Managing a forest property can be complex and time consuming. Foresters can provide advice and assistance to landowners who choose to undertake forest management projects that they do not have the time, or perhaps more importantly, the expertise to accomplish themselves. Public foresters generally are employed by the Alabama Forestry Commission, Alabama Cooperative Extension System, and others, but typically must respond to broad public demands, and are able to offer only limited services. Therefore, you will probably want to work with a private consulting forester at times--regularly if you have a large property.

When preparing and updating a management plan

A consulting forester can assist in preparing a forest management plan, which is an essential first step for any landowner concerned with properly managing a forest. Such a plan is a good way for a forest owner to define and organize land-use objectives. The plan describes the existing natural resources of the forest and defines a program of management activities for a specified period of time. A management plan should be prepared with the assistance of a professional forester. The landowner decides what kinds of benefits are wanted from the forest, and the forester determines whether and how the resource can be managed to provide those benefits. The landowner should be very specific in describing to the forester both their short-term and long-term goals for the forest. These goals should describe what benefits the landowner wants to derive from the forest land including, but not limited to, periodic income, aesthetics, wildlife (game and/or non-game), recreation (hiking, fishing, etc.) or any other objectives that can be derived from the land.

Developing a management plan implies a long-term commitment. Over time, the landowner's desires and expectations relative to the forest, often change. In addition, insects, disease, and other forest impacts may influence the forest to the point of requiring landowner action. A management plan should be kept current through periodic updates, based in part on annual or semi-annual inspections by the forester and periodic meetings between landowner and forester.

When planning a timber harvest

"Selling your timber" gives you some important information to consider prior to putting timber up for sale. However, selling timber is legally, financially, and environmentally complex to the extent that any time a sale or harvest of timber is anticipated, a forester should be a key participant, serving as the landowner's agent. Most private, non-industrial timber harvests in the Alabama are conducted without the involvement of a professional forester. The consequences of not seeking professional assistance for timber harvesting can be severe. Two anecdotes serve as examples of the kinds of problems which can be encountered.

Case Number One-In the first anecdote,1 a forest owner described an instance when he had sold standing timber directly to a buyer who had made a telephone offer. The sale agreement was verbal and a forester was not involved. The landowner related: "The original deal was that I would receive at least $4,500 in stumpage. When Mr. X got done, all I got was $1,350. Then come to find out, when we were out showing him the property lines I guess we didn't take enough time and he got over the line. The property owner that we got over on had his property surveyed and sent me a bill for $3,750. That's not the worst of it, now he wants $15,000 for the timber we took."

Case Number Two-The second example2 occurred in Warren County, Pennsylvania, and relates the experience of a 73-year-old recently widowed absentee forest owner residing near Pittsburgh. Mrs. 'North' and her late husband owned a 12 acre forest surrounding their hunting camp. Shortly after her husband's death, Mrs. North received a letter inquiring about the timber on her forest. In this case, Mr. X indicated that he had inspected the forest and would like to purchase "selected trees" at "market" value. He assured Mrs. North that he was a well-respected timber buyer and "forester."

In need of cash later that winter, Mrs. North called Mr. X. She explained that she wanted to be certain that if he cut her trees he would take good care of the property, which she and her husband had so enjoyed. Mr. X assured her that he always left the woods in good condition and that he would only "selectively cut" the forest to a 16" diameter. He told her that he would scale the cut logs and send Mrs. North a check for the value of the stumpage, estimating that the sale would net as much as $1,000 for her. He also agreed to grade roads to their pre-logging condition and that grass would be sown on any exposed soil.

Mrs. North liked what she heard and trusted the man's voice. Three months later she received a check for $1,100, with a note stating "Payment for timber purchased." Mrs. North was very pleased to have received more than expected.

Several months later during the summer, Mrs. North, accompanied by her son and his family, visited the camp for a vacation. They were surprised to see only saplings, some beech, scattered large hemlocks, and numerous broken trees remaining. In addition to the battered look of the forest, the access road was severely rutted. Mrs. North called Mr. X, but after three days with no return call, she contacted a consulting forester, whose number she had found in the phone book under "forestry." The consultant conducted a stump cruise of the forest, counting the stumps then estimating market value from the number and size of stumps by species. His report stated that over 34 thousand board feet of timber had been removed. Its stumpage value was approximately $11,000!

Examples such as these are not uncommon, in spite of most timber buyers and loggers being honest individuals. Timber buyers and loggers are in business to realize a profit, which drives them to purchase their raw materials, principally wood, at an economical price. While anyone in business strives to be equitable, a buyer without competition is not likely to offer top price. Also, many timber buyers and most loggers do not have the technical forestry expertise to prescribe cutting treatments that truly meet the landowner's objectives or the silvicultural requirements of the stand. The vast majority of harvests prescribed by timber buyers and loggers result in a clearcut or a diameter-limit removal of the largest and often the highest quality trees. Diameter-limit cutting tends to leave the lower quality and less desirable species to produce the next crop. Some owners do want to clearcut, or a stand may be too young to clearcut. The stand might return more financially by thinning now and delaying final harvest until higher valued products are produced.

Several important lessons are conveyed by the unfortunate experiences of these two forest owners:

• Never conduct a timber sale without full knowledge of the potential consequences; in most cases this means having a professional forester represent your interests.
• Never sell timber without a written contract.
• Never reach an agreement that results in an unsupervised harvest operation.

Comparative Advantage of Forester-Assisted Timber Sales--Although no detailed studies of landowner benefits derived from seeking professional forestry assistance have been conducted in Alabama, results from two studies provide some interesting food for thought. In the first study,3 conducted in Georgia, forty separate timber sales were included: twenty with and twenty without the involvement of a professional forester. Results of harvests in the two groups differed greatly and are described below:

Method of Sale-Eighteen of the forester-assisted sales were sold as individually marked trees; fifteen of the non-assisted sales were sold by simply marking the boundary of the sale area or by a minimum stump diameter limit, and not by individually marked trees. Seventeen of the assisted landowners sold by bid, as did nine of the non-assisted group (Table 1).

Harvest Returns-The principal product of value removed in all sales was pine sawtimber. In 1985, $100 per thousand board feet (MBF) was a good price for Southern pine sawtimber. Only four of the assisted landowners received prices less than $100/MBF, while only two of the non-assisted group had prices above $100/MBF! Although the non-assisted sales averaged 31 percent more pine sawtimber removed per acre, the assisted landowners averaged 23 percent more sales revenue per acre. On average, assisted landowners received stumpage prices 58 percent greater than those received by landowners making sales without forestry assistance (Table 2).

Residual Stand-Tracts harvested with forester assistance had more than twice the residual pine volume, which would lead to more volume available for future harvests. The higher volume of residual pine, and its potential for growth, resulted in an average net present value (the current value of future growth and sales) for the assisted sales of twice that of the non-assisted group (Figure 1).

Figure 1. Relative advantage of forester-assisted sales Source: Cubbage, F. W., T. M. Skinner, and C. D. Risbrudt. 1985.

With the assistance of a professional forester, landowners in the Georgia study realized greater profit, even though they sold less pine sawtimber and were left with a more valuable stand of residual timber than the non-assisted landowners. Sites, stands, markets, and other factors do not differ markedly from Alabama to Georgia, therefore results have direct applicability.

The second study4 compared twelve similarly matched timber sales in Illinois. All comparisons were in an oak-hickory timber type common to southern Illinois. Important findings included:

• Significantly less damage to the residual stand occurred in the forester-assisted sales.
• On the forester-assisted sales, revenue for the current harvest averaged more than double per acre the revenue received on the non-assisted sales.
• The value of residual merchantable timber also was more than twice the value of that remaining on the non-assisted tracts.

Forester-assisted landowners, whether in Georgia, Illinois, or here in Alabama, generally enjoy several advantages over their non-assisted counterparts:

• Forester-assisted forest owners know that their ownership objectives will be incorporated in any timber harvest. This is accomplished in many cases through the intentional removal of individually marked trees, with the harvest as a step in a continuum of forest management, and not an end in itself.
• Forester-assisted landowners are knowledgeable timber sellers. They have learned the quality and quantity of product they are offering for sale. A knowledgeable seller can deal more confidently and effectively with potential buyers.
• Through the experience and knowledge of their forester, forester-assisted forest owners know potential markets and how to reach them. By understanding the timber market, the seller can be confident that a sale will realize a fair market price.
• Forester-assisted landowners feel more confident that their interests are fully protected by reasonable terms and conditions specified by a written contract with the buyer, and that the actual operation will be adequately supervised by their forester.

Through this process, the forest owner is protected financially, legally, and environmentally. In addition to the tangible benefits of increased revenue and more favorable residual stand conditions, a forest owner can achieve peace of mind by seeking professional forestry assistance anytime a sale of timber is anticipated, or whenever an offer to purchase has been made.

When planning your estate and taxation matters

Recent United States Forest Service studies show owners over 45 years old hold most of the individually owned forestland in the Alabama. Much of this land will be passing through estates within the next 25 years. Because forest planning horizons often extend beyond that point, forest management should be a form of estate planning.

The consequences of ignoring the estate tax implications of forest management can be severe. Like farmers, forestland owners are often "land poor," with land rather than liquid assets representing the bulk of their net worth. This may not be realized until the forest passes through an estate and the heirs must pay the unexpectedly high estate taxes. Funds for paying the tax burden may have to come from a premature sale of timber or even a portion of the land, which in both cases may effectively destroy those values forest owners worked so hard to attain.

However, through well-advised estate planning, much of the tax burden, and all of the surprise, can be avoided. While estate planning can be quite complicated and requires expert help, most consulting foresters are familiar with its important elements. Together with your attorney and accountant, a knowledgeable forester should work with you to develop an estate plan. Don't work hard to improve your forest, only to have the fruits of your labor ruined by lackadaisical estate planning.

Annual income tax is another inevitability that can be made less painful by careful planning. Timber tax laws are particularly complicated, and the landowner is subject to regulations which are still evolving from the 1986 Tax Reform Act. Tax considerations are most important when a timber sale is anticipated, but should also be a factor in accounting for expenses associated with the forest every year. A professional forester, along with your accountant, can help reduce your forest tax burden and avoid IRS surprises. Planning and record keeping are the critical elements of a forest tax strategy.5

If you are an absentee landowner

Absentee landowners, particularly, can gain piece of mind in having a consulting forester act as their agent, recommending forest management activities and representing their interests locally. Natural agents such as insects, disease, fire, wind, and ice pose threats to your forest. A consulting forester can provide periodic inspection and information to keep you apprised of forest condition and any need for salvage harvests that might arise from a natural calamity. In your absence, a consulting forester can serve as your agent for leasing hunting rights or permitting access onto your property. Your interests as an absentee landowner are best served if your forester visits your forest at least annually.