Got Land? The Economics Of Timber Harvesting

Timber Harvesting

Who would have ever thought that buying acreage could offer multiple streams of income.  From rental property, to leasing your land out to farmers or hunters, or even harvesting timber.  For all the environmentalists out there, let me start by apologizing for even considering the harvesting of trees for money.  Make no mistake, I love trees, heck I really love anything that grows on its own.  I recognize that trees have a cherished environmental value, but with so many products made out of wood, the economic value is hard to overlook.  Since this is a blog about finances and not about the environment, I feel I can share my personal experience with the value of trees, from an economic perspective.

So without further adieu, here we go…  I have roughly 8 acres of timber on my farmland.  It is made up of red and white oaks, cedar trees, pines, various maples and willows.   Not to mention, mixed in with the trees is just overgrown scrub brush whose only purpose is a home for ticks and poison ivy.  I wanted to have a few acres removed because in the future I would like to have cattle and they need wide open spaces to roam and to eat.  So, getting rid of this scrub brush was my sole purpose for making the phone call to my timber logging friend.

Nevin, a simple man, who I genuinely admire for his values and strong work ethic came out to the farm for a “walk through”.  He spent 30-45 examining trees, explaining to me the value each had to the saw mills, and building a case for why I might consider getting rid of them.  Up until this point I knew I had trees on the property, but had little knowledge for what they were worth.  So, Nevin being the wealth of information he is, gave me a value of what he thinks the timber would sell for to the saw mills.  $20,000, I couldn’t believe it, and he said this was on the conservative side.  He said that in order for him to harvest the trees, he would need 50% of the sold value.  I thought that was actually reasonable, I mean for someone to cut all those down, load them on a truck and haul to the saw mill, would certainly come with a considerable cost.  This way, Nevin is encouraged to get the highest value for the trees and sell to the saw mills at a time when the wood is in high demand.

So I am torn, I hate to get rid of the beauty that the trees offer.  The fall brings dramatic orange and yellow leaves, and it really livens up the property.  It would also mean less grass to maintain, but grass in its own right provides a picturesque scene, which I like.  So, do I remove the most valuable trees, which will afford the removal of the scrub brush and re-grading of the land to be more conducive for cattle?  Or, do I keep all the trees and retain the aesthetics of the farmland?  I am leaning on removal of about 75% of the trees, that way I can retain the view, but get rid of the scrub brush.  Thing is, in order to get rid of the scrub brush I have to let Nevin have some of the most valuable trees which will offset the harvesting costs.  I had already thought of just removing the scrub brush, but just getting rid of it would cost me about $2-$3000, and that is far above my budget.  I have until the winter to decide, due to the fact that Nevin is too busy right now to remove the trees.  Also, the winter would be a good time to capitalize on an elevated value of the wood.

So, this was a pleasant surprise to know that there is significant timber value per acre, and they are just sitting on my land, looking pretty.  I knew that some of the trees had value, but not enough to warrant the labor of cutting down and removing.   So the moral of the story is, if you are ever looking to invest in acreage, be sure to have someone from the forestry department, or a timber logging friend you can trust (some may try to take advantage of you 🙁  ).  Have them give you an unbiased assessment of what is on the property.  You may be surprised and have a gold mine and not even realize it.

What are your thoughts on my harvesting the trees?