By Jim Griffith
Just because your money is in a bank doesn’t mean it is realizing its full earning potential. If your money isn’t in the right type of account, your money could even be dwindling away without you realizing it. One of my children had a savings account for which the bank charged a monthly fee when the balance fell below a certain level. Even though the monthly fee was small, it soon began to eat away the balance of the savings account until it was all but gone.
The value of your timber can erode over time if you are not thinning timber properly. If you have 18 to 23 year-old pine trees, and you are waiting on sawtimber prices to peak before putting your timber on the market, then you are wasting your time and money.
If the timber has never been thinned, then you are actually losing timber value in two ways. First, you are losing trees that are dying and falling to the ground due to natural mortality with no realization of income. This is like having your money in the bank but not earning enough interest to offset the monthly account fee. Dense stands of trees are going to lose a considerable number of inferior trees to natural mortality. The overcrowded conditions of a dense stand make it more susceptible to stress from environmental calamities such as insects, diseases, drought, etc. The value of your timber is going down, instead of working for you by growing in value.
Secondly, the density of an unthinned stand of planted pine will prevent your higher value sawtimber trees from growing to a sufficient diameter that will meet sawtimber specifications. It doesn’t matter if the price goes to $60 per ton, if the density of the stand keeps your trees from growing to the diameter required to qualify for sawtimber, you will never benefit from that increased value. It’s like having thousands of dollars sitting in the bank in a non-interest bearing account. You expect the principal to earn you money, but it never does because it wasn’t in the right type of account to grow.
Trees growing in a dense, unthinned stand are sitting in a non-interest bearing checking account, so to speak. This type of stand has lots of trees producing a maximum amount of biomass per acre, but the trees have little value or potential income.
You can turn your timber stand into a high interest yielding account by properly managing it. By thinning the stand at the appropriate times you can redirect the same volume of growth onto fewer trees. By managing for higher-value, faster-growing, better-quality trees you will get larger diameter trees that will produce more money per acre. If you’re unsure whether your timberland is sitting in a non-interest producing account or being managed as a high interest investment, you need a professional forester to assist with your timber management.
Jim Griffith is general manager of the Georgia Farm Bureau Timber and Real Estate Companies.
Georgia Farm Bureau News – November 2008