Tough Question for Our Foresters

[SwampDonkey]

Dang, we had rail to all the mills in western New Brunswick, pulp mills, sawmills and even a food processor and feed mill. It dried up because there wasn't enough business to remain profitable enough to maintain the rail ways and bridges. Trucking was more convenient, and now it has become expensive when it costs $450 a load to haul pulp worth $1800. 

My train of thought is like Tom's, sit on the wood until there is a need ($$) from the industry that allows a decent profit from my trees. I am thinning my stands early to be ready for a commercial thinning in 30 years, then let the woods reach maturity before harvesting some saw logs and taking the short lived species out (aspen and fir) in some form of selection. As I said earlier most don't wait and you can't pay decent prices for small sawlogs. But it also goes back to management. Just because the trees are mature doesn't mean they are big or worth much. Sometimes those untreated stands are full of rot. So we're back to the surplus pulp dilemma.

When I here 'grandfather was the last to cut any wood out there 50 years ago', walk away if your looking for sawlogs. If it's mixed wood of short lived species it's likely decadent, and if it's hardwood it's likely firewood.  That has proved to be the case many times over in this region.

[DanG]

I guess we're just lucky down here, because our rail system is still largely intact.  The line that runs through the OSB plant also runs right through my back yard, so I get to observe their load on a daily basis.  So far, I'm seeing product coming from the plant, but no logs coming in by rail.  I sorta expect to see that change eventually.  Right now, they are playing catch-up from the time the paper mill was closed down until the OSB plant came on-line.  People, including the big timber companies, private landowners and the National and State Forests, have been biding their time, delaying thinnings as much as they could.  Now, the loggers are running wide open, and thinning everything they can find.  They are trucking everything, because they are close to the mills.  Now, when they get caught up, and the plant starts needing material, it will be interesting to see what happen's in Middle Ga, where WDH is holding his trees.  Will Georgia-Pacific look that far away for logs?  Will they start yarding the logs up there and ship them down here by rail?  I have noticed that Knight Forestry, one of the biggest logging operations around here, has opened a yard along Highway 84 and built a new rail siding into it.  At the same time I've been watching that new yard develop, I've been watching an old yard a bit further north along Highway 19, slowly petering out until it finally died this past year.

Now, these are just things I've noticed in my local area by just keeping my eyes open.  I have no idea how the economics are playing out for the landowner.  I'll have to ask around about it.  I have a feeling they are taking a beating because they had no market at all for thinnings for several years.  They are probably just relieved to get anything at all for it.

[SPIKER]

I like these informative posts and read all of them (not made it to the links yet though I must say)

While I'm not as up on all this there are other factors that cause land owners to have to sell besides those mentioned above, like our area tax/ag agents say you have to show management practices one of which is thinning even though it may or may not be needed at the time and prices are $hot you still HAVE to do it to keep the land in the stewardship programs (ag tax exemptions ect) and if you push it they come out see that the stand has been left then they say you are out of program and must pay back all these tax abatements ect.   The county I live in has been to my place every year since I have owned it INSPECTING, always asking when am I going to make money so they can collect taxes off of it!   this is a pressure that I'm sure a lot of people here know all too well about.   while sticking to plan is great but then there are overzealous tax men that want to push the markets too...   

Our area has been hit but the same problems plaguing lots of timber industry & timber plantations the last 3~4 years, lots of ice storms high winds flood or drought (some times at the SAME TIME)    this leads to lots of slightly damaged usable timber being sold cheap, which forces new undamaged timber prices down and forms a glut/stockpile of wood related products that were made from these damaged trees as well as from top grade lumber which has been sold at damaged tree prices...   this all combined with fact that building industries are on a downward turn for last 2~3 years means lumber industry is where it starts and lowest rung is the 10~50 acre land owner who has to either clear cut & sell off lots or sell what timber he has for what ever he can get for it...    I've been holding my stuff but have a lot of damaged trees which are going to be nothing more than fire wood soon.  or I can sell them for firewood prices and not have to deal with it...   choices choices choices. 

mark m

[WDH]

I know many landowners who refused to thin their pine plantations when the time was right because the stumpage prices were low.  So, instead of seeing the thinning as a silvicultural treatment and going ahead and doing it, they saw it as a "financial treatment" and decided to wait until the price got better.  Well, it has been over five years and the price has not improved back to the level it was at before it fell. 

The point here is that those who decided to wait continued to grow a thick stand of over-stocked trees that are now still mostly low value pulpwood.  Instead, I thinned in 2000, and now the predominate product is chip-n-saw that is worth 2.5 times more than pulpwood. 

However, the crux of the matter is the same as it was five to seven years ago.  I need to second thin now to reduce the stocking and move the crop trees into the large sawtimber category, worth twice the value of chip-n-saw.  But, like it was with the first thinning, the chip-n-saw price is in the tank.  I can wait a little while, but my professional instincts say to do the "silvicultural" second thinning to grow the final large sawlog product, then time the market for the sawlogs/plylogs when it is mature

[SwampDonkey]

You folks are in a bit of a bind because of fast growing wood on short rotations. We have 12-15 years for an initial thinning, then 25 years for a semi or commercial thinning and if we are in spruce or hardwood probably 25-40 years before another harvest. This all provided we don't jump the gun and clear cut that 40 year old softwood at 6-8" dbh. 

[OneWithWood]

As an owner of forested proerty I find that managing the woodlot in the hopes of maximizing a financial return only leads to frustration.  Yes, the IRS wants to see a positive net to justify claiming the venture as a business and not a hobby, but that is only part of the criteria.  The approach that works for me and keeps the enjoyment factor high is to manage the woodlot to maximize the sustainability of producing good hardwood fiber.  I think in centuries, not decades.  Definately not years.  The income that is derived comes from thinning, group selection for oak regeneration, and weeding.  The purchase of a mill allows the weeds and thinned material to be worked and transformed to maximize the value added.  Hopefully the income produced will be enough to pay the management costs and show a positive net over a span of time.  Just what that span of time might be would be the basis of any discussion with my friends at the IRS. 
Unfortunately, my approach does not get a lot of support from the industry or government.  It would definately be easier if the powers that be could think beyond just a few years out, but it is what it is.

[DanG]

OWW, I know you have been awfully busy building your shop and getting the kiln going, so the past year or two isn't going to be typical.  Once you get all that finished and devote full time to production, will this surplus fiber from your woodlot sustain the other facets of your business?  I would think that such an enterprising young feller as you could find a way to link up with some other woodlot owners in the area, and use your mill to help them profit from their own trees.  While you're helping them, you could help yourself to a portion of their funds, as well.

Of course, I'm thinking that you are already pursuing that selfsame goal, but I wanted to weave that concept into this thread, as one of the many answers to the question.

WDH, have you thought any more about those 4x4s we talked about?  You wouldn't make much of a dent in your forest with that LT-15, but you could sure make a big difference in your bottom line.  It looked to me like you could get at least 2 eight footers out of each tree.  That would fetch you about $10 or more per tree, a lot more than pulpwood or chip-n-saw.

[WDH]

You are absolutely right, Dang.  I need to cogitate on that .

[Tom]

I was sideways threatened by a tax fellow, one time, when I suggested that I might want to saw and sell some of my trees.  He said that he could get me rezoned commercial and my trees taxed as inventory if I did.

[WDH]

Why am I not surprised .

[Ron Wenrich]

OWW

What you're looking at is called Dauerwald.  Its primarily cut the worst first, and you let the crop trees grow until a harvest time.  Clearcutting isn't really on the agenda and things are looked at on a per tree basis, not a per acre basis.

Another interesting concept that is used in Europe is the management of the forest in layers.  You have the overstory, and that is managed for crop trees. 

Then you have a middle layer.  Those are trees that don't or won't reach sawtimber sizes.  What I saw was ironwood being managed for firewood and cut every 20 years.

The lower layers were for shrubs and the like.  I think ginseng, shitake and morels would fit in there as other manageable crops.  There's probably some others that would also make a buck.

As for DanG's suggestion on the mill, I once proposed the idea of having landowner co-ops to the state Grange.  I figured the Grange was used to having co-ops for services and for their crops.  My concept was to have the landowners own their own mill and get fiber from their forest lands.  The concept is used in Sweden and accounts for 25% of the timber produced there.

It got shot when it was run past a consulting forester.  He didn't like the idea of landowners doing their own work, and he would lose timber sales. 

[WDH]

When DanG was over my way, we talked about harvesting the trees (southern pine) and sawing 1" rough pine for fences.  It could be done a little along to utilize the resource.  I had not thought about Tom's point about the tax man.  As Pooh would say, "oh bother!".

[Tom]

It's government's job to stop you from doing anything you want to do.

[SwampDonkey]

The government doesn't do much medaling here except help with silviculture activities that don't produce an income from the resource at the time of treatment. They don't watch over private land to see how it's managed. That is assessed by marketing boards in an informal way, nothing restrictive or invasive, more in the form of advise and education. The only thing marketing boards have any control over, and that has become more limited since 1993, is the collection of wood levies on private wood sales and marketing wood.

The average landowner is in his 50's or older and are more concerned with loosing their supplemental pension funds. Anyone on supplement, who has prescription drugs, only pay about $5 or $10 a pop. $1500 of heart medication, plus the extra income tax burden from the sale of marketable wood could put some old timer in an early grave. Doesn't matter if management is the right thing or not.

Landowners should be allowed concessions for forest management, just as the big industry players are given. But oh no, the government will make a big deal over anything over $2 bucks and make an example out of the little guy to justify their positions. Meanwhile the industry guys know how much, where and when they can have a guaranteed volume of wood at ever decreasing stumpage prices and low corporate tax. Pretty soon that tax is going to be eliminated.  Many forest companies have been behind in royalty payments for months on occasion. I wonder if interest is collected on this? It is on personal income taxes.

Hmmm, wood below fair market and reduced tax. Private wood shut off or prices set below a level for reasonable profit margins because Crown wood is cheaper. Who does this benefit in the end? When will the well dry up and many of the big players move on?

[DanG]

WDH, as you might have figured out by now, Tom and I communicate regularly, outside of the public areas of the ForestryForum.  In short, we are friends, and we share our woes and our triumphs with each other rather frequently.   One of the things that I have learned from that is, that things are a whole lot different around Jacksonville than they are around Chattahoochee.  He gets harassed by the DOT, and the County Tax Collector, and all the other "jack-booted thugs" that a corrupt local government can muster.  Out here, we pretty much lead our own lives, and don't get bothered too much.  I got a feeling that things around Perry, Ga. are a bit more like 'hoochee than Jax.  I say, GO FOR IT!

The point I'm trying to make, the same point that causes me to even participate in this thread, is that the particular flavor of your local situation has a lot to do with the development of your management plan.  It doesn't matter what kind of business you're trying to manage.  If you don't tailor that business to the market that is available to you, you will lose out.  Your opportunities are not the same as a timberland owner in my area, even though we are only 150 miles apart.

[WDH]

You are right, DanG.  I suspect Perry is more like Chattahoochee than Jacksonville except for the smoke today from the fires that created a dull gray haze all over. 

The ideas you shared with me on your visit are on-the-mark.  So, what I think I will do is to 2nd thin after the first of the year, work out several more years in the corporate world, then buy a bigger mill to convert my trees into wood products as a second career after I "leave" the corporate side of things.  As I harvest the trees, I can then remove them such that I ensure good natural regeneration to perpetuate the forest and maybe even move toward an "uneven" age strategy on my land.  By then, the trees will be large enough to create several good product options. 

Nothing like having a plan .

[tonich]

As I harvest the trees, I can then remove them such that I ensure good natural regeneration to perpetuate the forest and maybe even move toward an "uneven" age strategy on my land. 

That would certainly improve your flexibility at the future wood marker, because almost all of the time you will have all desired assortments available. Thus, as a wood producer, you could dictate timber prices.
If you decide to move to uneven forest management, I would highly recommend to start working towards it, within the very first thinning. The only problem could be to ensure enough participation for shade-tolerate tree species – lets say: 70 percentage and over (not pretty sure what is your current woodlot's composition, though).

[WDH]

The composition is 95% loblolly pine.  As I do a final harvest, I would take out small patches to open up the stand in the micro-harvested area to allow natural regeneration of pine.  Growing hardwood on the upland sites is not one of my objectives because the site cannot produce a suitable quality hardwood sawlog to have an appreciable value.   

[Don K]

My dad is in the same situation. A timber company is soon to start a second thinning on his tract of pine and yes the price is down, but it needs it and the income is needed as well. A fella can really have his feelings hurt as he has planned for timber income all his life and it just ain't there. I guess it pays to own a business farther along the chain in the timber industry as that is where the profit is.

I too think I will plan on manageing what little timber I will have and if I live long enough, I will harvest it myself and try to produce a quality product that individuals will buy from me at a slightly reduced cost than the box stores can offer as well as some unattainable items like 1X12's If I had a load of good trees, I could sell all I could cut right now.

[WDH]

You can cut-to-order and keep the trees on the hoof .