DEBATE OF '98- financial resources
dstaples at livingston.net
Thu Apr 23 21:44:10 EST 1998
Ron Wenrich wrote:
> KMorrisD wrote:
> > Joe and Group,
> > So a good investment isn't a choice that landowners even know they have--at
> > least not in Massachusetts. I'd be curious to hear from some of the
> > consultants and landowners in other states what their service and extension
> > foresters are telling landowners about rates of return. I'd also be curious to
> > know what you consultants are telling your clients in other states. And what
> > are they and you saying about the difference between managed and unmanaged?
> > How much of a difference does it make in rate of return?
> > Karl Davies
> I don't know of many foresters that tout rate of return to landowners. Most talk
> about how much they can get for timber (which most landowners can do on their own),
> and how they can "improve growth". Unfortunately, the "improved growth" goes on
> all those stunted trees that are left to be released. Of course, these trees
> already have problems like poor form or decay.
> Usually landonwers get a forester when its time to harvest timber. That's often
> too late. The forester should have been contacted before the harvest, when rates
> of return were important. But, like you said, landowners are more interested in
> recreation and aesthetics than growing timber.
Ron hits close to home. Tough to tout a rate of return in todays
financial world. I will be the first to tell you that I am not a
financial wizard, but what I and some of my comrades in Texas do is make
projections of growth (easy enough) based on soil, species and the
stand; projections of timber value (crystal ball stuff in the last few
years); and future harvest values and volumes. Then run a comparison
(usually by a tame cpa) of what investment in other funds would do.
Right now the market is beating the pants off me on some of the marginal
lands, but I'm still beating the bank rates. Those of you familiar with
southern forestry recognize three factors in the foresters favor in this
type of comparison. The Doyle Log Scale, annual growth, and demand.
Hard to beat an actual volume growth of from 5 to 8 percent a year, then
throw in the Doyle scale at 10 or 12 years, and be able to sell anything
you can produce.
And, unlike stocks or bonds, the investment, volume wise, continues to
grow regardless of the current price. A sure hedge against short term
loss. Most land owners do not care to look 15 years into the future,
much less 35 or 50, they are only interested in the value today, and in
what other capacity they may use that value. This leads to poor harvest
decisions, early harvests, and no replant/regeneration. Forestry for
the McDonalds generation, you want fries with that?
My Ego Stroke: http://www.livingston.net/dstaples/
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