Our Board Chairman, Don Seehusen, sold 50.000 wooden railroad sleepers (ties) to America’s largest railroad, Union Pacific Corporation in 1998. These sleepers were treated by the Union Pacific with creosote, a mix of diesel oil and coal tar. Local oak materials were used because of their cheap price. The contract was successfully completed. Previously, the company, had been in other natural resource products including log home manufacturing dating back to 1985.
In 2000 Hendrik Nollen, a Dutch citizen, with extensive knowledge of tropical hardwoods helped form Superhardwoods SA. We used high quality tropical hardwoods from FSC (Forest Stewardship Council) forest in Bolivia, Argentina and Brazil which were used to supply contracts around the world. Our network of foresters, some of whom are also farmers has continued to grow. The market has also grown, especially in the United States which uses 19 million wooden sleepers each year as replacements for creosoted oak ties, which until 2017 remained economically competitive.
The US Environmental Protection Agency (EPA) in a market changing pronouncement in 2017 now requires that all creosote treated (carcinogenic) ties be ground up after their service life of 15 years is over, transported and burned in special furnaces.The cost of a creosoted oak sleepers has increased by at least 30% and is no longer economically competitive with tropical hardwoods, which have natural tannins that protect the wood, and are so dense they do not allow rot causing water to enter the sleepers, and therefore do not require creosote. Oak is a lesser wood and only lasts 15 years when treated. 97% of all sleepers in the US are wood.
Our advantage over startup competitors is that we have established sources, we speak Spanish and Portuguese, and we know the culture of Latin America and also in the buying markets along with all the necessary languages. Europe, Canada and Japan already outlaw creosote treated wood. We are ready to supply high quality tropical hardwoods with a service life of 50+ years, at least 3 times the service life of oak, at a cheaper price and do not require remediation at the end.
While developing our hardwood markets, we have found that the Bolivia, Brazil and Argentina farm belt is one of a few remaining large “breadbasket” agricultural areas on Earth. The native farmers have all the skills, most of the equipment and large areas of fertile farmland along with 365 days of growing, plenty of water from Amazon and Andes aquifers. They are in the Southern Hemisphere so their harvests happen even when it is winter north of the equator.
Bolivia is our first target area since they have farmer-friendly investment policies, which we are utilizing. The farmers are enthusiastic to work with us on leases of their property in return for working capital and we own the harvested crop. Our President, Hendrik Nollen, is a hands-on manager there with his staff. We will provide the market and technical support, from the University of Wageningen, a leading Dutch agricultural university.
Consorcio Agroforestal SA
In 2017 we changed the name of the company from Superhardwoods SA to Consorcio Agroforestal SA to more accurately indicate our areas of expertise. We believe that working in this structure we can guarantee the returns that we have promised. We carefully evaluate each farming opportunity, and pick only those that meet our financial requirements.
We will continue the sourcing and selling of other farm commodities that are sold on a spot price (one shipload at a time) or on multiyear contracts. They include but are not limited to sugar, rice, wheat, barley, alfalfa hay, cocoa beans, quinoa, soya, beef, chicken and goats. All net revenues remain in the company for reinvestment and for providing a return on investment.
While we will sell anywhere, one of our target markets are the Middle East (Saudi Arabia, UAE, Qatar, and Oman). They import 70% – 90% of all of their food since they have little water or farmland and have growing populations.
We also target East Africa, and are ready to implement a food warehouse in Mombasa, Kenya. This marketplace can grow as we continue to improve our sourcing and selling.
We buy directly from the farmers and sell directly to distribution systems eliminating most middlemen. This keeps us very competitive.