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Timber Cruising is more than just counting trees

By Jim Griffith
Registered Forester #1616

Timber cruising is more than just counting trees. Actually, it is more than counting trees according to specifications of some timber company. Let me give you an example of what I mean.

I was recently asked to evaluate a timber tract that a purchaser was buying from a timber company that was selling off their land holdings. Before we went to do our timber cruise we found out there was an ‘out’ in the purchase agreement if a timber cruise was conducted, only if it was in accordance with their specifications.

This was actually a good clause in the agreement. It defined the limits and provided an accurate means of comparing apples with apples. It did however, cost the buyer more money because the specs were more stringent than we were first considering.

The results of our cruise were very interesting. We were only a few tons off from what they claimed, which is a very good sign and you would think the purchaser would be safe in proceeding with the sale. There is one catch, the volumes were the same, but the value was significantly short. In fact, the value was about thirty percent short of the advertised value.

There are several reasons the volumes can be correct and the value differ. One reason for difference in value could be a variation in the over product mix. By this I mean the overall volume could be the same, but the proportions of pulpwood to chip-n-saw and sawtimber could vary. It would not take much $45 per ton sawtimber being dropped into a $6 pulpwood category to result in a drastic drop in value. However, in this specific case, the product mix was almost exactly the same as was the overall volume, so this was not our problem this time.

There were two other problems that we did run into. First, they had simply put higher values on the sawtimber than the market would support. This is always a concern and should be verified before accepting someone else’s word for it.

Another problem we ran into were the specs required by the seller. The specs were not congruent with the market we have to sell that particular tract of timber. In other words, the timber buyers would classify a significant amount of the sawtimber as chip-n-saw class, and much of the chip-n-saw would only sell as pulpwood or super pulpwood at best. This was costing the buyer substantially in this case.

On the positive side, they had not allowed for the super pulpwood market that was available, which would double about half of this tracts pulpwood value. Even at that the buyer was still losing out on the value he thought he was getting on what turned out to be a very accurate timber cruise. It was simply a matter of inaccurate product specifications for the local market.

Jim Griffith is the General Manager of Georgia Farm Bureau Timber and Real Estate Company.

Georgia Farm Bureau News – April 2005

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