A Discussion of Timber Harvests for Owners of Mature and Overmature Timber Stands by Duane Bristow, Consulting Forester Albany, Kentucky 42602 July 1984 Many stands of timber do not produce as much as possible for the landowner due to mismanagement. Generally, the owner of timberland gets returns from his land in the form of recreational and aesthetic value (hunting, hiking, camping, looks, etc.) and in the form of economic return from timber products harvested. Maximum returns from this land are obtained by planning harvests according to the growth and condition of the stand and as dictated by the objectives of the landowner. Foresters recognize two types of maturity in a timber stand. Biological maturity occurs when the dominant trees in the stand have slowed in growth due to size and age to the point that losses due to mortality or death of trees from various causes equals or exceeds the annual growth. This is indicated in hardwood stands by large trees with spreading flattened tops and scattered dead, dying, or down trees. Economic maturity occurs when the amount of net annual growth will not return as much money from a later harvest as the owner can get now by selling timber and investing the money in an alternate way, whether this be bank savings, or investments in his business, or payments on outstanding debts. Net annual growth of a stand is determined by the site quality (depth, structure, and moisture of topsoil), the timber stocking (species, number, and size of trees), and annual mortality (death of trees due to age, fire, insects, and disease). Young hardwood stands in Kentucky may average 200 board feet per acre per year in growth. Overmature stands may be losing this much timber volume per year. Timber stands may be mismanaged by harvest before economic maturity is reached. This is usually done because the owner does not realize the benefits of delaying harvest or because he has immediate cash needs which outweigh any other considerations. Timber stands may not be harvested when mature due to economic values being outweighed by aesthetic values, due to lack of knowledge of the economics of maturity on the owner's part, or due to apprehension by the owner of the consequences of a harvest. The owner may be apprehensive about his ability to sell the timber for maximum value, to control the type and progress of the harvest and the condition of the resulting stand, or he may be apprehensive about the tax consequences of the income received. Most landowners who do not manage timber purposely for frequent small harvests will only have an opportunity to sell timber once or twice in a lifetime. This puts the landowner who is a novice at timber sales at a disadvantage when dealing with a timber buyer who may buy timber every day. It also means that the landowner will have to live for a long time with any timber sale decision made. For these reasons it is essential that a landowner be guided in timber sales by a knowledgeable individual with experience in conducting timber sales. The value of large areas of good timber is too high to risk any other course. Timber values may range from 1000 board feet per acre worth $80 per thousand on the stump to 5000 board feet worth $200 per thousand. This gives a value range of $80 to $1000 per acre. Of course, certain unusual tracts may be worth more or less. The intelligent owner negotiating his own sale is likely to obtain 50% to 70% of full value. By securing the services of a consultant, he is likely to obtain 90% of full value. The consultant should be able to sell for full value but would probably charge 10% for his services. On 100 acres of timber worth $300 per acre the landowner would probably get $15,000 to $21,000 on his own. A good consultant would probably get him $27,000 after the consultant's fee is paid. Any consultant chosen should be able to offer a full range of services including identification of owner's objectives, boundary locations, timber cruising, sale planning, tax planning (with an accountant), conducting the sale, execution of the contract and obtaining payment, supervision of the harvest and enforcement of the contract. He should be experienced in timber sales and familiar with local timber markets and any distant buyers who might be interested. He should work closely with the landowner in each phase of the sale. The consultant should: 1. Identify the landowner's objectives. 2. Survey the timber to determine volume, species composition, maturity, markets, and value. 3. With the owner and an accountant or tax planner, develop a plan of what and where to sell over what period of time to achieve the owner's objectives and minimize taxes. 4. Make sufficient timber industry contacts and obtain enough interest for a good sale either negotiated or sale by bids. 5. Execute a timber sale contract fair to both buyer and seller and sufficiently detailed to adequately protect both parties. 6. Obtain payment for the timber for the owner. 7. Inspect the timber harvest periodically while in progress and enforce the contract. The timber harvest plan can: 1. Minimize aesthetic damage by choices of where to harvest, types of trees to be harvested, exclusion of trees of exceptional aesthetic value, use of unharvested buffer strips, control of location of and reclamation of yarding areas and access roads and trails. 2. Detail timing of harvests to speed up or spread out the total harvest for tax and cash flow purposes. This can result in a plan of continuous periodic harvests dictated by timber growth rates. 3. Maximize income by planning volumes to sell, locations, timing and areas to entice competition among buyers and to enable buyers to plan harvests for their highest profit. The timber sale contract should: 1. Adequately identify what timber is being sold, on what area, and during what time period. 2. Provide a payment schedule which ensures that payments are made either as timber is harvested or in advance of harvest. 3. Describe required and prohibited timber harvesting practices to protect the landowner's interests. 4. Guarantee title to the timber. 5. Provide for penalties for violations of the contract. 6. Be enforced. Thoughts on Management of Large Timber Tracts (10,000 acres) by Duane Bristow March 11, 1987 The average timber growth rate on privately owned hardwood stands in Kentucky is around 100 board feet per acre per year. Therefore an ownership 10,000 acres in size should be producing one million board feet of sawtimber per year. Depending on the condition of the stand and the objectives of the owner it might be desirable to harvest either more or less than this amount annually. Over a period of time an annual harvest less than growth will increase the sawtimber inventory until biological maturity is reached. After that point losses will be incurred. A harvest greater than growth would be indicated if specific areas have reached economic maturity and harvestable volumes on these areas exceeds annual growth. Ideally, however, areas of economic maturity could be identified containing harvestable volume equal to annual growth so that an amount equal to annual growth could be harvested each year. This means that a forest management plan can be developed on such ownerships aimed toward achieving that objective. With proper sale and harvest supervision annual sales on 10,000 acres of timberland should average $100,000. If less than the annual growth has been harvested over a period of time sales for an initial period of years of $200,000 or more might be indicated. The objective of management then would be an annual harvest of 2,000 board feet per acre from 500 acres of timberland with cutover areas growing for 20 years before the next harvest. A reasonable course for ownerships which have a history of overcutting would be annual harvests about half this size. And ownerships with a history of undercutting could have 1.5 to 2 million board feet per year harvested for 6 to 10 years.