Marketing Timber: the Basics

1. Marketing Timber: the Basics Tamara Walkingstick UA Division of Agriculture Cooperative Extension Service

2. Is Harvesting Part of Your Plan? • Regenerate a stand • Forest improvement • Salvage • Wildlife Habitat • Aesthetics: visuals • Final harvest

3. If you sell timber, do it Smart • Easy to sell: just sell to first person that comes along • Problem: might not get what you need or be satisfied • Better to market & be competitive • Most landowners unfamiliar w/ marketing timber • Hire a professional forester

4. First Steps in Marketing • Determine your objectives: What does the sale do your for you? • What Do You Have? • Product Market & Options • Current Prices & Trends • How the Market Works

5. Board Feet Tons Cords stack of wood: 4 ft. X 4 ft. X 8 ft. w/ 128 cubic ft. Cubic Feet To determine volume Diameter at breast height Height at 66 ft. away Estimate volume Easy tool to use: Biltmore Stick Trees sold by Volume or Weight

6. Know What You Have • Inventory • Timber Species • Stand Density • Sensitive Areas • Volume by Size & Product • What to Sell

7. Wood Products Pulpwood (4- 9” dbh) Ties Chips Pallet Material Biomass (?) Quality Wood Products Face Veneer (> 10”) Chip-N-Saw Sawtimber Poles What to Sell: Wood Products

8. Are all Trees Top Dollar? Price determined by several factors • Tree Quality: ie. Is it hollow, damaged, crooked, diseased, insect infested, etc. • Distance to Mill or Buyer • Current Market Prices • Species • Tree Size • Site Conditions and Considerations • Product Class

9. Marketing Objectives • Maximum financial return • Revenue from sale • Find buyer w/highest offer • Balance against forest sustainability • Site protection • Regeneration

10. Sell Competitively • Determine Selling Method • Negotiated Sales • Sealed Bids • Sell at Gate • Method of Payment • Lump Sum Sale • Pay-as-cut (by unit) • Percentage basis

11. What’s wrong with “Buyer’s Select” ? • Cutting all the big & best trees & leaving the smaller & worst trees is high-grading • Devalues the forest • Shifts to lower value species • Cuts future profits • Diminishes habitat

12. The Harvesting Contract • Logging methods & requirements • Liability issues & insurance requirements • Lists & clarifies responsibilities of both • It protects both the seller & the buyer Don’t rely upon a “smile and a handshake”

13. What’s in a Contract: The Essentials • Language specifying the specific parties to the contract • Spell out the State laws which will apply • Spell out how the trees to be cut are identified. Eg. All trees marked w/red; all trees of specific species, etc. • Guarantee title • Specify amount to be harvested

14. Essentials Continued • Manner, time, and method of payment: • Lump-sum or per unit price • Any down payment to be made to the seller upon execution of the contract • Performance bond that will be returned to the buyer upon satisfactory completion of the sale

15. Essential Contract Components • Language that protects seller (landowner) from buyer’s failure to pay • Time frame w/a definite termination date • Language freeing the landowner from responsibility from any injury, death, or property damage caused by buyer during tenure of agreement • Language freeing seller from Worker’s Comp • Statement that the seller may suspend operations if conditions of the contract are violated • Any changes to the contract must be written, dated, signed, and witnessed as is the original document

16. Other Important Considerations • Prohibit excessive damage to “leave” trees • Statement about unmarked trees being cut • Specify any penalties • Establish who owns the tops: the seller or the buyer • Establish procedures for settling disputes • Determine sale boundaries • Location of all roads, landings, decks BEFORE harvesting • Establish access rights to seller and buyer

17. Special Provisions • You can determine stump heights • Limit number of trees left “hanging” • Timing of road and trail building • Requiring ruts be smoothed • Any seasonal restrictions: ie. No logging during deer season • Any weapon prohibitions • Determine how potential damage to fences, buildings, crops will be handled KEY: additional provisions will cost you money

18. Contract Tips • Consult an attorney • Put ALL agreements in writing • Try to avoid mistakes in contract • Make contract easy to understand • Make sure each party has a copy of the contract • Too many restrictions/provisions will not be acceptable to a buyer • If a buyer’s contract is used, make sure you understand what’s included: don’t sign just to complete the sale

19. Conclusions • Planning helps YOU meet your goals • Professional help is available • Timber contracts are important • Plan for the future by planning to reforest • It’s your land and your choice • Make the most of that choice

20. What’s the Message? • Stop & Think • Before you make any decisions: • Contact a Registered Forester • Get to Know your Forest • Get Everything in Writing • Protect your Forest by Protecting yourself • Develop a Long Term Plan

21. Get Professional Advice • Advantages/Disadvantages to each method—GET HELP • Seek advice from accountant, attorney, professional forester • Let them prepare a contract or sale agreement • Research shows that consulting foresters can make ~ 20% more for the landowner

22. Resources • Consulting Foresters • Arkansas Forestry Commission • Arkansas Game & Fish Commission • Arkansas Forestry Association • Cooperative Extension Service • Arkansas Timber Report • Fact Sheets

23. Arkansas Timber Report:http://www.arnatural.org/News/Timber_Report/default.htm

24. Questions?