Managing your land and forest is equally important as your stock investments. You study your stock portfolio and you certainly need to pay close attention to your land and timber investments. Land and timber returns have a direct relationship with your management efforts. Different investment goals require different management tactics, prescriptions and approaches to reach or achieve these designated goals.
Managing Your Forest is a Long-term Strategy
A forest is a long-term investment and, in many cases, a lifetime investment. Having a vision of where you want to be and what you want along the way is an integral part of developing a plan. Understanding your land’s capability and composition enables us to make important management projections. Location, soil characteristics, and proper timber management allow us to determine land productivity and make very sound growth and yield projections for timber. Utilizing this data along with educated assumptions we can dictate future cash flow and return projections. Of course, we cannot guarantee prices on a 20 – 30 year timber rotation, but we can certainly utilize this information to estimate future cash flows for budgeting and investment purposes.
Getting Started & Benefits of Forest Management Plans
Below are a few things to consider when developing a Forest Management Plan. These certainly are not all the considerations of the plan but provide a good introduction of the direction. Landowners goals dictate management prescriptions, impact management intensity, return on investment, and management horizon. Over time, management goals can very well change as do investment goals.
- Site Index, a measure of vegetative productivity associate with specific soils, needs to be identified. Soil productivity dictates how much, how fast, and how tall trees and vegetation will grow on your land. This affects timber, wildlife, forage, and crops.
- GIS mapping, more specifically stand type delineation, of your forest or land determines how many acres of that certain type of timber or land component you have. This is a key data point is integral in calculating yields and cash flows.
- Age of timber on your land allows us to estimate where you are in the timber rotation enabling us to predict timing of cash flows based on desired harvest criteria. We can consistently determine when future thinning and harvest should occur based on site index and growth analysis.
The above knowledge and data in the proper format allow us to quantify and make sound projections into the future for budgeting, inventory, harvest schedules and many other factors. An excellent advantage of timberland as an investment is the flexibility to defer harvest in order to capitalize on or adjust to market conditions. Unlike farming row crops or similar investments, timber does not have to be harvested at a specific time. A few years sooner or later is OK.
Having this data at your fingertips provides knowledge and flexibility to make sound decisions at a moment’s notice. If the opportunity for arbitrage or need for cash suddenly arises, the data associate with a proper forest management plan allows us to quickly assess and provide options. If you have a timber buyer looking for a certain product and has inflated price, we know if we have the product, where it is, and how much.
There are many other benefits associated with land and forest management. For example, if you have read our articles, you know that none of the above is as valuable without a good road system. Access is key in enhancing all other features of management. Below are a few other management objectives that are incorporated into a thorough, comprehensive management plan.
- Location of roads and water management to enhance road system
- Strategic placement of game fields & size of opening
- Creating management blocks for staggered rotation and harvest
- Locating buffers and game corridors to enhance wildlife movement and aesthetics
- Utilize different management techniques & constraints to enhance specific wildlife species prioritized by landowner
- Utilizing forestry prescriptions to maintain proper vegetation on forest floor, understory, and mid-story such as fire and herbicides.
- A continuous goal or priority to maintain character and integrity of the land & forest in the event property to be sold.
A comprehensive management plan has many moving parts. The plan may very well change over time and needs to be flexible. A plan can be tailored at any time wherever your land is in the timber rotation. You just need to get the initial data to begin the process, take the time to understand what timber you have on your land, and clarity around what you want to achieve. We will help you put all the parts together.
A comprehensive management plan includes:
- High quality color maps including stand type maps, satellite imagery, and topographic maps
- Clearly delineated and classified forest stands
- Volumes, values, and cash flow projections
- Compartment/ stand specific management recommendations
- Wildlife recommendation
Our goal is to help you manage your land, so you get the maximum benefit from your investment at the level you desire. Forest management does not have to be super intensive, although some prefer it that way. We want you to understand your land and manage at the level you want and enjoy. Our team here at Green Hill Land & Timber is happy to answer any questions you have. Give us a call today.