Thinking of fall and winter often brings to mind the satisfaction of cooler weather, football Saturdays, or a day spent in the woods. However, late fall and winter is also a great time for landowners to conduct a timber sale, as cold and wet conditions often fetch higher prices for some products (most often pine and hardwood pulpwood). Also during this time of year, landowners with naturally dry soils or tracts located near roads will likely have an easier time selling timber, especially when buyers are looking for wood sources during wet winters.
New landowners or those that do not sell timber frequently may be curious as to how timber is bought and paid for. Timber sales generally occur in one of two formats; per unit or lump sum. One system may be better than the other depending on what the landowner is selling and how they plan to report the income from the sale.
Per unit sales are usually best for timber stands that are being thinned and most of the cut timber, or stumpage, is of similar size and dimensions, which reduces the need for constant oversight by the landowner or forester to ensure the timber is appropriately merchandized. If the timber is diverse and includes a variety of product classes, it becomes more important for the landowner or consulting forester to ensure the loggers correctly merchandize and haul the different products to their respective markets.
This is where having an even-aged stand with similar dimensions eases the uncertainty for both the seller and the buyer. Typically, the buyer will supply the seller with the scale tickets received from the mill each week to provide proof of the volume or weight of timber removed as well as a check representing the agreed price per ton of each product.
Lump sum sales, on the other hand, are more common, especially for high value stands with a hardwood component or clearcuts with defined boundaries. Under this type of sale, the seller is paid a fixed amount of money up front for the designated timber for sale. Unlike per unit sales, lump sum sales usually entail the use of a timber deed, which proves the seller has a clear title to the timber and provides legal backing that the timber is now owned by the buyer.
The purchase price may be determined through direct negotiation with the buyer or through a competitive bid process involving multiple potential buyers, which can be aided by hiring a good consulting forester. While buyers base their bids on an estimate of the volume to be harvested, the total dollar amount received by the seller is independent of the amount actually removed. Competitive bidding is recommended to landowners using the lump sum method in order to receive an adequate payment for the timber. Lump sum sales also place all the responsibility of merchandising the trees and transporting them to market on the buyer, therefore reducing some of the burden of oversight on the seller or the consulting forester representing the seller.
Regardless of the sale method a landowner chooses, it is often a good idea to use the services of a consulting forester, especially for new landowners or ones that sell timber infrequently. A good consultant can help with the development of a sale prospectus by promoting the tract and timber information that attracts potential buyers.
Also, a consultant can help ensure that the necessary forestry best management practices are implemented during the duration and immediately following the harvesting process. These practices are crucial during the winter, as trees are dormant and transpiration rates are low, which allows soils to easily become saturated during wet weather. While timber sales provide a source of revenue, getting the most money shouldn’t be the only objective. Future productivity of the land and protection of streams, young timber stands, and erodible soils should be equally important to the landowner.
The following Alabama Cooperative Extension System resources can assist landowners to prepare and execute a timber sale: