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Need advice on small timber sale - resisting the walnut fever.

Started by deezler, September 25, 2012, 01:38:55 PM

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deezler

Hi all, great forum, thanks for letting me join and siphon off some info!

I'm not in the timber trade, but my wife and I did just acquire a 19 acre parcel of vacant land here in southern Michigan.  Just turned 29, no kids yet.  Bought it to build a home on and enjoy the natural beauty, but turns out, there is a 3-4 acre stand of fairly mature black walnut trees on it that I initially overlooked.  So I hit the internet and naturally caught the "walnut fever".  With a dose of patience I am weaning myself away from the dreams of huge money, and trying to be more realistic about what I could do with them.  But we could use some money to finance starting construction of our home on the land.

My wife and I love the natural beauty of the forest, and we absolutely don't want to clear cut it.  So I am looking to conduct a sale of standing timber in a very select manner.  Probably will pull some of the biggest trees to make sure there's some money in the sale, but otherwise look at cleaning up the junky ones that will never make veneer.  Maybe 25-35 trees total, best ones are 24-28" DBH with nice long logs.  Hoping that through some good management, I can prepare for a high(er) dollar select veneer harvest in another 10-15 years.

So, more reading on the mighty internet told me to hire a consulting forester, as the cost of their commission will almost always be made up for by obtaining higher bids on the timber.  I sprayed out emails to a number of contacts, and only got 2 foresters that replied.  So I had them both out to walk the land, and both seemed quite knowledgeable and helpful, though one guy stood out as a bit more professional (and was actually licensed).

Here's the problem though – I am particular.  I'm trying to work these walnut base logs as veneer grade (veneer, 3/4, rotary, whatever, just above saw log pricing).  It seems like few logging companies in this area have a lot of experience with walnut (as we're near the northernmost range for it).  I also want to protect the rest of the standing trees, so having the trees "topped" before felling seems like a no brainer.  However the forester seemed very reluctant to want to include this as a requirement on the bid contract, as it could turn away many companies up front.  In general he seemed used to working much larger timber sales but was more than willing to entertain our smaller select cut.

Enter option B – dealing directly with a logging company.  At the same time that I reached out to foresters, I had also emailed a few logging companies directly.  One of which came back at me very enthusiastically.  They pledged to top all of the trees, pay good rates by the bd/ft on the standing walnut up front, then bring their own veneer buyers on site to my landing, to purchase from them.  At which point they would give me 75% of the increased sale price proceeds.  They advised me to pass on the forester, since he is going to set up the sale according to his methods and knowledge base, and get bids from primarily saw mills and logging companies that don't have such extensive veneer contacts. 

So now I don't really know which way to go.  Common knowledge says to hire the forester, but maybe that's not so certain for small sales of a more niche product like walnut veneer.  I suppose there is no harm in first letting the one logging company bid directly to me first?

Thanks for any advice.  Great site; I'll try to find ways to contribute in the future.  Right now all I have is a tractor, pair of chaps, and a Stihl 028.  I know that I'll be doing a lot of firewood production and hopefully milling in the years to come though!  Exciting to think about my years ahead out on the land.



 

mad murdock

That is a nice looking walnut tree in the pic. If you want maximum value out of walnut logs, mills that specialize in Black Walnut products usually want the rootball intact on the first log, as there is high value material in the rootball. You should locate a mill (2 would be better), or buyers who specialize in Black Walnut products, as  Veneer prices may or may not be in line with other potential markets for your trees.  If you know any custom gunsmithers, or gun stock manufacturers, that is where the high $$ walnut goes.  Again though they may only be intersted in the first log with rootball, or maybe all the merchantable (merch) logs on the trees you plan on taking in this select harvest.  A lot depends on the buyer.  Locate the buyer and then you can put together a comprehensive plan on how to approach the harvest, as the harvest plan will be built around the bulk of what you are going to sell the buyer.  A good consulting forester should be able to plug in to those type of outlets, or you can contact a county or state forester as well.  Depending on the area, the county/state/ or extension forester is a good source for localized information on what you are trying to accomplish on your woodlot.  who know, you may end up getting a mill and making your own gunstock blanks to maximize profit for the trees you have??? (oops! maybe I said too much....the sawdust bug may bite :o). Welcome to the Forestry Forum :)
Turbosawmill M6 (now M8) Warrior Ultra liteweight, Granberg Alaskan III, lots of saws-gas powered and human powered :D

WH_Conley

Be careful of the guy offering the most. If it sounds too good to be true, it usually is. If you know the guy personally and he has a good back ground, that is one thing. If you just met by soliciting bids, beware.
Bill

Autocar

Very unlikely your find a contractor that will climb and top the trees before cutting. Ive only seen it done once and the log standing brought $33,000.00 I use to have a picture of it but haven't seen it for years. Cutting your logs from now to February the bark is tight and you can lay logs down in a leaf less woods better then you realize. It looks like you have some pretty good trees but with out seeing them its only a picture, bird peek and worm plus mineral can cut logs down to saw logs real quick. Ive never been big on foresters my two cents find a company that deals direct with the foreign markets. A good company I feel is Internationl Veneer Company, IVC will have a buyer in your area then while your walking your woodlot tell him what you exspect from there logger. Goodluck Bill
Bill

Ron Wenrich

Let's use a little ball park numbers here.  You're looking at trees that have about 500-600 bf per tree.  You can find volume numbers by using one of the forum's calculators.  Hit the red tool box on the left side of the forum, or go to "Extras" and hit the tool box.  Basically, a 15-20 Mbf type of sale.  That's pretty small for a forester to handle.  They'll sell it, only because they're charging a commission on high value wood. If you want his advice, then have him mark it, and give you a tally.  Pay him his daily fee, and then you have the information you need.  Consultants will not guarantee prices, but they can give you a ballpark number.

You can then market it to a logger on your own terms.  Its doubtful that you'll find someone to top them.  If you do, you'll get a lot less for the timber.  I wouldn't top them unless it was close to some obstruction like a house.  I don't know of any loggers that do that in my area.  Topping would reduce the number of loggers that would be interested. 

The other thing to look into is the strength of the market.  Its not as strong as it has been in the past.  Selling into a weak market will leave dollars on the table.  If it was mine, I'd wait for a year or two so the economies can pick up and prices increase.  I've heard tales of mills not buying walnut because the markets are too thin. 
Never under estimate the power of stupid people in large groups.

WDH

I agree with Ron.  Looks like you have some very nice trees.  Unless you have to have the money now, selling at the bottom of the market cycle will cost you a lot on valuable trees.
Woodmizer LT40HDD35, John Deere 2155, Kubota M5-111, Kubota L2501, Nyle L53 Dehumidification Kiln, and a passion for all things with leafs, twigs, and bark.  hamsleyhardwood.com

thecfarm

Trees can be cut down without making a mess. Yes,you may loose a few trees, but a GOOD logger can do a GOOD job. I would listen to your forester if you have never done anything like this before. Not saying a few logs might get on a truck without you knowing,but. Also being so fussy might cost you some money too. Meaning the logger will have to take more time to do a real nice job. But it's your land,get it cut the way you want it to be cut. I'm fussy too with my land/trees.
Model 6020-20hp Manual Thomas bandsaw,TC40A 4wd 40 hp New Holland tractor, 450 Norse Winch, Heatmor 400 OWB,YCC 1978-79

deezler

Thanks for all the replies.

I talked to the forester again yesterday.  After telling him that I may first consult with this one logging company, he really didn't try to talk me out of it or keep himself employed on the sale....  which was a little confusing.  I was almost hoping he would just talk me into staying with him on the sale, but he had little to say about it.  Perhaps the sale is just too small for him to want to deal with.

Oh well.

Yes, as a couple of you note, I should probably try to take advantage of the market cycle to get a better/best price.  But I have absolutely NO idea how to monitor that.  State stumpage reports are worthless - no Walnut reports for Michigan, and only a handful of sales in Indiana and Ohio that lump together anything worth cutting.  From what I can tell, timber prices have come down 20-40% over the last 5 years on many species, but walnut is only down 10-20%.  Does that sound about right?  Even the two foresters I talked with had no real information about current walnut prices, just a vague recommendation that things "could be better" in the future.

I could definitely use the money now, as I have a lot of ideas, projects and plans, but no savings or capital to get things started with.  On the other hand, I could just be patient and lay low for another year.  But since I have no way to get pricing info on standing walnut, I can't see any reason to wait around.  The only actual timing consideration I have right now is to wait until February to get paid for the logs since anything before that would be taxed at short term capital gains rate.  Of course, who the heck knows what tax rates will be next year!  Ugh, that is frustrating.

Ok, good to know that topping might not be so critical.  The logging company said they really like to do it.  I'm not sure how badly my forest will need it to prevent issues, but it sounded appealing.

drobertson

Hi deezler, welcome to the forum, I was curious how much that logging company is paying for the walnut per/bd/ft. There is one thing I do know, I have a good friend who works at a walnut mill,  Mid west walnut, willow springs   mo.  He says there are certain ways of felling the timber, and bucking the length that can increase or decrease the value.  Having someone familiar with walnut might be a good idea..  good luck,, david
ps,  time is on your side as long as they are standing. 
only have a few chain saws I'm not suppose to use, but will at times, one dog Dolly, pretty good dog, just not sure what for yet,  working on getting the gardening back in order, and kinda thinking on maybe a small bbq bizz,  thinking about it,

daleeper

Use your forester to determine what trees to sell, mark the timber, and take care of details you wouldn't think of.  When he has the bidding, include your loggers in the list that the forester also has, so they have the chance to competitively bid.  The only way you would know if that logger is going to pay that 75% is if you know what the buyer is paying him, and there are all sorts of ways to make that number change.

Then after the sale and harvest, the forester should come back and make sure the harvest was done the way it should have been.  He's not getting rich on these small jobs, but does give him a few days work, and most likely has connections to those that appreciate that rare log found in small tracts of timber.

Good luck, hope you have a successful timber sale.

thecfarm

If you do decide to have them cut with no forester involved get references and CHECK them out very carefully.Go to past wood lot owners and walk the lot to see how it was cut,to see if you want your done the same way, and the prices promised compared to what was paid. DO YOUR HOMEWORK. We don't need to hear from you about a bad sell.
Model 6020-20hp Manual Thomas bandsaw,TC40A 4wd 40 hp New Holland tractor, 450 Norse Winch, Heatmor 400 OWB,YCC 1978-79

Autocar

thecfarm hit the nail on the head ! Your only cut them once. Drive around in your county and look at the woodlots that has work done in them in the last year and even this fall and ask the landowners who did there work your learn alot in a hurry and ask plenty of questions.
Bill

WDH

Woodmizer LT40HDD35, John Deere 2155, Kubota M5-111, Kubota L2501, Nyle L53 Dehumidification Kiln, and a passion for all things with leafs, twigs, and bark.  hamsleyhardwood.com

stavebuyer

A small sale takes almost as much time to prepare and manage as larger one so thats probably why the consultant may not seem overly motivated. Topping sawlog trees while standing will cost you more than any residual damage and in most cases would exceed the stumpage vaule of the tree to be cut. It's your land and your decision to have the work conducted in the manner of your choosing but the reality is that all costs involved in a timber harvest come off the stumpage. The export market for walnut sawlogs is still doing ok and there are several firms targeting them. I would hire the consultant to mark the trees and help you with the contract terms. Marked timber sales are generally sold by invitation to a sealed bid opening. In your case it might be advisable to try and negotiate a purchase with someone who specializes in walnut. Occasionally special orders come along and your trees could bring a premium to market. One thing not often mentioned is that while waiting for markets to "peak" things can also "bust". I have seen mature timber stands totally decimated by Tornadoes, ice storms, insects and disease. Bridge closures, enviromental activists, endangered species restrictions or quarrantines aren't generally considered in the long term management plan but they can and do happen. Odds are in your favor those things won't happen but there is no guarantee.

MJD

Not sure if this would apply in your case, but you should check with your township and make sure a timber harvest is allowed on your property. I got a call from a guy years ago who had a patch of some of the best timber I have ever seen in this area to find out that it was in a green zone and could not get a cutting contract, even if you wanted to take a single tree it would need to be aproved by township.

craigc

I have so many questions.  To answer some I think deezler should post more pictures for us.  To base any numbers or advice off of one picture is impossible. Saying  they would average 500-600 bdft on walnut would be amazing.  I think there is a sale here but more pics are needed.  What do the lesser quality trees look like and how many of these are there.  Did the forester tell you how many venner tees there are?  Could go on but just realized what time it was, need to go to work.
Rottne SMV, Timbco with Logmax 9000, JD 540B Grapple.

Okrafarmer

I don't know for sure, but I'm guessing that since these walnuts are near the northern edge of their range, and are evidently healthy trees, they may have some higher-than-average quality wood in them. For instance, oaks of a particular species have smaller denser growth rings in northern areas than the same species in southern areas. I have one (1) (only one) nice walnut tree promised to me, looked at it again yesterday. I'm supposed to wait until the leaves fall off so as not to poison the guy's cows. It'll be a wide-ring southern special, but still good straight walnut.  ;D

Wish you luck in your endeavor, these guys have given you good advice.

I would not trust the enthusiastic logger without getting some great references for him, of his past work, sounds like he's got the gift of the blarney, and you need to examine what he's left in his wake. If it's all good, then go with him. If he gets mixed reviews, you don't want to be another part of the mix.  :-\
He that dwelleth in the secret place of the most High shall abide under the shadow of the Almighty. Psalm 91:1

Operating a 2020 Woodmizer LT35 hydraulic for Upcountry Sawmill, Dacusville, SC

Now selling Logrite tools!

Writing fiction and nonfiction! Check my website.

beenthere

QuoteFor instance, oaks of a particular species have smaller denser growth rings in northern areas

Oak will be denser if fast grown because of its ring porous nature. The large pores are about the same width in a growth year regardless of ring width. Means faster grown results in higher density. Not sure if that is what you were trying to convey. ;)

Slow growth of the walnut may mean less sapwood. Being on the northern edge may also mean lower quality within the tree.
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

Jeff

There is something that has not been mentioned here yet, and as a new property owner planning a potential timber sale, you should be very aware of, and that is the Timber Tax.  I've seen many instances where the landowner needed some money, had the sale, spent the money, then found themselves in dire straits due to the fact that they owed the capital gains tax on the timber and had no way to pay it. This is another thing that Foresters can give you guidance on that you may never consider. Many accountants don't even know how to handle it, but it must be handled.
Just call me the midget doctor.
Forestry Forum Founder and Chief Cook and Bottle Washer.

Commercial circle sawmill sawyer in a past life for 25yrs.
Ezekiel 22:30

deezler

Wow!  A lot more good advice here.  Thanks.

Yeah I want to go visit a woodlot that this company has cut on before to see how it was left.

Yes Jeff, I have been really researching the timber tax situation.  Was considering getting a basis survey done so I could do the depletion deduction too, but that seems like too much work for one little sale and potentially would cost more to do than I would save in tax deduction.  And I have short term / long term capital gains rates to work around, plus the rates are not even set yet for next year.  Oy.

MJD, I have to be honest, I have been afraid to contact my township about this.  They are fairly particular about removing trees for development, but I've seen nothing in the zoning ordinances restricting private homeowners.  I was hoping a single semi-load of logs could sneak out of my property without much attention being paid (the good trees are all a quarter mile away form the road, too).

I'll get some better pics soon!  My old iPhone 3Gs doesn't take too good a picture these days.

Ron Wenrich

Not sure that there will be any tax.  You're only obligated to pay tax on what you have grown, and that is taxed as capital gains.  What you are doing is liquidating an asset.  To do this, you should have a timber appraisal done for the whole property, and value allocation to the each species.  Its been a while since I've looked at the tax laws.  But, a good accountant should be able to give you some info and how to approach it.

The depletion allowance would extend into the future for all species.  What is the rest of the stand like?
Never under estimate the power of stupid people in large groups.

SwampDonkey

Here in Canada, the grown part the tax man looks at is the bank account and the income tax act. ;) I've seen lots of woodlot owners pay about 40% of their timber sale to the tax man. Forty percent of a $50,000 sale is a whack of quid. ;D Here the only thing that would save taxes is a management plan that is followed and not just used as a liquidation estimate and it doesn't apply on  a hobby farm. It only applies on a business that manages their woodlands as an integral part of their livelihood.
"No amount of belief makes something a fact." James Randi

1 Thessalonians 5:21

2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

WDH

In the same vein as what Ron said, if you recently bought the land and timber, then the cost basis that you have in the timber will be about the same as the market value of the timber since only a short time has passed and timber prices have not risen in the last while.  So, you would likely owe no Federal or State income taxes on the sale of the timber.  You do need to get the breakdown of value of the land and timber established. This is called the Basis.  This is used for establishing your depletion rates on your timber to use as the cost basis for future sales.  Don't overlook this and it is smart business and will save you a whack of tax $.  Getting this appraisal done will at the same time give you an idea of the potential timber value in the timber sale that you are considering, so you can kill two birds with one stone.
Woodmizer LT40HDD35, John Deere 2155, Kubota M5-111, Kubota L2501, Nyle L53 Dehumidification Kiln, and a passion for all things with leafs, twigs, and bark.  hamsleyhardwood.com

Okrafarmer

This situation is just yet another one where it really pays to "measure twice, cut once."  ;)
He that dwelleth in the secret place of the most High shall abide under the shadow of the Almighty. Psalm 91:1

Operating a 2020 Woodmizer LT35 hydraulic for Upcountry Sawmill, Dacusville, SC

Now selling Logrite tools!

Writing fiction and nonfiction! Check my website.

deezler

whoa!  I might not need to pay taxes on it, since it didn't really grow much (increase in value) over the short period of time that I've owned it?

So, I would just be liquidating an asset instead of profiting from capital gains?  I need an accountant.   :)

But, if you sell property (land or a house, say), don't you have to pay capital gains tax on what you're paid for it?  Sorry, I am a tax newb.

Sounds like getting the professional forester to do a timber basis might be a good idea still.  He charges $35/acre to do it, which seemed reasonable.

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