Selling Silviculture

This article was published in the Forest Stewards Guild's Distant Thunder, Fall/Winter 1999.

Selling Silviculture to Landowners

Foresters learn about the importance of silviculture in forestry school. This is perhaps the core purpose of forestry: improving the quality and rate of growth of trees. For some of us, silviculture becomes our mission in life. However, once we get to the real world of practicing forestry and applying silvicultural principles to actual stands of trees, we run into problems.

We learn that loggers don't want to cut the low-grade and small diameter trees, and mills don't want to saw logs from them. We learn that landowners don't want to pay for timber stand improvement work, nor do they want to pay for marking and tallying low-grade trees if the cost is a high percentage of the gross. Then we get discouraged and complain that if only there were better markets for low-grade material we could really practice good silviculture and fulfill our professional missions.

Yet are these real-world considerations truly problems, or are they just excuses for complacency? After all, markets for low-grade and small diameter material do exist. In most regions, demand for fuelwood is consistent, and there are usually markets for pallet and tie material. In many regions of the country, there is always a market for pulp. These may not be great markets, but they are markets nonetheless. Perhaps the problem lies not so much in the markets as in how to connect with them.

Perhaps there are some tricks of the trade that can applied to get the silviculture done. For instance, we could mark and tally low-grade trees differently than grade trees. Pallet and tie material could be tallied as wood or pulp, and diagonal stripes of paint used instead of horizontal ones in the marking. See Figure 1. Then, it will be obvious to potential buyers that some of the wood and pulp is actually better than that, and they will think they're getting a bargain on it.

Figure 1. Simulated wood/pulp marks on low-grade trees.

 

Considering that it takes eight 10" DBH trees to make a cord of wood/pulp as opposed to just two 16" DBH trees, loggers should get paid more on the smaller trees. When we mark small trees, we should make it clear to potential buyers that all the marked trees must be cut, and that the logger should be paid more for cutting the smaller trees. While we cannot set the rates for the logger's payment, we can set the expectation that different rates will be offered for cutting timber and wood/pulp.  This will help insure that those small trees actually do get cut, and that less damage to residual trees is done in the process.

If we have a lot of low-grade material to sell, it might be necessary to sell some high-grade material to "sweeten the pot." Alternatively, we can wait until markets improve or the right buyer comes along. Factors in the decision to wait are how strongly we feel about not compromising our silvicultural principles, and how long we can wait for our fee. This can get tricky, but most of us know when we have gone too far or waited too long.

Educating landowners about the economics of tree value growth rates will help them get on board. Landowners need to understand that their trees can earn very respectable rates of return with good silviculture. We foresters can often double the rate of annual value production over high-grading operations, and 50% over doing nothing. Several studies document this. See the references below for long-term silvicultural treatment studies in the Northeast.  Also see the Economics Section and the Cost of the Status Quo page for reviews and interpretations of these and other papers.

Computer treatment and growth simulation programs such as INFORM can be used to project rates of future value growth following thinnings and improvement harvests.  Rates of value growth are typically well above rates of volume growth alone (Davies 1996) .  Graphic presentations of growth simulations can help to convince landowners of the value of silvicultural practices. See Figure 2.

Figure 2. Per acre INFORM growth simulation of a residual stand.

 

A very useful study shows that consultants get 20% more money on timber sales for their clients than they would get otherwise (Munn 1995). This is usually because the forester does an accurate tally and fosters competitive bidding. The increased financial yield is also influenced by marketing the low-grade material, the net value of which often equals the forester's entire fee.

Using prescription tallies instead of marking can sometimes save a client money, and make silviculture more cost-effective. Prescription tallies based on sample points are possible when the silviculture is simple and the buyer can be trusted to exercise good judgement in adapting the prescription to the circumstances. In other cases, the timber can be marked and tallied, and a prescription tally used for the small trees of low-grade species. For example, we might do a prescription tally for all the red maple, diseased beech, white birch and poplar over 8" DBH, and mark and tally the rest of the stand.

In many cases, access improvements need to be made before potential buyers will even look at sales with high volumes of small and low-grade material. This can be a significant problem when landowners are unwilling to pay for those improvements in advance. But if costs of road construction can be estimated, and extra skidding costs without the road work can be estimated, the projected savings can be persuasive. Such calculations can also be used to justify investing some of the returns from easily accessible and marketable areas into access improvements for the other areas. 

One last trick is to create an incentive for ourselves. Instead of getting paid a percentage of the gross, we can elect to get a flat rate based on the volume or number of trees tallied. This takes away our incentive to high-grade and creates an incentive to apply better silviculture. Most landowners will appreciate the meaning of this incentive, and will like the way their properties look afterwards as a result of the good silviculture applied.  It will also help them understand the many silvicultural factors that create a better harvest and a better forest for the future.

References

Davies, K.  1996.  Toward more accurate growth simulations and appraisals: Using INFORM to project tree grade and market value increases.  The Compiler 14(1):18-23.

Erickson, M D, D D Reed and G D Mroz. 1990. Stand development and economic analysis of alternative cutting methods in northern hardwoods. Northern Journal of Applied Forestry 7: 153-158.

Hseu, J-S and J Buongiorno. 1997. Financial performance of maple-birch stands in Wisconsin: Value growth rate versus equivalent annual income. Northern Journal of Applied Forestry 14(2): 59-66.

Lu, H and J Buongiorno. 1993. Long- and short-term effects of alternative cutting regimes on economic returns and ecological diversity in mixed-species forests.  Forest Ecology and Management 58: 173-192.

Miller, G W. 1993. Financial aspects of partial cutting practices in Central Appalachian hardwoods. Northeastern Forest Experiment Station Research Paper NE-673.

Munn, I A and E C Franklin. 1995. Valuation of consulting foresters' contribution to timber sale prices. The Consultant: Winter, 1995. 

Niese, J N, T F Strong and G G Erdmann. 1995. Forty years of alternative management practices in second-growth, pole-size northern hardwoods. II. Economic evaluation. Canadian Journal of Forest Research 25: 1180-1188.

Solomon, D S and W B Leak. 1985. Simulated yields for managed northern hardwood stands in New England. Northeast Forest Experiment Station Research Paper NE-578.