NCX Guides
Guide to Timber Harvesting
Learn about the important things to consider if you’re thinking of harvesting timber from your land.
If and when to harvest your timber is one of the most consequential economic decisions you’ll ever make about your land. In this guide, we’ll talk about how to get a fair deal, avoid big mistakes, and set your land up to thrive after a harvest.
What types of timber products are there?
When timber gets taken off your land, it gets turned into one of several different products. Some products are significantly more valuable than others, so optimizing your timber management and timber harvest to produce high-value products can have a big impact on your timber sale revenue. Here are some of the key products your forest might produce, ranked from lowest value to highest:
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01 Pulp
Typically from small-diameter trees (less than 8 inches), pulpwood is ground up into tiny bits and used to make paper.
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02 Chip-n-saw
For slightly larger trees (8-11 inches) that are mostly pulpwood but have a few sawtimber logs as well.
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03 Sawtimber
Trees larger than 12 inches can be turned into 2x4s and other beam sizes for house construction.
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04 Specialty
If you have very straight, high quality trees, you may be able to cash in on specialty markets like those for telephone poles or for wood veneers. In cases like this, an individual tree can be worth tens of thousands of dollars.
How do you get paid for timber?
There are a few ways of structuring a timber sale. In any of these cases, running a competitive process will help get you the best price. If you’re working with a forester, they can help you solicit bids for your timber from trustworthy local buyers. You’ll also want to make sure that you provide the bidders with an updated “timber cruise” (see below) so that they can bid confidently and not lowball you because of poor information about your timber.
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Lump Sum
You and the buyer agree on a fixed upfront payment. This is a simple arrangement and it puts most of the risk on the buyer. What if the timber harvest has less volume or worse quality logs than they expected? You’re safe with a lump sum deal. However, the buyer knows this too, so they’re likely to offer you a price that is low enough that they’re nearly guaranteed to make money. This could mean you’re leaving a lot of money on the table.
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Pay As Cut
This is a more complex arrangement because it depends on the mill to report back exactly what products came out of each log. You’ll get the full value of your timber, but in the worst case, it may be significantly less than what you hoped. There are also more opportunities for tricks and bad behavior in a pay-as-cut sale, so oversight from your forester is very important.
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Timber Lease
Finally, you can actually sell your timber without cutting down your trees right now. A timber lease is a deal where a buyer pays you for the right to harvest your timber in the future. Timber leases can be either lump sum or pay-as-cut. Some buyers like to sign timber leases so they can have more certainty about their future supply of timber.
Where can you do a timber harvest?
Regulations – check your county and state regulations to see if there are any legal restrictions on your ability to harvest your timber. One common restriction is that you cannot harvest timber near streams (50 foot buffer is typical) because of concerns about erosion and sedimentation of the water supply.
Restrictions – if some or all of your forest is under a conservation easement or carbon contract, your ability to harvest timber may be affected. Many contracts still allow for some thinning for forest health, but restrict significant harvests like clear cuts.
Inaccessible – if your timber is on steep slopes, swampy terrain, or there are other accessibility issues, you may struggle to get any loggers who are willing to conduct a harvest.
Not enough acreage – Another common reason landowners struggle to sell their timber is because they don’t have enough acreage to harvest. Because there are significant upfront costs to set up a logging operation on your property, loggers typically need to harvest at least 20-40 acres of good timber to make a job worthwhile. You may be able to coordinate with your neighbors to assemble enough acreage to get a logger out to your land.
No markets – If there are no mills in your area, you won’t have any demand for your timber. Typically a mill will source timber from no more than about 150 miles away. NCX can help you learn which mills are in your area.
Who is involved in a timber harvest?
Timber harvests are major financial transactions and involve a number of specialists. Here are a few of the professionals you may work with on a timber sale. In addition to these groups, you may also want to consult with an attorney and an accountant to discuss the details of the harvest contract and relevant tax implications.
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Forester
A professional forester can help plan, coordinate, and oversee your timber sale – think of them like a “general contractor” for the project. To avoid a conflict of interest, a forester should work for you – not a mill. A forester will typically get paid a percentage of the proceeds of the timber sale – this incentivizes them to get you the best price for your timber. NCX highly recommends that you work with a professional consulting forester on your timber harvest. NCX can help you find a forester in your area.
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Logger
A logging crew will be the ones that actually come to your property to cut down your trees. To haul the logs to the mill, they may operate their own log trucks or that may be subcontracted out.
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Mill
A mill is typically the end buyer of the logs coming off your land. Different mills produce different products and will have different size and quality requirements for the logs they buy. Knowing which mills are in your area is an essential part of developing a profitable timber harvest strategy.
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Wood Dealer
Rather than selling to a mill or logger directly, you may sell to an intermediary called a wood dealer. They attempt to increase the value of a timber sale by optimizing which trees go to which mills.
How does a timber harvest work?
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Clearcut
All trees are removed. This is typical in plantation settings or when you want to really “reset” your forest with all new trees. You’ll want to deliberately replant your forest after a clearcut otherwise you’ll get a bunch of random trees coming up. This is the most common commercial timber harvesting technique because it is operationally straightforward and maximizes the timber extracted during the harvest. -
Seed Tree
Similar to a clearcut, but you leave behind a small number of high quality trees to provide seeds and naturally regenerate your forest with your chosen species. -
Thinning
This is a less intense harvesting method that removes a proportion (typically <30%) of the trees to reduce the density of the forest. The idea is that the remaining trees have less competition and will grow healthier and larger. A thinning can also provide some revenue before a final harvest. Many forest managers choose to do a thinning 10-20 years after the initial forest planting to improve the long-term growth trajectory of their forests. -
Selective Cut
Also known as “high grading,” this is a harvest that only takes out individual, particularly high value trees. Although it can produce some revenue for relatively little work, the removal of the highest quality trees from the gene pool of the forest can significantly reduce the quality of your forest in future generations. For this reason, selective cuts are generally not recommended. However, timber theft often takes the form of high-grading. Keep an eye on your most valuable trees!
Harvest types
Click for more info
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Clearcut
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Seed Tree
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Thinning
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Selective Cut
THE MARKET
Why do people harvest timber?
Humans have been working with wood for millenia and growing forests provide many key materials for our everyday lives. From the timber used to build our houses to the paper and cardboard packaging of many consumer goods, forests like yours are an essential part of the global supply chain.
Innovative uses for wood are also creating new sources of demand for your forest. “Cross-laminated Timber” (CLT) products combine sheets of wood to create super-strong building materials used in sustainable buildings – including some wooden skyscrapers! In recent years, demand from Europe for non-oil energy sources has also created a surge in biomass pellet mills that convert your trees into wood pellets that can be burned for heat.
A timber harvest is a major financial event for many landowners. Proceeds from a timber harvest can pay for a child’s college tuition, cover medical expenses, or provide cash to reinvest in improving the land. Because most landowners only conduct a single timber harvest in their lives, it’s easy to make very expensive mistakes. This guide can help you avoid some of the classic pitfalls! If you’d like to talk live with an NCX advisor, click here.
Risks, Rewards, and Restrictions
A timber harvest is a major economic and ecological event. The way it is handled can influence your finances and the future of your land. There are risks before, during, and after a harvest.
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Before Harvest
Before harvesting, your biggest risks are events that can reduce the value of your timber. You might not even be thinking about it, but nearby mills closing down can dramatically affect your timber value. Mill closures have become more common in recent years and they can reduce competition for your timber, lowering the price you can hope to earn. In the worst case, you might not have any mills left in your area and no buyer at all for your timber. Macroeconomic factors like housing demand can also significantly influence the prices you might receive. Natural disasters are another risk to consider. A wildfire, storm, or insect infestation can wipe out your whole forest before you have a chance to harvest.
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During Negotiations
During the negotiation of a timber sale, your biggest risk is selling yourself short. If the buyer of your timber has a better idea of what your trees are worth than you do, you could be leaving tens of thousands of dollars on the table. This is one of the main reasons why many landowners engage a professional forester to help manage the timber sale process.
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During Harvest
During harvesting, several things can go wrong. You’ll have strangers on your property and they’ll be operating heavy machinery. Make sure that they have the appropriate insurance coverage in case an accident happens and make sure that your liability is limited. Your forester should be overseeing the harvest to check that the correct trees are being harvested and any trees that you want saved are left alone. Your forester should also ensure that the loggers are following “best management practices” (BMPs) so they don’t mess up your land by compacting soil or dumping sediment into streams.
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After Harvest
After harvesting occurs, the biggest risk is that you don’t get paid correctly – especially on pay-as-cut sales. Timber theft is a real problem. Undercounting the number of truckloads of timber can cut into your profits from a timber sale. Your forester should know which logging crews are trustworthy, but you also might consider installing a wildlife camera trap on the road to your property and counting the number of loads that get taken off your land. Ask for the mill receipts to verify that your timber was graded correctly, especially for higher-value products like sawtimber. Getting pulpwood prices on sawtimber logs is never a fun experience.
HARVET TIMING
When should I harvest my timber?
In some sense, the entire profession of forestry is organized around this question! NCX strongly recommends that you engage with a professional consulting forester to help you plan and execute your timber harvest. NCX can help you find a local forester.
A “rotation” of a forest is the full cycle from planting to harvest. Before a final harvest, your forester may recommend that you do a “thinning” harvest to reduce the density of your forest and give the remaining trees more room to grow. The appropriate age to do this is going to depend on similar factors to the final harvest. Below are some rough rotation lengths and thinning ages for common forest types.
You should also consider how other natural capital markets could change the economics of your timber. For example, you may be able to use a carbon program to extend the rotation age of your forest. In an ideal scenario, you could receive carbon payments, keep your trees growing, and make even more money from a final timber harvest than you would have without the carbon program. NCX can help you find these win-win scenarios.
The appropriate rotation age for your forest is a balancing act. Growing trees for longer leads to greater harvest volume and a more diverse product mix. The more tons of wood you have to sell, the more you’ll make. As your trees get bigger, they can make more and more valuable products. Small trees get turned into low-value pulpwood. Big trees can get turned into more valuable products like 2x4s for houses. You may choose to harvest sooner because of slowing growth rate in your forest or risks like pests. Just like humans, trees start off growing really quickly and then their growth rate starts to level out. If your tree growth has slowed way down, you might be better off harvesting and starting a new generation. Few things are worse than a beetle infestation, storm, or fire that comes along and destroys a mature stand of timber right before harvest. The longer your timber is standing, the higher the likelihood of a disastrous loss.
