Father Sez

In June, I wrote about adding some deeply discounted bonds to our investment portfolio. 

They were seedlings of the gaharu tree, which we bought from the Forest Research Institute of Malaysia (FRIM).  It’s been about two and a half months since we got the seedlings.

We have been keeping them in a small makeshift nursery at our goat farm before transplanting them at our rubber smallholding. So far they are looking good.  We intend to transplant them only when they have reached a good height (about my chest height). Otherwise the local goats that somehow manage to get into our rubber smallholding might make a meal of our “bonds”.

The seedlings seem to be outgrowing their present tiny polybags. So now, we are going to transplant them into much bigger polybags. I also have to check with the people of FRIM from whom we bought the seedlings.

Perhaps I can just point them to my blog and see if the picture is good enough for them to do an overall health assessment. 

I’ll keep you posted.    

Some years ago I worked for a boss who was one of the best communicators I have ever known. He could colourfully describe almost any management fad or theory in such a simple manner that anyone could understand.    

His description of getting ISO certification was his “Bengkang Theory”. No Malaysian can profess not knowing what a “bengkang” is. It is a local Malaysian delicacy served at almost every function, and we have busloads of functions all year around.  

A Malaysian delicacy……..a bengkang cake.  For a recipe, please check out this site.

My former boss’s theory was that: 

If the correct and required amount of ingredients are listed, and the way to mixing them up shown clearly, and the temperature setting of the oven and time needed in the oven are stated, then any body could make a “Bengkang”. 

So relatively complicated tasks can be simplified in such a manner that novices can produce the desired results on a consistent basis. 

And for our goat farm, we intend to implement and practice this Bengkang Theory.  

The farm will be manned by workers who do not have degrees or diplomas. The workers would be just normal people with basic intelligence and perhaps a lot more street smarts than the most of us who read blogs like this one. 

My intention is :- 

a)    Sit with the workers and prepare simple drawings of the basic work flow and processes. 

b)    Go through with the workers on these processes until there is complete and clear understanding. 

c)     Prepare checklists for the repetitive work to be done daily, weekly and monthly. And let them have the freedom to simplify the work processes as they go along. These simplified processes, once agreed upon to be re-documented and the process repeated.  

The primary goal is to keep the goat sheds scrupulously clean, and the goats well fed, healthy and reproducing profusely.  

If we get this right….the rest should be easy.  Time will tell.        

Deep discount bonds are those which are sold at a big discount to their par values because they are zero coupon bonds (bonds that pay no interest), bonds with bad credit or suspect ability to pay, or a longer bond with a very low coupon requiring more yield in the form of a lower price.

The bonds that we have bought are of the 1^st variety, i.e. bonds that do not pay any income/ interest but have a thundering maturity value. My family has chosen these bonds in the form of gaharu trees. 

Last Thursday, we collected 100 trees from the Forest Research Institute of Malaysia (FRIM) where they grew these trees using a tissue culture process. They had thousands of these little plants growing in small plastic bags in a number of greenhouses. We were informed by the research folks at FRIM (and this is also confirmed by Wikipedia) that these trees (when they are around 5 years of age) have to be inoculated with a parasitc ascomycetous mould, Phaeoacremonium parasitica, a dematiaceous (dark-walled) fungus. (All these are still rocket science to me. I have to find out more over the next 5 years.)

As a response, the tree would produce a resin high in volatile organic compounds that aid in suppressing or retarding the fungal growth. While the unaffected wood of the tree is relatively light in colour, the resin dramatically increase the mass and density of the affected wood, changing its colour from a pale beige to dark brown or black. High quality resin comes from a tree’s natural immune response to the fungal attack. It is commonly known as agarwood #1 (first quality). An inferior resin is created using forced methods where aquilaria trees are deliberately wounded, leaving them more susceptible to a fungal attack. This is commonly called agarwood #2.The “trees” (as the picture shows, they are still teeny tots), are 10 months old now. We cannot transplant them in our rubber smallholding as they would be eaten or stepped upon by the local goats that somehow find their way into the smallholding. 

We have decided to build a small shelter for the trees at a corner of our goat farm and nurture them there for another few months or a couple of years if need be. (I am not sure of the growth rate of the trees.) Once they reach about my height, then they can be comfortably transplanted. We have been assured by the FRIM research people that soil that is good for rubber trees would be great for the gaharu trees.

Harvest time should be in about 9 years.  

The Malaysian Business, one of Malaysia’s premier business magazines wrote in December 2007, that a kilogram of the tree could fetch a price of about Ringgit 3,000 – Ringgit 25,000 (approximately USD900 – USD7500 at current exchange rates) depending on the grade.  

These trees, if properly looked after, should give us a good return. I am not sure of actual figures, but I think it’s safe to assume that one tree should easily yield more than a kilogram. 

I think these trees are as good as any deep discounted bonds that are in the market. Since there are 100 trees, they can be compared to diversifying our risks amongst 100 companies, though they are all in one industry.  

Each time my family visits the goat farm (which should be very often after the planned launch date of the 22^nd June), I would be able to show the trees to my children.

Hopefully these trees will repay our care and love for the next nine years or so in the form of super duper returns.

 Picture Credit: Azah. The stuff we bought. We have a few more packs of the garden soil.

I first read about square foot gardening in Lynnae’s post on Building a square foot garden. It seemed to be a cool way to grow some greens in not too big a space and without too much heavy activity. 

Lynnae also gave links to Frugal Dad’s take on square foot gardening. And he has written his journey into this in no small detail. 

We have some land around the house and this approach looked very doable. And besides, this looked great as a family project, something that cannot but have positive returns. 

I bounced this idea off my second girl and she agreed to read Lynnae’s and Frugal Dad’s posts. Which she did. And the project was officially launched last Saturday. 

We had some reservations on the issue of the boxes. The recommended or suggested manner seemed to be too much of a major engineering issue.  I discussed with my daughter about using baskets. After all they were about the same size and could be moved around easily. They had small holes at the bottom so drainage would not be a problem. They were so easily available, and besides we had a couple lying around at home. And secretly I was wondering as to why we could not use pots. And we had a number of available pots. 

Last night I read Jim’s post on his version of the square foot garden, the Blueprint for Financial Prosperity Garden Project. And he used garden pots!  

For now, my daughter has planted some seeds. They have been planted in polybags. (The leftover polybags bought for the incubation of the petai belalang and the geti trees for the goat farm.)  The idea is to transplant the plants into pots (for tomatoes, lime and chillies) and baskets for the vegetables.  

So far the money spent on the project is negligible. A total of about Ringgit 25 which is about USD 7.80 or so, which was spent on buying seeds, some garden soil and a couple of gardening implements.    

Picture Credit: My son. The tall scrawny looking trees are the 1.5 year old rubber saplings. 

Yesterday, my son and I visited our rubber smallholding. 

The rubber saplings are growing well. They still have about 3.5 years or so, before they can be tapped for their latex. I have mentioned earlier that the land is hilly and we have cut terraces on which the rubber seedlings were planted. We originally planted about 2,100 trees. About 200 trees have died and new ones have been planted in their place.

The latest “census” indicates that another 300 trees can be planted in the spaces available. The walk around the smallholding was quite a tiring one, but the spectacular view from the top made the whole thing worthwhile. I had a deep feeling of satisfaction when I reflected back on the work that has been done on the land since mid 2006 (when my wife and I sighted the land for the first time.) 

And though this was not the first time, my son has climbed up this hill, somehow I felt a stronger sense of belonging and responsibility from him. 

Recently some friends of mine have talked about planting gaharu or agarwood trees. These trees are prized for their resin which is used in the manufacture of perfume. 

Some additional information on the tree is shown here.

Our Forest Research Institute of Malaysia (FRIM) sells these seedlings. I talked with one of the research scientists at FRIM and he mentioned that they had a waiting list for the seedlings till 2010!!! 

He also mentioned that the trees should be inoculated (wow!….I’ll find out about this later) when they are 5 years old, and they can be harvested when they are 7 years and later. And he also mentioned that the later the better. 

It seems that commercial planting of gaharu trees is a big business in Malaysia. So there are also a number of private planters from whom we can buy the seedlings.  

I’ll discuss this with my wife and then craft out a plan to buy and to plant the trees. And then I’ll follow up with an investment appraisal. For now, we’ll just plant for fun.