By Jim Griffith
I recently sold a sizable tract of old-growth longleaf pine. In the timber business there is nothing like mature longleaf pine trees. These are the majestic pines people associate with Georgia, and the tract we sold was as good as it gets – that is, before pine beetles made their attack on this stately stand of pines.
Based on conversations I’ve had with landowners in my 28 years of being a registered forester, most people think they can leave their timber to grow indefinitely until one day, when they decide to access that savings account or pass it along to another generation. We have addressed this issue in past Timber Updates, but let’s look at another reason why this common management stragety may not necessarily be a sound one.
In regard to my recent sale, where the property was loaded with longleaf pine, the “savings account” was being rapidly depleted. There was some awareness of this occurrence by the landowners, but as is often the case with absentee landowners, they didn’t realize how bad the situation was. Well, this time it was bad. With high value timber like this, it doesn’t take long for the beetle damage to cause a significant loss. More than 25 percent of the trees had already died from this ruinous beetle attack at the time of the sale. Considering that the timber sold for more than $3,000 per acre, it would be safe to say that this landowner saw more than $100,000 disappear right before his eyes. Unfortunately, this savings account was not covered with a $100,000 FDIC federal guaranty.
Obviously, this stand of timber had to be harvested; and it had to be harvested promptly in order to avoid further losses. With similar cases in the past, I have immediately contacted a select group of timber buyers who could perform a quality job of harvesting the timber in an expeditious manner while still paying a premium price. But in this case there were some unknown risks to be considered.
The beetle activity had already caused considerable damage. It appeared to be still active in this stand of exceptional longleaf, and the long, dry, hot, months of summer were just beginning. Another summer like last year and this could spell further disaster. A sale with a long contract length could lead to even more losses, if the loggers did not get to the harvest immediately.
In a situation like this, the size of the cutting crew and how long it will take them to cut the timber and haul it to the mill is also a concern. I would also be concerned about when the logger would start. This particular tract had some low areas that would certainly be subject to rutting during a continued rainy spell. We haven’t had to worry about this problem in a couple of years now due to the drought, but you have to weigh all the possibilities.
The current timber market is another concern to consider when selling a tract with insect damage. Are the mills going to remain fully open or can you expect the mills to have shutdowns or cutbacks during your harvest time? If so, are you willing to take the risk? With old growth longleaf, there is bound to be some old turpentine trees present there. Turpentine trees can be subject to reducing high-value sawtimber trees to a much lower pulpwood value. Pitch streaks can develop in the area of the faces and work upward, which may not be obvious until the tree is cut.
Selling a timber tract such as this one greatly favors a lump sum sale as opposed to a cut-n-haul sale. It eliminates the risk endured by the landowner. One doesn’t have to depend on chance and hope to obtain full value for the trees being sold. Actually, the risk is still there, it is simply transferred to the timber buyer for a lump sum payment for your timber upfront.
Our sale worked out wonderfully well. Although some buyers were not willing to buy the timber, there were plenty of quality companies willing to make that trade.
Jim Griffith is General Manager of Georgia Farm Bureau Timber and Real Estate Companies
Georgia Farm Bureau News – July 2008