Saturday, May 16, 2009

Saw-Timber Economics and Timber Sales

Deciding whether to log or not and how is complicated by a number of factors according to Master Forest Owner Program Director Gary Goff and Cornell Cooperative Extension Forester Peter Smallidge. Most private forest land in New York State will eventually be logged and sold for saw timber; the question is when and how. Goff and Smallidge reviewed the details at the 2009 Master Forest Owner Training.

Stumpage is the price offered by a logger for a standing tree. DEC issues Stumpage Price Reports twice a year that can serve as a guide (if you know what you’re looking at) for landowners wondering how much their timber is worth.

A basic rule of thumb: A 20-inch diameter tree at breast height (dbh) generally contains two 16-foot merchantable logs. The same tree, cut down to four inch pieces, will yield about one cord of firewood (a cord is 4-feet tall, 8-feet long, and 4-feet wide).

Timber quality is the most important factor affecting the value of standing timber, but there are a number of other factors, including things like the volume per acre, the terrain, market demand, time of year, costs of harvesting, size, species, insurance, etc.

Another rule of thumb: a 12-14 inch tree can be graded to a 2-3 grade; 16 inches, 2 grade; 18-20 inches, 2-1 grade; 24-28, 1 grade. The bottom 16 feet on a tree holds two-thirds of the value of tree.

Other impacts on the decision to log include the rate of inflation, potential damage, rate of growth, market trends, changes in tax law, other goals and owner objectives (trails, wildlife improvement, etc.), social license (do I care what my neighbors think?), municipal ordinances (town, county, APA, DEC, etc.), supervision (do I need a forester?), state of stand (maintaining biodiversity and good regeneration, in other words, a stewardship plan).

Expenses to consider when logging include fixed costs like your mortgage, taxes, and insurance and variable costs like surveys, inventory, management plan, timber stand improvement, stand access improvement, and timber sale expenses. The bottom line is: management matters and can provide as much as twice the value.

Always have a contract between logger, forester, and landowner. Contracts should include who is selling what to whom and for how much, when, where, and with what restrictions. Payment options could include up-front stumpage, pay as you cut (certain dollar per thousand board feet), roadside (you haul ’em to the landing), or percentages. Contracts could also include best management practices, penalties for damaging residual stands, cutting of non-merchantable trees, a performance bond, non-transferability.

i won’t cover it here, because it’s complicated and really requires a forester, but those thinking about logging should understand what high-grading is and how to avoid it (of course the best way is to hire a professional forester).

Land owners should visit www.forestconnect.com for more about saw timer sales (and a lot more), and then begin thinking about a forest management plan.

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