Our plantation leases

As all land in China is owned by the state, there is a high degree of government involvement in the plantation lease arrangements. Our counterparties are collectives of farmers which possess the harvesting rights to the plantations. We are currently paying the counterparties a fee of around EUR 5,400 per ha for a 20-year lease, our average lease period, for a mature plantation. Around 20-30% of the total lease fee is paid when the contract is signed and the balance when the harvesting rights are transferred. The transfer of the harvesting rights takes several months, so the two payments are not necessarily made the same year. The terms of the contracts cannot be renegotiated during the lease period unless both parties agree.

Selection of the plantations

We select our plantations based on a variety of factors with the key criteria being:

  • The quality of the plantation
    • Density of trees
    • Age profile of trees
    • Quality of the trees (thickness and straightness)
    • Soil conditions
  • Closeness to our other operations and related industries
  • Price and payment terms

The assessment process of a plantation takes around 3-4 months and is carried out by our local experts. Mature plantations generally start generating an output within a few months after the contract has been signed.

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