HOW TO SELL TIMBER, TREES & LAND IN ALABAMA

Bucky Henson
334-412-2487
bucky@natvest.com

Who can I talk to?” “Who does this in Alabama?

Do you have 40 or more acres of Alabama timberland? Why 40 acres? Most modern logging crews have hundreds of thousands of dollars invested in their operations, and they need a good week’s work to make a move and setup profitable for them.

Of course, I am always here to discuss your timber project. I’ve been in the business of buying and selling timber and timberland across Alabama and The South for 30 plus years.

Whether you are an experienced landowner or new to the asset class, call, text or email me for a no-obligation discussion of your Alabama land and/or timber interests/needs:

Bucky Henson
Cell: 334-412-2487
bucky@natvest.com

THE TIMBER BUSINESS IN ALABAMA

The business of buying/selling/harvesting & delivering timber products in Alabama includes landowners, timber companies, foresters, logging contractors (loggers) and end-buyers (sawmills, paper mills, wood yards, etc. to whom loads of logs and pulpwood are delivered). All or some of these players will be involved in any timber harvest in Alabama.

LANDOWNERS

Typically (you’ll see this word often, because exceptions always exist), timber in Alabama is owned by the owner of the dirt that it grows on – the land.

In certain instances, the ownership of the timber is separate from that of the land, as is the case with timber that has been sold under a cutting/harvesting contract (usually for a limited period, maybe 18 months). In that case, the buyer of the timber owns the timber (and takes the risk of storm damage during the length of the contract).

Also, there are easements (usually for tax and/or conservation purposes) that provide ownership and management rights with respect to the timber only – not the land. In those cases, the land often has been transferred to a land trust, The Nature Conservancy, etc.

TIMBER COMPANIES/TIMBER BUYERS/WOOD BUYERS/TIMBER DEALERS

Companies and individuals whose business it is to purchase timber from landowners and hire logging contractors to harvest and deliver the timber, hopefully at a profit. They maximize timber value by properly merchandizing the various timber products (ply logs, saw logs, pulpwood, etc.) that come off of a piece of land.

The owners of timber companies often are and/or employ certified foresters and/or experienced timber people to carry out their operations. Many “timber companies” offer quality timberland management services to landowners, in addition to their timber-harvesting services.

Timber companies usually make (or lose) their money on timber harvests in one of two ways:

Lump-Sum

The companies negotiate or bid on timber and pay for the timber in advance. In these cases, the timber companies take the risk that they can get more for the timber when they harvest it than they paid for it. They take actual possession of the timber on the land for a period of time under timber deeds/timber cutting contracts – usually for 18 to 24 months. Many of these deeds/contracts include provisions for time extensions (in case of abnormally wet conditions, etc.). Many landowners are open to time extensions anyway. Just a good way to be, in my opinion.

Per-Unit

The timber companies pay landowners for each ton or thousand-board-feet that is harvested. This will include set per-unit prices and/or percentage commissions.

If you are a landowner or the owner of timber that is bought/sold on a per-unit basis, remember this term: Stumpage. That is the timber business’ name for what you get paid. It is not uncommon for a timber company to charge a set commission ($X per ton, for instance) for pulpwood and a percentage of stumpage for logs and other timber products.

Risks of Timber Damage

With regard to storm & fire risk and ownership of standing timber, an important thing to remember is that standing timber – made up of trees that have not been felled – is considered real property. Under the typical lump-sum purchase, the timber company is actually purchasing real estate. The timber deed/contract can be (and probably should be) recorded at the county courthouse. The timber company actually buys the standing trees for a period of time.

Under these timber deeds/contracts, the risks of fire, insects, disease and storms damaging or destroying the standing timber is borne by the owner of the timber – the timber company. Particularly, along the Gulf Coast and near Alabama’s Tornado Alley, as it has come to be called, this is no small consideration.

Under the per-unit arrangement, the landowner owns the standing trees as real property until they are severed from the property – in other words, until they are cut.

Under per-unit contracts, the landowner almost always continues to own the timber until it is severed (until it is cut). Therefore, fire & storm risks remain with the landowner until the timber is harvested.

The variations of arrangements for cutting and paying for timber products can vary greatly. I once heard of a tract of timber being paid-for with an outboard motor. That said, most deals fall under one of these two descriptions.

FORESTRY CONSULTANTS

Degreed forestry professionals who have been certified by the state (Alabama Forestry Commission). Forestry consultants are often relied upon by landowners to provide forest management services, including the management of timber harvests. Many forestry consultants are members of national societies such as the Association of Consulting Foresters (ACF) and the Society of American Foresters (SAF) and must adhere to the strict professional standards put forth by those groups.

Fees for forestry professionals managing timber harvests may include a set percentage of the proceeds of the timber harvest (much like a real estate commission) or may be on a set hourly rate or some other terms. Those fees are hard-earned. The forester will do a great deal of work before and during the harvest to ensure that the landowner gets a great return for their timber and to ensure that the harvest job is done well.

But, forestry consultants do more than manage timber harvests. A lot more. For some of their management (non-timber harvest) work, they may charge hourly, cost plus (for managing activities provided by third parties, such as earthmoving, bulldozing, etc.), or a flat management fee based on a percentage of the value of the assets (usually for landowners with large acreages). The flat management fee is charged much like a managed-money account with a financial professional and will often include the management of timber harvests.

The manner in which the timber is sold varies greatly and will be described below.

LOGGING CONTRACTORS

As noted above, there are a number of options, if you want to sell timber in Alabama or cut Alabama timber. But, in the end, the process involves cutting trees (usually with a large machine called a feller buncher or cutter), pulling the cut trees to a loading area (with another large machine called a skidder) where they are cut up and the parts (called logs or stems) piled into various products that go to various mills and woodyards, loading the logs/stems onto log trucks and, finally, delivery to the mill or woodyard. This is the task for the professional logging contractor.

Loggers and the wood buyers with whom they work regularly attend training courses such as the Professional Logging Manager course offered by the Alabama Forestry Association. These courses hone the skills of logging contractors and promote safety, efficiency and other important topics for logging contractors.

The logging contractor will charge a per-ton price for the timber that is harvested, as well as a per-mile cost for hauling the products over a set mileage, usually about 50 miles.

Logging contractors are often hired by the timber company that is buying or has bought the timber that is harvested. Many timber companies own their own logging crews and may use a mix of “company-owned” crews and independent logging contractors. Likewise, many logging contractors are also wood buyers, themselves.

SAWMILLS/PAPER MILLS/CHIP MILLS/WOOD YARDS

Truckloads of harvested timber are hauled to the end user, the mill or wood yard. Of course, different timber products (saw logs, ply logs, pulpwood, etc.) are hauled to different mills where the products will be accepted and bring the highest prices. All parties involved in the harvest must work together to ensure the timber is “merchandized” properly so that, for instance, valuable ply logs that are raw material for plywood don’t get hauled to a paper mill as pulpwood, where the mill pays only what they are worth as raw material for paper.

The mills and wood yards where the truckloads of logs and pulpwood are delivered usually weigh the log truck going into the facility and when it leaves. The weight of the logs/stems delivered is the difference in the two weights. Often, the mill or woodyard pays for logs by the ton. Sometimes, the amount of wood delivered is based on measurements of the individual logs in board feet.

From one tract of land or one stand of timber, there may be five or more timber products that all get hauled and sold to different mills in the effort to maximize the value of the timber harvest.

One important consideration: Mills and wood yards are often also timber buyers themselves, who purchase timber directly from the landowner and hire logging contractors, themselves.

How to cut? Which trees are to be cut?

Again, there are a number of options for deciding how to cut your timber, or rather, which trees are to be cut:

Thinning: Usually conducted in younger stands of pine plantations, a thinning involves harvesting the weakest trees in a stand of timber and leaving the healthiest trees to grow bigger and into higher-value products. A first thinning may occur anytime in the lifetime of the timber stand from about age 15-20. A second thinning or final harvest may take place anytime from about ages 22-35. The purpose of a thinning is to enhance future value at the final harvest.

Clearcut: This is a final harvest, preceding replanting or allowing the land to naturally regenerate/re-seed. All of the trees in the timber stand are harvested. Usually occurs when a stand of timber is mostly mature.

Group Selection: Sometimes, within a timber stand, there are areas of a few (maybe 2-10 acres) where the trees are mature or even past mature and beginning to weaken. In those cases, small clearcuts, or groups/patches, may be harvested.

There are other approaches that a wood dealer and/or forester may suggest. You may have other ideas yourself, as the owner of the timber. Sometimes wildlife considerations come into play. Always remember, it’s your timber. Harvest or don’t harvest as you and only you see fit.

Selling timber: Lump-Sum vs. Pay-as-Cut

The two primary means of selling timber in Alabama are Lump-Sum (where the trees that you decide to sell are purchased all at once) and Per-Unit or Pay-As-Cut.

Lump-sum sales are either negotiated between the buyer and the owner of the timber or the result of a competitive bidding between several potential buyers.

Pay-as-cut or Per-Unit sales are based on the exact amount of wood that is harvested and paid to the landowner about once a week during the harvest operation.

Which is better? That’s a good question. There are potential advantages and disadvantages of both approaches. If you are unsure, speak to an expert – either a forestry consultant or other professional whom you trust.

Land & Timber Management Services

NatVest is here to help you with Alabama timber sales, harvests, cutting, logging, etc. across Alabama:

  • Autauga County, Alabama
  • Baldwin County, Alabama
  • Barbour County, Alabama
  • Bibb County, Alabama
  • Blount County, Alabama
  • Bullock County, Alabama
  • Butler County, Alabama
  • Calhoun County, Alabama
  • Chambers County, Alabama
  • Cherokee County, Alabama
  • Chilton County, Alabama
  • Choctaw County, Alabama
  • Clarke County, Alabama
  • Clay County, Alabama
  • Cleburne County, Alabama
  • Coffee County, Alabama
  • Colbert County, Alabama
  • Conecuh County, Alabama
  • Coosa County, Alabama
  • Covington County, Alabama
  • Crenshaw County, Alabama
  • Cullman County, Alabama
  • Dale County, Alabama
  • Dallas County, Alabama
  • DeKalb County, Alabama
  • Elmore County, Alabama
  • Escambia County, Alabama
  • Etowah County, Alabama
  • Fayette County, Alabama
  • Franklin County, Alabama
  • Geneva County, Alabama
  • Greene County, Alabama
  • Hale County, Alabama
  • Henry County, Alabama
  • Houston County, Alabama
  • Jackson County, Alabama
  • Jefferson County, Alabama
  • Lamar County, Alabama
  • Lauderdale County, Alabama
  • Lawrence County, Alabama
  • Lee County, Alabama
  • Limestone County, Alabama
  • Lowndes County, Alabama
  • Macon County, Alabama
  • Madison County, Alabama
  • Marengo County, Alabama
  • Marion County, Alabama
  • Marshall County, Alabama
  • Mobile County, Alabama
  • Monroe County, Alabama
  • Montgomery County, Alabama
  • Morgan County, Alabama
  • Perry County, Alabama
  • Pike County, Alabama
  • Pikens County, Alabama
  • Randolph County, Alabama
  • Russell County, Alabama
  • Shelby County, Alabama
  • St. Clair County, Alabama
  • Sumter County, Alabama
  • Talladega County, Alabama
  • Tallapoosa County, Alabama
  • Tuscaloosa County, Alabama
  • Walker County, Alabama
  • Washington County, Alabama
  • Wilcox County, Alabama
  • Winston County, Alabama

I’ve spent the last 30 years managing land & timber in Alabama and Mississippi for the Buchanan family of forest products companies and other individuals, families, trusts and companies. Now out on my own, I am available to help with your land and timber management needs on a consulting basis. Just give me a call for a no-cost evaluation of your project. If it appears that we want to take that further into my actually helping you manage your land and timber, we can discuss that. Whether it’s reforestation, thinning timber, selling timber lump-sum, painting lines or whatever, I’ve been there.

Couple Real Estate Services with Land & Timber Management

Many owners of timberland in Alabama and Georgia are active buyers and sellers of tracts of timberland. As a broker as well as a manager, I am able to watch the market for clients who are looking for buying and selling opportunities.

Many of us have that special tract of land that we would not want to sell – ever. But, many landowners have other tracts of land that they see as simple investments and would be willing to trade, sell, etc. That’s where a broker such as myself can help, with those 30 years of experience with Alabama timber services & sales.

I’ve been involved in literally hundreds of land and timber sales, including acquisitions of land, sales of land, timber harvesting contracts, etc. I can help you take advantage of opportunities and help you avoid many of the potential pitfalls. I’ve been through both experiences!

So, contact me, if you’d like to bounce some ideas around.

Bucky Henson
President
NatVest LLC
PO Box 2500
Orange Beach, AL  36561

334-412-2487 (cell – call or text)
bucky@natvest.com

Alabama Ag/Land/Farm/Timberland Lenders