I was talking with a landowner recently who was asking about how to go about marketing their timber. About halfway through my discussion with them, I noticed a bit of a dazed look on their face, indicating they had gotten lost somewhere in my explanation. It’s not the first time I’ve seen that look, but it told me it was time to back up and do some more in depth explaining.
Marketing forest products can be confusing, especially since most people will only do this a few times in their life. We deal with it on a regular basis so we take the process for granted. I thought I would take a minute and elaborate on the subject.
Forest products are typically sold in a couple of different measurements: weight and volume. The weight is typically by the ton; the volume can be by the cord, board foot or in some cases cubic foot. What dictates which measurement method is used? That is governed by the mill and they type of product. For example, hardwood sawlogs can be bought by the ton or by the board foot or thousand board feet (MBF). Pine pulpwood can be bought by the ton or by the cord. Most mills are equipped with scales and therefore purchase their products on the basis of weight.
Weight is pretty straightforward, although there are variations between species of trees and time of year. For example, a thousand board feet of logs harvested in the springtime will weigh more; therefore take fewer of them to make a ton, than in the late summer or fall. This could be important if you are using a conversion factor to go from board feet to tons.
Selling by volume can be a little more complicated because there are a few different methods for measuring the board foot volume of a tree. For sawlogs, there are 3 different "log rules" that can be used to estimate board foot volume. The Doyle, Scribner and International ¼ inch rules could all be used, although the "recognized" method by the State of Arkansas is the Doyle rule. I won’t bore you with the mathematical differences in these log rules, but let’s just say they each have a unique formula by which to arrive at the board foot volume.
A cord is defined at 128 cubic feet of solid wood, which would be 8 feet long, 4 feet wide and 4 feet high. But we all know if you stack round wood like this you will have some areas that are not filled with wood, so in reality a stack 8x4x4 has somewhere around 90 cubic feet of solid wood. Unless we can figure a way out to grow square trees, this will always be the case. Similar to saw logs, a cord of wood can vary in weight depending on species and time of year.
See – pretty simple so far right?
Let’s continue. We’ve covered the measurement; now let’s look at the methods of sale. Forest products can be sold on a per unit basis or a lump sum basis. When gathering prices for different products, you will typically either get a per ton or a per thousand board foot price, or a lump sum price for all products to be sold. If timber is sold on a per unit basis, this typically means that as it is harvested, you get paid. That means that the title to the timber remains with the owner until it is severed from the stump. If sold lump sum, this is typically by a timber deed which transfers title of the timber to the purchaser, no matter if it’s cut or not. As you would imagine, there can be advantages and disadvantages to both.
Now one last thing: How much should you be paid for your timber? Well, surprise – there are actually a couple of different types of prices. Landowners that sell timber are typically paid a price called "stumpage" but that’s not the only price. If you were to deliver those logs yourself to the mill, you would be paid the "delivered" price. The delivered price has 2 components, the stumpage part and the logging cost. Since most landowners don’t own their own logging equipment, someone has to be paid to cut and haul the wood to the mill. That’s the logging cost component. In some cases there may be a timber broker involved and they will get a portion of the delivered price for brokering the timber to different mills and hopefully getting the best price. Be sure when you are talking timber prices you understand if you are dealing in stumpage price or delivered price.
We’ve just scratched the surface of selling timber so far. There’s more that could be said about contracts, performance, types of cutting, but you get the picture. For the same reason I don’t prepare my income taxes each year, I recommend you meet with a professional Forester prior to any timber sale. As I said, most people will only harvest timber a few times in their life if they are lucky, so do it right and don’t leave any "money on the table."