It takes a lot of financial investment to sell timber from your forest. Timber sales often irritate landowners and diminish the forest’s capacity to collect timber from potentially profitable regions. This could happen because of a poorly written contract or because the buyer and logger did not understand one other.
A poor timber deal may still be salvaged in some manner. If you are knowledgeable about the facts and follow the fundamental principles of forest management, you can maintain your woods in excellent condition to give wildlife, clean water, scenic beauty, timber, and a fair price for your timber.
As the harvester head diameter increases, a tree’s quality tends to rise. The end effect is a greater value for each board square foot. The total financial return is determined by an increase in volume, an improvement in log quality, and any gain in the market price per board foot.
So, let’s look at some tips to get the most out of your timber harvest:
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Wood is valued differently
Indiana lumber may be of high quality and worth a good penny, or it might be of extremely poor quality and useless. The species and quality of wood determine its value.
The accessibility of your forests and the weather conditions at various times of the year can have an impact on its value. Finding out how much standing timber is worth requires the insight of an expert with experience in the marketing sector.
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Swapped in and out as required
Timber is a material that is seldom handled. Standing timber is for offer at a “spot market.” Every sale is thus distinct. Timber species and varieties often found in Indiana woodlots do not have a consistent source for stated cost on a certain date, unlike agricultural commodities.
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Maintain a high level of product expertise
Hiring a forester to do an inventory will give you a good idea of the state of your forest and the number of trees that are ready for harvesting or development. Furthermore, they could jot down any low-value trees that need to be removed to make room for crop plants. To review the inventory, arrange a meeting with your forester.
Have the forester mark the trees that will be harvested if you need to sell any to pay debts or boost your timber earnings in the future. The forester will take precise measurements of the quantity and quality of these harvester heads.
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Giving up “on shares”
For a fee, loggers may use your land to harvest wood; in return, you can get a percentage of the profits. This method is often used for both hardwood logs and veneers, the prices of which may vary substantially from one contractor to the next. It may be appropriate for this kind of arrangement to use for small amounts of low-quality timber that would be difficult to sell otherwise.
The most efficient method for selling wood would be to mark it, agree on a price in advance, and then put everything in writing. The capital gains categorization of revenue from the sale of wood on shares is an issue that is up for debate.
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Always utilize a contract that is in writing
If problems arise throughout the sale and logging process, you won’t have much legal recourse unless you have a written contract. It is prudent to have legal representation when dealing with substantial sums of money or intricate legal issues.
Much of the consulting forest industry adheres to the “State of Maine” contract. You should be allowed to halt the logging activity via a particular clause in the contract if you believe the contractor is not following your aims.
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Insist on following BMP
The Maine forestry and forest products industries have willingly adopted BMPs with the aim of wood harvesting. Ensure that a condition is included in the contract when selling wood.
Determine the government’s policy about wood money before you sell. Federal income taxes have complicated restrictions. You can miss out on the opportunity to pay a lower tax on long-term capital gains unless certain provisions are included in your sale contract.
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Eliminate the “diameter limit cut”
Buyers offering a fixed sum in return for the right to cut down and remove any trees in your woods that are 16 inches in diameter or more should be approached with great care. You won’t get the trees of the proper species and quality to succeed financially in the long run with this sale because of how hard it is to determine the value of the wood.
Trees for sale should always be carefully considered. You should never put something up for sale without first giving it a rough valuation. Before signing a diameter-limit contract, or even more so, you should visit a forester.
Remember to save trees for when you need them: It is a poor technique to choose which trees to take down only on their size. A competent forester takes several factors into account before designating a tree as suitable for chopping.
Conclusion
A forester will consult with you, the landowner, and consider a number of factors before determining which trees to harvest. You must have reached a level of financial maturity. In this case, the rate of return that could be attained by cutting down the tree and investing the money elsewhere is higher than the rate that could be attained by waiting for the tree to develop until the next harvest.
For example, if a tree’s owner stands to earn 6% from a bank CD and the tree’s value is predicted to increase by 4% per year, then the tree is financially mature. You could be asking whether your crop trees are capable of producing 10% each year. Most people can’t if they assume a physical volume grows at a certain pace every year. Things shift, however, when you consider enhancements to log quality or grades.
