Selling your timber
|
Selling standing timber has long been a subject wherever trees of value grow. How trees are bought and sold can be as complex as any business transaction (you are selling a product or commodity). The quality of this commodity and in some cases the quantity of the commodity being sold will dictate the value of your trees. Competition, when used to your advantage, will also have an influence on the value paid for your trees. While the value of a woodlot will vary depending on such factors as size, quality, species composition, etc., a woodlot in good condition can have considerable value and can be managed to yield periodic income.
If you are contemplating selling some timber or if you are approached with an offer to buy some of your timber, DO NOT jump into an agreement too quickly. Taking the time to find out what you have to sell, then choosing the appropriate method of marketing will usually result in more income to the seller. In addition, selling timber and implementing forest management practices do not always mean the same thing. Cutting trees just because someone knocked on your door or sent you a letter is generally not a wise decision. It is better to take the time to evaluate what you have, what your goals and long term objectives are and ask yourself how will a timber harvest meet these goals and objective.
TYPES OF TIMBER SALES
LUMP SUM TIMBER SALE
A timber sale in which a single payment (the lump sum) is made to the seller for the trees designated for sale (TREES SHOULD BE MARKED FOR SALE).
Advantages:
•Places the burden of quality and quantity assessment on the producer.
•Seller does not have to be knowledgeable in timber markets, logging, trucking, sawing, scaling and alike aspects of producing forest products.
•Seller does not have to worry about buyers ability or inability to market log products.
•Levels playing field among producers.
•Bids can be easily compared. A dollar value per tree can be easily computed.
•Assures payment. You are paid up front for your trees.
•Seller does not have to rely on the ability or inability of the producer to merchandize each tree.
Disadvantages:
•Does not compensate for fluctuations in timber markets (upward).
•You have no control on who the producer is. Simply pick the highest bidder.
•Buyers tend to underestimate true value of trees. Cover the risk described above.
•More difficult to have a relationship with the producer.
SCALE SALE OR SCALE BY UNIT
A timber sale in which the seller is paid a certain amount for each unit of product cut (e.g. so many dollars per 1000 board feet, per cord, per post, per pole, etc.). This type of sale requires someone to measure the products harvested. This someone is typically the receiving sawmill.
Advantages:
•Can negotiate a percentage of profit from each log produced.
•May be able to take advantage of specific market trends.
•Have a relationship with the logger/producer.
•Ability to see how logs are merchandized.
•Lower risk to the logger as described above.
Disadvantages:
•Must have complete confidence in the credibility of the producer.
•The question of who provides an accurate production tally and how, when, and where the scaling will be done makes this sale more difficult to administer.
•Logger hold all of the cards with regards to marketing, transportation etc.
•Seller is relying on the merchandizing skills of the logger.
•Seller is relying on the marketing skills of the logger.
Types of Timber Buyers
A Timber Buyer is someone who is willing to make you an offer on your standing timber.
A Broker is a timber buyer who will offer you a price for your timber then sell it to a sawmill or lumber company.
An Industry Buyer is a timber buyer who works for a single sawmill. They are paid by the sawmill to bring wood into the mill.
Timber Snoops are individuals who makes an initial contact and refers you to a sawmill representative. He or she is paid a percentage of the timber value coming from a referral. Similar to a broker.
Loggers/Jobbers these are independent small businesses or companies. Often they will buy timber on shares or on a cut and scale basis. They sell their products to a variety of sawmills.
Types of Foresters
Consulting Foresters is an accredited forester who is operating a company or small business. They can be hired to market your standing timber.
Industry Foresters are accredited foresters hired by sawmills to purchase timber as well as assist with the management of company lands and private lands. They generally do not charge a fee. It should be understood that they are working for a given lumber company.
Public Service Foresters are employed by local governments, State governments or the Federal government are public service foresters. They can often be relied on to provide unbiased advise to private landowners.
If you are contemplating selling some timber or if you are approached with an offer to buy some of your timber, DO NOT jump into an agreement too quickly. Taking the time to find out what you have to sell, then choosing the appropriate method of marketing will usually result in more income to the seller. In addition, selling timber and implementing forest management practices do not always mean the same thing. Cutting trees just because someone knocked on your door or sent you a letter is generally not a wise decision. It is better to take the time to evaluate what you have, what your goals and long term objectives are and ask yourself how will a timber harvest meet these goals and objective.
TYPES OF TIMBER SALES
LUMP SUM TIMBER SALE
A timber sale in which a single payment (the lump sum) is made to the seller for the trees designated for sale (TREES SHOULD BE MARKED FOR SALE).
Advantages:
•Places the burden of quality and quantity assessment on the producer.
•Seller does not have to be knowledgeable in timber markets, logging, trucking, sawing, scaling and alike aspects of producing forest products.
•Seller does not have to worry about buyers ability or inability to market log products.
•Levels playing field among producers.
•Bids can be easily compared. A dollar value per tree can be easily computed.
•Assures payment. You are paid up front for your trees.
•Seller does not have to rely on the ability or inability of the producer to merchandize each tree.
Disadvantages:
•Does not compensate for fluctuations in timber markets (upward).
•You have no control on who the producer is. Simply pick the highest bidder.
•Buyers tend to underestimate true value of trees. Cover the risk described above.
•More difficult to have a relationship with the producer.
SCALE SALE OR SCALE BY UNIT
A timber sale in which the seller is paid a certain amount for each unit of product cut (e.g. so many dollars per 1000 board feet, per cord, per post, per pole, etc.). This type of sale requires someone to measure the products harvested. This someone is typically the receiving sawmill.
Advantages:
•Can negotiate a percentage of profit from each log produced.
•May be able to take advantage of specific market trends.
•Have a relationship with the logger/producer.
•Ability to see how logs are merchandized.
•Lower risk to the logger as described above.
Disadvantages:
•Must have complete confidence in the credibility of the producer.
•The question of who provides an accurate production tally and how, when, and where the scaling will be done makes this sale more difficult to administer.
•Logger hold all of the cards with regards to marketing, transportation etc.
•Seller is relying on the merchandizing skills of the logger.
•Seller is relying on the marketing skills of the logger.
Types of Timber Buyers
A Timber Buyer is someone who is willing to make you an offer on your standing timber.
A Broker is a timber buyer who will offer you a price for your timber then sell it to a sawmill or lumber company.
An Industry Buyer is a timber buyer who works for a single sawmill. They are paid by the sawmill to bring wood into the mill.
Timber Snoops are individuals who makes an initial contact and refers you to a sawmill representative. He or she is paid a percentage of the timber value coming from a referral. Similar to a broker.
Loggers/Jobbers these are independent small businesses or companies. Often they will buy timber on shares or on a cut and scale basis. They sell their products to a variety of sawmills.
Types of Foresters
Consulting Foresters is an accredited forester who is operating a company or small business. They can be hired to market your standing timber.
Industry Foresters are accredited foresters hired by sawmills to purchase timber as well as assist with the management of company lands and private lands. They generally do not charge a fee. It should be understood that they are working for a given lumber company.
Public Service Foresters are employed by local governments, State governments or the Federal government are public service foresters. They can often be relied on to provide unbiased advise to private landowners.
