A timber harvest is perhaps the most exciting part of being a timberland owner. In many cases, landowners have waited years to reap the rewards of their acreage, and it may have been their entire reason for buying the property to begin with. There are many aspects of harvesting that are crucial to understand and plan, but of key interest to many is the financial return. How much loggers pay landowners for the right to harvest standing timber is, in most cases, the primary determining question for the return on timberland investment activities. Unfortunately, its not an easy question to answer. Landowners can receive anywhere between $500 and $5,000 per acre (or more) for a timber harvest. With such a large variation, it is important to understand timber value and what makes certain timber stands worth more than others. First, however, let’s look at exactly what timber value is and what loggers actually pay for to begin with.
It is important to understand exactly what landowners are paid for and how they are paid. In forestry, there are generally three classes of prices that represent different levels of value-added activities in the lumber supply chain. Lumber prices are what consumers pay to retailers and mills. Log prices are what mills pay to loggers for cut logs delivered to the mill. Finally, stumpage is what loggers pay for the right to harvest standing timber on someone’s land. This last class of prices, stumpage prices, is the name given to what a logger pays the landowner. it is the return, so to speak, on timberland investment.
Once a logger harvests timber, it is, generally speaking (and certainly with variations in different jurisdictions and contracts), the property and responsibility of the logger. Thus, the logger then must sell and truck the wood to an agreeable mill. Because of the risk and responsibility assumed by the logger in this situation, contracted stumpage rates must consider a wide range of variables. For this reason, there is a great deal of variability in these contracts, and they not only vary greatly from region to region, but from property to property and week to week.
We will dive deeper into these contracts and explore on a more nuanced level what loggers pay landowners, but if you are just curious about stumpage rates, we have a list of stumpage rates by state and province to help you find the best and most accurate data on a per-unit basis, but be warned that even on this level, there is a great deal of variability, and the prices for your land may be significantly higher or lower.
Now let us examine all the factors at play.
Stumpage Rates Depend on the Standing Timber Quality
It may be obvious, but one of the key elements that determines how much a logger pays a landowner is the qualitative attributes of the standing timber on the land. Namely, the species, volume, quality, and wood size all play a substantial role.
Perhaps in the eyes of God, all trees are created equal. Sawmills disagree. Certain species are substantially more valuable than others. Most softwoods, such as pine, spruce, and fir, are used as dimensional lumber and can fetch top dollar as a construction commodity. Other species, such as black cherry and walnut, are prized for their naturally beautiful color tones and can yield landowners thousands of dollars an acre.
On the other hand, there are plenty of species that aren’t valued very highly at all. Beech, mostly due to the proliferation of beech bark disease, is unsuitable as lumber and mostly used as pulpwood and firewood. Its value is quite low. Likewise, certain softwood trees, like red pine and eastern hemlock, have limited commercial uses and also fetch low prices–if in fact any market for the wood can be found at all.
High-value species include hardwoods like sugar maple, oak, black walnut, black cherry, and yellow birch.
High-value softwoods include spruce, fir, white pine, loblolly pine, and yellow pine.
It’s not enough to have high-value species on your land, however. How much wood volume do you have? While most timber sale contracts are done on a per-unit basis (per ton, MBF, etc), the volume of timber on your land may not affect the stumpage rate, but it will have a marked impact on your nominal return–how much money is in that final paycheck. A logger is going to pay a landowner more money for more wood.
Ultimately, the volume of wood per acre on a piece of timberland is going to be a function of tree height and basal area per acre–a measurement of how many square feet of area is occupied by wood on a horizontal plane. Below are two charts for wood volume per acre (in tons) for both hardwood and softwood.
Often, stumpage contracts are denominated into MBF (or thousand board feet) instead of tons. If so, a good rule of thumb is that there is 1 MBF for every 5 tons. To convert tons to cords, assume there are 2.5 tons in every cord. With these charts and quick measurements in the field, you can get a usable estimate of standing volume.
If the land is covered mostly in softwood, volume is going to be the most important metric, as lumber is a commodity with each individual undifferentiated from the next. But when it comes to hardwood, quality is vastly more important. The difference between what loggers will pay landowners for pulpwood and sawtimber is huge–literally the difference between thousands and a couple hundred. Unfortunately, assessing timber quality can take experience, but generally, the market favors long, straight trunks (more professionally called the “bole”) with minimal knots, cracks, scars, bulges, or branching. See the picture below as an example of what could be considered high value hardwood, even if the individuals may be on the smaller side.
Wood size can also have a large impact on landowner returns, and not just because it affects total wood volume. An acre of land might have 20 cords on it, but it makes a big difference whether that wood is locked in small, but densely-packed 5 inch trees or large, but well-spaced 12 inch trees.
Remember, when loggers pay for standing timber from landowners, they also assume the risk and responsibility of the harvest, sale, and transport of those logs. If there are extra costs associated with the harvest of those logs, it will be reflected in the amount paid to the landowner. In the case of small wood size, productivity can be effected, as seen in the chart below from this study.
Granted, this study was based on CTL harvesters, which, along with conventional chainsaw systems, are more sensitive to stem size. Feller-bunchers don’t have as much of a problem.
The Physical and Geographic Features of the Land Impacts Stumpage
As previously mentioned, any anticipated higher costs associated with harvesting timber on a given property will likely be passed on to the landowner during contract negotiation. Stem size is, of course, a factor, but there are other factors that go beyond the qualitative aspects of the wood–physical properties of the land itself.
Distance From Mill
Trucking can be a major cost of timber harvest–in certain cases a greater cost than the harvest itself, and it is a function that is usually the responsibility of the logger. Thus, a property that is farther away from a mill and requires longer trucking distances will generate a lower return for the landowner. Loggers simply will not pay landowners as much to harvest those properties.
Unfortunately, there is not much that can be done to mitigate this issue, other than owning your own mill or building your own road system (both of which are strategies used by large, industrial landowners all the time, notably). Instead, it is best to strategize a purchase of timberland around the availability of mills. Prior to buying, it is good to do your due diligence and locate mills and other pieces of infrastructure and map out distances. The closer timber is to a sawmill, the more valuable it is, and the more loggers will pay landowners to harvest it.
A second attribute that may affect stumpage value is site quality. This could be anything that makes the land harder to harvest. It could be steep, treacherous slopes that put a great deal of wear on a logger’s machine. It could even be wet, mucky ground that requires extra care and low-impact logging techniques to mitigate damage. Even streams, which can be difficult and costly to cross (in an ethical and legal way), can create barriers that make skid distances long and expensive. Skid distances are what loggers call the distance wood has to be hauled from the woods to the road. Generally, anything over 1800′ is unpalatable, and landscape barriers can create skids that exceed that.
Luckily, there are some strategies that can be used to mitigate the profit-deleterious effects of a poor site quality. Equipment can be optimized, roads can be built, and proper seasons can be chosen (sometimes snow and ice are your friend). No one knows a logger’s limitations better than a logger, so it is best for you or your forester to talk to the logging contractor and discuss the best strategies to overcome obstacles. These guys have seen it all, and it is in their interest to make the harvest as seamless as possible. Let them know what they’re up against, and they’ll likely have a few suggestions in mind.
Markets Are King
Perhaps it goes without saying, but its worth repeating for those with little experience in the field of natural resources: Markets reign supreme, and they can change without warning. One need only look at lumber prices over the past couple years to see how volatile the woods industry can be.
At least with lumber, which comes mostly from species of high-value softwood, there is virtually always a market to sell wood into. With other forest products, and pulpwood in particular, that is by no means a given. The markets can literally disappear overnight, and mills that were buying loads of logs a few weeks ago can suddenly stop buying. Even if the macro environment is still good, the local mill may have purchased too much inventory and must work through what they have before buying more. A lot can happen. It’s important to accept the unpredictability of forest economics and do your best not to let it dictate sound, long-term management of your property.
The Amount of Timber Removed Greatly Affects Payment.
Even if the timber is great, the site is amazing, and the markets are sparkling, how much loggers pay landowners is ultimately determined by the amount of timber they remove, which is largely dictated by the silvicultural prescription and long-term management goals of the property. However, seeing how we are talking about finances and not silviculture, we will break harvests down (erroneously, perhaps), into two main categories: partial harvests, and final harvests.
Final harvests, as the name implies, involves the removal of all or most merchantable timber on the property. In some cases, this is a clearcut. Other times, it is an overstory removal or shelterwood removal. In either case, the result is the same: liquidation of remaining timber. In these situations, obviously the landowner will be entitled to a larger payout, but it will be quite some time before the property is again eligible for harvest. There may also be costs associated with follow up treatments, such as planting or herbicide. This is particularly true for clearcuts.
Partial harvests, on the other hand, involve only a partial removal of standing volume. These can be thinnings or establishment cuts, like shelterwoods. In the majority of cases, the total removal of a partial harvest will be no more than 50% of standing volume, so the payout will be half as much as a final harvest (assuming the same volume), but there will be timber that will be left to grow, and the landowner will only need to wait a fraction of the time to harvest again.
Determining How Much Your Timber Is Worth
Ultimately, there are many factors that influence how much a logger will pay a landowner for the right to harvest timber. Most landowners have no experience navigating this complexity, as trees grow slowly, and harvests are few and far between. If you are planning a harvest or would like to know how much a harvest would yield you, it is best to get in contact with a local forester and discuss it with them. Foresters have been around the block a few times, and they know what to look for. Most importantly, they are familiar with the local forest economy and can advise you about market conditions and can give you advice on whether now is the best time to harvest. Give one a call. You will be glad you did.