Progressive Farmer — November 2016
Money Grows On Trees
Boyd Kidwell, Contributor

Hiring the right forestry consultant is a wise investment toward a premium timber harvest.

Timber sales with sealed bids maximize income from well-managed forests.

(Progressive Farmer image by Boyd Kidwell)

Johnson Tilghman has managed family-owned farmland and timberland in Harnett County, North Carolina, for 42 years, and he’s an attorney to boot. But when this veteran landowner sells timber, despite all his expertise, he hires a consulting forester to handle the sale. “I receive calls and letters every week from timber buyers wanting to make us offers. I tell them when we sell timber, they’ll receive a notice of our professionally managed sale. We’ve worked with consulting foresters for decades.”

A Pro. Brad Rawlings, Wendell, North Carolina, has been the Tilghman family’s consulting forester for 30 years. Rawlings works with approximately 30 landowners in eastern North Carolina. The professional forester strongly recommends sealed bid timber sales and sends bid invitations to 60 to 90 buyers before holding a competitive sale.

“We [once] worked with a lady who was offered $18,000 over the telephone for a piece of timber. We went in with a sealed bid sale and sold the same timber for $80,000,” says Rawlings, who operates Rawlings Consulting Forestry (rawlingsforestry.com).

“In today’s market, even offers from legitimate buyers can run from a low of $30,000 to a high of $90,000 for the same piece of timber,” he says.

WHAT’S FOR SALE? When contacted by a prospective client, Rawlings visits the property and looks at the standing timber with no charge for his first trip. Without basic information, it’s impossible to tell a landowner what the timber is worth. Tree species, size of trees, growth rates and access for logging the property all play roles in the value of timber.

Southern Yellow Pine is the predominant timber “species” from North Carolina to Texas. It is not a species but includes pines common in the South, such as loblolly, longleaf, shortleaf and slash pines.

Harvested timber falls into three primary classes: pulpwood (6 to 9 inches in diameter at breast height, or DBH), chip-and-saw (10 to 13 inches DBH) and sawtimber (14 inches, plus DBH). Pulpwood is used in paper production. Chip-and-saw serves double-duty, producing chips for pulpwood and small dimensional lumber. Sawtimber is cut into dimensional lumber. The value of timber approximately doubles as trees move from chip-and-saw to sawtimber. Rawlings preaches patience.

“The last thing I want is for my client to clear-cut a stand of chip-and-saw timber that will double in value over the next five or six years,” Rawlings explains. “My job is to give landowners enough information to make decisions that are best for them.”

MAINTAIN PRODUCTIVITY. A timber consultant’s job doesn’t end when the landowner accepts a bid. Rawlings includes a set of conditions in the logging contract. One of his key points is the right to stop logging operations if the soil becomes too wet. Logging in wet soil can permanently degrade the timberland productivity by 50%.

The consultant also makes sure loggers use best-management practices. He marks the logging area boundaries and supervises the operation so that only trees covered in the contract are harvested. One of his jobs is making sure trees aren’t removed from streamside management zones (SMZs).

In some states (including North Carolina), cutting trees in SMZs can land the property owner in trouble with environmental agencies and lead to stiff fines.

Finally, the consultant guides his clients through replanting a new stand of trees. This step includes site prep, controlling competing vegetation and selecting the best seedlings for the soil and site conditions.

Genetically improved seedlings are available, and Rawlings helps landowners select new trees based on disease resistance and growth form. Today’s genetically improved seedlings improve the stand’s value by 30% because of improved growth, form and disease resistance.

FUTURE. Tilghman is keenly interested in replanting new stands. The landowner points out that a consulting forester works with his family from planting seedlings through the years of growth to maturity and sales.

“We hope a good sale, a well-managed logging operation and a replanted stand will leave us productive timberland for our next generation,” Tilghman says. “When these goals are accomplished, we feel fine with rewarding our consulting forester with a commission on the high end of the range.”

TIPS FROM THE PROS:

1. To market timber, you need to know what products will come from a stand of timber and which mills or buyers are looking for specific types of wood.

“The most important advice that a forest landowner can follow is to hire a professional consulting forester,” says Tamara Walkingstick, associate professor, Extension forestry specialist with the University of Arkansas. “When my husband and I market timber from our small piece of land, we’ll hire a consulting forester. I can’t keep up with local buying trends like foresters that are marketing timber every month.”

Walkingstick offers a number of suggestions on timber sales for private landowners at www.uaex.edu/publications/pdf/FSA-5014.pdf.

2. North Carolina State University compiled this information on professionally managed timber sales in the state:

• In 267 sealed bid sales, the winning bids averaged 49% greater than the lowest bids.

• The winning bid averaged 19% greater than the minimal acceptable bid set by the consultant.

• Sealed bid sales averaged five bidders.

• The average sale was 41 acres.

Depending on the quality of the timber, clear-cut sales might range from $1,500 to $3,000 per acre, North Carolina State University (NCSU) Extension forester Mark Megalos explains. Using these figures, the average sales of 41 acres would be worth $61,500 to $123,000.

3. When you hire a consulting forester, you can expect to pay a 5 to 10% commission on the timber sale. On a sale of $100,000, that’s $5,000 to $10,000. However, research from NCSU indicates sales conducted by consulting foresters more than make up for the commissions.

To learn more, check out “A Consumer’s Guide to Hiring a Consulting Forester” from NCSU at content.ces.ncsu.edu/20829.pdf.

4. The forester’s commission (and any other sales costs such as attorney fees or surveys) comes off the top of the sale price for tax purposes, Megalos notes. Of course, you should check with your accountant for tax deductions associated with timber sales.

“By and large, we recommend that even seasoned landowners hire consulting foresters. When the landowner does well, the forester does well, and the land is left with more productive potential,” Megalos says.
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