Article #90, December, 2004
By Bill Cook
There are roughly
50,000 parcels of timber in the Upper Peninsula that are owned by private citizens.
Across Michigan, there are well over 300,000. Most of the state's forest resource
is owned by this block of people. Many times, these ownerships are called "family
forests". Most of Michigan's timber harvest comes from family forests.
usually involves a whole host of factors. Implementing a harvest not only yields
numerous benefits to the owner, but also to the larger society in which we all
live. A thoughtful harvest will capture the greatest good.
Here are ten
things to consider when thinking about selling your timber.
1. Hire a professional forester to help you
with the entire process. This includes harvesting within the context of sustainable
management objectives. There is more to a timber sale than just the logging.
Think in terms of decades, not just a few months.
2. The trees are probably worth more money
than you think. Don't accept cash. Don't accept a single offer. Treat your timber
like any other asset worth thousands of dollars. At the same time, don't expect
every big tree to be worth hundreds of dollars. High-end markets have many variable
specifications. Do your homework.
3. Always use a written contract. Understand
everything in the contract. Think about what may be missing from the contract.
Make sure the logger understands everything in the contract. Keep open the lines
of communication between you, the forester, and the logger. Most problems are
the result of miscommunication, not dishonesty.
4. Don't automatically assume that "select
cutting" is good forestry. The selected trees might be only your best trees.
This is called high-grading and degrades the stand. The selected trees might
be all those over a certain diameter. This, too, is degrading to a stand of
timber. Be certain the selected trees are ones that will leave the forest in
a better condition, not worse.
5. Don't be frightened if someone mentions
clearcutting. Many of our forest types are best regenerated by clearcutting,
which mimics natural regeneration methods. Different forest types are managed
in different ways. A one-size-fits-all management system doesn't exist. Learn
about the forest ecology on your land and the management options applicable
to your situation.
6. Make certain that the logger complies with
all state regulations, workman's compensation laws, and has a good continuing
education record. Membership in professional organizations such as the Michigan
Association of Timbermen or Timber Producers Association is a sign of a professional
logger. Don't be afraid to ask. Most loggers expect to be asked lots of questions.
7. Work with the forester and logger to set
up a system of roads, skidways, and landing areas that everyone can agree on.
Decide which you would like to be permanent and which you'll want to grow back
into forest or maintain as open areas. Work with the regulatory agencies on
stream-crossings. Modify the harvest or set aside areas that you consider special,
such as forest along water or sensitive places.
8. Make sure a harvest time frame is understood.
Specify a begin and end date. Decide whether summer or winter logging may best
meet your objectives. If you have summer-accessible timber, the stumpage prices
are often higher than in the winter.
9. Decide if you want a lump-sum or scale sale.
Lump-sum is a single agreed-upon amount of money for a particular set of trees
(usually marked with paint). A scale sale involves different stumpage values
for different timber products, such as logs, bolts, and pulpwood. Stumpage is
the amount of money a landowner receives for standing trees. Remember that the
logger makes his money on the margin between what he pays for your trees and
what a mill pays for his cut products. That margin is often mighty slim.
10. Consider the income tax implications of
a timber sale. Your income can jump significantly in the year of harvest. The
IRS will want a piece of the action. Learn how you can minimize your tax liability.
You'll need to know the value of the timber when you acquired it, the volume
at that time, the volume now, and how much volume will be harvested. Keep expense
receipts for deductions. Take advantage of capital gains treatment rather than
report the sale as ordinary income. Find a tax preparer experienced with the
special IRS treatment of timber sale income.
For some, a timber
sale can be scary. For others, their timber value and the importance of a well-planned
harvest are underestimated. Few owners have more than one or two timber sales
in their lifetime. The services and experience of a professional forester lead
to higher landowner satisfaction. That means a higher income and a better harvest
job. A harvest has long-term effects. Get the job done right. Your children
will thank you.
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Bill Cook is an MSU Extension forester providing educational programming for the entire Upper Peninsula. His office is located at the MSU Upper Peninsula Tree Improvement Center near Escanaba. The Center is the headquarters for three MSU Forestry properties in the U.P., with a combined area of about 8,000 acres. He can be reached at email@example.com or 906-786-1575.
by Bill Cook, Forester/Biologist, Michigan State University Extension, 6005
J Road, Escanaba, MI 49829
906-786-1575 (voice), 906-786-9370 (fax), e-mail: firstname.lastname@example.org
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