Leptomorphic (Running) Bamboo Diagram
Leptomorphic (Running) Bamboo Diagram
Please note that in no way, shape or form is any proposal in this document to be legally considered an offer for an agreement nor shall the terms in this document be considered terms for a contractual agreement until a formal contract is drafted and signed by both parties
The Nursery’s Background
For the past 8 years LeBeau Bamboo Nursery has sold bamboo plants in the Rogue Valley at the local Rogue Valley Growers and Crafters Markets, the Jackson County Master Gardener Show and through visitations to our nursery by customers. Many of our customers meet us in person at the local markets before buying, but we also gain many customers through our website (www.lebeaubamboo.com). In the coming year we plan to also start selling directly online, shipping our plants throughout Oregon to increase our customer base.
My father and I have always shared a deep passion for growing plants, so we decided to start the nursery when I was twelve years old. Originally we had a focus on selling vegetable starts such as tomatoes, peppers, corn and squash. In the beginning bamboo was only a small part of the business. As our collection of bamboo species and varieties grew from five to ten to fifty, I began to realize how different bamboo was from other plants and ultimately how useful they could be.
I am now 20 years old and studying public accounting, CPA track, at Southern Oregon University. My father has been teaching sciences at Ashland High School for 19 years. We work together closely to run a solid operation.
The Plan in Two Parts
A) The Nursery
Our Expansion Plan
We have experienced high levels of demand and over the past few years and our greatest challenge has been keeping enough supply to meet that demand. We currently grow our entire stock at our home in Medford. The soil is very poor and although we have several acres, only a small portion of it has adequate sun exposure and irrigation - our current property is north-facing behind a large, forested hill. We are ready to expand but for that we need at least an additional acre with direct sun exposure. As will be explained in the Competition section, there is currently a lack of supply of wholesale plants to other nurseries. With an additional acre, we would be able to grow enough stock plants to provide a steady flow of cheap plants to wholesale. One one acre we could fit around 55 species and varieties of bamboo, providing a huge variety of plants from timber species to clumping species to ground cover species.
Under full scale production, which we expect to begin between years 5 and 6, we estimate around 90% of our sales will be wholesale orders to other nurseries. Based on our current yields from an array of bamboo species, we expect the production of around 4,500 successful rhizome cuttings per year.
Customer Base
Thus far, most of our customers have been individuals looking for bamboo to plant as a privacy hedge or for other landscaping purposes. We’ve experienced a relatively even demand for bamboos of all maximum heights ranging from two-foot ground covers to towering timber bamboos of fifty or more feet. The majority of our customers are local and want to physically see mature specimens before purchasing their plants. In the beginning we plan to focus on local customers who want to browse our display garden, which doubles as our division stock plants, before purchasing. Of course, within the near future we will also begin shipping plants locally and out of state. In recent months, we have had customers attempt to place orders of 500 or more plants from states like Texas and Idaho where there are few bamboo plant suppliers.
Most of the interest in bamboo appears to be focused on the north west, especially Oregon (ranked 2nd highest), Washington (3rd) and California (5th). Of course, Florida and Hawaii are high on the list as well. Google Insights records the volume of keyword searches by location and displays the results on a map. Pictured below is a Google Insight Index of the keyword “bamboo” which shows the states with the highest number of searches (displayed darker).
Google Searches for “Bamboo” by State
Screenshot taken from http://www.google.com/insights/search/#q=bamboo&geo=US&cmpt=q
Division Process - Rhizome Cuttings
Generally, bamboo plants must be divided vegetatively (from cuttings) rather than from seed. However, most species of bamboo do not have the capability of rooting so the divisions will be made by digging up 6” sections of underground sections of the plants called rhizomes. Each rhizome piece is placed into a 1 gallon container in early spring and sends up a shoot usually 1-2 feet tall. This represents the size 1 plants. These plants will continue to grow each year until by year 4, they are often five feet or greater in height, usually with ten to twenty canes per plant (so the plants are very thick and bushy). Each year before this, the plants will be potted into larger containers and the price increased. We figure that 56% of the plants will be sold each year based on past sales, so 44% will be potted up to the next size each year.
Because of the vegetative requirement, few bamboo divisions can be made on young plants, providing a barrier to entry. We have spent the last few years collecting larger plants that will allow us to get a head start. These plants will be planted in the ground and spaced approximately 18’ apart for runners and 8’ apart for clumpers. The running bamboos will continuously spread into the space in between each plant which is where the division process will take place. In this way, the main groves will not be touched so their rigor will not be affected.
The space in between plants will be minimized by placing identifiably different species next to each other. Various bamboo species have green, yellow, black and red-colored rhizomes while some are ⅛” in diameter compared to 2”. Without this measure of identification, running plants would have to be spaced 50’ or more apart to prevent incorrect labeling.
Clumping bamboos can be spaced so close together because, as implied by the name, they don’t spread. The spacing in between is solely to provide foliage enough sunlight. However, to benefits of requiring less space is slightly offset by limited production, as shown in the financial projections.
The Competition
Bamboo has been an increasingly popular plant in recent decades and a plethora of profitable bamboo nurseries have started in the United States. Demand has been especially high in the Rogue Valley due to very few suppliers locally. A wonderful bamboo specialty nursery is located in Grants Pass, Oregon, however their focus is on very rare, collectible, bamboo species. A second nursery in Gold Beach, Oregon focuses on bamboos from Latin America which are less cold hardy and few plants can be grown inland. The owner is also director of the Bamboo of the Americas Program (www.bamboooftheamericas.org) which is working to rescue endangered bamboo species in Latin America.
A third bamboo specialist, Bamboo Parc Nursery, used to grow plants in Jacksonville for wholesale to other nurseries, however the owner retired five or so years ago and now maintains his bamboo collection on a non-commercial scale. Bamboo Parc sold wholesale plants throughout the valley and surrounding area, providing a constant supply. Since the nursery closed, few local nurseries are able to maintain stock as the next best bamboo wholesaler is in Portland (www.bamboogarden.com). Shipping live plants from Portland is incredibly expensive, giving our wholesale efforts direct competitive advantage (UPS estimates $15.00 for shipping single plants and $300.00 or more per pallet load of approximately 40 plants).
Bamboo Headquarters is a large retailer and wholesaler located in central California and boasts the title as the largest bamboo nursery in the country. However, similar to the Portland nursery Bamboo Garden, Bamboo Headquarters has high prices due to the shipping to this area.
For the moment, we are the only nursery that focuses on affordable plants for privacy screens and other common uses of bamboo such as timber groves, ground cover and erosion control in the area. We know there is a direct local wholesale need from nurseries because several have asked us to be their supplier. In the later financial projections, we provide estimates for division capabilities and pricing for using a single acre for nursery stock purposes.
B) Timber and Shoot Production
A mature timber grove has canes of up to 5-6 inches in diameter. Pictured is Phyllostachys edulis.
Background
The world is just beginning to utilize bamboo in ways other than for the landscape on a commercial scale. CO2 Bambu is based in Latin America and is manufacturing homes using bamboo as the primary building material (visit their website at http://co2bambu.com). In China, manufacturers are moving from just making bamboo flooring to bamboo 2x4 boards and plywood. Additionally, bamboo is being used to create clothing, electronic casings, furniture, kitchenware and sports equipment such as surfboards and bikes. Bamboo is quickly becoming known as a renewable resource around the world because, unlike trees which can only be harvested twice a century, a portion of each bamboo grove can be harvested every single year.
A grove of bamboo is actually one plant, each cane working with one another to send up new shoots each spring (see the diagram on page 1). These shoots will reach their full height and cane diameter within a month before growing branches and leaves. This process is repeated each year as the grove continues to expand. Because individual bamboo canes only live for five to seven years, the oldest portion of the grove can be cut out each year. This yields a continuous supply of bamboo timber. Trees grow individually and only grow a few feet each year, requiring decades to form trunks large enough to cut for timber. Because of the annual harvest, bamboo produces far more wood per acre than trees - yielding a perfect renewable resource.
The timber produced from bamboo groves is usually processed into floorboards, but is also commonly used in fences and various bamboo crafts such as window shades and chairs. Bamboo has high potential in other product lines as well - most people have felt the soft clothing made from the long fibers extracted from bamboo wood. Bamboo is also used for bike frames, cups and plant stakes.
In addition to these manufacturing uses, new bamboo shoots are edible and used in many Asian dishes. Without the supply of fresh shoots, many local restaurants resort to using canned shoots or leaving them out entirely. Shoots can be sold in bulk directly to chefs in the valley and at local growers markets, at which we are already established. While selling bamboo plants, tomatoes and other fruit at the markets, we have been asked numerous times by customers if we sold fresh bamboo shoots. Following direct requests from customers has worked well in the past and this should be no exception, especially because markets cater to fresh produce which are rare in supermarkets.
Around the United States, growers are starting bamboo plantations to meet these demands. Most of these plantations so far are in the southern states and have not yet been started here. When it comes to bamboo, being the first in the area is key to success because the plants mostly need time to establish groves.
The Plan
Two acres of the property will be used for the nursery and processing area while the remaining acres will be planted with various bamboo species to produce timber, plant stakes and edible shoots. The shoots will be harvested and sold fresh in the Rogue Valley both retail and in bulk.
Plant stakes, harvested from Pseudosasa japonica which has ⅛ to ¼ inch thick by 16 foot tall canes, will be bundled at varying lengths and sold to farm supply stores wholesale, such as the Grange Co-op. The local Grange sells bundles of around 60 stakes 4’ long for $50. Additionally, many farms and nurseries around the valley sell tomato and vegetable starts in the spring with these bamboo stakes to hold up the plants. We have been asked by numerous large growers if we could supply them with garden stakes for their spring plant sales.
The bamboo timber can be sold in limited amounts as-is, however most of it will need to be processed. We are currently looking into making a deal with local mills to manufacture bamboo products in the already-established Rogue Valley timber industry. The local timber economy is one of the benefits we enjoy over plantations in other areas where there is less logging. Smaller-sized canes can be used to make bamboo fencing which fetches a high price around the country.
Bamboo canes are also widely used for fencing. There are many companies within the United States that make the fencing but they have to import the bamboo canes from China. Instead of paying for so much shipping, the bamboo material would come from us.
Looking Further Ahead
Because acreage is so expensive, we are planting only the start of our groves. The timber bamboos planted now will also be used as division plants to start additional plantations on more property. Most or all of profits generated during the first decade of operations not distributed to investors will be used to purchase or lease land for expansion.
Facilities
The bamboo canes will be harvested from the groves and then moved to the on-site storage and drying facility. It will consist of a roof with vertical drying racks in rows, each set of racks for a specific size and color. In the back a table will be used to remove the branches and dispose of the waste, which will be chipped and applied as mulch to the growing bamboos. This facility will be relatively easy to build, requiring several main support beams and a sheet metal roof. The main problem with building the structure is the land zone, which requires special permits and inspections for construction. Jackson County land use officials have stated through email that it would be possible to obtain such permits for the uses stated with a fee, included in the later financial projections.
The shoot preparation area will be similar but much smaller, requiring only a few work tables with washing and packaging. Food preparation licenses will not be required because the bamboo shoots will not be altered; only cleaned and packaged fresh.
Customer Base
Unlike the nursery division which will sell both retail and wholesale, the timber production division will focus on selling B2B for the manufacturing of bamboo fencing or bamboo timber products with local mills, as described above. There would be very few competitors who could supply bamboo canes because of the numerous barriers to entry with growing bamboo, which will be discussed below.
Marketing
The marketing expenses on the financial statements include discounts and promotions. A portion of the budget will be spent on online advertising with Google AdWords. Postcards with information and promotions will also be sent to businesses for potential B2B transactions. Discounts for new wholesale customers are factored into the marketing budget.
Informational videos will also be produced promoting bamboo as the next renewable resource. The videos will be placed on Facebook, YouTube and the nursery website.
Barriers to Entry
Several key factors have prevented bamboo plantations from moving out of Asia and Latin America to the United States. However, we are able to overcome many of these initial barriers.
 Knowledge of growing bamboo. Although most bamboo species grow easily, planting the correct species for each purpose and effectively managing the groves takes several years of trial and error. Many growers in the United States who start down this path don’t know what species to plant. With eight years of experience growing bamboo commercially the groves of expertly selected species will individually be given their ideal conditions.
 Poor climate. Most areas where space is available don’t have the correct climate for growing bamboo. Some species don’t grow well with high humidity, present in the Midwest and East. Many locations are too cold, have too short or long of summers or receive too little or much of rainfall. Heavy snows can damage large portions of timber groves, which rules out most of the northern states.
 No ability to process locally. Most areas that could grow bamboo would have no way of processing the cut timber. The Rogue Valley is home to several local wood mills which are shrinking because of decreased logging, due both to dwindling old growth and increased environmental protection laws. Rather than shrinking or closing entirely, these mills could easily convert part of their plant to processing timber bamboo. Particularly bamboo flooring and plywood are in high demand in the United States. The local mills already have a distribution channel in place to move the finished products to customers.
 Price of land. Especially where water is available, farm land is incredibly expensive. Land in the Rogue Valley is much cheaper compared to other parts of the country partly because on average it’s a lower income region. A high proportion of the valley is zoned Exclusive Farm Use – low demand and high supply keeps prices low. And importantly, almost half of the original pear orchards have been removed with much of the land being left open. In fact, Oregon State University estimates that almost 50% of pear orchards have been removed as of 2007.
 Cost of labor. Workers are very expensive in the United States especially with employer taxes such as FICA. To offset the high costs of labor, the harvesting process will have to be immaculately efficient. The processing facility will be in the direct center of the plantation to reduce travel between cuts. Computer applications, programmed by myself, will calculate the most effective cutting patterns and employee schedules. Additionally, most of the farm work in the Rogue Valley is in spring or late summer and fall. However, with bamboo the majority of work is early to mid-summer when there is less competition for employees, helping keep rates lower.
 Starting the groves. Bamboo plants are expensive even when small and are often the major limiting factor for starting a plantation. Plantations in Latin America are often started only because of a bamboo species flowering, yielding hundreds of thousands of potential plant starts. See the section below for how we will plant our groves.
Supplying Plants for the Initial Planting
As an existing nursery, we already have many plants available to plant. We currently have over 350 Chusquea culeou seedlings which will be ready for planting soon. Bamboo plants flower very infrequently, some species on a cycle of 120 years or more. Chusquea culeou is a Latin American clumping bamboo which has different properties than most Asian bamboos. Because it’s a clumper, not only can the plants be closer together, but each grove produces more canes each year than running bamboos. Generally, this species is difficult to divide and plants are in low availability. Pictured right are new shoots still covered in the protective sheaths.
Plants which we don’t have enough of in stock will have to be purchased or dug. We can usually find owners of established groves who wish to get rid of their timber bamboos and are willing to let us dig them up. The plants we have to purchase will probably come from the Bamboo Garden Nursery in Portland, Oregon. The wholesale prices average $15 per plant and we would rent a single truck from them for $600 to ship all the plants.
Potential Liabilities
Flowering
Bamboo flowers gregariously, meaning that all plants of a species flower at the same time around the world. The glowering cycle for larger bamboos varies from 50 to 120 years depending on the species, with most timber bamboos around 80-90 years. Unfortunately, when a bamboo plant flowers there is a high chance that the mother plant will die. Although this phenomenon is not well understood, it is thought that the flowering plants die to allow the young seedlings to grow without competing with their parents.
Several measures will be taken to avoid losing the entire plantation to flowering. First, more than ten species will be planted so that if one flowers, the others will still be in full production. Second, the main timber bamboo species to be planted is Phyllostachys bambusoides which recently flowered and so should go another 70+ years before flowering again.
Severe Drought
The Rogue Valley usually has very little rainfall during the summer and so irrigation will be needed even during rainy years. However, droughts that last several years deplete water stored in lakes and so irrigation occasionally doesn’t last the entire summer. It is especially damaging to lose crops when the crops have taken several years to establish before producing.
Four years ago we started a small research project by planting a bamboo, Phyllostachys nigra ‘Henon’, on a partially forested hill. The plant was watered during the first summer to help get it established, but the following three years it received only natural rainwater. Today, the plant is still alive, even though it hasn’t grown much in size. We concluded that if our groves are not able to be watered for a summer they would survive, just without producing any shoots or timber for harvest.
Pests
Few pests seem to bother bamboo – aphids occasionally show up on leaves but rarely decrease vigor. Moles have been known to dig at the roots, but again don’t often cause a problem with mature groves. The bamboo mite is similar to aphids but can be slightly more problematic. The mites are actually arachnids which suck from the bottom of bamboo leaves, protected from predators or chemicals by webbing. Mites are mostly a problem for nursery plants as those infected can’t be sold. Luckily, mites aren’t native and so can only infect a grove by being introduced. As long as new plants coming into the plantation are mite-free, mites won’t come to the groves. Plants coming in can be sprayed with a mixture of oil, soap and water (which dissolves the webbing and kills the mites) as a backup method to only purchasing plants that haven’t come in contact with mite-infested groves.
Exit Strategy
In the event that the business becomes clearly unprofitable, assets such as land and property will be sold. Bamboo plants in the ground will be dug and sold at wholesale pricing, as will any nursery plants. After covering expenses, revenues will be paid back to investors proportionate to their original investment amount.
Our Proposal
Good business deals are made to be win-win so we are willing to be flexible. We want to incorporate your needs into any agreement we reach so we can maintain a strong relationship.
We are planning on purchasing property zoned Exclusive Farm Use for operations. The first acre will contain a nursery and display garden and the second the processing facility. The remaining acreage will be used for the plantation. For the moment, the properties we’re looking at range from 6 to 15 acres and depending on the financing we are able to obtain we will get the largest size possible.
As shown on the financial projections, we will need a significant amount of cash to not only purchase the property but get the plantation and nursery started. In exchange for your investment, you will be entitled to a percentage of profit each year.
Up to 15% of our annual profits are available, with $250,000 being the goal. Any amount invested will get the same proportion of 15% as to the proportion of the investment amount to $250,000. For example, a $50,000 investment would yield 3% of annual profits and a $100,000 would yield 6%. If more than $250,000 is raised we can move the limit to 30% with a goal of $500,000 at our sole discretion. The first investors to make final agreements are given priority if there are not enough profit shares. Those who would like to invest more than $250,000 please contact us to make special arrangements.
For now, we are just planting on the 6-15 acre lot described. However, we plan to continue to expand our bamboo plantations in the near future to begin producing bamboo flooring with local wood mills. Investing now entitles you to the same profit shares of any expanded operations under LeBeau Bamboo, LLC.
Corporate Tax Structure
The plantation and nursery will be run as an Oregon Limited Liability Corporation, which has a pass-through tax structure. Each investor will be signed on as a Limited Partner. A limited partner will not have the power to bind the corporation in contract, but will not have to pay self employment taxes on earnings. The general partner can bind the corporation in contract but must also pay self employment taxes on earnings.
In order to invest, you must be able to sign as a limited partner or make other arrangements with us at our discretion. To invest, visit http://lebeaubamboo.com/invest.
Financial Projections
Financial projections have been prepared looking ahead ten years for various acreage amounts, depending on how much capital is raised. Each additional acre drastically improves the return on investment so it’s beneficial to all to encourage other investors in the project. The financial projections can be found at http://lebeaubamboo.com/invest.
Please take note that these are only projections and these numbers should not be relied upon as the sole basis for decision-making. These projections are not able to forecast future events such as the state of the economy of environmental conditions such as extended droughts. This plan, including its financial projections, is subject to change as information becomes available. Check online at http://lebeaubamboo.com/invest for the fully updated business proposal.
It must also be understood by the reader that no offers have been made to form a contract at this time. BEFORE an agreement can be made, an INVESTMENT AMOUNT and RETURN ON PROFIT PERCENTAGE must be agreed upon, by way of signed written contract, by both parties. Additionally, the Operating Agreement for the Limited Liability Company must be signed and approved by all involved parties and members.
In the event that LeBeau Bamboo Nursery determines not enough money has been raised to complete the project, the investment amount will be returned to the investor in full within 30 days following the decision. If interest was earned on the invested money, the interest will also be distributed back to its respective investor.