Don’t postpone the sale of mature timber
I recently
sold a sizable tract of old-growth longleaf pine. In the timber business there is nothing like mature longleaf pine
trees. These are the majestic pines people associate with Georgia, and the
tract we sold was as good as it gets - that is, before pine beetles made their
attack on this stately stand of pines.
Based on conversations I’ve had with
landowners in my 28 years of being a registered forester, most people think
they can leave their timber to grow indefinitely until one day, when they
decide to access that savings account or pass it along to another
generation. We have addressed this
issue in past Timber Updates, but let’s look at another reason why this common
management stragety may not necessarily be a sound one.
In regard to my recent sale, where the
property was loaded with longleaf pine, the “savings account” was being rapidly
depleted. There was some awareness of
this occurrence by the landowners, but as is often the case with absentee
landowners, they didn’t realize how bad the situation was. Well, this time it was bad. With high value
timber like this, it doesn’t take long for the beetle damage to cause a
significant loss. More than 25 percent of the trees had already died from this
ruinous beetle attack at the time of the sale. Considering that the timber sold
for more than $3,000 per acre, it would be safe to say that this landowner saw
more than $100,000 disappear act right before his eyes. Unfortunately, this savings
account was not covered with a $100,000 FDIC federal guaranty.
Obviously, this stand of timber had to
be harvested; and it had to be harvested promptly in order to avoid further
losses. With similar cases in the past,
I have immediately contacted a select group of timber buyers who could perform
a quality job of harvesting the timber in an expeditious manner while still
paying a premium price. But in this
case there were some unknown risks to be considered.
The beetle activity had already caused
considerable damage. It appeared to be
still active in this stand of exceptional longleaf, and the long, dry, hot,
months of summer were just beginning.
Another summer like last year and this could spell further
disaster. A sale with a long contract
length could lead to even more losses, if the loggers did not get to the
harvest immediately.
In a situation like this, the size of
the cutting crew and how long it will take them to cut the timber and haul it
to the mill is also a concern. I would
also be concerned about when the logger would start. This particular tract had
some low areas that would certainly be subject to rutting during a continued
rainy spell. We haven’t had to worry about this problem in a couple of years
now due to the drought, but you have to weigh all the possibilities.
The current timber market is another
concern to consider when selling a tract with insect damage. Are the mills going to remain fully open or
can you expect the mills to have shutdowns or cutbacks during your harvest
time? If so, are you willing to take the risk? With old growth longleaf, there
is bound to be some old turpentine trees present there. Turpentine trees can be subject to reducing
high-value sawtimber trees to a much lower pulpwood value. Pitch streaks can develop in the area of the
faces and work upward, which may not be obvious until the tree is cut.
Selling a timber tract such as this one
greatly favors a lump sum sale as opposed to a cut-n-haul sale. It eliminates
the risk endured by the landowner. One doesn’t have to depend on chance and
hope to obtain full value for the trees being sold. Actually, the risk is still
there, it is simply transferred to the timber buyer for a lump sum payment for
your timber upfront.
Our sale worked out wonderfully well.
Although some buyers were not willing to buy the timber, there were plenty of
quality companies willing to make that trade.
Georgia Farm Bureau foresters are here
to help you make the right decisions in managing and selling your land or
timber. We give you the knowledge to
make informed decisions, which always leads to better choices. Call Jim
Griffith with our land and timber marketing services at 478 471 0440 to help
with your management decisions.