Possible business idea?? thoughts/ comments/ concerns

[chevytaHOE5674]

So as few of you know I am a forester, farmer, and have done some part time timber felling. I talk to many land owners that have small acreages, mainly in the 5-20 acre range. They all generally would like some type of forest management (mainly for wildlife habitat improvement), but when it comes to a timber sale very few loggers if anybody at all wants to touch them because the cost is too high for such small jobs, as most everybody up here has a buncher or processor, and a forwarder or big skidder.

So I've had this idea for many years now about working with small private land owners on forest management. Mainly writing plans and then doing the actual work myself, be it food plots or harvests. I've done a lot of skidding with a 4wd farm tractor and a log winch and am looking at getting a grapple trailer. So I have most of the equipment already. I just see so many small parcels of land being left out from management because of the economics of small timber sales. 

Does anybody have any thoughts on the possible profitability of such an endeavor? Anybody doing something similar? Any thoughts? Comments? Concerns? Thanks much

[fishpharmer]

I just see so many small parcels of land being left out from management because of the economics of small timber sales. 

Since you said anybody.......I will offer my opinion.  The economics of small timber sales may hold your answer.......

From a purely business perspective,  finding a market for the logs from your well managed small tracts would be my first priority.  Unless you plan to add value to the logs by sawing them into a product yourself.  That would stretch a fella pretty thin after doing all the above.

Seems the market for the logs would dictate how much people would be willing to pay for a management plan. 

my $00.02

On the other hand, I know of some folks that make a decent seasonal  business of planting wildlife food plots, especially with absentee landowners.

[chevytaHOE5674]

Finding markets I know is a biggy. Generally I can find markets for most products, but recently they change week to week. They are there just have to hunt.

One of the killers for the larger loggers around here is daily/weekly/monthly quotas at the mill. Bigger loggers have to worry about small quotas for their products (less $$$), as well as making payments on big ticket equipment (some upwards of a million bucks), as well as pay the 2-4 man crew and still trying to turn a profit. Where a 1-2 man crew (myself and father in law [logger for 35 years]) would have little overhead and just maintenance on equipment. back to the cost/benefit analysis and research..

[Reddog]

A couple issues for me here in MI while trying to run a similar business.
1. selling and trucking of the timber has been a problem. Seems the qty is usually to low to get much interest in bidding.

2. insurance with selling direct to the mills. Work Comp is required to sell to some mills. Work comp is not a requirement by law in Mi for a single employee owner/operator.

I would be happy to hear you take on these issues as a Forester.

[chevytaHOE5674]

There is a few ways I see around the trucking, one is to know somebody who will toss your wood on the truck with other landowners wood to make a full load (can run into quota problems), this becomes a problem when a mill is buying certified (SFI,FSC, etc) wood. The mill has to know exactly where the product came from etc.  Another way is to find somebody with a smaller truck (not many in Mi, but some singles out there). A thought that has passes through the back of my mind is purchasing a small truck and doing the trucking "in house". Hmm, more research is needed.

The workmans comp insurance could be an issue. I will have to check with some of the mills, as of now I've never even bothered to ask. I know some mills buy "gate wood" from the back of landowners pickups though...

[pasbuild]

Anybody running a truck up here has the paper work to get them in to the mills and the ability to sell to them, if it is saw logs the mills are always looking for logs they just pay based on how badly they need them as for the pulp wood you may do better to just sell firewood locally.

[chevytaHOE5674]

Anybody running a truck up here has the paper work to get them in to the mills and the ability to sell to them, if it is saw logs the mills are always looking for logs they just pay based on how badly they need them as for the pulp wood you may do better to just sell firewood locally.

If the trucker is taking the wood to the mills and selling them with "his paperwork" then whose is getting paid? Would I have to get a check from the trucker, or from the mill and then pay the trucker...

Any I appreciate any and all thoughts. Gives me many things to think about before I jump in.

[pasbuild]

when I have done this in the past the trucker had the contracts with the mills and he paid me.

[chevytaHOE5674]

when I have done this in the past the trucker had the contracts with the mills and he paid me.

Thats how I've seen it done in the past. I would assume that is the easiest way, as long as you have agreement on his cut of the $$$ beforehand.

[pasbuild]

For me it was the only way, I needed to do this one or two times per year and never more then a short double so for me it wasn't worth my time to find a home for the load. the trucker took his standard fee.

[Ron Wenrich]

I think a lot depends on the quality of wood you're working in.  5-20 acre woodlots are not a problem in this part of PA.  Those smaller woodlots are most often areas that include a homesite, so the soil quality is generally higher than on the bigger woodlots.  But, there is some really nice wood growing on these smaller tracts.  I've seen guys on as small as an acre lot.

We don't have a problem working on smaller tracts.  As long as you're not building roads, you should be able to do it if you have the appropriate equipment.  We use a grapple skidder, but also have a winch skidder.  We have our own trucks, and several knuckleboom loaders.   Felling is done with chain saw.  There is no forwarder, since those smaller jobs don't normally have long skids.  The average sale will have an avg dbh of about 18".  Species are generally mixed oak and tulip poplar.  You'll also find some low grade timber, and on some tracts there will be pulpwood.  A 20 acre woodlot would only take about 1 week to cut, depending on volume.

For markets, we have a very good veneer market.  We sell it all year long.  Some sawlogs are now moving to export.  What's leftover we mill.  Soft pulpwood goes to either a shaving mill or a paper mill, whichever is closest.  Hardwood pulp is put through a firewood processor.

The economics work out well, since we're not outsourcing any of the work.  We have managed to not have any downtime during this recession except for when we were out of logs, and that was mainly weather related.

As long as you can get the needed production and keep a keen eye on the equipment outlay, you should be able to get it done.  But, if you go to light on your equipment, you'll never get enough production to turn a profit.

[chevytaHOE5674]

Ill talk to my trucker buddy at the bar tomorrow night and see what insight he can offer me. Thanks again.

[chevytaHOE5674]

Ron up here there are very few loggers doing anything with a chainsaw and a small cable skidder anymore. Everybody wants big production numbers, and big acreages with high mbf, and cordages. UP here there will be pulpwood on every sale, but we have a new power plant that is grinding pulp at the moment, although the price is low.

I think my tough spot will be sourcing markets for the products since the volume will be low, and prices are down. Thanks 

[DanG]

Well I really like the idea, Chevy.  It seems to me like it just opens up some niche opportunities for you, and that's important in tight times.  If those small owners are hurting for a sale, you might could even hoard the logs for a while, especially if you added a firewood processor to your stable to keep beans on the table.  Also I like the idea of your own straight truck with a self-loading capability.  That would also open up the market at any small backyard mills that might be around.  I know I looked and looked for just such a small logging outfit when I was trying to be in business, but there just aren't any around and I couldn't handle semi loads.

[Tom]

It's a wide open field.  Big business, or people who think they are big business, have shut out the small landowner.  There was a time when the shortwood pulpwooder gleaned the fields of the big company's tailings.  The big mills and the yearn for dollars made the industry go full tree length and shortwood trucks disappeared.  That's OK, I guess, except that the small logger was still there, just no one to buy the logs. The small landowner found that the loggers with the big equipment weren't interested in small woodlots. So, he was left out in the cold.

You would be a blessing in disquise, if you were to target the small landowner and treat him like a real person. I don't know about selling short loads up there, nor the status of selling short wood, but there is always the possibility of being a collection site where the wood is sold to give the landowner his money and then resold to the mill when the sale was viable.  It could also be a staging area where a landowners wood was kept until you could generate enough loads to interest the mill.

Whatever you do, you would be filling a big hole down here and giving credence to a segment of the timber industry that has essentially been forgotten.

You would also be an attractive venue for Urban Wood.  This wood is taken down, privately, by tree surgeons and developers with nothing but an economic liability confronting them.  The Urban wood is also taken down Publically by Road Right-of-way crews, Power company right-of-way crews and park services.

Think of the market of this beautiful wood at the mill.  Also think of the service that you could perform by sawing some of this wood into lumber for the use of the counties in their parks.

[sjfarkas]

A couple of years ago when the market was good myself and 2 employees cleared half an acre in 12 hours with 2 chainsaws, a bobcat track machine with grapple and a woodchipper.  we hired a selfloader to haul for us and he took 2 loads of pine to the mill which grossed $2800.  we then donated a load of small logs and oak to a charity for a write off and still had 1/2 load of cedar to throw on a later load.  The majority of the logs were 33's some 16.5's mixed in.  If the market is there I think it could pay off.  Right now I doubt that it would unless you can find a niche market.

[Clark]

From what I know of the UP you should have good quality hardwoods up there.  If the woodlot has been managed I think that you should be able to turn a profit on the smaller woodlots much like Ron is saying.  Considering the past history of most of the upper midwest I highly doubt this is the case.

Clark

[SwampDonkey]

The whole production thing boils down to increasing labour costs at those mills, so they want to keep the price low for the producer and push for production. The more you produce the more the price falls. Also, the companies want cabbed machines in the woods because of worker safety. And worker safety is hammered big time up here at the big timber companies. They will ride your behind, even for a chip out of the side of a brush saw blade guard. You get yellow tagged and the equipment gets fixed or your out of work. Even a hoe operator has to move to one side and put his bucket on the ground before you pass. I've seen foreman lean real hard on an operator that doesn't put that bucket on the ground.

The reality is that those small sized tracts are costly to try and look out for those small owners, not only because of size. But you are forever hunting for the next 5 acres to cut. Sometimes a lot tramping. I guess you have to be in the right location with a lot of participating woodlot owners to make them profitable. Also, as Ron says it depends on local markets and value of the product. There is one fellow here that has always used old second hand equipment like a modified skidder hooked to a log trailer and a small Bombardier forwarder. He doesn't skid, just forwards it cut to length. At times it seems he's fixing more than cutting, but he has built up a reputation over the years so he no longer has to search much for woodland to work on. They usually are calling him instead of the other way around. The only thing I don't like when I see a job he has pulled away from is all the junk wood left on the yards. He should have left it out in the woods, but he brings all that junk out with the good wood. If you can build up your reputation and be in that situation than your all set for those 5 acre lots. A tandem truck with a self loader is a plus or use a forwarder on the yard to load the truck. But a self loader might be worth it if selling firewood logs or processing your own. No matter how big you are, you pretty much have to keep the equipment busy to keep the refrigerator full.

In today's markets, a woodlot owner does well to get $10 a cord stumpage. Many many woodlot loggers and log truckers are gone.

[thecfarm]

Will you be working at this full time?I use to cut on my land a few days a week.Softwood pulp got to be a problem.I don't have alot of pulp wood,just the tops of the trees that I cut saw logs from.Almost got stuck with a load of it.It had started to turn black from the summer heat and sun.Wasn't for some talking from the trucker,I would of got it back.But the same paper company can cut on their land 2 miles up the road in June and leave it there until Oct and still make good paper from it.  I would be careful about keeping logs stock piled.Most mills want them as quick as you cut them because of stain.
I had some of my lot cut.The logger I got was forced to a forwarder because that's what most want now.He was a man with a chainsaw and skidder losing out on jobs because he did not have a forwarder or a feller buncher.At times you may have to pay the trucker for a full load even though it is not.But maybe if you used the same guy all the time he may treat you right.One word of advice,make sure you landing is cleaned up of any logs.Nothing I hate to see is 10-12 logs just left to rot.I feel your plan can be done.But the land owner has to realize you will have to get paid more than the guy down the road with his forwarder.It will take you longer to plan out your roads and get the wood to the landing with a tractor.That will be a problem because the guy down the road will say I got $1000 per load and you're only getting $700? But he is getting it cut.I myself could not see how you could make money at cutting just pulp with a tractor.Like I say,the trucker has the least time with the pulp wood and he's making the money on it.That grapple trailer is not cheap.I only saw one in use and stopped to talk to him.Looked good,but was a slow operation to make money I feel,at the price of it.Working a site for a few weeks should not make a mess on skid roads.But that being said,a trailer would be better  if you could twitch the logs out to the roads to be picked up with the trailer.I hardly ever twitch any much longer than 32 feet when I'm in the woods,to keep from barking up trees.House lots are another sell for you too.

[John Mc]

Any chance of hooking up with someone with a sawmill and some woodworking skills and offering these smaller landowners something made from their own wood? The novelty of that may be worth a lot more to them than getting money from the timber sale and buying something from a big box store.

Landownership patterns have changed a lot in my area. A lot of the smaller landowners can't bring themselves to have a tree cut. The resistance begins to crumble when they realize they can actually help some wildlife species by doing so (yes, that's news to a lot of new landowners). If they can get something unique out of it and show their friends "this TV cabinet was made by Bill just down the road from a tree that used to grow out back", they may be really interested. If you're the guy who can make that happen for them (even if you are not doing all added processing yourself), you may have a way to ride the "value added" train a bit.

I'm not saying this would happen with all your clients, just wondering about ways to further differentiate yourself from the big operators or the "other guy with a tractor and winch".