Farmland Timber Management and Profit Potential

By Craig Springmier

12 /13 /19

We sat down recently with Craig Springmier of Halderman Land and Farm Management. Craig has been with Halderman for 29 years and is active in managing farms along with farm property acquisitions and auction and private treaty sales.

Today we are discussing managing timber. What do you see as far as preferences go for owners and their timber holdings?

We see many different types of farmland in our farm management practice. One aspect of farmland ownership is woodland or forest management.

We can leave the forest as is, plant trees or establish open spaces for wildlife. A practice to expand your timber land is to plant trees under a government-subsidized riparian buffer program.

What is a riparian buffer and what it is used for?

Planting row crops adjacent to creeks, rivers and seasonal waterways that often flood may not be the best use for this land. Through the Farm Service Agency (FSA), there is a Conservation Reserve Program (CRP) practice called the Riparian Buffer program. Last spring on a Halderman managed farm we planted 5,250 tree saplings in two smaller fields along a creek that periodically floods under this program. The farm tenant did not want the risk of row cropping the land. Using the Riparian Buffer program we are establishing trees to decrease soil erosion after the floods recede back into the waterway while simultaneously providing wildlife habitat and timber value in the future. The program will cost-share the sapling expense and the tree planting.

Timber is valuable. How is it actively managed?

Private Forest Consultants (PFC) are specialists that help us determine the value of timber and advise us regarding maintaining the health of woodlands on farmland. With a timber sale, the PFC will match loggers with specific tree species, from valuable veneer hardwood timber to lower-valued saw logs.

One financial benefit the PFC can offer is to establish the tax basis for standing timber. When woodland is purchased, a tax basis can be determined by the PFC. If the timber is sold, the sale proceeds can be realized as a capital gain, which is taxed at a lower rate than ordinary income.

What are some basic qualities of timber products?

Timber falls into two basic categories: some trees are processed as saw logs, and desirable species such as black walnut and oak can be harvested as much more valuable veneer logs. To give you an idea of the value of veneer, an unblemished straight veneer 8-9 foot long log that is 22 inches in diameter at $3.00/board foot is worth approximately $500. A saw log with imperfections could be half this price. Leaving the veneer tree in the woods to grow for an additional 7-10 years and 6-7 diameter inches could add another $600 to $700 of veneer value. This is an example of needing the expertise from a PFC to determine when the trees should be harvested. Managing timber over time will promote potential veneer log development in your woodland.

What are some of the trickier aspects of timber management?

One thing that comes to mind is managing invasive species. Woodlands are under threat from insects, vines and non-native invading trees that multiply rapidly. Bush honeysuckle will completely take over a forest if left unattended and will choke out new saplings.

Insects have devastated trees like elm and ash. The ash borer infestation started in the Detroit area and rapidly migrated through Indiana and Ohio, devastating virtually all the ash trees in the region. In other parts of the country, like California, conifers have been devastated by beetles. We are continually on the lookout for parasites and signs of potential damage from invaders.

Government-subsidized programs will assist landowners with Timber Stand Improvement (TSI) and invasive species control or eradication. These programs are administered through the Natural Resource Conservation Service (NRCS) and the Farm Service Agency. TSI includes grapevine control and culling out undesirable tree species. Grapevines can break out treetops during ice storms from the added weight of the vines in the canopy. A method used to cull trees is mechanically ringing the bark on the tree and, with tougher species, adding herbicide to assure their demise.

Halderman Real Estate and Farm Management helps its farming clients find the right solutions to manage their woodland asset. Contact Halderman to learn more.