People don’t like to talk about money for all sorts of sensible reasons. But since the financial details of a story are crucial to our comprehension of it, there’s a point when fiscal coyness becomes detrimental.
I think about this a lot in regards to the stewardship issues at the core of so much of what we write about. Take the concept of high-grading – the practice of cutting down the nice trees in a stand and leaving the ugly ones. We tell people all the time not to do this, and that’s often how we convey the message: some crafted version of the word stop! But unless stop! has a dollar figure attached, this message has a pedantic, superficial ring. The tax bill is tangible – it comes every fall and tells its story in dollars and cents. The offer someone gets from a logger who shows up at the door and says he’ll pay a lump sum for the standing timber – that’s an easy story to grasp. It’s hard for our virtuous admonitions and vague promises of long-term gain to compete with this.
Helping people who are new to forest management understand the different strategies behind timber harvesting is also hard to do without talking money. Landowners don’t often want to discuss what they make, or don’t make, on a timber sale, but leaving these details out leaves the door wide open for people to fill this gap in the story with misinformation. I think a lot of people believe that trees are worth more than they really are – that includes both timber skeptics, who are quick to draw a caricature of the forest landowner as an exploiter, as well as forestland owners, who are frequently disappointed to learn that the wood that was going to help fund their retirement isn’t even worth cutting.
So let me put some money where my mouth is.
We had a 9.5-acre clearcut done this summer on a thoroughly mediocre chunk of family woodland. The previous owner had conducted two log-only harvests that we knew of, and probably the guy before him had picked it over, too; in the old days, high-grading was how it was done. And so by the time my father purchased the lot in the early 1990s, the best trees had been taken and what was left was either junk or meh.
By waiting 25 years, the meh matured. At this point, it made the most sense to just take it all and start fresh stewarding the next forest. Our motivations for the harvest were timber-related – we want the next forest to have a significant amount of pine, which means a biggish opening with lots of light. But a nice bonus will be the wildlife habitat that’s created in the process: the nearly 10 acres are bounded by productive fields and backed by a stand of mature forest and then a wetland, so a young forest will make the whole thing a layer cake of habitat diversity. A different landowner who cared more about warblers than wood might have used the same prescription.
A mechanized crew came in and artfully creamed it, leaving a smattering of well-formed young oak, cherry, and popple, and some standing snags, but everything else left on a truck. The leave-trees will contribute to the new stand, but the pine seed crop that’s on the ground will do the heavy lifting where it comes to regen.
So, the numbers. In all, the loggers took 701 tons of wood that was unfit for anything but fuel or fiber – logs with rotten hearts or squirrely trunks. You can picture that 701 tons as 24 log trucks. One load became firewood, fourteen loads became wood pellets, nine became paper. This low-grade wood accounted for almost two-thirds of the total volume.
They also cut 54,000 feet of sawlogs – picture that as nine log trucks. About 50 percent of the hardwood logs graded either #1 or #2, which are average logs with two or three clear faces. (If these logs were properties on a Monopoly board, they’d be on the second street between “Jail” and “Free Parking.”) The one outlier was a cherry log that graded “choice,” meaning four clear faces. (Picture this as one of the yellow properties – Marvin Gardens, say.) The rest were of poor quality and graded either #3 or #4 – these were first-street-on-the-Monopoly-board logs.
The accompanying chart, pulled from a scale ticket, shows the big swing in value between the classes of logs – it’s the high-grading story told in dollar figures. The choice log netted $140, and there were likely three logs in that tree. The #4 log, same species but from an ugly tree, netted $3. Foresters are always railing against high-grading because if you take all the trees growing choice lumber and leave a forest full of #4s, there’s no economic future in the stand.
How the landowner and logger divvy the pie varies from job to job. In this particular job, the loggers paid us nothing for the pulp and firewood, nothing for the low-grade logs under $300/MBF, and 50 percent of everything else. The result was that we got paid for around 16 percent of the wood that was cut. You can see this job from the road, and I’m sure there were people driving by, wrinkling their nose at the clearcut, thinking we were making out like bandits; thinking that if we only had a land ethic we would have selectively harvested (in the wintertime when the ground was frozen) like the previous owner did. Of course, in some scenarios a selective winter harvest is ideal – we would have loved it if this stand were full of beautiful trees of different ages, and we could have hired a young John Anderson-type [see page 44] to sneak in with a horse and grab a few veneer stems, releasing some just-as-nice younger trees in the process. But experience has taught us that on this land we need big openings to regenerate pine and oak, coupled with the soil disturbance that you only get in summer. Plus, in this case, a selective harvest would have been the piece’s final high-grade.
Even if we could have found a logger to selectively cut the sort of profitable wood, we would have been left with a piece where 84 percent of the trees had no value to the owner, and the other 16 percent was 80 years from maturity (if it grew in at all).
All told we made $5,714.12. Let’s say there was $300 in the stumpage of the seed trees that were left – there were a few nice ones. So $6,000 was the value, to the landowner, of all the wood on that 9.5 acres. If you figure the purchase price was $7,000 in 1993 dollars – that figure based on the going rate for forestland at that time – we’ve yet to pay off the investment.
Now the way to make money in this game, of course, is to whack the timber and then sell the parcel as a house lot and walk away with a cool $60K or whatever. Liquidation is the essence of capitalism. But we’re tree farmers, so instead we’re going to do our best to keep the land undeveloped. In this scenario, three generations will steward the land over the next 80 years, until the next crop is ready. The goal at that time will be a better timber harvest. At the very least we’d like to flip the percentage of two-thirds low-grade, one-third sawlogs around. And we want to grow nicer logs. This will take several intermediate treatments. Work with a brush saw and a chain saw. Likely herbicide to treat invasives. Hours of rewarding but unpaid time doing risky work; perhaps wages to others who help with the risky work (a spitball figure for timber stand improvement work is $150/acre). It’ll take 80 years of property taxes; this on top of the 25 years of taxes already in the books.
Let’s look at these numbers through a tax lens. We’ve determined there’s $600/acre in timber value to the landowner – that’s literally every stick of wood. Now let’s scale up and make this 10-acre parcel a 100-acre parcel, which is about the minimum amount of land you’d need for any serious timber growing. If timberland is worth $1000/acre, that’s a $100,000 investment. There’s $60,000 in timber value you could capture, and 80 years before the next crop’s ready. Based on the rate my town uses, the tax bill over that 80 years on that 100 acres would be $148,800. Add in the $15,000 you’d spend on timber stand improvement work in the interim, and your heirs would be starting the next harvest $200,000 in the hole. Over this time the land is appreciating, so you’ve got to figure that in to get a complete picture of the investment. But you can see the scary math that occurs when forestland is taxed at a standard ad valorem rate rather than the reduced rate you get by enrolling in Current Use, the state-administered tax program that – in exchange for development restrictions – taxes land on its agricultural or timber value and not its development potential.
(Every state in our region has one of these.) In times of tight budgets and populist rabblerousing, Current Use programs are sometimes assailed as an unfair subsidy for the relatively well-off. But as this example shows, in a best case scenario the programs are the only thing keeping tree farming from becoming alpaca farming – that is, a kind of pyramid scheme where instead of value being pegged to a tangible product, it’s all based on theoretical appreciation. In a worst case and more realistic scenario, Current Use is the only thing keeping this 100-acres of high-graded forestland from becoming 10, 10-acre house lots.
I am so much more comfortable writing about the soulful side of land stewardship – the last hitch of the day being skidded out under mango- and peach-colored winter skies – and the cultural side – how working lands provide a community with a grounded existence that’s at odds with the specialized suburban lifestyle that’s killing the planet and making people lonely and crazy – than I am writing about finances.
But the future of the Northern Forest does not ride on poetics or philosophy, it rides on money. There are around 5 million family forestland owners in the northern US, and they own around 94 million acres; land that cleans our air and water and gives wildlife a home. And every one of these parcels has a price tag attached to it. All the trees on every parcel have little price tags, and the price goes up or down every year. The land incurs tax debt every year, regardless of whether the people who own it are good people or bad, rich or poor, eighth-generation or lived here for eight days. We all have values-driven opinions regarding how land should be stewarded – these are important. But it’s money that dictates the rules of the game.