Seeking Professional Forestry Assistance:
Managing Your Woodlot with the Help of a Consulting Forester
by Stephen B. Jones, Professor, Pennsylvania State University
By practicing sound forest management woodlot owners can enjoy the full spectrum of benefits from their forests: timber products, clean water, abundant wildlife, aesthetics and peace of mind. However, the woodlot is a complex natural system and proper management requires a broad understanding of many biological processes, as well as an appreciation for the economic, social and personal pressures that influence woodlot decisions. In fact, the Wk of proper woodlot management is so complicated that most woodlot owners periodically need the assistance of a professional forester.
Professionally managed woodlots yield more timber, have a higher net present value, suffer fewer environmental impacts and generally provide a more pleasurable experience to their owners than do non-managed woodlots. Professional assistance is available from a number of sources, including state forestry agencies, Cooperative Extension, the forest products industry and private forestry consultants. Because consultants offer the widest range of services and availability, this article focuses on them.
What is a Consulting Forester?
A consulting forester is a professionally trained forester, generally with a bachelor of science degree in forestry or natural resource management,. whose services are available to the public on a fee or contract basis. Consultants may be either general practitioners or specialists. Good consultants have a college education in forestry, several years of experience and subscribe to a code of ethics developed by their connection with a forest industry firm.
Consultants are in the business of providing forestry management and other related services. Their fees vary greatly. Some of the common ways consultants charge for their services include: lump sum contractual price; percentage of the gross income from a sale of timber; hourly rate; or on the basis of unit work performed.
When Do I Need a Consulting Forester?
Managing a forest property can be complex and time consuming. A forester can provide advice and assistance to landowners who choose to undertake forest management projects that they do not have the time or expertise to handle themselves. Your local state forester may help with advice but, typically, public foresters have limited time and only offer specific services. (State foresters, in a few states, are permitted to provide significant services for private woodland owners.) Therefore, you will probably want to work with a consulting forester at times - regularly if you have a large property.
• When Preparing a Management Plan:
A consultant ran assist in preparing a woodlot management plan. This is an essential first step for any landowner concerned with managing a woodlot properly. A plan is a good way for a woodland owner to define and organize land-use objectives. The plan describes the natural resources of the woodlot and defines a program of management activities for a specified period of time. A management plan should be prepared with the assistance of a professional forester. The landowners decide what kinds of benefits they want and the forester determines whether and how the resource can be managed to provide those benefits.
• When Planning a Timber Harvest:
Selling timber is legally, financially and environmentally complex For these reasons, any time a sale or harvest of timber is anticipated a forester should be a key participant, serving as the landowner's agent. Yet, all too frequently, this isn't the case. In Pennsylvania, for example, more than 80 percent of all private, non-industrial timber harvests are conducted without the involvement of a professional forester. It is likely that a similar statistic holds for many other states. The consequences of not seeking professional assistance for timber harvesting ran be severe.
• When Planning Your Estate and Taxation Matters:
Recent U.S. Forest Service studies show that about three-fourths of the individually owned forestland in the Northeast is held by owners who are more than 45 years old. Much of " land will be passing through estates within the next 25 years. Because your woodlot planning horizon extends beyond that point, forest management should be a form of estate planning.
The consequences of ignoring the estate tax implications of woodlot management can be severe. Like farmers, forestland owners are often 'land poor," with land rather than liquid assets representing the bulk of their net worth. This may not be realized until the woodlot passes through an estate and the heirs must pay the unexpectedly high estate taxes. Funds for paying the tax burden may have to come from a premature We of timber or even a portion of the land. Having to dispose of these assets may effectively destroy those values you worked so hard to attain.
However, through well-advised estate planning, much of the tax burden - and all of the surprise - can be avoided. While estate planning can be quite complicated and require expert help, most consulting foresters are familiar with its important elements. Together with your attorney, your forester can work with you to develop an estate plan. Don't work hard to improve your woodlot only to have the fruits of your labor ruined by lackadaisical estate planning.
Annual income tax is another inevitability that can be made less painful by careful planning. Timber tax laws are particularly complicated, and the landowner is subject to regulations which are still evolving from the 1986 Tax Reform Act (Jones, 1989). Tax considerations are most important when you are considering a timber sale, but they should also be a factor when you account for yearly woodlot management expenses. A professional forester, along with your accountant can help reduce your woodlot tax burden and avoid IRS surprises. Planning and re-cord keeping are the critical elements of a woodlot tax strategy.
• If You are an Absentee landowner:
Absentee landowners, particularly, can gain peace of mind in having a consultant act as their agent, and recommend forest management activities and represent their interests locally. insects, disease, fire, wind and ice pose threats to your woodlot. Even animals can cause significant damage at times. A consulting forester can provide periodic inspection and reporting to keep you apprised of the woodlot condition and any need for salvage harvests that might arise from a natural calamity. In your absence, a consulting forester can serve as your agent for leasing hunting rights or permitting access onto your property. Your interests as an absentee landowner are best served if your woodlot is visited at least annually by a professional forester.
What are the Advantages of Forester-Assisted Timber Sales?
Results from two recent studies provide some interesting food for thought. In the first study, conducted in Georgia (Cubbage, Skinner, and Risbrudt, 1985), 40 separate timber sales were included - 20 with and 20 without the involvement of a professional forester. Harvests between the two groups differed greatly and are described below.
• Method of Sale:
Eighteen of the forester-assisted sales were sold as marked by individual trees; 15 of the non-assisted (control) sales were sold by the boundary or by a minimum stump diameter limit and not by individually marked trees. Seventeen of the assisted landowners sold by bid and nine of the control group did also.
• Harvest Returns:
The principal product of value removed in all sales was pine sawtimber. In 1985, $100 per thousand board feet (MBF) was a good price for Southern pine sawtimber. Only four of the assisted landowners received prices less than $100/MBF, while only two of the control group had prices above $100/MBF! Although the control sales averaged 31 more pine sawtimber removed per acre, the assisted landowners averaged 23 more sales revenue per acre. On average, misted landowners received stumpage prices 58 greater than those received by landowners making sales without a forester's assistance.
• Residual Stand:
Tracts harvested with forester assistance had more than twice the residual pine volume, leading to more volume available for future harvests. The combination of higher revenues from the present sale and growing stock available for future sales resulted in an average net present value (the current value of future growth and sales) for the assisted sales of twice that of the control group.
With the assistance of a professional forester, landowners in the Georgia study realized greater profit even though they sold less pine saw timber and were left with a more valuable stand of residual timber than the non-assisted landowners. The second recent study compared 12 similarly matched timber sales in Illinois (Budelsky, Burde, Kung, McCurdy and Roth, 1989). AR comparisons were of an oak-hickory timber type common to southern Illinois.
The forester-assisted sales had:
• Significantly less damage to the residual stand.
• Sales revenues for current harvests more than double per acre than revenue received on the non-assisted sales.
• Twice the value of residual merchantable timber.
• Forester-assisted landowners, whether in Georgia, Illinois, Pennsylvania or Maine, generally enjoy several advantages over their non-assisted counterparts:
Forester-assisted woodlot owners know that their ownership objectives will be incorporated in any timber harvest. This is often accomplished by removal of individually marked trees; the harvest is a step in a continuum of woodlot management and not an end in itself.
Forester-assisted landowners are knowledgeable timber sellers. Through their forester, they have learned the quality and quantity of products they are offering for sale. A knowledgeable seller can deal confident- ly and eff6ctively with potential buyers.
Through the experience and knowledge of their forester, forester-assisted woodlot owners know potential markets and how to reach them. By understanding the timber market, the seller can be confident that a sale will realize a fair market price.
Forester-assisted landowners can rest assured that their interests are fully protected by reasonable terms and conditions specified by a written contract with the buyer. They're also assured that the actual operation will be adequately supervised by their forester. Through this process, the woodlot owner is protected financially, legally and environmentally. In addition to the tangible benefits of increased revenue and more favorable residual stand conditions, a woodlot owner can achieve peace of mind by seeking professional forestry assistance any time a sale of timber is anticipated.
How Can I Establish a Relationship with a Consultant?
Managing your woodlot is a lifetime endeavor with serious legal financial and environmental implications. Choosing a forester to assist you in managing your woodlot, a source of personal pride and enjoyment as well as a major portfolio asset is an important process. A long-term satisfactory relationship with a forester you can trust is preferable to searching the Yellow Pages every time you require a forester's service. There is considerable advantage in working with a forester who has become familiar with you, your woodlot and its management plan.
Today, in most states, anyone can call himself or herself a forester or forestry consultant. There are few state licensing or minimum educational requirements which a forester or forestry consultant must satisfy. However, one way to assess a consultant's qualifications is to check his or her affiliation with professional groups. Both the Association of Consulting Foresters and the Society of American Foresters promote high standards of professionalism through their membership requirements and ongoing programs. In some states, organizations of consulting foresters exist separately. Membership in these organizations requires a professional forester to abide by a code of ethics. Membership also serves as an indication of a forester's level of professional commitment.
Choose a consulting forester in the same way you would select any service-related business. Check the phone book and classified ads, ask friends and professional acquaintances, including other woodlot owners, your banker, lawyer, accountants or call your state forestry agency, the Cooperative Extension or one of the professional groups mentioned above.
Once you have selected several candidates from whom to choose, determine whether an individual may have a conflict of interest that may influence his or her representation of your interests. Ask each to submit a prospectus, including documentation of professional experience, list of local client references and an estimated cost for services. Each consultant should outline the management alternatives available to you and explain why his or her firm can better represent your interests.
Call selected clients and inquire about satisfaction with the job performed and, if they are willing, visit their woodlot to see for yourself the nature and quality of service provided. Make sure that the consultant is located near enough to your property to administer the project adequately.
Finally, as with any other service-related transaction, demand a written agreement, with fees, services, obligations, terms and principal parties clearly identified. All consultants will have forms of agreement which they use routinely. Read the agreement carefully and make sure you understand it. If you don't, ask questions. If you are uncertain about any condition of the agreement, have your attorney review it for you.
What Will a Consulting Forester Cost?
Fees vary with the individual and with the nature of the project. However, in all cases, the rate and method of charge should be specified by the service agreement. Fees may be based on the actual time and expenses involved with the project, or they may be set at an amount contracted in advance. If the contract involves the sale of timber, fees may be a percentage of the total amount of the transaction. In all cases, make sure you understand the terms and conditions of payment
The Pitfalls of Working Without a Consultant
The two cases that follow illustrate the problems that can arise when foresters are not consulted prior to a timber deal.
Case No. 1: A woodlot owner described an instance when he had sold standing timber directly to a buyer who had made a telephone offer (DeCoster, 1984). The sale agreement was verbal and a forester was not involved. The landowner related.
"The original deal was that I would receive at least $4,500 in stumpage. When Mr. X got done, all I got was $1,350. Then, I came to find out, when we were out showing him the property lines, that we didn't take enough time, and he got over the line. The other property owner had his property surveyed and sent me a bill for $3,750. And that's not the worst of it! Now he wants $15,000 for the timber we took."
Case No. 2: Mrs. 'Smith' and her late husband owned a 12-acre woodlot surrounding their hunting camp. Shortly after her husband's death, Mrs. Smith received a letter inquiring about the timber on her woodlot In this case, Mr. Y indicated that he had inspected the woodlot and would like to purchase "selected trees' at 'market" value. He assured Mrs. Smith that he was a well-respected timber buyer and forester.
In need of some cash flow later that winter, Mrs. Smith called Mr. Y. She explained that she wanted to be certain that, if he cut her trees, he would take good care of the property which she and her husband had so enjoyed. Mr. Y assured her that he always left the woods in good condition and that he would only "selectively cut" the woodlot to a 16-inch diameter. He told her that he would scale the cut logs and send Mrs. Smith a check for the value of the stumpage, estimating that the sale would net as much as $1,000 for her. He also agreed to grade roads to their pre-logging condition and that grass would be sown on any exposed soil.
Mrs. Smith liked what she heard and trusted the man. Three months later, she received a check for $1,100, with a note stating "Payment for timber purchase." Mrs. Smith was very pleased to have received more than expected.
Several months later, during the summer, Mrs. Smith visited the camp for a vacation with her son and his family. They were surprised to see only Saplings some beech, scattered large hemlocks and numerous broken trees remaining. In addition to the battered look of the woodlot, the access road was severely rutted. Mrs. Smith called Mr. Y but, after three days with no return call, she contacted a consulting forester whose number she had found in the phone book under "Forestry." The consultant conducted a stump cruise of the woodlot counting the stumps and then estimated market value from the number and size of stumps by species. His report stated that more than 34,000 board feet of timber had been removed. Its stumpage value was approximately $11,000! This incident took place in Warren County, Pennsylvania (Smith, 1988).
Examples such as these are not uncommon in Pennsylvania and elsewhere, in spite of the fact that most timber buyers and loggers are honest businesspeople. However, even those operators with the highest integrity cannot be relied upon to strike an agreement that has the woodlot owner's best financial interests in mind. Timber buyers and loggers are in business to realize a profit and this drives them to purchase their raw materials principally wood, at an economical price.
Also, most timber buyers and loggers do not have the technical forestry expertise, to prescribe cutting treatments that truly me-et the landowner's objectives. Where so-called "selective" logging is practiced, the vast majority of the harvests prescribed by timber buyers and loggers result in a strict diameter-limit removal of the largest and highest quality trees, leaving the lower quality and less desirable species to produce the next crop.
Several important lessons can be learned from the unfortunate experiences of these two woodlot owners:
Never conduct a timber sale without the involvement of a professional forester.
Never sell timber without a written contract
Never reach an agreement that results in an unsupervised harvest operation.
Be absolutely certain that the forester you select understands exactly what your woodlot objectives are. Explain your thoughts and expectations in clear terms. Simply asking your forester to do "what's right" is not enough. If you want your woodlot to look like a park and be a wildlife sanctuary, say so. If you want to maximize income production, make it clear. Some foresters may try, with good intentions, to impose their own personal bias on your woodlot. Be aware and resist this - it's your forest! Decide what you want, work with your forester to decide how to achieve it and then direct your forester to do it.
Your woodlot is a valuable portfolio asset as well as a source of great enjoyment and periodic income. Proper management of this complex biological system requires the forestry and business skills and experience of a professional forester. A professional forester can help assure that your woodlot is managed wisely- environmentally, legally and financially. Although limited free forestry service and advice are available from various public and industry sources, consulting foresters offer the widest range of services and availability.
Most woodlot owners will at times want to work with a consultant forester. While timber sales generate the most pressing need for professional assistance, there are other reasons for seeking a consulting forester: preparation of a management plan; estate and taxation planning, and whenever other forestry activities are anticipated. As with other service-related transactions, it is extremely important to choose a consulting forester carefully. Take care in selecting the right one.
Costs vary with the project. Some services, such as appraisals and planning, result in immediate out-of-pocket expenses, but these should be viewed as an investment in woodlot stewardship which will likely save money or reduce costs in the future. Although timber sales are usually handled as a percent of gross receipts, ample evidence exists to support the fact that even with the percentage reduction, the forester-assisted woodlot owner normally realizes a greater net sales return. The greater net income, combined with an environmentally sound forestry prescription for your woodlot, results in compelling justification for seeking professional forestry assistance as you contemplate woodlot management.
Literature Cited
Budelsky, CA., J.H. Burde, F.H. Kung, D.R. McCurdy and P.L. Roth. 1989. "An evaluation of state district fox-ester timber marketing assistance on non-industrial private forest lands in Illinois.' Southern Illinois University at Carbondale, Dept. of Forestry.
Cubbage, F.W, T.M. Skinner and C.D. Risbrudt. 1985. "An economic evaluation of the Georgia Rural Forestry Assistance Program." The University of Georgia, College of Agriculture Experiment Station, Research Bulletin 322. p. 59
DeCoster, L. 1984. "Is a consulting forester worth the fee? Note from a phantom forester." The American Tree Farmer, Vol. 1, No. 3, p. 15. Jones, S.B. 1989. "Timber taxation: A general guide for woodlot owners." Pennsylvania State University, College of Agriculture Circular. Smith, S. 1988. "Timber swindle tales: Story #1." 7he Woodlander, Pennsylvania Cooperative Extension, Warren, Forest and Erie Counties. 2 p.
Professional Forestry Consultant Associations
The Association of Consulting Foresters, Inc. 5410 Grosvenor Lane, Suite 205 Bethesda, MD 20814 (301) 530-6795
Society of American Foresters 5400 Grosvenor Lane Bethesda, MD 20814 (301) 897-8720
This article was adapted and reprinted from the July 1989 issue of national Woodland. Stephen B. Jones is on the faculty of the School of Forest Resources, Pennsylvania State University, University Park, PA. He holds the Ph.D. in forestry and he is a regional correspondent for National Woodlands.
File Reference Yankee Woodlot YW 8.4