Presented at the Arkansas Tree Farmer Conference - June 18, 2015

2. Arkansas
Tree
Farmer
Conference
Pete Prutzman, RF, ACF
June 18, 2015
Marketing Your TimberMarketing Your Timber
© 2015

3. Factors to Consider in Any Sale
 Because timber sales are infrequent, planning is
especially important. Each property is different and a
landowner should plan the sale with input from their
accountant, forester, etc.
 http://www.fs.fed.us and search for “Tax Tips”
 www.timbertax.org
 www.msucares.com/forestry and search for “Basis”
 www.acf-foresters.org

4. Taxes
 How will the timber sale affect annual income?
 Will the sale qualify for capital gains?
– holding period, method of sale
 Is there timber basis available for depletion?
– Ice and wind storms heightened awareness
 How long between sale income and tax time?
– some sell early in the year, so they have use of income longer; others
sell timber to pay last year’s taxes

5. Professional Marketing
 Timber buyers and mills are notnot the enemy; to
practice forestry we need active markets for our
products.
 Our goal is to make it easy for buyers to pay a
high price.

6. Successful Sale Ingredients
 Good maps (location, tract, aerial photo, topo)
 Well-marked sale boundaries
 Logging access
 Clear instructions / conditions
– including contract time or terms of sale
 Reliable timber inventory
– 100% tally of sawtimber whenever possible

7. ActualActual
TimberTimber
SaleSale
NoticeNotice

8. ActualActual
TimberTimber
SaleSale
NoticeNotice

9. ActualActual
TimberTimber
SaleSale
NoticeNotice

10. Actual Timber Sale NoticeActual Timber Sale Notice

11. ActualActual
TimberTimber
SaleSale
NoticeNotice

12. ActualActual
BidBid
ResultsResults

17. Statewide pine sawtimber
stumpage price $25.30/ton in
1Q 2015

20. Utilization
•Different product specs /
sorts
•Grow a variety of
products if possible
•Include a variety of
products in sale
•Specialty products

21. Utilization
•Hardwood utilization
has improved

22. Timing
 Timber will continue to grow as it is, “stored on
the stump,” until markets are favorable.
 Except when insects or disease threaten, there is
a sale opportunity window of several years.
 We have learned not to speculate on future
market conditions, can only tell about past
experience.

23. A few thoughts on timing a sale…
 As much as possible, offer for sale accessible, “high
ground” timber in the winter season.
– Bottomland hardwood should not be advertised in winter.
 When possible, mark a timber sale after most annual
growth has occurred, so that estimates reflect optimum
volume. Also, visibility better in dormant season.
 Allow buyers enough time to prepare a bid
 Allow sufficient time for harvesting; one “dry season”
may not be enough.

24. Additional Comments
 Clearcut vs. Select Cut
– Often, clearcuts generate a higher per-unit price than
selectively marked sales.
 Too many restrictions on sale often mean less
buyer interest.
 BMPs
 Know the buyers
– An active consultant forester will constantly update their
buyer lists.

26. Pay-as-cut Sales
 There are also some sales where competitive
bidding is not practical. Salvage of damaged
timber or first thinnings of pine plantations are
two examples.
 Request down payment (if possible)
 Work with a conscientious contractor who will
sort forest products, etc.

27. Actual Bid ResultsActual Bid Results

28. Good News
 Mill Expansions
 Pellet Mills
 Global Markets
 Key Driver of Investment Return is Tree Growth

31. Summary
 In short, there are many factors beyond our control, but
the key “sales strategy to maximize revenue” will continue
to be planning and preparing a professional sale that
makes your timber (or land) as attractive as possible.
 Be flexible, reasonable, patient.
 Keep records on basis.
 With a professionally managed sale, the landowner will
receive full market value or above whenever they market
timber.