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

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

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

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

Trees sold by Volume or Weight 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

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

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

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

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

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

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

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”

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

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

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

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

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

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

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

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

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

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

Arkansas Timber Report:

Questions?