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The economics of a tree

Started by texansfan, November 26, 2015, 09:02:47 AM

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texansfan

I've been thinking about the economic process between a $2 curvy 2x4 in Home Depot all the way back to the 5 cent seedling I plant in the ground.

Anybody know about how many 2x4s I can get out of 1 MBF?

And also if I sell my 1 MBF timber to a forester for $220 how much does he sell it to the mill for before the mill gets it and chops it into hundreds (if not thousands) of 2x4 who then sells it to Home Depot for how much per stick (I understand they'll sell them by the pallet load at least).

I'd like to be able to look at a tree in the woods and size it up and know "that's about 28 2x4s"

beenthere

For one thing, you have a lot of confusion between the processing of a tree and the yield of that tree in 2x4's. Don't know where to start to try to help you understand it better. Not a simple conversion.

south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

texansfan

Quote from: beenthere on November 26, 2015, 11:09:58 AM
For one thing, you have a lot of confusion between the processing of a tree and the yield of that tree in 2x4's. Don't know where to start to try to help you understand it better. Not a simple conversion.

I know this is not the most efficient use of tree but lets say that 100% of a tree is milled for ONLY 2x4x8
The $2 Home Depot variety
Let's say this tree is 82 feet long
If we cut the tree into 8.1' sections we have 10 sections of 8' length (the 0.1 is for cuts and whatnots)
Again, this is a VERY rough estimate
Think of it as a 5th grade math problem

Actually, this is more of a pre-calculus problem as it deals with conic sections

If we said the tree was 28" DBH and tapered down 2" every 8' up as it goes How many 2x4 could be cut out of this tree?

Again, I understand in the "real world" of milling this makes no sense but I'm curious

I know that you will take the longest straightest clearest beam out of a tree that's possible as that's where the BIG money is

Example, let's say you could get four 12x12x40 out of the above described tree
You'd do that first and whatever "scraps" are left you will make whatever cuts you can out of them down to 1x1 strips


beenthere

Reminds me of an economist.. just plug in the "what if" and "imaginary" numbers in a model, to get some data on which to make an estimate, and actually put some trust in the final estimate..   ;D ;D 
Anxious to see what you come up with.. and don't mean to offend you over your question.
south central Wisconsin
It may be that my sole purpose in life is simply to serve as a warning to others

Ianab

If you are planning to grow a tree for maximum return, your target product isn't cheap 2x4s. Those are almost a by-product. the lowest grade wood that you can't unload on to anyone else.

You should be planning on producing some clear boards, some 2x8(+) boards, heavier beams etc. Stuff that sells for decent money.

The 2x4s are the leftovers once you extract the more valuable stuff. The side boards, the top logs etc. Their sale value (per bd/ft) may actually be less than the cost of production, once you factor in the cost of growing the tree. But if selling them as well as the more valuable product increases the total return from the tree by even 10%, it's a good thing.

Yes you can calculate up the yield from the tree, and estimate how many boards you can saw from it. There are even calculations that you can  just punch the numbers into. But if you simply do this for $2 low grade 4x2s I bet you come out with a negative number for the economics of the whole enterprise.

Ian
Weekend warrior, Peterson JP test pilot, Dolmar 7900 and Stihl MS310 saws and  the usual collection of power tools :)

starmac

I have been playing with calculations myself the last few days. Our mill here where I haul wood into, is big in the dunnage business,
A log that they pay 49 and change delivered to the mill that is big enough to make 8X8 dunnage, turns into 217 dollars at 6.80 a foot, which is their advertised price.
I am sure commercial and quantity buyers get a huge discount on this price though.
Old LT40HD, old log truck, old MM forklift, and several huskies.

texansfan

There is a sawmill near me (snider industries) that only produces 1x products. They have 48,000 acres of forest. Do you think they sell their sawlogs to other mills and they keep the stuff to make 1x products?

Jeff

They might. A smart Forest Products company does what ever it takes to get the best bang for their buck. They may buy logs, they may buy standing timber, they might harvest the timber, or they might have someone else do it, they may process the timber they own, or they might process someone elses timber and vice versa. They may not eve ever own any timber.

Foresters don't typically buy timber. They may work for someone that does, as in a procurement Forester but as a general rule, they don't themselves.

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

SwampDonkey

Forester is sometimes a loose term used instead of "my logger". And sometimes a forester or forest technician is a logger. We do have a few members, especially in the Maritimes and parts of Ontario that are foresters who either are loggers themselves with their own equipment or are foresters that hire the loggers to cut the timber they purchased (stumpage) from woodlot owners. They often have volume based contracts with mills or indirectly through marketing boards where volumes are filled by many producers. They still purchase the wood, the scales and mill cheques are send to the boards. They take a management levy out and pay the logger and the trucker.
"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)))

Peter Drouin

Quote from: texansfan on November 26, 2015, 09:02:47 AM


Anybody know about how many 2x4s I can get out of 1 MBF?



[/quot



150 to 180
A&P saw Mill LLC.
45' of Wood Mizer, cutting since 1987.
License NH softwood grader.

SwampDonkey

One of those linear programming problems in college back in the day of a i286 cpu and LINDO. The folks at McGraw-Hill even wrote a forestry textbook on it. All day and half the night to find out it was full of programming errors. :D Now you can do them on spreadsheets.

They still develop the software.  ;D
"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)))

texansfan

http://www.sniderindustries.com/main/products

That's the company that does only 1x stuff
So I was wondering if there are companies that only do 2x stuff?
Do they own their own forests?

Texas Ranger

We had a slash gang saw mill in Livingston that produced 2x material, they went out of business when they could not compete with companies that merchandised the timber.  You are asking a lot of high end questions that require more study than most of us are willing to get involved with, perhaps if you were to purchase some basic forestry texts down in Nachodoches a lot of your questions will be answered.  Your questions are of the nature of the stock forester answer, "maybe".
The Ranger, home of Texas Forestry

SwampDonkey

We actually have studwood sawmills up here. They also sell planer chips, sawdust, and hog fuel. No one burns slab piles here unless they are hobby.
"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)))

Wudman

The "Random Lengths Composite Average" will give you an idea of the price that mills are receiving for their structural lumber.  Random Lengths is a price benchmark service.  A quick glance at their website yeilded a composite average of $322 /MBF for the month of November.  This is the average price of 15 (I think) structural lumber products.  It will give you a decent trendline in benchmarking price.

Wudman
"You may tear down statues and burn buildings but you can't kill the spirit of patriots and when they've had enough this madness will end."
Charlie Daniels
July 4, 2020 (2 days before his death)

texansfan

Quote from: Texas Ranger on December 11, 2015, 10:46:29 AM
You are asking a lot of high end questions that require more study than most of us are willing to get involved with, perhaps if you were to purchase some basic forestry texts down in Nachodoches a lot of your questions will be answered.

All my questions were mainly out of curiosity.
Like, if I put this $0.05 seedling in the ground today, how much hwill it be "worth" in 25 years (given that it doesn't get ravished by deer, bugs or fires)

Jeff

So, basically, you want us to answer that age old question.  "What is the meaning of life?"
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

texansfan

Quote from: Jeff on December 13, 2015, 12:26:40 PM
So, basically, you want us to answer that age old question.  "What is the meaning of life?"

No.
How long is a piece of string?

Jeff

Forestry Forum String (Length) Theory.
String length= 24*7*365*25/31379= 48.8543293 =seedling age.value.round=48.85

This is your answer. 24 hours times 7 days a week times 365 days a year times your 25 years divided by your forestry forum member number = string length which equals the value of that sapling at 25 years. (rounded down to the nearest ¢)  $48.85
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

edkemper

And Merry Christmas to you too.

Now I have to try to dry off my keyboard from the coffee stray. Good thing I use a thin clear vinyl keyboard cover.
Old Man

texansfan

 :new_year:
Quote from: Jeff on December 13, 2015, 03:49:45 PM
Forestry Forum String (Length) Theory.
String length= 24*7*365*25/31379= 48.8543293 =seedling age.value.round=48.85

This is your answer. 24 hours times 7 days a week times 365 days a year times your 25 years divided by your forestry forum member number = string length which equals the value of that sapling at 25 years. (rounded down to the nearest ¢)  $48.85

HAHAHAHAHA

Thanks for the laugh :new_year:

Jeff

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

Jeronimojc

Quote from: texansfan on November 26, 2015, 09:02:47 AM
I've been thinking about the economic process between a $2 curvy 2x4 in Home Depot all the way back to the 5 cent seedling I plant in the ground.

Anybody know about how many 2x4s I can get out of 1 MBF?

And also if I sell my 1 MBF timber to a forester for $220 how much does he sell it to the mill for before the mill gets it and chops it into hundreds (if not thousands) of 2x4 who then sells it to Home Depot for how much per stick (I understand they'll sell them by the pallet load at least).

I'd like to be able to look at a tree in the woods and size it up and know "that's about 28 2x4s"

Great topic!  I am hardly qualified to give an answer, but I often think of these kinds of things.  Below are some numbers to kick around.  Keep in mind there are tons of variables to consider, one of which is location.  This alone may influence tree species, markets, etc.  I am in the Pacific Northwest.

Assume some timberland with 30 to 40 year old Douglas-Fir.  Depending on the site type, you may be able to get 30MBF per Acre (Scribner).  Assume a pond price of $550/MBF.  Say logging is $200/MBF and Trucking is $50/MBF.  Profit would be $300/MBF or $9,000/Acre.

If I understand Scribner correctly the 30MBF represent usable 1" boards.  Let's just say Scribner applies to usable 2x4s (1.5"x2.5") straight up.  There are 3.5 BF in a 8' long 2x4.  That means the $2.35/per 2x4 at my local Home Depot calculates to 671.43 $/MBF.

So the difference between the $671 and the $550 is what the mill and Home Depot are adding in value.  I speculate Home Depot isn't making much on this.

As for the first 40 years of this cycle, planting costs, thinning, brush clearing, etc.  These aren't significant.  For example, planting costs in the NW are about $350/Acre.  Translated to the final 30MBF/Acre that's $11.67/MBF.  For most people the question is should I use the land to grow timber or for some other purpose. 

If you are in an area where you can grow good timber and the markets are reasonable, then timber may be a great investment.  I read a good article that opened my eyes to this; timber could easily grow in diameter at a 3% per year, it could easily grow in height at a 3% per year, it can jump in class (12" sawlogs being more desirable than 11" sawlogs), and chances are timber prices like everything else will keep going up.  Add to this any land value appreciation and it is hard to think of any other investment that can match timber's returns with little risk. 

However, if the site isn't good for growing timber or there are no sawmills in the area, then timber won't make sense. 

As for the value of a tree, I often look at a tree and ask myself how much is this tree worth?  With a $550/MBF POND price, 30MBF/Acre and say 300 trees/acre I would be looking at $55 tree (not profit though).  If can wait another 10 years I could be getting close to $100 per tree.

Please feel free to critique at large.








SwampDonkey

I think timber goes down as much as it goes up. It does in these parts and have never recovered to 2004 levels yet. Sales off woodlots are down by $millions every year since 2008 and crown royalties were slashed (twice) back then and never increased. It actually has been costing government and $35M in the hole and they don't do much it's all in the hands of licensees who write all the prescriptions, hire the cutting and hauling, and get free money to thin. I can't imagine anywhere else that timber is going up every year. I think land value might be in different areas, but not the timber.
"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

For 1,000 BF, the answer is about 188  for the most efficient big Pine Mills in the South.  The landowner would receive about $100 for the value (stumpage) of the standing timber.  The Mill would pay about $180 delivered to the mill ($100 to the landowner, $80 to the Logger).  The mill would sell the 2x4's for about $300, plus they would sell the chips, sawdust, and bark to a pulpmill for about another $50.  Home Depot would sell the 2x4's for about $470.  They pay $300 before freight.  Not sure what freight would be, depends on the haul distance. 

It would take four SYP trees that are 14" DBH and 50' long to a merchantable top diameter of about 8" to saw 1,000 BF.  That is 250 BF per tree which would be about 47 2x4x8's from each tree.  So the landowner is selling the 2x4x8, in tree form, for about $.53 per 2x4x8 equivalent.
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

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