
43

1990)(Figure 5.1). Smallholder production and income generation is much smaller in
comparison to conventional forestry (Pinedo-Vasquez and Rabelo, 2002; Pinedo-Vasquez
et al, 2001). They have watched the large investment corporations and plantations with
government incentives grow and progress. Of course the small landholder craves the
same success and attempts to grow teak.
Figure 5.1: A smallholder and his field in Panamá
Profitability is the main incentive for the small landholder. Factors influencing
the adoption of teak are the need for wood caused by deforestation and the emergence of
a market for short rotations (fifteen to thirty years) in Central America. Smallholders in
Ipetí are now using their own teak supply as building material for their own stilted houses
because of the depletion of wood from the surrounding forest. Another impetus for
growing teak is the possibility of using teak plantations as collateral for credit. This is
especially noteworthy with the Emberá in Ipetí who do not live in a reservation but on
collective land. Without a land title or evidence of ownership, agricultural loans cannot
be given. However, teak plantations can be used as collateral in eastern Panamá. But,
most smallholders cannot devote their money or time to a long-term investment. Without
44

having another source of income, a smallholder cannot sustain a teak plantation alone. In
other words, a long maturation period is a significant deterrent for smallholders (Sarre
and Ok Ma, 2004; Oteng-Amoako, 2004; Varmola and Carle, 2002).
Smallholders run into a series of problems when trying to decide whether to grow
teak. First, most small-landowners do not have the technical knowledge nor the
experience needed to grow plantation teak. Second, they do not have the financial
resources to cover initial costs. Moreover, they are not eligible to receive any
reforestation incentives. Still, even in Costa Rica where the smallholders do receive
economic incentives, more than half do not prune or thin (Martinez et al, 1994; Keogh,
2004; de Vriend, 1998; Schmincke, 2000; Nair and Souvannavong, 2000).
Mittlelman (2000) believes that teak is suitable for small-scale planting because
of its high value, relatively fast growth and ease of cultivation. However, limited land
involves many risks. Smallholders cannot guarantee a consistent supply of teak, which
will close doors to many markets. Even though their quality may be as good as a
commercial grower, it can reduce the prices that are received up to fourfold (Keogh,
2004).
Most literature is focused on teak management by medium to large landholders,
and not whether teak is profitable for a smallholder. Nevertheless, smallholders always
need access to good planting materials and assistance with the establishment and
management of teak. It is essential that smallholders have the information to handle
problems that may arise. Also, since no domestic teak market currently exists in Panamá,
smallholders will have to be reasonably assured of the prices of teakwood and learn how
45

to sell it within the current international system (Keogh, 2004; Nair and Souvannavong,
2000).
46

CHAPTER SIX
METHODS AND DATA
To determine the feasibility of a teak project for smallholders one must
understand how smallholders manage their teak plantations and the financial implications
of these practices. Since there are many management scenarios for growing commercial
teakwood, a range of values are considered for key factors in commercial teak
production. Market prices are a primary concern because better prices will motivate
smallholders to grow teak. The information necessary to conduct a teak feasibility study
is provided in Table 6.1. Each topic in the table will be covered in a subsection of this
chapter. Finally, a sensitivity analysis is performed on all critical costs and possible
returns based on different management practices. Feasible projects are determined by
positive net present worth. Therefore, participant observation, informal and in-depth
interviews, literature, yield tables, growth tables, management scenarios, and
international measurement formulas were reviewed and collected for this report.
Teak rotation, growth rates and commercial yields
Costs associated with proper management
Cost analysis
Prices paid for teak in eastern Panamá
Sensitivity analysis
Table 6.1: Information needed for a teak plantation feasibility study
Primary data was gathered based on participant observation and unstructured
interviews. Peace Corps service provided me with twenty-five months of time to build
community ties and trust with the villagers in Ipetí and the surrounding communities so
that I could understand the innuendos, language, and cultural history in order to make a
47

fair interpretation of what I saw. Participant observation is a useful research method.
The benefit of this approach is a longer time to view, extrapolate, and ponder information
from participants through observations, discussions and informal interviews over a large
period of time (Nichols, 2000).
Based on participant observation, I was able to find key informants to provide me
with the basic understanding of the differences in native and exotic timber management
in eastern Panamá. Key informants are people who are knowledgeable about certain
topics and are able to provide information (Bernard, H, 2002; Nichols, 2000). With these
informal interviews I understood that people believe native trees grow slower than teak
and are usually not managed or planted. These exploratory, open-ended interviews
helped to structure more detailed questions for further in-depth and structured interviews.
These interviews asked why the smallholders in eastern Panamá plant teak, how they
plant, manage, and harvest teak, where they sell it and for what price, and all the costs
involved in a teak plantation (Appendix One).
During interviews with villagers, native trees were discussed so that there was
always a comparison for the smallholders to conceptualize the differences between native
trees and teak. What I discovered through interviews was validated working with the
villagers for over two years.
Teak rotation length, growth rates and commercial yields
Through Peace Corps connections and internet research, I located Jean Marc
Verjans, a teak research scientist working as the head of research at Ecoforest S.A. in
Panamá. He provided me with basic biological information about teak and how it is
48

grown in Panamá. He shared a list of bibliographies and I used these to form more
interview questions and to begin to develop my literature research. In addition,
interviews and trips to teak plantations and smallholder teak sales with the engineer
Eliacer Perez, offered a good understanding of the market in Panamá, especially about
the biological factors that influence growth, quality, and price.
Because the average teak rotation in Panamá is between twenty and thirty years,
all growth tables used in this study have a final cut or harvest at twenty-five years.
Existing growth tables from other Central American countries are based on data from an
entire rotation age, while Panamanian growth models are projections based only on
young plantations (de Camino, 1997). Alfaro (1990), Bermejo et al (2004), and de
Camino et al (2002) have all created growth tables for teak in Costa Rica. Existing
regional growth tables better estimate an average commercial volume that is similar to
the real commercial volume than do those based on Panamanian projections. There have
been many lawsuits filed in Central America because of overestimates of commercial
value in teak plantations that have resulted in huge losses for international investors
(Romeijn, 1999).
Three Costa Rican growth tables are used for this study (Table 6.2). These
growth tables display different total commercial volume totals of 144.6 m³/ha (Alfaro,
1990), 217.2 m³/ha (Bermejo et al, 2004), and 257.3 m³/ha (de Camino et al, 2002).
Secondary data are used throughout this analysis. These data were gathered by other
scientists and are cited in this report. These secondary data include growth tables,
commercial teak yields, thinning, pruning, and weeding regimes. Growth tables with
given commercial yields and management scenarios are used to show essential
49

management practices for optimized growth and to quantify associated management
costs.
50

Table 6.2: Growth tables (Alfaro, 1990; Bermejo et al, 2004; de Camino et al, 1998)
Year Trees per ha D (cm) V cut (m3/ha) CV (m3/ha) Total V (m3/ha)
1 1111 3.5 0 0 46.9
4 660 13.4 9.7 0 127.9
8 440 20.8 33.9 10.2 186.7
12 220 25.9 67 26.8 297.9
25 0 36.2 179.4 107.6 297.9
144.6
(Alfaro, 1990) D:diameter at breast height; V: Volume; CV: Commercial Volume
Age Top Height D Number of trees Basal Area CV D of crop removed D of main crop CV accumulated Total V Total CV
(Years) (Meters) (cm) (m2/ha) (m3/ha) from thinnings after thinning from thinnings (m3/ha) (m3/ha) (m3/ha)
3 8.3 7.2 1111 4.6 0 0 8.8 0 0 0
5 14.4 14.2 754 11.9 30.2 9.4 16 0 30.2 0
8 19.3 20.5 512 16.9 76.8 15.7 22.4 17.3 83.6 17.3
12 22.1 25.5 347 17.7 107.6 21.1 27.3 24.1 131.7 24.1
20 23.9 30.7 236 17.4 146.3 28.7 31.5 33 194.5 33
25 24.3 36.1 160 16.4 136 217.2 136
(Bermejo et al, 2004) D: Average quadratic mean diameter at breast height; CV: Commercial volume; V: Volume
Thinning/ final cut Year Trees harvested CV CV CV V Total V Total CV
D >20.1cm D 15.1 - 20.0 D 10.1-15.0 D

Plantations should be managed to achieve the best growth levels for maximum
economic returns. Studies based on data from managed and unmanaged teak plantations
are rare. Unmanaged plantations result in smaller diameter teak trees. It is important that
plantations are managed and thinned so that a plantation owner can expect a reasonable
return. Good management includes proper weeding, pruning, and thinning. These
practices will optimize the growth, maximize value, and result in more uniform sizes.
Picado (1997) produced a table of values to indicate the differences between plantations
with good management and those without (Table 6.3). The smaller height and diameter
trees from an unmanaged plantation will negatively affect the stand’s ability to return a
profit.
Proper
Ages
(years)
Variables Management 2 4 8 15 >15
MAI (dbh) no 1.68 3.08 2.38 1.82 1.2
yes 2.69 2.06 1.37
Total Height no 6.05 12 15.5 19.5 20
yes 16.3 21.1 20.8
Commercial height no 11.4 14.3 11
yes 11.5 15.6 11.5
MAI: mean annual increment
Table 6.3: Teak in Costa Rica with good management includes proper weeding, pruning,
and thinning. Without proper management, teak plantations result in smaller height and
diameter growth (Picado, 1997).
During a teak sale in Ipetí, in eastern Panamá, two sellers who had never thinned
their plantations cut their largest trees to sell (Table 6.4). Unfortunately, they did not
generate a profit and ended up losing money due to small diameter sizes. The trees were
cut to fit the container and therefore a total tree height and total merchantable height were
not collected.
52

age (years) AVG SED (cm) ST DEV
87 trees 12 23.33 5.29
165 trees 10 19.43 2.94
AVG SED: average small end diameter
ST DEV: standard deviation
Table 6.4: Teak sale in Ipetí of trees with no past management
Bemejo et al (1997) created a growth and yield table with a guide for thinnings
for sites in Costa Rica with proper management (Table 6.5). The twelve-year-old teak
trees taken from the stand in Ipetí averaged larger diameters when compared to the 212
removed trees from thinnings of twelve-year-old teak trees in Costa Rica (Tables 6.4 and
6.5). However, the 87 trees thinned from Ipetí were the best and largest trees from the
stand. When compared to the average tree sizes of 27.3 centimeters in diameter that
remained after the thinning in Costa Rica, the trees in Ipetí do show much smaller
diameters. Inadequate or late management can result in smaller diameters that will
negatively effect the prices of the commercial yield.
53

Age Top Height D Number Basal Area CV D of crop removed D of main crop CV accumulated Total V Total CV
(Years) (Meters) (cm) of trees (m2/ha) (m3/ha) from thinnings after thinning from thinnings (m3/ha) (m3/ha) (m3/ha)
3 8.3 7.2 1111 4.6 0 0 8.8 0 0 0
5 14.4 14.2 754 11.9 30.2 9.4 16 0 30.2 0
8 19.3 20.5 512 16.9 76.8 15.7 22.4 17.3 83.6 17.3
12 22.1 25.5 347 17.7 107.6 21.1 27.3 24.1 131.7 24.1
20 23.9 30.7 236 17.4 146.3 28.7 31.5 33 194.5 33
25 24.3 36.1 160 16.4 136
D: Average quadratic mean diameter at breast height
CV: Commercial volume
V: Volume
54
217.2 136
Table 6.5: Proper management of a teak plantation in Costa Rica results in optimum diameter and height levels (Bermejo et al,
2004)
210.4

Costs associated with proper management
Changing management variables can render different annual costs. This study
uses all essential costs needed to start a teak plantation in eastern Panamá. The costs
used were obtained from farmers through informal interviews and prices that I located in
eastern Panamá by interviewing timber buyers. The essential cost variables used are the
lowest investment costs possible which do not reduce the quality of teakwood to be
harvested. These cost variables include land cost, clearing and fencing, teak seedlings,
and planting labor.
The largest initial cost for a teak plantation is buying land unless the land is
already owned. In eastern Panamá, land costs approximately $1000 per hectare with a
title and can cost two hundred dollars less if land is not close to a main road or if it does
not have a title. Land titles are important in Panamá, especially for a long-term
plantation because squatters still have the ability to encroach on land (Fischer and
Vasseur, 2002). Squatters can sit on untitled land and claim it as their own after a few
years. If the land has been bought but does not have title nor is currently being used,
squatters have the right to farm and make use of the land. In addition, to claim untitled
land, it is necessary to cut down a ten to twelve meter barrier between owners or to cut
down all trees on the land. Without a title or an indigenous reservation, land is not
protected. Renting land is not financially viable since annual rents per hectare in eastern
Panamá average $500 per hectare. With a twenty-five year lease for a teak rotation, rent
adds up to $12,500 per hectare (undiscounted), which will make a teak plantation
unprofitable.
55

A teak plantation is planted on a cleared section of secondary forest or
agricultural land. Clearing of land in eastern Panamá is still done with manual labor.
Usually it takes four laborers working an eight-hour shift to clear one hectare of
secondary forest. Any large trees available from the harvest of successional regrowth
will be cut with a chainsaw or ax and used as fencing posts. Labor costs are six dollars
per person for an eight-hour workday in eastern Panamá, with a total cost of twenty-four
dollars to clear one hectare of land.
Fencing a hectare of teak will keep out animals or people who may damage or
steal teak trees. Fencing with two rows of barbed wire can reduce damage to trees, which
will maintain the quality of logs to be sold. All posts are collected from the clearing of
the secondary forest and therefore posting only has a labor and chainsaw cost. Also, if a
smallholder owns more than one hectare of land and has available money to plant and
manage more than one hectare of land then, the plantation will have a higher return
because of a slightly reduced initial investment per hectare. If hectares are adjacent and
fenced together, there is a reduction in the amount of fencing and posts that would be
needed if each hectare was fenced separately (Figure 6.1). Therefore, it is more
economical to plant more than one hectare of teak when land is adjoining.
56

Figure 6.1: Reduction in initial cost of fencing when land is square and connected
√ ha * 400m/ha -1.5 * $0.5138/m = $/ha
ha = hectare(s)
m = meter(s)
Planting costs include seedlings. Containerized seedlings or bare-root nursery
stock from special landraces are sold throughout Panamá by the Ministry of the
Environment (ANAM). These seedlings are of good quality stock because experienced
nursery workers harvest the seed stock from superior quality seed trees. Selection of
seeds from superior teak trees can increase volume production ten to fifteen percent
(Hedegart, 1995). The environmental sector of the Panamanian government Instituto
Nacional de Recursos de Naturales Renovables (INRENARE) donated a small number of
teak seedlings to communities in eastern Panamá about twelve years ago. Autoridad
Nacional del Ambiente (ANAM) took over INRENARE in June 1998 as the new
Ministry of the Environment. This transition resulted in a loss of institutional knowledge,
which also occurs during major governmental party changes in Panamá (Slatton, 2004).
ANAM has no records of giving the containerized seedlings to the communities or any
57

information they gave the smallholders on planting and management. No government
official has been back to visit the smallholders after the initial donation of seedlings.
Most teak planted by smallholders in eastern Panamá is not purchased. Instead
seeds are picked off the ground from trees in the surrounding area. A personal seed
supply is the most economical method of plantation establishment. However, because the
largest and best trees are generally selectively cut to generate a quick income, the best
seed supply is gone and this practice now results in the use of lower quality seed stock.
“This favors trees that are genetically disposed to early flowering, which is considered a
negative trait related to excessive branching and reduced volume increment” (Hansen et
al, 1997). Additionally, coppicing and voluntary regeneration of teak are used instead of
buying seedlings. Because teak is a coppicing species, new shoots grow from stumps of
harvested teak trees. This method is the least labor intensive for the smallholder. These
past investments may generate higher returns because there are no seedling and planting
labor cost for a second rotation. However, teak uses up much of the soil nutrients and
unless fertilized the coppicing sprouts can be stunted and more susceptible to disease
(Weaver, 1993; Hase and Foelster, 1985).
Regeneration under already existing teak can be transplanted into another area
where it will not have to compete for light. Most smallholders gather their own teak
seeds and plant according to their perception of corporate investment plantations
throughout Panamá. Unfortunately, smallholder’s seed stock is probably not from quality
seed trees and may produce lower quality or slower growing teakwood (Kaosa-ard,
1998). Since there is no market for low quality trees, it is probably best if smallholders
buy quality seed to ensure a quality product for their long term investment.
58

Containerized seedlings sold through the Ministry of the Environment in Panamá
cost twenty cents per seedling when fewer than one thousand trees are purchased (three
meter by three meter spacing = 1,111 trees per hectare: $189.00 per hectare). Any
number above one thousand trees purchased cost seventeen cents a seedling. A five
percent mortality rate is added on in this study in case seedlings die during transplanting.
This adds nine dollars to the total seedling cost with fifty-six extra seedlings per hectare.
Planting costs include the labor needed to plant a hectare of teak. Planting
seedlings with a height of twenty to thirty centimeters (this height includes the root
length) with three meter by three meter spacing requires ten laborers to plant one hectare
in a day. To plant one hectare of teak, labor costs $60. Most smallholders already
possess planting equipment and therefore, tools are not a factor included in the initial
costs.
Management is the key component to produce high quality teak. However,
management of teak is not common knowledge since plantations are new to most
smallholders. Weeds compete heavily with teak seedlings, therefore weeding or cleaning
is essential to grow straight merchantable logs quickly. Two different weeding regimes
are found in the literature. One model suggests that cleaning should be done three times
in the first year, twice in the second year, and once in the third and fourth years (Keogh,
1987; Romeijn, 1999). Another model prescribes cleaning twelve times in the first two
years and twice in the third, fourth, and fifth years (de Vriend, 1998; Alfaro et al, 1997).
Teak can be weeded with herbicide or cleared manually. Both systems stimulate
growth since competition is reduced. In a study done by Anoop et al (1994), the authors
believe that Paraquat® application is the cheapest of the weed control treatments tested
59

ecause they believe that labor is more scarce and costly. However, the study was
performed in Kerala, India, where the cost of labor may be more expensive than labor
costs and supply in eastern Panamá. Both chemical weeding and hand weeding are
compared with two different weeding models to find the least expensive methods to
employ (Table 6.6). Chemical weeding costs $34 per hectare and manual weeding costs
$24 per hectare.
Number of cleanings
Year de Vriend Keogh
1 6 3
2 6 2
3 2 1
4 2 1
5 2 0
Table 6.6: Two different weeding regimes (Keogh, 1979; de Vriend, 1998)
When done effectively pruning can save labor costs and improve the quality of
the wood. Teak must be pruned carefully. If performed incorrectly, pruning can reduce
the quality of wood even more than failing to prune at all. Incorrect pruning can damage
the quality of wood by inviting pests and disease into the tree. Pruning should occur
directly after teak has produced leaves. This will decrease the number of new branches
and stems that form on the bole. Three prunings are recommended when teak is young
(Cordero 1996; Perez, 1996). Four laborers can prune one hectare of teak in a day with a
labor cost of $24.
Thinning is the most effective management tool available to increase diameter
growth of the best trees. All three growth models used in the analysis start with 1,111
trees per hectare but thin different numbers of trees at different times (Table 6.2). Two of
60

the three models use almost the same thinning schedules although they result in different
commercial volumes (Table 6.7) (de Camino et al, 1998; Alfaro, 1990). The Alfaro
growth model uses three thinnings while the other two regimes use four. Labor is the
only cost involved in a sanitary thinning. Sanitary thinnings are performed with a
machete since the trees are small enough to cut easily. These small poles do not have a
commercial market and are usually cut and discarded in the field. Thinning costs include
the labor to cut and carry wood. The amount of labor is dependent on the number of trees
to be thinned. All commercial thinning and harvests are done with a chainsaw and
thinning after nineteen years of age requires the use of a tractor to carry out the logs
unless the cut logs are close enough to a main road to be hand carried. Tractor rental is
$100 per day in eastern Panamá. Each thinning will raise the cost of management.
61

Years Alfaro de Camino et al Bermejo et al
1
2 220
3 357
4 451 220
5
6
7
8 220 220 242
9
10
11
12 220 220 165
13
14
15
16
17
18
19
20 111
Total thinned 891 880 875
Left to Harvest 220 231 236
Table 6.7: Comparison of three different thinning schedules and the number of trees
thinned per year
Cost analysis
Since there is a high degree of uncertainty in making a profit in smallholder teak
production, prices received, essential costs, and potential yields are all analyzed in Excel
spreadsheets to see how sensitive the outcome of a project is to variation in critical
variables. Net present worth (NPW) is used in this sensitivity analysis as a measurement
of discounted cash flow to show a project’s worth (Figure 6.2). All prices are real prices
and, therefore, do not include inflation.
62

Figure 6.2: Net present worth equation for cost analysis
The derivation of cash flow in a project quantifies the gross return less capital
items and inputs less labor and management costs. A discount rate is used. The discount
rate measures the value of future income that a project will receive based on the
understanding that initial costs vary over time. Governments of developed countries
generally use a discount rate around 3.5% for projects that take up to 100 years. Industry
in developed nations use a discount rate of 8% for shorter-term projects (Catchpole,
2005). In developing countries like Panamá, discount rates are generally higher than
developed countries. These rates are between eight and fifteen percent. Higher interest
rates reduce the net present worth because costs occur early in the project while returns
occur later. The first years of a project will have a negative net present worth because of
the initial investment costs with no returns. If the calculated net present worth is less
than zero then it is assumed that with the discount rate given, the costs outweigh the
benefits. Therefore the smallholder should not invest in a teak plantation. However, if
net present worth is greater than zero, a project should be undertaken (de Vriend, 1998;
Gittinger, 1972).
n Rt n Ct
NPW = ∑ - ∑
t =0 (1 + r) t t = 0 (1 + r) t
t = year
n = rotation length
r = real interest or discount rate
Rt = revenues in year t
Ct = costs in year t
63

Prices paid for teak in eastern Panamá
Finding buyers who will disclose their prices is a challenge. Through the Peace
Corps sustainable agriculture trainer, I was given a list of names and telephone numbers
of people to contact in order to find international buyers of teak in Panamá who export it
to India. Eventually, four buyers provided the prices they pay for teakwood in eastern
Panamá. Each category is a complete list of all merchantable timber sizes and the prices
that each buyer paid for each size within that category. Transcontinental Forest Products
Limited (TFP), however, supplied two different price scenarios, one for low grade teak
and another for medium grade. The differences in grade depended on the length of each
bole. Panamá does not have a standard price for teakwood. A range of prices was paid
for teak in eastern Panamá from 2002 to 2005 (Table 6.8). Still, with five different prices
there is only a small difference between prices.
Small end diameter
(cm) TFP Medium grade TFP Low grade Hindu Perez Valderrama
35+ 142 82 98 220 190
30 to 34 127 72 98 220 190
25 to 29 102 52 70-83 150 140
20 to 24 102 52 70-83 120 100
15 to 19 42 22 35 55 45
10 to 14 17 -3 - 55 45
Table 6.8: Price lists of teak timber prices in eastern Panamá in US dollars
Price variability over time is common with teak logs. The International Tropical
Timber Organization publishes monthly reports on prices of teak logs from veneer quality
through grade four, saw log quality for Myanmar. The prices of teak in Myanmar
64

fluctuate anywhere from 300 to over 1000 Euros annually (ITTO, 2004). Thus, the prices
I have gathered for this study reflect the varying prices in the world market.
Prices for teak are dependent on commercial timber sizes. In Panamá, there are
different formulas used to determine the commercial volume in cubic meters (Appendix
Two). However, all formulas only give an estimate of volume and not an exact amount
(Avery and Burkhart, 1983). It is more important to know the relationship of price to log
scale. A buyer who uses a formula that might give a smaller volume for a bole might pay
more than a buyer who uses a formula that pays less for a larger volume. It is important
to note that most smallholders in eastern Panamá normally sell native timber in board
feet. Therefore, with these technical international formulas, the typical smallholder will
not know the volume of timber she or he is selling and if they are receiving a good price.
Sensitivity Analysis
A sensitivity analysis was performed to determine the feasibility of smallholder
teak production. A sensitivity analysis is used to determine at what level of a critical
variable a decision maker alters the management decision. Risk is not taken into account
here. This entails a social discount rate that is weighed on both the length of time it takes
to get a return on an investment (temporal) and if the individual can wait that long
(personal). Different income groups will have a different discount rate with a higher
discount rate for low-income groups because of the present need of money for survival.
For example, is there a set of prices, the critical value, which makes it economically
infeasible to invest in a teak plantation? A sensitivity analysis is designed to answer this
type of question. All projects that have a positive net present worth are feasible and those
65

projects with a negative net present worth are not to be undertaken (Arndt, 1993; Price
and Nair, 1985).
A sensitivity analysis was performed on two different weeding regimes, chemical
and manual weeding, size of plantation, and existing infrastructure (Table 6.9). Three
different growth tables are used to determine commercial volumes of all variables that
were analyzed. These growth tables used four different price scenarios that show the
variation in prices for eastern Panamá. Feasibility of projects will be dependent on the
net present worth on each analysis performed.
Effects of two different weeding regimes on net present worth results
Effects of chemical and manual weeding on net present worth results
Effects of plantation size on net present worth results
Effects of existing infrastructure on net present worth results
Table 6.9: A sensitivity analysis is performed on the variables in this table to find if there
are differences in net present worth that will affect project feasibility
66

CHAPTER SEVEN
RESULTS AND DISCUSSION
This chapter will explain the price lists used for this study to quantify returns,
which will effect the net present worth or the feasibility of the project. The sensitivity
analysis used with the four price lists showed that present net worth varies with certain
management practices, quantity of land, variable cost inputs, and discount rate. Project
feasibility is dependent on discount rates. The chapter describes when projects are
acceptable given their sensitivity to the data.
Price scenarios
Based upon the five given price lists (TFP1, TFP2, Valderrama, Perez, and Hindu
prices), a price table with four price scenarios was formulated for this study (Table 7.1).
Price scenario one subtracted one standard deviation from the average of all prices to
create a list of prices for every commercial timber size. Price scenario two used the
average of all prices from all four buyers to create a list of prices for every commercial
timber size. Price scenario three added one standard deviation to the average prices to
create a list of prices for every commercial timber size. Price scenario four used the
medians of all prices given to create a list of prices for every commercial timber size.
Each price scenario is used in the sensitivity analysis to show the range in net present
worth based on higher or lower prices.
67

Small end Scenario One Scenario Two Scenario Three Scenario Four
diameter (cm)
35+ 87.6 146.4 205.2 142
30 to 34 79.3 141.4 203.5 127
25 to 29 66.6 111 155.4 121
20 to 24 64.4 93.5 122.6 101
15 to 19 27.5 39.8 52.1 42
10 to 14 -3.4 22.8 49 17
Table 7.1: Price table with four price scenarios used in this report to quantify returns
according to small end diameters from thinnings and harvests
A. Analysis of Weeding Regimes
Three growth tables were linked together with four different price scenarios to
find differences in project feasibility depending on the weeding regime. First, all three
growth tables were analyzed under the Keogh weeding schedule with the four different
price scenarios. Then, the same growth tables were analyzed under the de Vriend
weeding regime with the four different price scenarios. Discount rates of eight percent to
fourteen percent were used to find the net present worth. Panamá is a developing country
and tends to have higher real interest rates than a developed country (Catchpole, 2005; de
Vriend, 1998). All net present worth above zero means that a project should be accepted.
Anything below zero implies that with the discount rate given, the costs outweigh the
benefits and the project should not be undertaken.
Analysis of de Camino et al growth table with two weeding regimes
One hectare of a teak project with the de Vriend weeding regime worked
together with the de Camino et al growth table shows net present worths lower than the
Keogh weeding regime for the same growth table (Figures 7.1and 7.2). Price scenario
68

one will never be feasible unless the Keogh weeding regime is used with the lowest
discount rate of eight percent. Price scenarios two and four with the de Vriend weeding
regime are only feasible with a discount rate of eight percent to ten percent; the Keogh
weeding regime will be feasible with a discount rate through eleven percent (Figure 7.3).
Price scenario three, the scenario with the highest prices, has the highest positive
discount rate of both weeding regimes. De Vriend weeding regime is feasible through a
twelve percent discount rate and Keogh weeding regime is feasible through thirteen
percent. A discount rate of fourteen percent is not feasible with either weeding regime
(Figure 7.4).
$
4000
3000
2000
1000
0
-1000
-2000
NPW of prices scenarios for "de Camino et al" growth
table with the "de Vriend" weeding regime, one ha
8 9 10 11 12 13 14
% Discount rates
69
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Figure 7.1: Net present worth results using various discount rates for the de Camino et al
growth table with the de Vriend weeding regime for one hectare

$
4000
3000
2000
1000
0
-1000
-2000
NPW of price scenarios for "de Camino et al" growth table
with the "Keogh" weeding regime, one ha
8 9 10 11 12 13 14
% Discount rates
70
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Figure 7.2: Net present worth results using various discount rates for the de Camino et al
growth table with the Keogh weeding regime for one hectare
$
1500
1000
500
0
-500
-1000
-1500
-2000
de Camino et al: NPW of two different weeding
regimes with a discount rate of 11% for one ha
Scenario 1 Scenario 2 Scenario 3 Scenario 4
de Vriend
Keogh
Figure 7.3: Net present worth results of both de Vriend and Keogh weeding regimes for
the de Camino et al growth table with an eleven percent discount rate for one hectare

$
1500
1000
500
0
-500
-1000
-1500
-2000
de Camino et al: NPW of two different weeding
regimes with a discount rate of 14% for one ha
Scenario 1 Scenario 2 Scenario 3 Scenario 4
71
de Vriend
Keogh
Figure 7.4: Net present worth results of both de Vriend and Keogh weeding regimes for
the de Camino et al growth table with a fourteen percent discount rate for one hectare
Analysis of Alfaro growth table with two weeding regimes
For a one hectare teak project with the de Vriend weeding regime and the Alfaro
growth table results show net present worths lower than the Keogh weeding regime for
the same growth table (Figures 7.5 and 7.6). Price scenario one will never be feasible
with the Alfaro growth table. Price scenarios two and four with both the de Vriend and
Keogh weeding regimes are feasible with a discount rate through nine percent (Figures
7.7). Price scenario three is again the scenario with positive net present worth at the
highest range of discount rates. All price scenarios with a discount rate above nine
percent are negative except for price scenario three (Figure7.8). Both the de Vriend and
Keogh weeding regimes are feasible through a discount rate of eleven percent. A project
with a discount rate of twelve percent to fourteen percent is not feasible with either
weeding regime.

$
4000
3000
2000
1000
0
-1000
-2000
NPW of price scenarios for "Alfaro" growth table with the
"de Vriend" weeding regime, one ha
8 9 10 11 12 13 14
% Discount rates
72
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Figure 7.5: Net present worth results using various discount rates for the Alfaro growth
table with the de Vriend weeding regime for one hectare
$
4000
3000
2000
1000
0
-1000
-2000
NPW of price scenarios for "Alfaro" growth table with the
"Keogh" weeding regime, one ha
8 9 10 11 12 13 14
% Discount rates
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Figure 7.6: Net present worth results using various discount rates for the Alfaro growth
table with the Keogh weeding regime for one hectare

$
1500
1000
500
0
-500
-1000
-1500
Alfaro growth table: NPW of two different weeding
regimes with a discount rate of 9% for one ha
Scenario 1 Scenario 2 Scenario 3 Scenario 4
73
de Vriend
Keogh
Figure 7.7: Net present worth results of both de Vriend and Keogh weeding regimes for
the Alfaro growth table with a nine percent discount rate for one hectare
$
1500
1000
500
0
-500
-1000
-1500
Alfaro growth table: NPW of two different weeding
regimes with a discount rate of 10% for one ha
Scenario 1 Scenario 2 Scenario 3 Scenario 4
de Vriend
Keogh
Figure 7.8: Net present worth results of both de Vriend and Keogh weeding regimes for
the Alfaro growth table with a ten percent discount rate for one hectare

Analysis of Bermejo et al growth table with two weeding regimes
One hectare of a teak project with the de Vriend weeding regime and the Bermejo
et al growth table again shows net present worths lower than the Keogh weeding regime
for the same growth table (Figures 7.9 and 7.10). Price scenario one will not be feasible
with either weeding regime. Price scenario two for the de Vriend and Keogh weeding
regimes are only feasible through a discount rate of ten percent (Figure 7.12). Price
scenario three for the de Vriend and Keogh weeding regime are feasible with a discount
rate of eight percent through twelve percent (Figure 7.13). Price scenario four of the
Keogh weeding regime is feasible from eight through ten percent unlike the de Vriend
weeding regime that is only feasible through nine percent (Figure 7.11).
$
4000
3000
2000
1000
0
-1000
-2000
NPW of price scenarios for "Bermejo et al" growth table
with the "de Vriend" weeding regime, one ha
8 9 10 11 12 13 14
% Discount rates
74
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Figure 7.9: Net present worth results using various discount rates for the Bermejo et al
growth table with the de Vriend weeding regime for one hectare

$
4000
3000
2000
1000
0
-1000
-2000
-3000
NPW of price scenarios for "Bermejo et al" growth table
with the "Keogh" weeding regime, one ha
8 9 10 11 12 13 14
% Discount rates
75
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Figure 7.10: Net present worth results using various discount rates for the Bermejo et al
growth table with the Keogh weeding regime for one hectare
$
3000
2500
2000
1500
1000
500
0
-500
-1000
-1500
-2000
Bermejo et al: NPW of two different weeding regimes
with a discount rate of 9% for one ha
Scenario 1 Scenario 2 Scenario 3 Scenario 4
Vriend
Keogh
Figure 7.11: Net present worth results of both de Vriend and Keogh weeding regimes for
the Bermejo et al growth table with a nine percent discount rate for one hectare

$
2000
1500
1000
500
0
-500
-1000
-1500
Bermejo et al: NPW of two different weeding regimes
with a discount rate of 10% for one ha
Scenario 1 Scenario 2 Scenario 3 Scenario 4
76
Vriend
Keogh
Figure 7.12: Net present worth results of both de Vriend and Keogh weeding regimes for
the Bermejo et al growth table with a ten percent discount rate for one hectare
$
1000
500
0
-500
-1000
-1500
-2000
Bermejo et al: NPW of two different weeding regimes
with a discount rate of 12% for one ha
Scenario 1 Scenario 2 Scenario 3 Scenario 4
de Vriend
Keogh
Figure 7.13: Net present worth results of both de Vriend and Keogh weeding regimes for
the Bermejo et al growth table with an eleven percent discount rate for one hectare

Results of weeding regimes on growth tables
The Keogh weeding regime is feasible at higher discount rates than the de Vriend
weeding regime with every growth table used in this report (Table 7.2). It would be easy
to say that every plantation in eastern Panamá should use the Keogh weeding regime.
However, weeding must be done according to the physical evidence of weeds and not
solely determined by a weeding schedule. It is best to consider the de Vriend weeding
regime as the lowest common denominator, which recommends more weeding than the
Keogh schedule. In other words, it is best to choose plantation projects that have a
positive net present worth from both weeding regimes should more weeding need to be
done (Table 7.2).
8% 9% 10% 11% 12% 13% 14%
Scenario One de Vriend
Keogh dC
Scenario Two de Vriend B, A, dC B, A, dC B, dC
Keogh B, A, dC B, A, dC B, dC dC
Scenario Three de Vriend B, A, dC B, A, dC B, A, dC B, dC B, dC
Keogh B, A, dC B, A, dC B, A, dC B, A, dC B, dC dC
Scenario Four de Vriend B, A, dC B, A, dC dC
Keogh B, A, dC B, A, dC B, dC dC
B: Bermejo et al growth table (2004)
A: Alfaro growth table (1997)
dC: de Camino et al growth table (2002)
(letters in bold signify positive net present worth from both weeding regimes)
Table 7.2: Table of project feasibility for each growth table with both weeding regimes.
Black area signifies project feasibility for all three growth tables. Gray area suggests that
a majority of growth tables make feasible projects.
Scenario one, the low price scenario, is not feasible for the Bemejo et al and
Alfaro growth tables. However, the de Camino et al growth table with the Keogh
weeding regime is the only feasible project with a discount rate of eight percent.
77

Scenario one is the average of all prices minus the standard deviation of each price class.
If the teak prices are as low as those in price scenario one, a teak project will not be
feasible.
The majority of the net present worths with the highest positive discount rates are
those from price scenario three. Price scenario three is the average of all prices plus the
standard deviation of each price class. When smallholders receive higher prices for teak,
projects are feasible at higher discount rates.
Although all three growth tables are similar, the Alfaro table has the smallest
commercial teak yield for a twenty-five year rotation cycle when compared to de Camino
et al and Bermejo et al growth tables. Returning the lowest yield, the Alfaro growth table
should be used as the lowest common denominator of acceptable projects. This means
that feasible projects that include the Alfaro growth table should be chosen to be sure that
there would be a profit. Smallholders must realize that all three growth tables are
predicated upon proper weeding, pruning, and thinning practices.
The majority of price scenarios except for scenario one with the lowest prices
have project feasibility through a discount rate of ten percent with both weeding regimes
(Table 7.2). A discount rate of ten percent or below implies that the farmer is patient
enough to wait twenty-five years until harvest. If in twenty-five years the prices in the
market are low then the farmer must also have patience to wait to harvest her or his teak
when prices reach an average to high level similar to price scenarios two, three, and four.
The Alfaro growth table with the de Vriend weeding regime is the lowest common
denominator in this report. In the remaining analyses, only price scenario two of the
Alfaro growth table with the de Vriend weeding regime will be analyzed in detail. Only
78

in special circumstances will the Keogh weeding regime or a different price scenario be
used in the main analysis. Summary tables at the end of each analysis show the outcomes
of project feasibility for all growth tables.
B. Analysis of Chemical and Manual Weeding
In this report, all weeding that is performed is assumed to be done by chemical
means. This includes the cost of Paraquat® used as an herbicide and the cost of labor
that is more expensive than the cost of labor for manual weeding. A smallholder may
choose to invest extra money and save time by having the weeding done by chemicals.
Chemical weeding was the most common weeding method smallholders performed in
eastern Panamá.
A comparison of price was performed using both the de Vriend and Keogh
weeding regimes to show the difference in cost between herbicide (chemical) and manual
weeding. These weeding regimes are based on a twenty-five year rotation. Although
chemical weeding in both weeding regimes is more costly than manual weeding (Figure
7.14), it is the most common practice in eastern Panamá.
79

$700
$600
$500
$400
$300
$200
$100
$0
Comparison of manual and herbicide weeding for
two different weeding regimes
Manual Herbicide
80
de Vriend
Keogh
Figure 7.14: Manual and chemical weeding costs table based upon the de Vriend and
Keogh weeding regimes
A one time cost for manual weeding is $24 per hectare compared to $34 per
hectare for herbicide weeding. The de Vriend weeding regime is more costly than the
Keogh weeding regime (Figure 7.15). The total cost of manual weeding for the de Vriend
weeding regime for five years and eighteen applications is $432. In comparison, the total
cost of the Keogh manual weeding regime for four years and seven applications is $168
per hectare. However, the cost of chemical weeding for both weeding regimes is higher
with $603 per hectare for the de Vriend weeding regime and $329 per hectare for the
Keogh weeding regime.

$700
$600
$500
$400
$300
$200
$100
$0
Comparison of two different weeding regimes
using the manual or herbicide weeding
de Vriend Keogh
81
Manual
Herbicide
Figure 7.15: Costs of Keogh and de Vriend weeding regimes based on manual or
chemical weeding
Results of chemical weeding and manual weeding costs
The manual weeding method when compared to the chemical weeding method
does not have much of a difference when determining project feasibility. The manual
weeding method of the de Camino et al growth table with scenario four prices and an
eleven percent discount rate is the only project where the manual method is an acceptable
project and the chemical weeding method is not (Figure 7.16). It must be recognized that
a discount rate of eleven percent is the maximum discount rate for the feasibility of a
manual weeding project with any growth table. Nevertheless, the cost difference in
chemical and manual weeding is insignificant.

$
2000
1500
1000
500
0
-500
-1000
-1500
NPW of "de Camino et al": chemical vs. manual weeding
for scenario four prices
8 9 10 11 12 13 14
82
Manual
Chemical
Figure 7.16: A discount rate of eleven percent with the de Camino et al growth table can
make a project feasible with the manual weeding method
C. Analysis of One Half Hectare of Teak
In eastern Panamá, many smallholders do not want to plant an entire hectare with
teak, especially if it is their first time planting teak. It is important that smallholders
know if it is possible to plant less than one hectare of teak and still generate a profit. In
this analysis, one half hectare of teak is analyzed using the Alfaro growth model with the
de Vriend weeding regime to discover if half hectare teak projects can be feasible. At the
end, a summary table shows project feasibility of all three growth tables for one half
hectare of teak production with discount rates ranging from eight to fourteen percent.
Analysis of Alfaro growth table with the de Vriend weeding regime for one half hectare
One half hectare of a teak project with the de Vriend weeding regime analyzed
with the Alfaro growth table reveals several feasible projects (Figure 7.17). With a
discount rate of eight percent, scenario two prices of the Alfaro growth table with the de

Vriend weeding regime are feasible projects (Figure 7.18). This means that if a
smallholder has extra resources available and decides that a long-term project is worth
her or his time, then a teak project is possible. Poorer smallholders who have limited
financial resources and land will not have the option of a long-term project since most of
their focus is based on day-to-day survival. The half hectare teak project, assuming the
Alfaro growth table, should only be undertaken when a smallholder has the patience and
resources for this long-term investment.
$
2000
1500
1000
500
0
-500
-1000
-1500
-2000
NPW of price scenarios for "Alfaro" growth table with
the "de Vriend" weeding regime, 0.5 ha
8 9 10 11 12 13 14
% Discount rates
83
Scenario 2
Figure 7.17: Net present worth results using various discount rates for the Alfaro growth
table with the de Vriend weeding regime for one half hectare

$
300
200
100
0
-100
-200
-300
Alfaro growth table: NPW of scenario two for an 8%
and 9% discount rate for 0.5 ha
8% 9%
Scenario Two
84
de Vriend
Figure 7.18: Net present worth results of scenario two prices with the de Vriend weeding
regimes for the Alfaro growth table with both an eight percent and nine percent discount
rate for one half hectare
Results of one half hectare teak analysis
The only major difference between this analysis based on one half hectare of teak
and the analysis of weeding regimes is that the majority of all project feasibility has
shifted from a maximum of a ten percent discount rate to a maximum of a nine percent
discount rate for one half hectare of teak production (Table 7.3). All projects are feasible
through a discount rate of nine percent with both weeding regimes except for price
scenario one which has the lowest prices. The same circumstances apply in all cases; a
farmer must be patient and wait the twenty-five years plus until teak prices are at least
average to have a feasible project.

8% 9% 10% 11% 12% 13% 14%
Scenario One de Vriend
Keogh
Scenario Two de Vriend B, A, dC B, dC
Keogh B, A, dC B, A, dC B, dC
Scenario Three de Vriend B, A, dC B, A, dC B, dC B, dC
Keogh B, A, dC B, A, dC B, A, dC B, A, dC B, dC
Scenario Four de Vriend B, A, dC B, dC
Keogh B, A, dC B, A, dC dC
B: Bermejo et al growth table (2004)
A: Alfaro growth table (1997)
dC: de Camino et al growth table (2002)
(letters in bold signify positive net present worth from both weeding regimes)
Table 7.3: Table of project feasibility for each growth table with both weeding regimes
for one half hectare of land. Black area signifies project feasibility for all three growth
tables. Gray area suggests that a majority of growth tables make feasible projects.
D. Analysis of One and Two Hectares of Teak
An analysis was performed to find the differences in net present worth for one and
two hectares of teak production. The Alfaro table with the de Vriend weeding regime is
analyzed in detail. At the end, a summary table shows project feasibility of all three-
growth tables for one and two hectares of teak production with discount rates ranging
from eight to fourteen percent.
Alfaro: Difference of net present worth between one and two hectares
Two hectares of a teak project with the de Vriend weeding regime analyzed with
the Alfaro growth table reveals the same feasible projects as does one hectare (Figures
7.19 and 7.20). Price scenario two is feasible for discount rates of eight and nine percent
for both one and two hectares. Little difference occurs in costs per hectare and project
feasibility between price scenario two for both one and two hectares (Figure 7.21). Based
85

on the Alfaro growth table there is not a significant financial difference in project
feasibility between one hectare and two hectares.
$
6000
4000
2000
0
-2000
-4000
NPW of price scenarios for "Alfaro" growth table with the
"de Vriend" weeding regime, one ha
8 9 10 11 12 13 14
% Discount rates
86
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Figure 7.19: Net present worth using various discount rates of Alfaro growth table for one
hectare
$
6000
4000
2000
0
-2000
-4000
NPW of price scenarios for "Alfaro" growth table with the
"de Vriend" weeding regime, two ha
8 9 10 11 12 13 14
% Discount rates
Scenario 1
Scenario 2
Scenario 3
Scenario 4
Figure 7.20: Net present worth using various discount rates of Alfaro growth table for
two hectares

$ per ha
1000
-1000
-1500
Scenario Two: NPW difference between one ha and
two ha
500
0
-500
8 9 10 11 12 13 14
% Discount rates
Figure 7.21: Net present worth of scenario two prices for Alfaro growth table of one and
two hectares on a per hectare basis
Results of project feasibility differences for one and two hectares
There are more positive net present worths with two hectare projects than with
one hectare projects (Table 7.4). The cost of fencing per hectare is smaller for two
hectares than for one hectare. When more than one hectare of adjoining land is fenced,
less material is needed. All fencing costs for more than one hectare in this report are
based upon square and adjoining land.
Except for price scenario one, the majority of projects are feasible with a ten
percent discount rate (Table 7.4). There is not much variability in project feasibility for
both one and two hectares when compared to the analysis of weeding regimes due to few
economies of scale. Projects are feasible when the farmer is both patient for a return on
her or his investment and will sell when prices are at least average.
87
1 ha
2 ha

8% 9% 10% 11% 12% 13% 14%
Scenario One 1 ha
2 ha dC
Scenario Two 1 ha B, A, dC B, A, dC B, dC
2 ha B, A, dC B, A, dC B, dC dC
Scenario Three 1 ha B, A, dC B, A, dC B, A, dC B, A, dC B, dC
2 ha B, A, dC B, A, dC B, A, dC B, A, dC B, dC
Scenario Four 1 ha B, A, dC B, A, dC dC
2 ha B, A, dC B, A, dC B, dC dC
B: Bermejo et al growth table (2004)
A: Alfaro growth table (1997)
dC: de Camino et al growth table (2002)
(letters in bold signify positive net present worth for both one and two hectares of corresponding discount rate within
that scenario)
Table 7.4: Table of project feasibility for one hectare and two hectares using three
different growth tables. Black area signifies project feasibility for all three growth tables.
Gray area suggests that a majority of growth tables make feasible projects.
E. Variable Production Cost
All initial capital and maintenance costs are factored in to the total cost that a teak
plantation with a twenty-five year rotation requires. Perhaps one management scenario
can produce the same results for less money than another scenario. Knowledge of what
management is critical to the commercial development of teak can help to avoid loss of
investment and in the long run, possibly lower investment costs. This report will analyze
critical costs differences of smallholders who already own a substantial amount of the
infrastructure needed for a teak plantation and may be able to reduce their costs by half
(Table 7.5) (Appendix Three).
88

Total costs Scenario A costs Scenario B costs
Land Owned land Owned land
Clearing Clearing Clearing
Fence Fence Existing fencing
Fencing labor Fencing labor Existing fencing
Seedlings Seedlings Seedlings
Planting labor Planting labor Planting labor
Weed control Weed control Weed control
Pruning Pruning Pruning
Sanitary Cut Sanitary Cut Sanitary Cut
Thinning Thinning Thinning
Harvesting Harvesting Harvesting
Tractor rental Tractor rental Tractor rental
Chainsaw rental Chainsaw rental Chainsaw rental
Chainsaw labor Chainsaw labor Chainsaw labor
Table 7.5: Financial components of teak production with those components which may
be zero cost or reduced cost in italics
F. Analysis of Owned Land and Existing Fencing
Analysis of one and two-hectare teak projects exhibited all costs included in a
teak project. However, if the land is already owned, then the cost of land is excluded
from the total investment cost. Land ownership may not mean privately held with
exclusive titling and sale rights. Land may be permanently held by an individual while
some legal rights remain with the community. In addition, if land is owned and already
fenced, then there will be an even smaller initial investment cost. This analysis will
investigate the differences between feasible projects based upon projects that do not
include land costs and projects that do not include land or fencing costs.
Price scenario one with the Alfaro growth table and the de Vriend weeding regime
is used in this case to compare the differences between land cost and no land cost.
89

Scenario one is used because up to this point it is not a feasible project with any discount
rate and growth table for one hectare when all initial costs are involved with the de
Vriend weeding regime. Scenario one prices are the lowest prices received of all
scenarios. When comparing the feasibility of projects it is important to note what
infrastructure the smallholder already owns that will lower the initial costs for the
plantation.
Price scenario one projects are feasible with an eight percent discount rate using
the Alfaro growth table (Figure 7.22). When prices for commercial teak are very low,
smallholders who do own land will still be able to receive a return on their investment.
$
500
0
-500
-1000
-1500
-2000
Scenario one of "Alfaro" growth table with and without
land costs
8 9 10 11 12 13 14
Figure 7.22: Alfaro project feasibility with no land costs
90
land cost
no land cost
The present net worths based upon the Alfaro growth table projects change greatly
when there is no land or fencing cost. For price scenario one, there are no feasible
projects for the Alfaro growth table when all initial costs are involved. However, with no

land or fencing costs, projects are feasible with discount rates ranging from eight through
ten percent (Figure 7.23).
$
1500
1000
500
-500
-1000
-1500
-2000
-2500
Scenario one of "Alfaro" growth table with and without
land and fencing cost
0
8 9 10 11 12 13 14
91
land cost
no land cost
no land or fence cost
Figure 7.23: Alfaro growth table: Discount rate changes for no land or fencing cost
Results of project feasibility for no land or fencing costs
There is quite a difference in project feasibility between projects that do not have
land and fencing cost and those that do. It is significant to note that no projects are
feasible with scenario one prices when all initial investment costs are needed.
Smallholders benefit greatly from already owning land and fencing. A ten percent
discount rate signifies that farmers must be patient and have enough resources to wait for
at least twenty-five years. With lowered investment costs, smallholders can harvest when
prices are lower but still should wait until prices rise to improve earnings (Table 7.6). It
seems all the more possible for smallholders to undertake a teak project when they do not
need to pay the high investment cost for land and fencing.

8% 9% 10% 11% 12% 13% 14%
Scenario One no land cost dC, B, A dC, B dC
no fencing or land cost dC, B, A dC, B, A dC, B, A dC
Table 7.6: NPW of all three growth models with no land or fencing cost for one hectare.
Black area signifies project feasibility for all three growth tables. Gray area suggests that
a majority of growth tables make feasible projects
Summary
This report concludes that the de Vriend and Keogh weeding regimes and the
manual and chemical weeding methods give similar project feasibility results and
therefore, do not display sensitivity in this study. The de Camino et al, Bermejo et al,
and Alfaro growth tables vary slightly in commercial growth yields of teak and display
similar project feasibility results. However, present net worth is sensitive to both prices
and discount rates when determining project feasibility.
The majority of results of the analysis show project feasibility with a discount rate
of ten percent. A ten percent discount rate signifies that only farmers that have
appropriate economic resources and the patience to wait out the twenty-five year rotation
would be able to undertake a teak project. If smallholders have enough land to grow
short-term crops for sustenance or sale and would not demand the space where the teak is
growing for at least twenty-five years then a teak project is feasible according to this
report. However, waiting a longer period of time is necessary if buying prices of teak are
low at the twenty-five year mark. If there are no land costs, a smallholder can be more
flexible about the timing of harvest because lower prices can be accepted for a feasible
project. It is recommended that smallholders with no land costs also wait until prices are
higher.
92

Prices are an external factor that cannot be controlled by the smallholder. Timing
of harvest and sale should coincide when prices are at least average and above. Global
teak prices fluctuate annually, which permits the seller to either negotiate better prices to
be received with various buyers or wait until prices rise.
Not all smallholders can undertake teak projects. They may have insufficient land
and financial resources needed to initiate and sustain a teak plantation. In all cases,
proper teak plantation management is required to grow commercially viable teak trees.
Without proper management, teak trees will not be able to grow to optimum levels and
will result in smaller trees, smaller commercial volumes, lower financial returns, and
infeasible projects.
93

CHAPTER EIGHT
CONCLUSIONS AND RECOMMENDATIONS
A sensitivity analysis was performed to find critical factors that determined the
feasibility of teak production for smallholders in eastern Panamá. Results show net
present worth is sensitive to both discount rates and prices when determining project
feasibility. De Vriend (1998) performed a sensitivity analysis based on smallholders and
Costa Rican teak and came to the same conclusions. His results state that the most
important factor determining profitability of teak plantations is the discount rate. De
Vriend also claims that world teak prices determine a teak plantation profitability. He
concludes by saying that both discount rates and prices are external factors and cannot be
influenced by management. Adequate management, however, will stimulate growth and
the quality of teak and in the long run, if smallholders are patient, they can harvest when
prices are reasonably good.
Promotion of teak by extension workers for local government and international
agencies should promote best management practices. Educating smallholders about teak
can improve their technical skills and their plantations’ productivity. Better
informational material and demonstration plots can teach smallholders how to grow
commercial teak, which can lead to market access and the ability to make profitable
returns on investments. Peace Corps Panamá would do well to train their agriculture and
forestry volunteers in basic pruning, weeding, and thinning techniques that can aid
smallholders in growing quality wood (Bhat and Ok Ma, 2004; Durán, 2001; Hansen et
al, 1997).
94

Community forestry and large group initiatives are becoming more common
throughout the world. De Camino et al (2002) have suggested that a Central American
teak growers association be formed to exchange information on selecting good sites,
discussing what vegetative material is best to use, and understanding what management
practices result in optimal growth rates for the area. Associations like these can be
leaders in creating new market niches and products (Bhat and Ok Ma, 2004). Working in
groups with extension workers can be financially advantageous to smallholders,
especially when direct marketing can eliminate the cost of middleman (Mittelman, 2000).
Keogh (2004) suggests that connecting both private companies and communities working
with teak can be mutually beneficial where development banks provide low-interest loans
to the private sector for investment in teak plantations and in return, surrounding
communities benefit from technology transfer, and experience in participatory harvesting
and marketing. Not all cooperatives function well and some community forestry
programs can result in social tension and economic complications (Sears and Pinedo-
Vasquez, 2004). A community analysis would greatly benefit agencies that are thinking
of implementing organized forestry in communities. A community analysis will give the
researcher or extension agent an insider’s perspective on how well the community
functions and works together.
Many smallholders in eastern Panamá do not have the option to engage in long-
term investments because of limited economic resources. However, government
incentives for smallholders and reforestation loans with low interest rates and long
extensions for initial payback can compensate for income deferred until longer-term
investments become profitable (Mittelman, 2000). The tangua system is a method that
95

combines both crop production with the initial years of teak production on the same plot
of land. This practice can provide the smallholder with both long-term and short-term
profits, which would help to recover the initial investment costs of planting teak. Many
Asian teak-producing countries interplant crops with teak from the first to the sixth years
of teak development. The tangua system can reduce labor expenses and ensure adequate
weeding for the plantation when both agricultural crops and teak grow on the same plot
of land (Hansen et al, 1997). Although not widely promoted or practiced in Panamá, the
tangua system has been used in Central America where bananas have been cultivated
during the first few years of teak growth (Chaves and Fonseca, 1991). Nevertheless,
research needs to be undertaken in Panamá to find the affects of inter-cropping on teak
development.
General research of teak yields is needed in Panamá. Test plots need to be
developed to provide accurate growth models for Panamá. The effects of low to no
management on teak yields should also be researched to find the differences between
these and optimum growth tables.
Improving on knowledge of supply and global price trends for teakwood would
also be beneficial to understanding teak’s future in the global market. An investor can be
more accurate in whether she or he will place her or his money into a long-term teak
project. Supply information will aid in predicting future teak prices.
Promotion of best management practices by extension workers and education in
marketing is essential for smallholder teak production. With this education, smallholders
who may not have the resources to maintain a plantation will foresee that a long-term
investment is not possible. Extension workers and international development
96

organizations can choose participants or communities wisely to develop potential forestry
projects with the basic knowledge that a smallholder will need sufficient financial
resources and the patience necessary for a long-term investment to work. With extensive
deforestation and its associated environmental effects in Panamá, both smallholders and
the environment can benefit from the ecological and economic results of including trees
in their production systems. Educating smallholders in timber production is critical to
countries where growing trees has the potential to reverse environmental damage caused
by deforestation and the ability to replace the country’s dwindling wood supply.
97

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105

# de casa________; Iniciales del entrevistado_____
Fecha___________;Tiempo__________________
APPENDIX ONE: QUESTIONNAIRE
Preguntas para las personas que tienen plantaciones de teca en la comunidad de Ipetí Embera:
Introduccion:
Buenas tardes. Me llamo Daniela Zanin y soy estudiante de foresteria y voluntaria de Cuerpo de Paz. Me gustaria hablar con Ud. para
aprender sobre el manejo de arboles con una concentracion del arbol teca. Si desea Ud. hablar conmigo, le solicito que me responda
algunas preguntas sobre su terreno. ?Desea participar en esta encuesta corta? Le tomará entre unos treinta minutos a una hora.
1. ?Cuantos personas viven en su casa?
A. Informacion basica y socioeconomica:
?Quienes son? ?Cuantos anos tienen estas personas?
Nombre Sexo Edad Educacion Trabajo Ingreso Relacion Leer Escribir Matem
(H/M)
por mes Familiar
atica
106

B. Informacion mas especifica sobre la casa y la propriedad:
1. ?Por cuanto tiempo ha vivido Ud. en esta comunidad?
a. menos de 5 anos
b. entre 5-15 anos
c. mas de 15 anos
d. fue uno de los fundadores
2. ?De que materiales esta construida su casa?
-?El piso? ?de donde? ?cuanto cuesta?
-?El techo??de donde??cuanto cuesta?
-?Las paredes??de donde? ?cuanto cuesta?
3. ?Que usa para cocinar la comida?
-?Lena? Si No
-?Estufa de gas? Si No
4. ?Tiene una television? Si No
5. ?Tiene un radio? Si No
C. ?Que herramientas tiene?
1. Cuenta con machete? Cuantos?
Si No
1 2 3 4 mas
2. Cuenta con hacha?
Si No
107

3. Cuenta con serrucho? Si No
4. Cuenta con coa? Si No
5. Cuenta con piqueta? Si No
6. Motocierra? Si No
a. cuanto vale un dia de trabajo de motocierra con aceite, gasolina, lubricante, y cadena?
D. Preguntas del terreno
1. ?Que usa ud. de medir? Cabuya o hectarea?
2. ?Aparte de su casa, cuantos (hectares/cabuya) cuenta Ud. de terreno?
a. hectares de portrero?
b. hectares de bosque?
c. hectares de rastrojo corto?
d. hectares de rastrojo largo?
e. plantaciones de maderables/frutales?
f. hectareas de finca?
g. hectareas de cultivos?
3. ?Tiene titulo de su terreno? ?Paga impuestos de terreno?
108

4. ?Que cultivos siembro Ud. en su terreno en el ano pasado (De ambos coas)? ?Que cantidad?
¼ ect. ½ ect. 1 ect. 1 ½ ect. 2 ect. 3 ect. 4ect. 5 ect. Otro
Maiz
Arroz
Platanos
Name
Yuca
Nampi
Otoe
Frijoles
Hortilizas
Otro
5. ?Que sembrara esto ano?
¼ ect. ½ ect. 1 ect. 1 ½ ect. 2 ect. 3 ect. 4ect. 5 ect. Otro
Maiz
Arroz
Platanos
Name
Yuca
Nampi
Otoe
Frijoles
Hortilizas
Otro
6. ?Por cuantos anos siembra lo mismo parcela de terreno?
1 2 3 4 5 6 otro
109

7. ?Que hace con el terreno despues de termina la ultima cosecha?
-descansa? Si No
-Cuantos anos? 1-5 6-10 11-15 16-20 otro
a. descansa con arboles sembrado?
b. descansa con abonos verdes sembrado?
c. ponga en potrero?
d. otro
e. NA
8. ?Cuantos dias trabaja en el terreno suyo semenal?
1 2 3 4 5 6 7
9. ?Cuantos horas hay en un dia de trabajo? sin almuerzo.
2 3 4 5 6 7 8 9 otro
10. ?Que son los pasos para preparar el terreno antes de la primera coa? (Si quema, #11)
1.
2.
3.
4.
5.
11. ?Que son los pasos para preparar el terreno antes de la segunda coa?
1.
2.
3.
4.
5.
110

12. ?Tiene Ud. una finca? ?Cuantos cabuyas/hectareas? ?Que lo tiene?
Si No
1/2 1 2 3 4 otro
Maderables
Espave
Cedro
Espino
Cedro
Amaro
Maria
Coca
Cocobolo
Caoba
Sabo
Amaro
Amaro
Zapotillo
Kira
Mora
Bambito
Laurel
Nispero
Guajow
Bono
Pino
Sembrado
(Si/No)
Menos 5 -10 -15 -20 -50 -100 Mas de
100
111

Teca
Roble
Frutales
Auacate
Almendra
Cacao
Ciruela
Fruta de
mono
Coco
Limon
Naranja
Zapote
Tamarindo
Mano
Toronja
Nance
Uava
Uyaba
Uanabana
Caimito
Mamon
Maranon
Bonojo
Cerca
Leucaena
Jobo
112

Coquillo
Ciruelo
Balo
Colo Pelado
Leña
Jai Jai
Blanco
Mandrono
Guayabito
Kira
13. ?Hace rondas cuando quema? ?De que tamaño?
Si No
1m 2m 3m 4m otro
14. ?Ha perdido cultivos, bosque, o arboles de la candela?
15. ?Que cosas ha cambiado para evitar la candela?
16.?Hay algunos arboles que son mas resistente a la quema?
E. Manojo del terreno tradicionalmente
1. ?Como fue el manojo del terreno antes?
113

2. ?Sea tradional sembrar arboles?
Si No
a. ?Que clases?
b. ?Los vende?
c. ?A quien?
d. ?Por cuanto?
3. ?Sea tradicional quemar terreno?
4. ?Usa quimicas?
F. Abastecimiento de Teca
1. Tiene ud. el arbol teca?
Si No
2. ?De donde vinieron las semillas/plantones de teca? de quien? Hace cuando?
3. ?Cuantos arboles tiene? ?De cual edades?
4. ?Cuantos hectareas de teca tiene?
5. ?Compra plantones de teca en bolsas? ?Compra solomente la semilla?
Bolsas Semilla No compra
a. Por cuanto?
6. Recoge sus propias semillas de su teca o de la teca de otros?
Si No
114

7.? Tiene su propia semillero de arboles?
Si No
a. ?Donde se queda?
b. ?Lo tiene una abastecimiento de agua anual?
G. Manejo de Teca
1. ?Recibio entrenamiento de la siembra, manejo, o la cosecha de teca?
Si No
a. ?Que lo fue?
b. ?De quien?
2. ?Cual espacimiento de teca usa Ud.?
a. Por cuantos hectares?
3. ?Como decide a donde sembrar la teca?
4. ?En que clase de suelo siembro la teca?
5. ?Como es el terreno donde siembras teca, pendiente o plano? Porque?
6. ?Cuando siembra la teca? ?En cual mes?
a. ?Que tamano/edad tiene la teca cuando esta lista sembrar?
7. ?Hace limpiezas de malezas alrededor de la teca?
Si No
a. ?Cuantos veces?
b. ?Hasta que edad?
115

8. ?Hace podas?
Si No
a. ?De que edad?
b. ?Como? ?En que partes del arbol? ?Con cual herramienta?
9. ?Hace raleo o destumbas sanitarias?
Si No
a.?En que anos?
b.?Cual arboles le coge?(La mas grandes, chiquitos, mas cerca de un sendero)
c. ?Que hace con los que corta?
10. Usa fertilizantes con la teca?
a. ?Cual?
11. ?Cuanto vale un dia de trabajo?
a. limpiar?
b. Cosechar?
c. Cargar?
d. Podar?
e. Aplicar fertilizantes?
12. ?Usa los peones en su plantacion de teca?
Si No
a. En que trabajos?
b. Cuantos dias mensual, anual?
13. ?Cuantos arboles de teca se puede cortar entre un dia?
H. Teak and economy
1. ?Porque siembra teca?
116

2. ?Por cuantos anos crece la teca hasta le cortara?
3. ?En que meses del ano corta la madera? Porque? La luna tiene significa con el tiempo de cortar?
4. ?A quien la vende la teca?
5. ?Por cuanto? Pie cuadrado o metro cubico?
6. ?Usa teca en su casa para lena, cerca, o construcion?
7. ?La candela sea problema con teca?
8. ?Porque le gusta or no le gusta la teca?
117

APPENDIX TWO: MEASUREMENTS FOR COMMERCIAL TEAK
In this study, prices per mbf are paid for the commercial volumes found in the
growth tables. All prices are based on the final commercial volumes of each log to be
sold at roadside. Roadside prices are the prices a teak buyer pays for wood that is stacked
in an area close to the road for easy loading into a truck container. Therefore, all costs
prior to roadside are the responsibility of the seller. Different size diameters are
separated into given standard classes. Each small-end diameter class has its own price.
These six classes are:
1. Thirty-five centimeters in diameter and above
2. Thirty to thirty-four centimeters in diameter
3. Twenty-five to twenty-nine centimeters in diameter
4. Twenty to twenty-four centimeters in diameter
5. Fifteen to nineteen centimeters in diameter
6. Ten to fourteen centimeters in diameter
Any logs measuring less than ten centimeters in diameter do not currently have a market
in Panamá. Since most buyers in Panamá are buying the teak for its heartwood it is
necessary to note that some buyers will deduct one to six centimeters of diameter
depending on the thickness of sapwood. Thicker sapwood, measured from the bark to the
heartwood, will have a greater deduction.
Structured interviews were completed with teak buyers, teak exporters,
middlemen and a millwright to find the formulas utilized for measuring merchantable
teak and its prices. During a teak sale in Ipetí, I interviewed the buyer, José Valderrama
of Teak Traders Incorporated from Panamá City. Through the interview I learned the
118

parameters that the company uses to buy teak. These strictures included minimum sizes
of teak logs that can be bought and the “Hoppus formula” used to determine the
commercial volume in cubic meters of each tree and the company’s deductions
determined by each bole’s sapwood. The Hoppus scale uses the circumference of the
trunk to calculate the volume (Figure A.1). In addition, Mr. Valderrama explained the
market in Panamá and what characteristics determine quality teak wood.
Figure A.1: Hoppus Formula
Soon afterwards, I interviewed Eliacer Perez who works and lives in the same
district of Ipetí. Eliacer is an agricultural engineer who holds a degree from Centro
Agronimo Tropical de Investigación y Ensenanza (CATIE) in Costa Rica. I worked and
consulted with Eliacer on other projects and knew him as a reliable source. On the
occasion that it would present itself, Eliacer would work as an intermediary on teak sales.
He verified the Hoppus formula and compared and contrasted the prices that both he and
Mr.Valderrama use to buy teak.
V= (c²-10)(L-5)
16
V= Volume
C= Circumference in centimeters
L=Length
Originally from New Zealand, Roslyn Lang has been living in Panamá for the last
20 years and was hired in 2003 by TFP to work as an intermediary between the forester
in Panamá and the buyers in India. I finally met Roslyn personally and she shared a
generous amount of information concerning all the costs behind teak sales including,
119

transportation and shipping costs, costs at the port, container charges, and administrative
charges. Three of Roslyn’s contracts and teak sales are utilized to determine two out of
the five roadside prices for this study. TFP uses the Brereton scale to measure
commercial volume (Figure A. 2).
Figure A. 2.: Brereton Scale: D² x L x 0.7854 = Vm³
Brereton Scale:
1. Smallest diameter at both ends
2. Second diameter at right angles to smallest diameter
3. Average of SED (e.g. 32/36 = 34)
4. Average of LED (e.g. 38/42 = 40)
5. Average of the averages of SED and LED (e.g. 34/40 = 37cm – 4 cm of bark)
(e.g. 0.33m² x 6.0m x 0.7854 = 0.151318036)
In Panamá, the Hoppus formula is more widely used than any other measurement
of teak. The Brereton measurement gives significantly less cubic meters to the seller than
the Hoppus measurement (Figure A.3).
1 mbf (thousand board feet) Hoppus = 1273 bf Brereton
1 mbf Brereton = 785.4 bf of Hoppus
Figure A. 3: The difference between the Hoppus and Brereton formulas
120

Because formulas only give an estimate of volume and not an exact amount it is
more important to know the relationship of price to log scale. A buyer who uses a
formula that might give a smaller volume for a bole might pay more than a buyer who
uses a formula that pays less for a larger volume. Most smallholders in eastern Panamá
normally sell native timber in board feet. Therefore, with these technical international
formulas, the typical smallholder will not know the volume of timber she or he is selling
and if they are receiving a good price.
121

APPENDIX THREE: INVESTMENT COST DIFFERENTIATION
Costs without discounting of three growth tables less initial investments due to owning
infrastructure, location of plantation, and weeding regimes.
Bermejo et al growth table (2004): Costs range from $2387 -
$4594
Practice Amount Total cost
Land 1000 (yr 1) 1000.00
Clearing 24 (yr 1) 24.00
Fence 62 (yr 1) 62.00
Fencing labor 310 (yr 1) 310.00
Seedlings 258 (yr 1)¹ 258.00
Planting labor 60 (yr 1) 60.00
Weed control 33.5 (6x's in yr 1and2, 2x's in yr 3,4,and 5)² 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 5)³ 420.00
Thinning w/ tractor 620 (yr 20)³ 620.00
Thinning 315 (yr 8)³ 315.00
Thinning 235 (yr 12)³ 235.00
Harvesting w/ tractor 585(yr 25) 585.00
Total $ 4,594.00
¹ (1,111 containerized seedlings)
² (Herbicide method, de Vriend regime)
³ (Bermejo et al growth table)
122

No land cost
Practice Amount Total cost
Land
0 (yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 62 (yr 1) 62.00
Fencing labor 310 (yr 1) 310.00
Seedlings 258 (yr 1)¹ 258.00
Planting labor 60 (yr 1) 60.00
Weed control 33.5 (6x's in yr 1and2, 2x's in yr 3,4,and 5)² 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 5)³ 420.00
Thinning w/ tractor 620 (yr 20)³ 620.00
Thinning 315 (yr 8)³ 315.00
Thinning 235 (yr 12)³ 235.00
Harvesting w/ tractor 585(yr 25) 585.00
Total $ 3,594.00
¹ (1,111 containerized seedlings)
² (Herbicide method, de Vriend regime)
³ (Bermejo et al growth table)
123

No land and tractor cost
Practice Amount Total cost
Land 0 (yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 62 (yr 1) 62.00
Fencing labor 310 (yr 1) 310.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1) 60.00
Weed control 33.5 (6x's in yr 1and2, 2x's in yr 3,4,and 5)¹ 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 5)² 420.00
Thinning 420 (yr 20)² 420.00
Thinning 315 (yr 8)² 315.00
Thinning 235 (yr 12)² 235.00
Harvesting 385(yr 25) 385.00
Total $ 3,394.00
¹ (Herbicide method, de Vriend regime)
² (de Camino growth table)
124

No land, tractor, and fence cost
Practice Amount Total cost
Land 0 (yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 0 (yr 1) 0.00
Fencing labor 0 (yr 1) 0.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1) 60.00
Weed control 33.5 (6x's in yr 1and2, 2x's in yr 3,4,and 5)¹ 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 5)² 420.00
Thinning 420 (yr 20)² 420.00
Thinning 315 (yr 8)² 315.00
Thinning 235 (yr 12)² 235.00
Harvesting 385(yr 25) 385.00
Total $ 2,822.00
¹ (Herbicide method, de Vriend regime)
² (de Camino growth table)
125

No land, tractor, and fence cost with manual weeding
Practice Amount Total cost
Land 0 (yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 0 (yr 1) 0.00
Fencing labor 0 (yr 1) 0.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1) 60.00
Weed control 24 (6x's in yr 1and2, 2x's in yr 3,4,and 5)¹ 432.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 5)² 420.00
Thinning 420 (yr 20)² 420.00
Thinning 315 (yr 8)² 315.00
Thinning 235 (yr 12)² 235.00
Harvesting 385(yr 25) 385.00
Total $ 2,651.00
¹ (Manual method, de Vriend regime)
² (de Camino growth table)
126

No land, tractor, and fence cost with manual weeding (Keogh regime)
Practice Amount Total cost
Land 0 (yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 0 (yr 1) 0.00
Fencing labor 0 (yr 1) 0.00
Seedlings 258(yr 1) 258.00
Planting labor 60 (yr 1) 60.00
Weed control 24 (3x's in yr 1, 2x's in yr 2, 1x in yr 3and4)¹ 168.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 5)² 420.00
Thinning 420 (yr 20)² 420.00
Thinning 315 (yr 8)² 315.00
Thinning 235 (yr 12)² 235.00
Harvesting 385(yr 25) 385.00
Total $ 2,387.00
¹ (Manual method, Keogh regime)
² (de Camino growth table)
127

de Camino et al growth
table (1998)
Costs range from $2272-$4279
Practice Amount Total cost
Land 1000 (yr 1) 1000.00
Clearing 24 (yr 1) 24.00
Fence 62 (yr 1) 62.00
Fencing labor 310 (yr 1) 310.00
Seedlings 258 (yr 1)¹ 258.00
Planting labor 60 (yr 1) 60.00
Weed control 33.5 (6x's in yr 1and2, 2x's in yr 3,4,and 5)² 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 4, 8 and 12)³ 1260.00
Harvesting w/ tractor 600 (yr 25) 600.00
Total
¹ (1,111 containerized
seedlings)
² (Herbicide method, de
Vriend regime)
³ (de Camino et al growth
table)
$ 4,279.00
128

No land cost
Practice Amount Total cost
Land 0(yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 62 (yr 1) 62.00
Fencing labor 310 (yr 1) 310.00
Seedlings 258 (yr 1)¹ 258.00
Planting labor 60 (yr 1) 60.00
Weed control 33.5 (6x's in yr 1and2, 2x's in yr 3,4,and 5)² 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 4, 8 and 12)³ 1260.00
Harvesting w/ tractor 600 (yr 25) 600.00
Total $ 3,279.00
¹ (1,111 containerized
seedlings)
² (Herbicide method, de
Vriend regime)
³ (de Camino et al growth
table)
No land or tractor cost
Practice Amount Total cost
Land 0(yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 62 (yr 1) 62.00
Fencing labor 310 (yr 1) 310.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1) 60.00
Weed control 33.5 (6x's in yr 1and2, 2x's in yr 3,4,and 5)¹ 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 4, 8 and 12)² 1260.00
Harvesting 400 (yr 25) 400.00
Total
¹ (Herbicide method, de
Vriend regime)
² (de Camino et al growth
table)
$3,079.00
129

No land, tractor and fence cost
Practice Amount Total cost
Land 0(yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 0 (yr 1) 0.00
Fencing labor 0 (yr 1) 0.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1)
33.5 (6x's in yr 1and2, 2x's in yr
60.00
Weed control
3,4,and 5)¹ 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 4, 8 and 12)² 1260.00
Harvesting 400 (yr 25) 400.00
Total $ 2,707.00
¹ (Herbicide method, de Vriend regime)
² (de Camino et al growth table)
No land, tractor, and fence cost with manual weeding
Practice Amount Total cost
Land 0(yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 0 (yr 1) 0.00
Fencing labor 0 (yr 1) 0.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1)
24 (6x's in yr 1and2, 2x's in yr
60.00
Weed control
3,4,and 5)¹ 432.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 4, 8 and 12)² 1260.00
Harvesting 400 (yr 25) 400.00
Total $ 2,536.00
¹ (manual method, de Vriend regime)
² (de Camino et al growth table)
130

No land, tractor,or fence cost with
manual weeding (Keogh regime)
Practice Cost per hectare ($) Total cost
Land 0.00
Clearing 24 (yr 1) 24.00
Fence 0 (yr 1) 0.00
Fencing labor 0 (yr 1) 0.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1)
24 (3x's in yr 1, 2x's in yr 2, 1x in
60.00
Weed control
year 3and4)¹ 168.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary Cut 30 (yr 2) 30.00
Thinning 420 (yr 4, 8 and 12)² 1260.00
Harvesting 400 (yr 25) 400.00
Total $ 2,272.00
¹ (manual method, Keogh regime)
² (de Camino et al growth table)
131

Alfaro growth table (1990): Costs range from $2332-$4339
Practice Amount Total cost
Land 1000 (yr 1) 1000.00
Clearing 24 (yr 1) 24.00
Fence 62 (yr 1) 62.00
Fencing labor 310 (yr 1) 310.00
Seedlings 258 (yr 1)¹ 258.00
Planting labor 60 (yr 1)
33.5 (6x's in yr 1and2, 2x's in yr
60.00
Weed control
3,4,and 5)² 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary cut 30 (yr 3) 30.00
Thinning 840 (yr 8)³ 840.00
Thinning 420 (yr 12)³ 420.00
Harvesting w/ tractor 660 (yr 25) 660.00
Total $ 4,339.00
¹ (1,111 containerized seedlings)
² (Herbicide method, de Vriend regime)
³ (Alfaro growth table)
132

No land cost
Practice Amount Total cost
Land 0 (yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 62 (yr 1) 62.00
Fencing labor 310 (yr 1) 310.00
Seedlings 258 (yr 1)¹ 258.00
Planting labor 60 (yr 1)
33.5 (6x's in yr 1and2, 2x's in yr
60.00
Weed control
3,4,and 5)² 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary cut 30 (yr 3) 30.00
Thinning 840 (yr 8)³ 840.00
Thinning 420 (yr 8 and 12)³ 420.00
Harvesting w/ tractor 660 (yr 25) 660.00
Total $ 3,339.00
¹ (1,111 containerized seedlings)
² (Herbicide method, de Vriend regime)
³ (Alfaro growth table)
133

No land and tractor cost
Practice Amount Total cost
Land 0 (yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 62 (yr 1) 62.00
Fencing labor 310 (yr 1) 310.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1)
33.5 (6x's in yr 1and2, 2x's in yr
60.00
Weed control
3,4,and 5)¹ 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary cut 30 (yr 3) 30.00
Thinning 840 (yr 8)³ 840.00
Thinning 420 (yr 8 and 12)² 420.00
Harvesting 460 (yr 25) 460.00
Total $ 3,139.00
¹ (Herbicide method, de Vriend regime)
² (Alfaro growth table)
No land, tractor, and fence cost
Practice Amount Total cost
Land 0 (yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 0 (yr 1) 0.00
Fencing labor 0 (yr 1) 0.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1)
33.5 (6x's in yr 1and2, 2x's in yr
60.00
Weed control
3,4,and 5)¹ 603.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary cut 30 (yr 3) 30.00
Thinning 840 (yr 8)³ 840.00
Thinning 420 (yr 8 and 12)² 420.00
Harvesting 460 (yr 25) 460.00
Total $ 2,76700
¹ (Herbicide method, de Vriend regime)
² (Alfaro growth table)
134

No land, tractor, and fence cost
with manual weeding
Practice Amount Total cost
Land 0 (yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 0 (yr 1) 0.00
Fencing labor 0 (yr 1) 0.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1)
24 (6x's in yr 1and2, 2x's in yr
60.00
Weed control
3,4,and 5)¹ 432.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary cut 30 (yr 3) 30.00
Thinning 840 (yr 8)³ 840.00
Thinning 420 (yr 8 and 12)² 420.00
Harvesting 460 (yr 25) 460.00
Total $ 2,596.00
¹ (manual method, de Vriend regime)
² (Alfaro growth table)
135

No land, tractor, and fence cost
with manual weeding (Keogh
regime)
Practice Amount Total cost
Land 0 (yr 1) 0.00
Clearing 24 (yr 1) 24.00
Fence 0 (yr 1) 0.00
Fencing labor 0 (yr 1) 0.00
Seedlings 258 (yr 1) 258.00
Planting labor 60 (yr 1)
24 (3x's in yr 1, 2x's in yr 2, 1X in
60.00
Weed control
yr 3 and 4)¹ 168.00
Pruning 24 (yr 3, 5,and 7) 72.00
Sanitary cut 30 (yr 3) 30.00
Thinning 840 (yr 8)³ 840.00
Thinning 420 (yr 8 and 12)² 420.00
Harvesting 460 (yr 25) 460.00
Total $ 2,332.00
¹ (manual method, Keogh regime)
² (Alfaro growth table)
136

137