P.O. Box 10 Bentley, Louisiana 71407

Vol. 6 No. 2 Summer 1996
- Real Life Forest Management -
Income Now and in the Future

Sam took his rightful place with his Maker a year ago last month. He was my friend, my teacher in the school of life, and my client. He never met a stranger and was loved by everyone who knew him. Sam left his wife Dottie and their two daughters, Connie and Catherine several tracts of land in North Central Louisiana. Sam and Dottie lived modestly. They received income from occasional timber sales and re-invested some money in forest management from time to time.

I met Sam about fourteen years ago when he needed some planting done on Dottie’s inherited property. Sam was an “action man.” He understood that since it took so long for trees to respond to management, there was no time to lose in managing his forest. Over the years we conducted several timber sales, and did some herbicide work and planting on various areas of his properties.

Our first thinning was done through a natural stand of mixed pine and hardwood trees. We selectively marked the timber to remove most of the mature pines along with those trees that were forked, crooked, diseased, or otherwise deformed to improve the growing conditions for the remaining timber. We took the merchantable hardwoods out in the pine dominated areas and left all the oaks larger than 14 inches in diameter in the hardwood dominated areas. The thinning brought over $500 per acre in 1980 and left the forest in a productive growing condition. He decided to chemically inject the unwanted cull hardwoods in the pine areas at a cost of around $35 per acre. By doing this he improved the availability of soil moisture and nutrients, sunlight, and space for his more desirable trees.

Sam’s willingness to invest a small amount of money into the growth of his forest at the right time resulted in a beautiful, fully stocked forest that is comprised of pine trees averaging over 16 inches DBH along with scattered mature red and white oaks. Through his patience and foresight he nurtured a stand of trees into one that provides plenty of acorns and homes for various animals as well as financial security for Dottie and the girls.

After Sam died we prepared an appraisal of the properties to minimize the estate taxes and establish a new tax basis for the land and timber. From timber sale proceeds Dottie was able to pay the minimal estate taxes owed without incurring income tax liability. She should be able to live the rest of her life comfortably with the help from periodic timber sales.

Connie and Catherine have children in college and have the financial pressures that go along with middle age and too many expenses. So far, they are willing to stay within the forest management plan we developed for them. However, I expect we will need to accelerate our timber selling program in the near future to provide some economic relief for them. I plan to listen carefully to Dottie and the girls to learn of their needs and plans. I will do my best to convey the short term and long term consequences of the decisions they make regarding their properties so that they can appreciate the full benefits of forest ownership.

To me, this is what forest management is all about. My relationship with Sam and Dottie has been a blessing to me, as have many of the relationships I have developed with my clients and with the people in this business. I thank God for guiding me to this profession.

Stumpage Report

The markets for timber are ever changing. Pine sawtimber stumpage prices edged lower during the last half of 1995. Average prices are currently running around $340/mbf. Please keep in mind that every tract of timber is different in the combination of characteristics that contribute to value. The high stumpage prices we’ve normally seen in January and February never materialized this year due to the dry weather. The dry winter and spring allowed logging contractors to harvest timber in places that are normally operable only in the summer. Therefore, the mills have high inventories of logs on their yards and are not needing to buy timber to run the mills right now. Many mills put logging contractors on quotas in February. The quotas are still in effect.

The graph we presented in our last newsletter showing how the average pine stumpage prices compared with the average composite prices for lumber and plywood was so informative that I think we’ll include them from now on in this section of our newsletter.

* Random Lengths ** Templin Forestry

The high prices we got for our clients in the first quarter of 1995 occured during a six week period in January and February. Pine sawtimber has been falling since then. The high prices were a result of wet weather, low mill inventories, and high expected housing demand at the beginning of 1995.

As you can see, the prices for lumber and plywood have been somewhat depressed so far this year. The prices for lumber have been improving substantially so far in the second quarter and plywood prices are now starting to rise. Housing starts this year are running well above projections. Housing starts for the second quarter are sure to surpass those in the first quarter due to good weather, even though mortgage rates have risen a full point since the beginning of the year. The economy is in good shape, and there are no significant signs of trouble ahead. Therefore, I expect that as the temporary log inventories at the mills come into equilibrium, we’ll see stumpage prices improve. It may take until the fourth quarter of this year, or even into 1997 before we see substantial improvement. However, it will come. Our declining supply of pine sawtimber in Louisiana will come into play sooner or later.

The pulpwood markets are experiencing the same phenomena due to the dry weather. The demand for chips is not as good as it was last year, however. The markets for hardwood sawtimber seem to be holding up pretty well. For those of you who have hardwood sawtimber to sell, you might consider making a sale this year.

The graph presented below shows the average estimated prices our clients have received from selling pine sawtimber as compared with the average prices reported by the Office of Forestry for the state. There is normally a much greater difference in the prices we get for our clients. Please understand there are significant fluctuations in the price any tract of timber brings. The prices shown below are market indicators.

Pine Sawtimber Stumpage Prices in Louisiana

* Published by the Louisiana Office of Forestry

Focus on...Planting

Everyone benefits from planting trees. During this planting season we planted about 2,500 acres for our clients. About 1,800 acres were loblolly, slash, or longleaf pine seedlings. We planted around 700 acres of hardwoods, mostly oaks. Approximately 100,000 acres of pine seedlings were planted in Louisiana in the 1995-96 planting season.

Unfortunately, planting is not without risk. The unusual weather this past winter and spring will adversely affect the survival of many seedlings planted this past season. We are currently running around 10” below our normal rainfall to this date. As you may recall, we had alternating cold and warm temperatures this winter along with the dry weather. It got so hot during the second week of February that the daffodils in my yard burned to a crisp. Seedlings planted early in December or January will most probably survive better than those planted later. Most of the seedlings we planted are still living, but are facing the long, hot summer coming upon us.

The Louisiana Office of Forestry estimates the number of acres planted in Louisiana. Their representatives indicate that they may account for about 80% of the total planting done in the state. The estimated acres planted with pine seedlings in Louisiana in the last six years are shown below:

Acres Planted with Pine Seedlings in Louisiana

Roughly 80% of the pines planted are loblolly, 18% slash, and 2% longleaf. Survival rates typically run around 80%. Forest Industry accounts for over 80% of the planting done in the state. The estimates on private land are only those that received cost-sharing assistance. The estimates are therefore low, perhaps one-half of the number of acres actually planted privately. Estimates for the last six years show an average of around 110,000 acres per year were planted in Louisiana with pine seedlings.

As I drive throughout Louisiana, it’s reassuring to see pine plantations growing at various stages. The forestry economy in Louisiana is healthy and we will continue to grow the resources needed to sustain it. Although like the farmer, there are risks involved in planting a crop of trees, there are also many rewards. The seedlings you plant contribute to your well being as it benefits virtually everyone. It’s helping to heal the earth and promote productivity. It’s just another example of receiving as you give.

Real Estate Page

We have several tracts of land surrounding the Alexandria/Pineville area that are suitable for developing for residential or commercial purposes. The properties have good highway frontage and have strategic locations for the growth in the Alexandria area. We expect to have several tracts of timberland for sale later this year. If you are interested in buying or selling land, call Steven K. Templin at (318) 899-3361 for more information or See our Real Estate Page

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