larryc at teleport.com
Mon Apr 7 01:03:29 EST 1997
In article <33453BA1.45CC at livingston.net>,
Don Staples <dstaples at livingston.net> wrote:
Don, you just illustrated why many landowners think the best thing to do
with a forester is get them the hell off your property.
> Again, in Texas, there would be far less value, only that of pulp wood,
> and about $400 to $500 per acre, 800 trees to the acre. Planting and
> management costs per acre at age ten would be around $350 per acre. But
> at 10 is when things begin to change in southern forestry, next 20 years
> require thinnings that start bringing the cash.--
At $350/acre I doubt you are figuring capital costs into the mix. Only
about half that $350 is floated for the entire 10-year term, so at
8.5% simple you can figure another $200 capital costs, for a total of
about $550/acre. The landowner gets screwed for 10% of his money and
all of his time and trouble.
Now let's look at how the purchaser comes out.
> In the south those 30 year old trees had better be 16 to 18 inches or I
> haven't done my job. Scale some 250 bd ft Scribner. worth, today in
> Texas about $130 per tree.
So the purchaser buys a 10-year old established plantation for $0.625
a tree, holds it for 20 years and sells it for $130 a tree. Let's
be real generous and pull half the trees o of the stand as worthless
culls, so he really paid $1.30/tree. Gee, that's a 10,000% return over
20 years, just exactly 100 times what he paid for it. At simple interest,
that figures out to 500% a year return on his investment.
Jeff? You listening to this? Do you start to see why "old timers" get
a little surly when a forester shows up? Before I'd take a screwing like
that I'd light a match and clear some ground!
Don, if you really want to promote forest management you better allow the
guy who establishes a plantation a reasonable percentage of the eventual
harvest price. Why the hell should somebody go to all that work just to
lose money? And for sure, why the hell would you pay a professional
forester to recommend a selling price that's guaranteed to lose you money
before you ever go looking for a buyer?
I think $3500/acre for 10-year old managed plantation is a pretty good
price. That's less than ten times your figure, and still allows the
purchaser an easy 50%/year on his money even after you knock off management
and harvest expenses. Depending on the plot, I might go as low as
$2000/acre, but that would be a bargain basement price for a pretty
marginal piece of land.
If you want to work for the landowner, you better figure out how to make
the landowner some money. I don't mind making some snot-nosed kid rich
30 years from now, as long as I get paid for my efforts. I see you
foresters making all sorts of noises about forest management, while
operating under a set of assumptions that guarantee that anybody dumb
enough to actually do it will get screwed.
All you have to do is look at the industry to see that the old assumptions
are trash. Roseburg Forest Products just paid $250 million for 17,000
acres of cutover hills. There's damned little harvest to get off
the land right now, but they paid almost $14,700 an acre BECAUSE it's
a well managed plantation with some real potential.
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