Is $10/ton a decent price for Loblolly pine in Central VA?

[Mestak]

Relative newbie here, hoping to soak up some knowledge from all y'all kind folk. A hobby mill is in my future, initially to build a new barn/shed for equipment storage. We would eventually like to build a cabin is well. But those are future topics for future posts...

For now, my wife's family has a 95-acre parcel of Loblolly pine (separate from the old homestead and planted purely for investment) that is about 22 years old. By my measurements, a decent number of the trees are in the 14-16" DBH range, with almost none (that I measured anyway) smaller than 10". Funds are needed for the barn build and to offset taxes/utilities on a property where no one lives full time and divvying up the costs is getting complicated.

The family has used this forester for decades and we trust him, but the first quote he got just seems low to me given the present cost of lumber. (I know the mills aren't exactly kicking down those profits, but they must be at least somewhat proportional). No figures yet for the CNS or sawtimber size trees, but we got offered $10/ton for the pulp.

The stand in question has great access and the forester did suggest we might get a better price later in the year.

Thoughts on the $10/ton price? I keep seeing much higher figures, here and elsewhere online, and want to be sure we're doing the right thing. Thanks in advance for any info or advice offered. 

[IndiLina]

I find this site helpful.   
Quarterly Price Report | NC State Extension

[Mestak]

Thanks, IndiLina. 4th Q 2021 prices listed there seem comparable to the offer. But I've also been using this as a guide:

Historic Virginia Timber Stumpage Prices | Virginia Forest Landowner Education Program | Virginia Tech

and prices there are closer to $12/ton 4thQ 2021. I guess I'm surprised/confused by the $2 difference.

[IndiLina]

Thanks, IndiLina. 4th Q 2021 prices listed there seem comparable to the offer. But I've also been using this as a guide:

Historic Virginia Timber Stumpage Prices | Virginia Forest Landowner Education Program | Virginia Tech

and prices there are closer to $12/ton 4thQ 2021. I guess I'm surprised/confused by the $2 difference.

In my limited experience, bids can vary widely depending on how far the mill is from the woodlot, road access, volume of wood on the tract, and how thirsty the mill is for wood at that moment, among other factors I'm sure. Maybe fuel costs are factoring in now. 

[btulloh]

Regarding taxes, does your county have a land use tax mitigation program?  It's a state sponsored program but implemented on a county by county basis and can reduce real estate tax by as much as 85%.  It's not hard to qualify and your pine plantation certainly would. 

Pulp prices have been highly variable in va in the last few years. Your trusted forester is most likely a good source for current pricing. 

[Mestak]

Regarding taxes, does your county have a land use tax mitigation program?  

Not sure (researching now, thanks for the tip), but I feel certain my late father-in-law would have known and taken advantage of this if it existed. The land is in Appomattox county, fwiw.

[Den-Den]

The price a landowner gets for pine pulp varies a lot from month to month.  Most of the money paid at a mill for pulp goes to cutting and hauling, so a few dollars change in price has a big affect on what the landowner gets.  The cost of fuel and distance to haul is also a big factor.

[Southside]

Pulp price at the gate dropped $2 two weeks ago, fuel is up and spring is coming. If the mills don't offer a distance adjustment and fuel allowance, and honestly I don't see how they can with everything the way it is, pulp is going to drop more.

Pulp and lumber are two different markets, you can't compare the cost of a retail 2 x  4 to stumpage pulp value. 

[Mestak]

Regarding taxes, does your county have a land use tax mitigation program?  

As follow-up, best I can tell, Appomattox County has mitigation programs for Agricultural and Horticultural uses, but *not* for what Virginia calls "Forestal" use. We do rent about 40 acres to a local farmer, but do not farm the land ourselves.

Division 16 ? Assessment of Real Estate Devoted to Agriculture and Horticulture ? Appomattox Code

[Mestak]

Pulp price at the gate dropped $2 two weeks ago, fuel is up and spring is coming. If the mills don't offer a distance adjustment and fuel allowance, and honestly I don't see how they can with everything the way it is, pulp is going to drop more.

Pulp and lumber are two different markets, you can't compare the cost of a retail 2 x  4 to stumpage pulp value.

Bad timing, I guess. When you say pulp is going to drop more, do you mean in the short term or in general? (Not asking for predictions, just clarification.) Either way, sounds like it may be best to wait until fall or winter at least.

[Southside]

I would call the County Forest Service Forester and ask about the forest use tax plan / program.  I can't imagine Appomattox not having that in place.  As far as pulp prices goes - historically as spring and summer arrives guys can put more wood out faster so the mills aren't as hungry, price drops.  Right now - who knows.  Fuel is going up daily if not multiple times a day, that will have an impact on how many guys stay in the woods if it's long term.  That could bring prices up, but if cardboard use drops due to the greater economic situation, then SYP pulp will go down. 

If you are talking about a couple of dollars per ton gamble, factor in what the cost of not having the money to use may cost you in the future.  Do building expenses go up more than the difference in the pulp income?  If so you lost money.  It's not about what you make, it's about what you keep in this game.  

There are also quotas that come into play at the mills, so that can have a dramatic impact on what happens on the ground.  

Are you going to clear cut the tract?  If so have you planned for re-planting or alternate use conversion costs? 

[LeeB]

Just a question for my own education, you mentioned everything was mostly 10" - 16" DBH. Is all of that considered pulp?

[IndiLina]

Participating Counties/Cities | Department of Agricultural and Applied Economics | Virginia Tech.  
There is quite the range in how individual counties choose to implement the land use assessment in Virginia.   

[Mestak]

I would call the County Forest Service Forester and ask about the forest use tax plan / program.  

[snip]  

Are you going to clear cut the tract?  If so have you planned for re-planting or alternate use conversion costs?

Thanks. Definitely some things to think through. Think I will call the forester and the County Commissioner's office on Monday.
We will probably clear cut whatever portion of it we decide to harvest. Replanting costs are being anticipated (and maybe even factored into the contract). Our forester thinks loblolly is the the only thing that makes sense (mortality rates too high on other species), but I would love to explore other options.

[Southside]

Oh boy - that last sentence is a whole 'nother can of worms.  Is this forester a consulting forester who you hired or working for the logger doing the harvest?  You are basically at the northern edge of Loblolly range.  

[Mestak]

Just a question for my own education, you mentioned everything was mostly 10" - 16" DBH. Is all of that considered pulp?

This is where some of my confusion lies. I'm very new to all this, but according to what I've found online anything under 10" is normally used for pulp, 10-12" is chip-n-saw, and everything bigger than 12" can used for sawtimber.

So I'm left to wonder, given the size of the trees, why I've only received a pulp wood price quote.

[LeeB]

Don't know about VA, but as far as I know from friends in the logging biz that pulp has very limited sales opportunity at the mill. I have to agree with Southsides question. Who does the forester actually work for?

[Mestak]

Oh boy - that last sentence is a whole 'nother can of worms.  Is this forester a consulting forester who you hired or working for the logger doing the harvest?  You are basically at the northern edge of Loblolly range.  

The forester works for us, and prepared the management plan for this stand and others back in 2000. He's worked with the family since the late 80s/early 90s I believe.  So, despite what appears to be a clear bias towards loblolly, we have every reason (and due to our ignorance, a real need) to trust his judgement.
My father-in-law was pretty hands off, trust the experts, plant-and-forget type. I like to get my hands dirty, try to independently verify everything I'm told, and don't really measure my time in dollars, so I may decide to experiment with other species.

[Southside]

It sounds like he is planning a second thinning more than a complete harvest, which would be appropriate from what you described.   

When it comes to planting more pine I have a few sides to me.  First, as a guy who buys pine logs I love, absolutely love, seeing folks planting hardwood cut overs, hay fields, and everything else to pine.  Why you ask?  So I will have a future supply of quality pine logs? No - so I will have a future supply of CHEAP, pine logs that I can choose from.  Supply and demand, the supply side of the equation is through the roof here in central Virginia and the demand side is not growing at the same pace.  So, when someone won't take my offer for pine logs, I just look to the neighbor and ask if he wants to sell. When #1 comes back around ready to sell at my previous offered price, well now I am full so my offer to him drops.  

On the flip side as a guy who enjoys wildlife and a diverse landscape I can't stand seeing all the pine we are transitioning to.  I do not personally think it's a good idea to remove our hardwood and replace it with pine, same for clear ground.  We need to be diversified with our resources if we want to be competitive as a region and as individual land owners.  

For the past decade Sweet Gum has paid more than pine, it grows faster and you can't kill the stuff, so I can't say I agree with your Forester on his risk assessment.  

[Mestak]

Thanks, Southside. I agree with you on several fronts. Pretty sure we're talking a clear cut, not thinning, but I'll certainly confirm.

Are you by any chance the guy who advertises free slab wood on Craigslist? If so, we met a couple years back when I came by looking for scrap stuff to build my raised garden beds. Thanks again, btw, about to head into the third season and the beds are holding up well. I'm about to pull the trigger on a Woodland Mills 126, so I'm sure to have a million questions once I get to making some sawdust of my own.  ;D

[rusticretreater]

Yancey Mills, near Crozet, buys every pine tree it can get its hands on.  As a result, they also make a ton of pulp, pine bark mulch and such.

[nativewolf]

We do hardwoods but I'm just going to second all of Southside's comments on Lob pine in your county.  Basically you are disadvantaged from an ecological standpoint, it is not meant to grow there, it grows much faster in GA and NC further south, the best markets are further south, the pulp market is very limited where you are and if Covington ever closes (which it likely will one day) forget selling pulpwood again.  $10 while not high, is higher than it has been just recently...sometimes you can't give it away.  

Good on you to dig into things. Keep digging.  

Southside mentioned Sweetgum.  Another option is Yellow Poplar, it also grows quickly.  The markets are typically excellent in Virginia, the volume per acre rivals pine, the price per ton has been much higher recently.  There is a market other than just pulpwood and I believe that market diversity is an important factor.  

Good luck!

[stavebuyer]

Yancey Mills, near Crozet, buys every pine tree it can get its hands on.  As a result, they also make a ton of pulp, pine bark mulch and such.

I was raised within shotgun distance of Yancey Mills. Back in those days old man Dick Yancey ran a peckerwood circle mill sawing hardwoods. They shifted to pine around 1980 and haven't quit growing since.  

[Southside]

Yup, that's my ad. Glad to hear it  worked out for you. 

[Clark]

I don't know what the % of this sale is anticipated to be pulp but around here you don't determine a sale based on the bid price for pulp. It's such a small part of the sale compared to bolt prices (and volume) that you'd be insane to reject an offer based on pulp price. Yet, I've seen it done.

From what very little I know of lob it does seem like you could squeeze in a thinning. That would space our your income and give you a volume boost on the final harvest.

If you want to make your forester really scratch his head you could suggest two thinnings: the first very traditional and the second a heavy thinning to give a lot of sunlight to the forest floor. From there you seed in shade-tolerant hardwoods and let nature take it's course. It's very possible to do and could meet many of your goals but I'm guessing the forester has never done that or considered it. I highly recommend making foresters think differently.

Clark