Markets Only the Beginning of Successful Timber Marketing

By Chip Bessey

My previous article discussed conditions in the markets for our timber and land. There isn’t much we can do about markets other than try to use them to our advantage. They are the seas on which we sail. But landowners should focus their attention on timber marketing – how we captain our own ship – since that is under our control.  Face it, we and our predecessors have invested 40 to100 years in growing every tree we sell. What a waste to have invested that much time and not get the maximum possible value for each one.

But marketing is more than just selling trees. It’s not just enjoying dessert, rather it’s more like planning, and hosting, a successful banquet. Marketing your timber properly involves forest management planning, organizing the harvest itself, and only then, selling the trees.

First, make clear (both to yourself and to your forester/logger) what your goals are for the harvest. Is it maximum cash? Aesthetics? Wildlife enhancement? Traditional multiple use? Write a harvest specification that meets your goals so that the eventual harvester will have a clear understanding of what you expect. When you discuss this with candidate harvesters there may be some negotiation on points of your specification, but that can be useful to everyone. The discussion may inform you of things the harvesting experts understand more clearly than you, and it will inform the harvester of those things that are key and non-negotiable from your standpoint.

Next, decide: Are you going to handle the timber sale and oversight yourself, or hire a forester to represent you? In either case, you should interview the candidate loggers on sites where they have worked during the past few years. Is the result you see what you want for yourself? Talk to the landowners involved to gauge their satisfaction with the harvest and with the harvester.

What about the equipment mix? Mechanical? Conventional? These terms barely have meaning any more since there is a wide variety of logging systems in Maine now which range from highly complex processors to small skidders and chainsaws. Cable skidders or grapple skidders? Forwarders? Saw heads or shears? Stroke delimbers or pull-throughs? Chippers or tubgrinders? Each has advantages and disadvantages, and – very important – have widely varying costs of operation. Listen to the claims and promises made by each candidate logger, but be sure to see on-site what the end result looks like.

Only then should you negotiate a price for your stumpage. Every woodlot represents a different market situation. Key determinants of price include your harvest specs, distance from market, the contractor’s equipment mix, wet ground (necessitating a winter harvest) or dry (making your timber easily accessible and more valuable).What is the quality of timber? The volume to be removed? Each of these will affect the price you receive.

You can evaluate the prices you are offered by comparing them to stumpage data compiled yearly by the Maine Forest Service. Google “Stumpage Prices By Maine County/Unit.” The information is always a year behind, but it’s the best available. Unless you have already decided to negotiate with just one logger, get several quotes. Remember, one bidder does not make an auction.

Probably the most important step in the overall marketing process is harvest supervision. If you hire a forester, make certain he or she will be on site at least once a week and, in the case of a high-production mechanical job, several times. Remember that 40-100 year investment you have in each tree? Put in place supervisory and financial incentive systems that ensure that potential veneer isn’t sold as sawlogs, that potential sawlogs aren’t sold as pulpwood, and potential pulpwood isn’t chipped for biomass. Even if you have an agent representing your interest, be on site yourself, if possible. Ask questions. Satisfy yourself that the harvest intent and specs are being fulfilled. If they aren’t, invite the contractor to leave, immediately. Here’s a closing thought, Bessey’s first law of timber marketing: Perverse incentives yield perverse results. In all of the arrangements regarding your harvest, make certain they create incentives which make the interests of the harvester parallel to those of the landowner.

The landowner and harvester need each other. They should enjoy a mutually beneficial, mutually respectful relationship.

The most common error I see is to negotiate very high stumpage rates for sawlogs and veneer, but very low rates for pulpwood and biomass. Preparation of logs takes expertise, time, yard space and delivery to multiple markets. Without round-the-clock supervision, who knows how many high-quality stems are loaded onto the pulpwood trucks or put through the chipper? Round-the-clock supervision shouldn’t be necessary if there are financial incentives for the harvester to sell every tree to its best use.

Then there’s Bessey’s second law of timber market, borrowed from Ronald Reagan: Trust, but verify. This is a repeat of my earlier entreaty that there be good on-site supervision You or your agent should be there. See for yourself.

Earle D. “Chip” Bessey is president of E.D. Bessey & Son, a fourth generation family forest products company in Hinckley.