Expert advises small forestland owners on how to find best deal
By STEVE BROWN
ELMA, Wash. -- Profiting from a crop with a 50- to-75-year rotation has a lot to do with timing, a forest land manager says. And small forest landowners can take advantage of their inherent flexibility.
"The only advantage of nonindustrial landowners is we don't have to log," said Steve Pederson, of Forest Resources Inc. "We can hold it on the stump until the market recovers enough."
Several markets are prime right now, he told landowners recently at the Satsop Development Park.
"You'd be crazy not to take advantage of pulp prices right now," he said. Commercially thinned Douglas fir can bring $45 per thousand board-feet; grand fir and spruce, $47. He called the $640 export price for grand fir and spruce "phenomenal."
Pederson said prospective sellers should consider not only the price, but also the specifications demanded and the location of the stand relative to the market.
The dominant part of the profitability equation is how far the logs have to be hauled. With current fuel costs -- unlikely to drop soon, he said -- landowners in essence have to pay a premium to the truckers to haul the logs.
One trend right now is the "super-heated China market," Pederson said.
China-grade logs are relatively lower in quality than Japan-bound logs. They're younger, rougher, with more defects. Rather than using the wood for building homes, the logs are used for concrete forms and for timbers in heavy construction.
The current demand can't last forever, though. "The China market may go on for two or three years, or it may blow up next week," he said. "The hope is increased demand from Japan would be going by then."
Japan logs are older, cleaner, with fewer defects. Homes there are often built with exposed lumber, and wood without blemishes is preferred. Also the country is adapting to stick-built, drywall-style homes, which stood up better in the Kobe earthquake of 1995.
The recent tsunami made no distinction in construction type, crushing everything, he said. When Japan starts rebuilding from that disaster, it will need 4-by-4s and 4-by-8s from the Pacific Northwest.
As long as export demand holds, the region's timber industry can survive, Pederson said. "If it weren't for the China-Japan market, we'd be in the same depression as the South. Mills can at least keep working."
Pederson advised the forestland owners to get involved with their county farm forest associations.
"If you're not a member, that's the dumbest thing you've done," he said. For those who take classes a couple of times a year and read the reports, membership is worth 10 to 100 times the value of the dues, he said.
Watching the clock
Niche and spot markets can be worth monitoring, Steve Pederson said:
* Douglas fir and cedar poles can be a good deal "if you know exactly what you're doing," he said. Candidate trees 150 feet or taller are "real money trees," but it costs a lot more to extract a pole than a log, and such trees should be at least 10 percent of a stand to make it worthwhile.
* Figure maple is also hot in the export market, generating thousands of dollars in net income. He urged owners to "get some knowledge" before cutting anything.
* Veneer alder is "the new green gold," but not all big alder makes veneer quality. Landowners can get "premium prices for premium logs, (but) do not succumb to the siren of the highest prices. Look for the best deal."
* One landowner asked what he could do with a wind-damaged, huge, old-growth Sitka spruce. There's no commodity value, Pederson said. He suggested the owner could market the uniqueness of the tree and auction it online, taking bids to leave it standing in the buyer's name. Legacy trees do attract certain buyers.
-- Steve Brown