Greenwood Management forestry investment Canada Phase1 Rpt Greenwood

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This is an independent report prepared for Greenwood Management in regards to the company's establishment of Christmas tree farms in the New Brunswick region of Canada.Since this report was prepared the company has gone on to develop a further three sites and now holds a significant stake in the New Brunswick Christmas tree market.

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<ul><li><p>Phase 1 Report Christmas Tree Plantation: Initial Assessment </p><p> Prepared for Greenwood New Brunswick Project Ltd. </p><p>July 13, 2008 </p><p>2095438 Ontario Ltd. o/a</p><p> Hollands Forestry Consulting199 Ravina Avenue</p><p>Garson, Ontario, P3L 1A7Tel: 705 693 9089 Fax: 705 693 9191 </p><p>email: forester@onlink.net </p></li><li><p>Executive Summary This report satisfies the Phase 1 requirements of the Greenwood New Brunswick Project Ltd. June 13, 2008 approved project proposal submitted by Hollands Forestry Consulting. Thus report indicates that by 2018 assuming the successful establishment of a quality Christmas tree plantation on the Greenwood properties, the project will account for approximately 2% of the provinces sales. New Brunswick has consistently generated 10% of Canadas sales of Christmas trees between 2003 and 2007. New Brunswick markets are dependent on exports to the United States for success. Approximately 85% or more of trees grown in New Brunswick are used to satisfy export markets. Balsam fir is the bulk of the trees used for this purpose and is a native tree to New Brunswick. Fraser fir is also used however cultivating this tree requires significantly higher diligence and care to allow this tree to achieve its crop potential. Markets for Scotch pine and white pine appear to be declining. This report identifies several agencies that support growers in the art and science of tree growing and marketing. Key government agencies and the start of a list of competing growers are also presented. Remote sensing suggests that 43.7 hectares of the Greenwood properties have potential for development. This will result in a maximum of 110,000 trees. The actual figure established on the project area will be less than this amount due to periodic mortality typically associated with natural plant systems and due to space requirements for within plantation access trails for tending and maintenance equipment. Available imagery did not permit adequate evaluation of the current vegetative condition of the York property, although the front end of the parcel looks to support heavier vegetation than that found at the rear of the property. Heavy site preparation (tree chippers and herbicide use) to clear both parcels is anticipated. A site assessment is required to verify the productive area for each property and site preparation requirements and costing. Soil analysis to assess fertility and initial fertilization schemes will also be conducted as part of the proposed site assessment. Remote sensing confirms that the majority of the Greenwood properties can be considered upland which could feasibly support development of a Christmas tree farm. The properties appear to have an existing heavy brush to woodland vegetative cover, however a viable timber harvest is not anticipated. Chipping or heavy site preparation is anticipated to allow for the establishment of the project. Further on-site evaluation is recommended.</p></li><li><p> Table of Contents Executive Summary ..............................................................................................1 Table of Contents..................................................................................................2 1.0 Overview of the New Brunswick Christmas Tree Industry ..............................3 2.0 Industry Contacts ............................................................................................5 </p><p>2.1 Christmas Tree Associations.......................................................................5 2.2 Professional Associations ...........................................................................7 2.3 Growers List ................................................................................................8 2.4 Regional Woodlot Association.....................................................................8 </p><p>3.0 Regulatory Considerations..............................................................................9 3.1 Environment ................................................................................................9 3.2 Export ........................................................................................................10 3.3 Grading .....................................................................................................11 </p><p>4.0 Market Considerations ..................................................................................11 5.0 Development Potential ..................................................................................12 </p><p>5.1 Remote Sensing Assessment ...................................................................12 5.2 Soil Sampling ............................................................................................13 5.3 Foliage Analysis ........................................................................................13 </p><p>6.0 Summary ......................................................................................................14 Appendix I ...........................................................................................................15 Appendix II ..........................................................................................................16 Appendix III .........................................................................................................17 </p><p> 2</p></li><li><p>1.0 Overview of the New Brunswick Christmas Tree Industry </p><p> Wikipedia reports that North America cuts 40 million Christmas trees annually, with 3 to 6 million trees cut from Canadian Christmas tree farms. This suggests that Canadian share of the North American Christmas tree production can range from 7% to 15%. The web posting goes on to state that in 1995 Ontario, Quebec and Nova Scotia accounted for 80% of the Canadian production. These provinces, together with British Columbia and New Brunswick in 1995 accounted for 95% of Canadas land in production of this crop. During this time Quebec generate a third of Canadas production. Figure 1 below provides a comparative view of provincial annual Christmas tree sales from 2003 to 20071. The trend in sales appears relatively consistent from year to year for Ontario, New Brunswick and Nova Scotia. The largest producer of Christmas trees, Quebec, experienced a recent decline in sales of $17 million (cdn.) The reason for this decline was not provided with the data. </p><p>330 330 330 330 330247 243 220 242 238</p><p>10794 10530 10635 10636 10000</p><p>6557 6852 6921 6692 6290</p><p>4379248773 49261 49261</p><p>32250</p><p>5936</p><p>5141 5192 5151</p><p>5355</p><p>102</p><p>121 122 121</p><p>117</p><p>175</p><p>177 179 177</p><p>177</p><p>84</p><p>82 83 82</p><p>83</p><p>519</p><p>601 556 562</p><p>559</p><p>0</p><p>10000</p><p>20000</p><p>30000</p><p>40000</p><p>50000</p><p>60000</p><p>70000</p><p>80000</p><p>1 2 3 4 5</p><p>Year</p><p>Sale</p><p>s $</p><p>British ColumbiaAlbertaSaskatchewanManitobaOntarioQuebecNew BrunswickNova ScotiaPrince Edward IslandNewfoundland and Labrador(2)</p><p>2003 2004 2005 2006 2007</p><p> Figure 1. Annual Canadian Christmas tree sales by province 2003 - 2007 </p><p> 1 Statistics Canada. Table 002-0001 - Farm cash receipts, annual (dollars) (table), CANSIM (database) </p><p> 3</p></li><li><p>In 2004 Wikipedia notes that Canada had a production of 3.9 million trees valued at $62 million of which $36.2 million was generated by 2.5 million exported trees. Quebec accounted for over 30% of this production. 2The New Brunswick Christmas tree industry is reported to have 350 active growers putting to market approximately 0.5 million trees annually which generates revenues around $10 million (cdn). These figures presented by INFOR may be a somewhat optimistic when compared to the revenue data presented in figure 1 which suggest sales for the province around $6.2 million (cdn.)3 Export to the United States, particularly the eastern seabord accounts for more that 85% percent or more of these trees. The wreath and greenery market adds another $20 million in annual sales making New Brunswick the largest Canadian greenery-exporter. This industry generates 4,500 full time annual seasonal jobs. Figure 2 below suggests that on average over the five year term between 2003 and 2007 New Brunswick contributes approximately 10% of Canadas sales based on date use to generate figure 1. </p><p>16%</p><p>10%</p><p>65%</p><p>8%1%</p><p>Nova ScotiaNew BrunswickQuebecOntarioBritish Columbia</p><p> Figure 2. Average proportion of Christmas tree sales 2003-2007 by province. Assuming the Greenwood project establishes 100,000 seedlings on their project area, and puts approximately 10% of these trees on the market, the project will 2 INFOR http://www.infor.ca/?lang=en&amp;section=2&amp;PHPSESSID=aa07e50223899e1d5909a5159e8ba8f2 3 Inclusion of different datum or assumptions may explain difference between the INFOR and the Statistics Canada sales figures. </p><p> 4</p></li><li><p>contribute approximately 2% of New Brunswicks annual sales in 2018 assuming sales demand and producers remain consistent. </p><p>2.0 Industry Contacts Growers in the province have the opportunity to become a member of six regional associations. These associations contribute to the New Brunswick Christmas Tree Growers Coop Ltd. which is the provincial agency responsible for lobbying the provincial government. Membership in this association is administered by INFOR. INFOR is the key information source for Christmas tree growers in New Brunswick. Due to the large dependence on export markets, membership in the National Christmas Tree Association is considered essential to doing business in the Untied States. The New Brunswick Coop is a member of this association, however membership and direct contribution to the Market Expansion Program of the association is recommended by area growers. The following section presents additional information about the associations involved with Christmas tree growing and marketing in New Brunswick. </p><p>2.1 Christmas Tree Associations This section of the report presents the contact information for industry associations that may provide value to the grower. These agencies are generally membership driven groups. Groups with potential relevance to Greenwood New Brunswick Project are listed below. INFOR INFOR is a key resource to the Christmas tree industry in New Brunswick. All points of inquiry lead back to INFOR at some point in the discussion. The agency was formed through the initiative of the New Brunswick Christmas Tree Growers Association, the NB Maple Syrup Association and the New Brunswick Federation of Woodlot Owners with support from the NB Department of Natural Resources. The contact for Christmas tree culture at INFO is Chris Dickey. The contact information is noted below. Janette Desharnais Executive Director, INFOR Inc. 1350 Regent Street Maritime College of Forest Technology, Room 223 Fredericton, NB E3C 2G6 Telephone: 506-450-8787 Toll Free (in the Maritimes): 1-877-450-8787 Email: janette@infor.ca </p><p> 5</p></li><li><p>Web link: www.infor.ca The New Brunswick Christmas Tree Growers Coop. Ltd. The Coop was established in 1976 to act for and on behalf of the members who are involved in the growing and marketing of Christmas trees and other related natural products. Membership is administered by INFOR. Tree grading fees are paid to this agency. Reduced tree grading fees are observed by membership in the agency. Central Christmas Tree Growers, New Brunswick This is a regional group representing Christmas tree growers in the Fredericton area. Chris Bringloe norcrest@nbnet.nb.ca National Christmas Tree Association The National Christmas Tree Association is national voice of the Christmas tree industry in the United States. Membership is through association with the State of provincial organization or through participating in the Tree Industry Partnership (TIP) and/or through individual contribution to the Market Expansion Program. This is a key association to contribute to due the market intelligence and networking opportunities with U.S. growers. Membership cost ranges from $US 229 to $US 879 plus $0.02* the number of Christmas trees sold in the prior year. Associate Membership is $US 80 annually for access to publications, newsletters and research. Additional fees are charged for access to different programs offered by the association, including the Market Expansion program. 16020 Swingley Ridge Road, Suite 300 Chesterfield, MO 63017 Phone: 636/449-5070 FAX: 636/449-5051 Email: info@realchristmastrees.orgWebsite: www.christmastree.org Canadian Christmas Tree Growers Association This association is comprised of five provincial Christmas tree associations in Canada. The executive of the association is elected or appointed from growers holding membership in one of the provincial associations. The mandate of this agency is to lobby government to improve the economic environment for </p><p> 6</p></li><li><p>Christmas tree growers and to assist with developing domestic and international markets. Website: www.christmastree.net Christmas Tree Farmers of Ontario The Christmas Tree Farmers of Ontario provides a networking, marketing and information repository for its membership. Full Member: $195 cdn. annual fee (less than 40 acres in production) Senior Member: $250 cdn. annual fee (40 or more acres in production) Plus Member: $360 cdn. annual fee (option to use Export Member status for and addition $165 fee) Association Member: $130 cdn. annual fee (non-voting membership for those not yet selling trees) Subscriber: $80 cdn. annual fee receives newsletters and communiqus. Box 93 Wasaga Beach, Ontario L9Z 1A2 Telephone: 1-705-429-5328 Fax: 1-705-429-6561 Email: ctfo@christmastrees.on.ca Website: www.christmastree.on.ca </p><p>2.2 Professional Associations Christmas tree management is designated an agricultural activity in New Brunswick. There is some crossover however with forestry in many of the management activities supporting Christmas tree farming can be considered to fall within the scope of the practice of forestry. The used of the term Registered Professional Forester (R.P.F.) is not currently a right-to-practice term with membership in the association still voluntary. Efforts are underway to amend the provincial legislation to elevate the designation to right-to-practice and subsequent Licensure as has previously occurred in other provinces in Canada. Application for temporary membership with A.R.P.F.N.B. to cover any work undertaken within the province by this author is required out of courtesy and demonstration of professional conduct. The Association of Registered Professional Foresters in New Brunswick (A.R.P.F.N.B.) 1350 Regent Street, Suite 221 Fredericton, NB E3C 2G6 Telephone: 506-4526933 Fax: 506-450-3128 Email: info@arpfnb.ca</p><p> 7</p></li><li><p>Web: www.arpfnb.ca </p><p>2.3 Growers List INFOR indicates there are approximately 350 growers in the province of New Brunswick. Appendix I presents a short list of nurseries as presented on the INFOR website and the Canadian Christmas Tree Growers Association website. This provides an initial contact list from which to develop contacts and network within the local industry. </p><p>2.4 Regional Woodlot Associa...</p></li></ul>