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Per ton sales sometimes the best way to sell hardwood

By Jim Griffith
Registered Forester #1616

Most people are generally interested in pine timber. Historically, that is where the tree value has been in Georgia. Hardwood timber has not demanded much attention in the past. The value of hardwood can be is often underappreciated, even by landowners who have previously sold their own timber. However, hardwood can be a real income producer for the private landowner who is savvy enough to market his trees progressively.

Many landowners like to sell their timber on a lump sum basis. I often recommend this as the best means for the seller to get the greatest income for their trees. However, there are some stands that do not lend themselves to lump sum sales. A hardwood swamp might be one of those stands that will bring more income overall on a per-ton sale.

Why would a hardwood swamp be different? Well, for one reason, this type of timber can be very difficult to reach with harvesting equipment. There will be streams, sloughs, and other drainage areas that may cut off portions of the timber stand that could have significant value. These areas of timber are accessible only at given dry times of the year. If there is a chance these trees will not be harvestable during the term of the timber cutting agreement, then the buyer cannot afford to make an upfront payment on trees that might not be cut and sold. Unfortunately, a lump sum purchase in this case allows the buyer to cut these trees under favorable conditions, but the landowner will not be compensated accordingly. From the timber buyer’s position, they are taking a risk and should be compensated for it. From the landowner’s position, we all want to be paid for the assets we own and are selling.

Hardwood swamp stands are not the only type of hardwood stands for which it might be best to sell on a per-ton basis. A simple network of creeks and low ground on an otherwise upland hardwood tract could create enough questionable logging conditions to caution a buyer from making a lump sum bid to purchase at the full value of the trees. Again, there is risk involved. It might not be the inability to reach the trees, but the rutting of the ground that creates the limiting factor preventing these trees from being cut. This factor may not be detectable until the harvest equipment is on the property, so how can you blame the buyer.
Risk is the operative word with wetland hardwood. It is our job at Georgia Farm Bureau to help remove the risk. Remove the risk and enjoy higher potential benefits. I say potential, because you, the owner of the trees, are now participating in the risk. However, you should get what the easily harvestable trees are worth in the per-ton sale plus, in the event the risk trees are cut, the potential over-cut on those trees.

There are many other issues we need to discuss about hardwood but we’ll save those discussions for another day.

Jim Griffith is general manager of th GFB Timber and Real Estate Companies.

Farm Bureau News – October 2005

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