Marketing Timber from the Private Woodland Charles R. Blinn Department of Forest resources Lewis T. Hendricks Department of Wood and Paper Science

Copyright ©  2008  Regents of the University of Minnesota. All rights reserved.

Approximately 40 percent of Minnesota's commercial forest land is owned by non-industrial private woodland owners. Over 40 percent of the timber harvested in the state is derived from these lands. Each year many of these landowners receive significant income from their woodlands by selling timber. They also improve the health and vigor of forest land and its quality for other uses by following management guidelines in selecting which trees to harvest and which to leave.

Unfortunately, many woodland owners sell their timber for only a fraction of its value because they fail to recognize its true value or they do not market it effectively. Also, some woodland owners are disappointed with their residual timber stand. These problems often can be avoided by obtaining assistance from a professional forester. Your problem as a woodland owner who wants to sell timber is to find a reliable logger who will pay a fair price for your timber and leave your woodlot in an acceptable condition.

This bulletin presents guidelines to assist individuals in marketing timber from their woodlands. These suggestions are not meant as a substitute for advice and assistance from a professional forester. They are provided to assist you in understanding and implementing effective timber-marketing procedures. If you use sound judgment and follow the guidelines outlined in this publication your timber harvest should be financially and aesthetically rewarding.

Sources of Assistance

Landowners who have little or no experience in woodland management or timber marketing should seek the assistance of a professional forester when undertaking these activities.

Private Sources

Many large forest industries provide forest management and marketing assistance to private woodland owners. In addition, there are consulting foresters who, for a fee, can provide a wide range of land management services, including timber harvesting and marketing assistance. Fees for such harvesting and marketing assistance usually are a percentage of the gross receipts from the sale. These consultants can also act as agents for landowners during the timber sale. The range of services provided by these private sector foresters usually exceed those provided by public foresters.

Public Sources

The Minnesota Department of Natural Resources (DNR) Division of Forestry has foresters located throughout the state who can assist you at little or no cost. The DNR provides "on-the-ground" forestry advice and assistance to owners with holdings of fewer than 500 forested acres. A DNR forester will, upon written request, examine your woodland, prepare a forest management plan that will help you achieve your ownership goals, mark or designate timber to be harvested and timber sale boundaries, estimate the volume and value of your standing timber, prepare sample timber sale bids and contracts, provide market advice and assistance, give technical assistance for reforestation activities, and furnish cost-share information. The forester can also measure the value of forest products (e.g., veneer logs, sawlogs, pulpwood, firewood) after the trees are felled through a process called scaling.

Why Sell Timber?

There are several reasons why you may decide to sell timber. First, a harvest may be prescribed in your overall forest management plan. If you worked with a professional forester to develop a management plan for achieving your ownership objectives, the plan likely calls for periodic timber harvesting. Timber harvesting is one of the landowner's major management tools. It is useful for accomplishing objectives such as improving the health and vigor of the forest, promoting natural regeneration, developing wildlife habitat, controlling stand density, releasing an established understory from undesirable overstory trees, altering species composition, establishing planting areas, creating vistas and trails, and developing certain types of recreational activities.

Second, the woodland may be used as a source of income. This may be an objective of the management plan. Timber in good condition may have considerable value and can be managed to yield periodic or emergency income.

Third, timber may be harvested to salvage its value. Such a harvest is done to salvage the value of trees that have been damaged to such an extent that they will not recover or when the potential for such damage is extremely high. Wind, ice, snowstorms, fire, insects, and disease could cause enough damage to justify a salvage cutting. The incidence and rapid spread of Gypsy moth defoliation, for example, resulted in many salvage cuts being performed because of anticipated damage.

Fourth, timber may be harvested in order to use the land for other purposes. Conversion to different land uses, ranging from golf courses to crop and pasture land, may require timber harvesting. The timber on such land often has considerable value and should be marketed. If you are contemplating woodland conversion, evaluate the economic and environmental impact of the proposed conversion carefully.

Steps in Marketing Timber

When marketing timber, follow these steps:

1. Select trees to harvest.
2. Estimate individual tree volumes.
3. Estimate the total volume to be sold.
4. Determine what your timber is worth.
5. Determine what method you will use to sell your timber.
6. Identify what method you will use to select a buyer.
7. Determine how your timber will be priced.
8. Advertise your timber sale.
9. Develop a written contract with a logger.
10. Inspect the sale.

Each of the steps is described in this publication.

Selecting Trees to Harvest

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You must determine what you have to sell before you can advertise a timber sale. This requires selecting trees to harvest and identifying those trees for the logger.

Select the trees to be harvested with the advice of a professional forester to ensure that the harvest satisfies your management objectives and maintains the woodland in a vigorous and productive condition. The type and intensity of harvesting required will depend on your objectives and on the type and condition of the woodlot.

Clearly mark trees to be harvested so they can be identified easily by the logger. If individual trees are to be cut throughout the woodlot, mark each tree with a paint spot at about chest height. Place paint spots on the same side of the marked trees (the north, south, east, or west) or mark the trees so they are visible from a main trail or road. Where the timber is valuable and there is a risk that the logger might harvest unmarked trees, place a second paint spot at the ground line. This second spot should remain after logging to serve as a check that only marked trees were harvested. If all trees within the sale area are to be harvested, as in a clearcut, mark only the boundary trees and instruct the logger to leave the marked boundary trees uncut.

Estimating Individual Tree Volumes

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After selecting the trees to be harvested, estimate the volume of wood that will be cut by species. Some common products that may be produced from trees include veneer logs, sawlogs, pulpwood, and firewood. Within any given area, there may not be a market for all of these products. Local mills will determine the specifications for each product they purchase.

Tree volume tables are used to estimate volume from individual tree measurements. It is important that you be aware of the specifications (stump height, minimum top diameter, bolt length, etc.) used in constructing the table to ensure that you use it appropriately. Volume tables generally are specific to a geographic region and for each type of product.

Table 1. Tree Board foot volume (Scribner rule) to a variable top diameter in the Lake States based on the number of 8-foot bolts in the tree.*

Sawtimber and Veneer Trees

Trees that are large enough and of high enough quality to produce logs that can be sawed into lumber are referred to as sawtimber. To qualify as sawtimber, trees should have at least one 8-foot bolt, should be at least 10 inches in diameter measured 4 1/2 feet above the ground (foresters refer to this as the Diameter at Breast Height, or DBH), and should have a minimum top diameter inside the bark that is the larger of either 8 inches or 50 percent of tree DBH. Minimum sawlog top diameter inside the bark for a tree with a DBH of 20 inches is, therefore, 10 inches. (These diameter specifications are typical and correspond with the tree volumes in Table 1; individual mills may have different specifications). Sawtimber trees must not contain too many defects such as excessive branchiness, decay, scars, bulges, bark distortions, holes, branch stubs, and crookedness.

Individual trees of many species (black walnut, sugar maple, elm, red oak, white oak) that are of exceptional quality, have at least one 8-foot bolt, are at least 16 inches DBH, and contain bolts that have a top diameter inside the bark of at least 10 inches often can be sold as veneer trees. Logs harvested from these trees will be sliced or peeled to produce veneer. Such trees are more valuable than sawtimber trees.

The basic unit for estimating volume for both sawtimber and veneer trees and logs is the board foot. A board foot is a piece of wood of any shape that contains 144 cubic inches of wood (12 inches x 12 inches x 1 inch; 6 inches x 6 inches x 4 inches; etc.).

To estimate the number of board feet in a standing tree, you need to know its DBH, merchantable height (limit of utilization such as height to a main fork, height to a serious defect such as a hollow or fork, or height to a minimum top diameter), and you need to have access to a tree volume table (Table 1). A Biltmore stick (Figure 1) or a tape measure can be used to estimate DBH. The Biltmore stick can also be used to estimate merchantable height. The merchantable height of most sawtimber is estimated in logs and half-logs or bolts. A log is a timber- measurement term indicating a tree trunk length of 16 feet. A half-log or bolt is 8 feet in length. The merchantable height of high-value veneer trees often is estimated to the nearest foot. A clinometer (Figure 2) can be used to estimate merchantable height.

Figure 1. A Biltmore Stick can be used to estimate tree DBH.

Figure 2. A clinometer can be used to estimate merchantable tree height.

The Scribner log rule is one method for estimating sawtimber and veneer tree volume in Minnesota. The Scribner Decimal C log rule was derived from the Scribner rule by dropping the last digit and rounding the values to the nearest 10 board feet. Table 1 describes tree volumes obtained by applying the Scribner rule to the logs in trees of various sizes. As an example, Table 1 indicates that a tree with a DBH of 22 inches and 32 feet (four bolts) of merchantable height will yield approximately 290 board feet. In those woodlands that contain sawtimber and veneer trees, a reasonable range for board foot volume estimates per acre is 1,000 to 15,000 board feet.

There are several other log rules used in different parts of the United States. Some mills that purchase veneer quality trees (especially consumers outside Minnesota) may buy timber on the Doyle rule or the International 1/4 -inch rule. These mills may either remeasure each tree to be sold using their accepted rule or apply a conversion factor. Because different methods and assumptions are used in the construction of these rules, they give somewhat different results (Table 2). Although a tree volume table provides an estimate of the number of board feet of lumber that can be sawed from the tree, it does not give an absolute measure of the actual board foot volume of the standing tree.

Table 2. Comparison of log rules for 16-foot logs.*

Pulpwood

Trees that are too small or too poor in quality to be sold for sawlogs often are sold for pulpwood. Ultimately, trees sold for pulpwood are chipped or ground up to produce wood fiber (pulp) or chips that are used to manufacture paper, hardboard, or various types of structural board. A large number of tree species growing in Minnesota can be sold for pulpwood. However, in some areas of the state, it is difficult to sell certain species because of the long distance to the nearest mill that uses the species.

The basic unit for estimating pulpwood volume in trees is the cord. A standard cord is equivalent to a stack of wood measuring 4 feet x 4 feet x 8 feet (128 cubic feet) (Figure 3). The solid wood content (excluding bark and air space between stacked logs) of a cord varies from about 65 to 95 cubic feet, depending on the diameter, roughness, and crookedness of the pieces. In the Lake States, solid wood content per cord is frequently considered to be 79 cubic feet.

Figure 3. A standard cord is equivalent to a stack of wood measuring 4 feet x 4 feet x 8 feet and contains 128 cubic feet of wood, bark and air space.	Figure 4. A standard cord cut into firewood lengths contains less than 128 cubic feet because pieces pack together more tightly.

To estimate the number of cords in a standing tree, you need to know its DBH and merchantable height, and you need to have access to a tree volume table (Table 3). Minimum DBH for pulpwood trees is 5 inches. Minimum top diameter inside the bark is the larger of either 4 inches or 50 percent of tree DBH. (These diameter specifications are typical and correspond to tree volumes in Table 3; individual mills may have different specifications). For pulpwood, minimum top diameter inside the bark for a tree with a DBH of 12 inches is, therefore, 6 inches. Merchantable height of pulpwood timber is estimated in 8-foot bolts.

As an example of using Table 3, a tree with a DBH of 10 inches and 24 feet (3 bolts) of merchantable height will yield approximately 0.10 cord. A reasonable range of cord estimates per acre is 5 to 45 cords.

In Minnesota it is standard to include a trim allowance on each piece of pulpwood so that the stack actually is 8 feet 4 inches (100 inches) long. In this case, a cord contains 133.33 cubic feet. Pulpwood is sold and purchased by mills either by the cord or by weight, with weight sales in thousand-pound units being most common. The average weight of a cord of wood for several Minnesota tree species is shown in Table 4. Small sawlogs (100-inch lengths) also are scaled by the cord and are referred to as boltwood in some areas of Minnesota.

Table 4. Approximate green weight of a cord of wood and bark by species.*

Firewood

Most firewood dealers measure firewood on a volume basis (i.e., standard cord). Some dealers will measure firewood by weight. Avoid buying or selling firewood by weight unless the moisture content can be determined at the time of the sale. Water may make up a substantial part of the total weight.

When a cord of logs is sawed and split into firewood and neatly stacked, the solid wood content remains unchanged, but the overall pile volume may measure less than the standard cord amount of 128 cubic feet because the pieces are packed more tightly (Figure 4). Minnesota law states that a cord sawed into firewood lengths and stacked neatly shall occupy 110 cubic feet of space, and a cord of logs sawed, split, and stacked neatly shall occupy 120 cubic feet of space.

Firewood also is sold in units smaller than a cord. The terms face cord, rick, fireplace cord, stovewood cord, shortwood cord, and pickup truckload are used, sometimes interchangeably, to refer to some fractional portion of a cord. In practice, at least two terms, rick and fireplace cord, commonly refer to one-third of a cord. Some pickup trucks also may hold one-third of a cord if the springs don't give out. Because all these terms have varying definitions and are misunderstood, they are not legally recognized.

Miscellaneous Products

The volume of most other timber products, such as poles, posts, ties, and pilings, are measured and sold by the individual piece. Posts occasionally are sold by the cord.

Estimating the Total Volume To Be Sold

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You need to develop an estimate of the volume to be sold in preparation for advertising your sale. Because most landowners do not have adequate training or the necessary tools to measure timber volumes, you should contact your professional forester for assistance. Information presented below describes the general process that a professional follows to estimate volume.

To estimate the total volume of wood to be sold within the sale area, you may evaluate each tree individually or you can set up sample plots and use these to estimate overall volume. Individual tree volumes might be recorded and later summed by species if the sale will contain multiple timber species and/or products for which there are readily available markets.

Measure and evaluate each tree individually if the sale area is 5 acres or less, or if it contains highly valuable material such as black walnut veneer trees. To estimate merchantable tree volume, measure tree diameter, merchantable height, and percent defect for every tree, and then add the individual tree volumes as determined from your tree volume table(s).

The simplest method of estimating the volume of timber in a larger area is to estimate the volume on a sample of the sale area and then apply an expansion factor based on the area of the sale and the area sampled. An accurate volume determination may be obtained by taking tree diameter, merchantable height, and percent defect measurements on a sufficient number of 1/20th-acre (radius 26.33 feet) circular sample plots. Sample 1 plot per acre in sale areas of 30 acres or less. In larger areas, sample 24 plots plus an additional plot for each 5 acres in the sale. (As an example, if the sale area is 37 acres, you would sample 32 plots [24 + (37/5)].) This sampling intensity usually will provide estimates within 10 to 20 percent of the actual volume.

Many trees contain defects that may make them unusable. If the entire tree is unsuitable because of an excessive amount of defect, do not measure it. For usable trees containing some defects, note the percent of defect by product. This estimate of defect is then deducted from the overall estimate of tree volume.

For example, estimated yield for a pulp-wood tree with a DBH of 10 inches and 24 feet (3 bolts) of merchantable height would be 0.10 cord (see Table 3). If the tree contained 10 percent defect, the merchantable volume would be calculated by deducting the estimate of defect (0.01 cord) from the total estimated yield (0.10 cord). The usable yield for this tree would be 0.09 cord. Percentage deductions for tree defects should be estimated by a professional forester.

After estimating individual tree volumes, you can calculate the total volume to be sold. Use the following formula to estimate total sale volume from 1/20th-acre sample plots:

V = v x 20 x A/n

Where:

V = Estimated volume within the sale area

v = Sum of individual tree volumes

A = Total number of acres in the sale area

n = Number of sample plots

As an example, in a 37-acre sale area containing pulpwood-sized trees in which you sampled 32 plots, you would multiply the sum of the individual tree volumes by 23.125 [= 20 X (37/32)] to estimate total volume within the sale area. If the sum of individual tree volumes from 32 sample plots was 35 cords, the estimate of total pulpwood volume within the sale area would be 809 cords (32 X 23.125).

Determining What Your Timber Is Worth

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Stumpage (standing trees or trees "on the stump"before they are harvested) is an unusual commodity in that it has no exact or "going" price. Instead, the selling price is whatever you and the buyer agree to and is influenced by many factors, including:

• Species. Black walnut is usually worth more than aspen.
  
  
• Tree size. Large trees have more usable volume and clear wood than small trees. In general, sawtimber-sized trees are of greater per unit value than pulpwood-sized trees.
  
  
• Tree quality. Large trees with no branch scars have more knot-free wood than trees with many branch stubs. High-quality trees of species that are in demand generally have the greatest value, whereas low-quality trees of species that have low demand have the least value. As quality differences decline, price differences among most species decrease.
  
  
• Volume of sale. On large sales, fixed logging costs can be spread over the larger volumes, so the buyer can pay more per unit volume for the timber.
  
  
• Distance to market. The closer the woodlot is to the mill, the lower the hauling costs will be.
  
  
• Site accessibility. The ease with which the woodlot can be reached affects the selling price.
  
  
• Logging difficulty. Steepness of terrain and soil moisture conditions determine the equipment that can be used and the harvesting rates.
  
  
• Market conditions. Poor markets mean lower timber prices.
  
• The mill's log inventory. Timber buyers will often pay more for logs when their inventories are low to ensure the continuance of mill operation.
  
  
• Your restrictions on harvesting and skidding techniques. Such restrictions for site and residual tree protection tend to increase logging costs.
  
  

Because of these factors, the relationship between you and the buyer is unique for each timber sale. Different buyers may offer substantially different prices for the same timber, depending on their own particular costs and markets. To receive the highest value, contact several potential buyers when you have timber for sale. A professional forester can estimate the expected value of a particular timber sale.

Methods of Selling Timber

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You can harvest your own timber and sell the material produced or you can sell the trees as they stand and allow the logger to cut and haul them away. The latter method is called selling stumpage. Regardless of which method you choose for selling your timber, you will go through the same process for selecting a buyer, determining how your timber will be priced, and advertising the sale.

Harvesting Your Own Timber

The woodland owner who delivers harvested material to the roadside or the mill may substantially increase profits from the sale as a result of the investment of labor. Such an operation, however, should be undertaken only by someone with experience in timber harvesting. Logging is hard, dangerous work that requires special skills and knowledge while undertaking substantial risks. Besides the personal risks, engaging in logging may alter your insurance coverage. Workers' compensation and other state and federal employment requirements are particularly strict in the logging industry.

Some types of logging may require special equipment. Attempting to log with agricultural machinery that is not properly adapted for woodland use can result in extensive damage to the equipment. Logging an area often requires a much longer time than is initially estimated and so may interfere with other activities and responsibilities. Furthermore, improper cutting, handling, or transporting of high value logs can destroy a great deal of their value. For these reasons, the harvesting of high value species, such as black walnut trees containing veneer quality logs, should always be left to the logger.

A discussion of the proper techniques of cutting, handling, and transporting timber products is beyond the scope of this publication. If you have the necessary time, skills, and experience and wish to harvest and transport timber products, keep the following points in mind:

1. Have a market for your trees before you invest the time and money necessary to harvest them. Obtain a written contract from the mill. Don't get stuck with harvested products to sell without a consumer who will pay for that material.
   
   
2. Know the mill's specifications and requirements (i.e., size, volume or number of pieces the mill will accept in a given time, quality, etc.).
   
   
3. Know your legal responsibilities for workers' compensation insurance, minimum wage, social security, state and federal income tax, Occupational Safety and Health Act (OSHA) requirements, etc. These points are particularly important if you employ other people. Also, carry sufficient liability insurance.
   
   
4. Use safe and efficient equipment.
   
   
5. Practice all appropriate safety precautions and procedures.
   

Selling Stumpage

As discussed above, harvesting your own timber requires special skills, knowledge, and equipment, undertaking personal risks, a large amount of time, additional insurance coverage, and adherence to employment requirements. For these reasons, most landowners sell their stumpage to a buyer who can meet all of these requirements.

Selecting a Buyer

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The sale price and buyer for logs that you have harvested or for stumpage usually are determined through a single offer, an oral auction, or written sealed bids.

Single Offer

The sale price can be negotiated between a single buyer and seller. Although this procedure may produce a fair price, it often produces a price well below what the timber is worth because the buyer has no competition and the seller often is uninformed about the timber's value. For that reason, don't be too anxious to accept the first offer. In the following situations, however, the single offer may be the best method of selecting a buyer:

• If you have only a small amount of timber or poor quality timber to sell, there may be only one buyer interested in the sale.
  
  
• If markets for the species and products for sale are so poor that few buyers would be interested.
  
  
• If you know and want to work with a particular buyer who has a good reputation.

If you are working with foresters familiar with the area, they can tell you whether any of these situations exist and advise you accordingly.

Oral Auction

Buyers can be invited to inspect the timber and, at a given time and place, to bid for it at an oral auction. Auctions may be appropriate for high value sales or when several woodlots can be auctioned at one time and many buyers can be expected to attend the auction. Although an oral auction is fairly quick and sometimes produces a high sale price, it is not the type of sale to engage in if you are unfamiliar with timber markets and the quality and value of the timber to be sold. In short, unless you are extremely well informed, it is best to leave oral auction sales to professional foresters.

Written Sealed Bids

When the sale price and buyer are determined through written sealed bids, potential buyers are informed about the sale and given a period of time (usually 4 to 6 weeks) to inspect the timber and submit bids. Bids are then opened at a specified time and place and the successful buyer is selected. To be fair to all parties concerned, no further price negotiations should take place after bids are opened and unsuccessful bidders have been notified that the timber has been sold. Written sealed bids produce the most desirable results for private woodland owners in most situations.

Pricing Stumpage

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There are two general types of sales, both of which are based on how the timber is priced. You may wish to contact the IRS for information on federal income tax regulations before deciding which type of stumpage sale method to use. Your method of pricing may affect your ability to claim capital gains treatment of timber sale income.

Lump Sum Sale

In a lump sum sale, you receive a single payment (the lump sum) for the trees designated for sale. When selling stumpage, a down payment of one-fourth to one-third of the sale price may be made when you sign the timber sale contract with the buyer; the remainder of the lump sum should be paid before harvesting begins. Payment is based on an estimate of the timber volume available in the sale area and not on the actual volume harvested. Therefore, lump sum sale values depend heavily on the accuracy of the timber inventory used to estimate the volume and quality of timber for sale. Lump sum sales may be a good idea if the purchasing mill does not do consumer scaling (estimate the number of units delivered to the mill).

Sale by Unit

In a sale by unit (also called sale by scale), you are paid a certain amount for each unit of product cut (so many dollars per thousand board feet, per cord, per post, per pole, etc.). This type of sale requires that someone scale the volume of products harvested. Product volume can be measured by the landowner, by a professional forester, by the logger (if you have complete confidence in the logger), or by the mill through consumer scaling. Determining who can provide an accurate volume measurement and how, when, and where the scaling will be done make the sale by unit method more difficult to administer than the lump sum sale method.

Where it is available, consumer scaling generally provides an easy and unbiased method of estimating the volume of products removed from your woodland. In many areas, a consumer scale ticket process may be used in conjunction with consumer scaling. Under that process, the landowner provides the logger with a booklet of sequentially numbered scale tickets obtained from the consuming mill. As harvested wood leaves the woodlot, the logger or trucker completes a scale ticket and leaves the lock box stub in a "lock box" that is located in a convenient place for the hauler. That stub is your best assurance against theft. You should retrieve tickets from the "lock box" weekly and then compare them with the tickets you receive back from the mill.

Although final payment is based on the volume that is scaled, you should require a substantial down payment (10 to 25 percent) when the contract is signed with the remainder of the estimated balance paid before the logger is allowed to begin the harvest. On high value sales, you might want to require only a 10 percent down payment and less than 100 percent payment before cutting begins to reduce potential cash flow problems for the logger.

Advertising Your Timber Sale

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The most effective way to notify potential buyers about your timber sale is to send them a timber sale notice. Foresters usually can provide a list of reputable timber buyers. In many cases the buyer also is the logger who will perform the timber harvest. However, some buyers may be timber brokers who purchase timber for multiple loggers.

If you want additional advertising for a timber sale, place a brief advertisement in the newspaper directing interested buyers to contact you for a complete description of the sale (Figure 5). Advertising in the newspaper may be a particularly useful method when the main product anticipated from your harvest is firewood. Some firewood cutters do not harvest other products and may not appear on a list of local timber buyers.

Figure 5. A brief newspaper advertisement can direct potential buyers to you for a complete description of the sale.

The more information on special requirements that is put on the timber sale notice, the less hassle there will be in finalizing a timber sale contract. A timber sale notice should include all of the basic information that will later be a part of the timber sale contract including:

1. Your name and address.
   
   
2. The location of the timber for sale (both the legal description and directions for locating the area).
   
   
3. A description of the trees or logs to be sold (species, volume, volume table used to estimate sawtimber and veneer volumes, and the size and quality of sawtimber and veneer trees, if known).
   
   
4. The type of bid you are seeking (lump sum or sale by unit) and whether it will be a written sealed bid or oral auction.
   
   
5. The times when potential buyers can inspect the trees or logs. Usually at least 1 month is allowed from the time notices are sent until a buyer is selected. If you or your representative must be present for potential buyers to gain access to or inspect the woodlot, include the times you are available or a description of how arrangements can be made to gain access.
   
   
6. The date, time, and place when written sealed bids will be opened or when an oral auction will be conducted to select a buyer.
   
   
7. Whether or not a deposit (usually 10 percent of bid price) binding the offer must be paid when the timber sale contract is signed.
   
   
8. When payment is to be made. On lump sum sales, full payment (100 percent) prior to the start of any harvesting activity is desirable. When selling by unit, require a substantial down payment when the contract is signed with the balance paid before any cutting begins. A definite cutting and payment timetable should be negotiated with the logger when timber is sold by unit.
   
   
9. Any major conditions or limitations on the sale. Such limitations might include a harvesting deadline, who has cutting rights to tops that could be sold as firewood, method of slash disposal, restrictions on access to the area, or conditions when loggers cannot operate (e.g., when the area is excessively wet). Note that the cost of harvesting is increased by imposing restrictions on the logging operation and that excessive restrictions on buyers may result in reduced bid prices or fewer bids.
   
   
10. The requirement of a performance deposit or bond. A performance deposit is an amount of money over and above the sale price (usually 10 percent) posted by the buyer when the contract is signed and held in escrow by the seller. Its purpose is to ensure that the buyer abides by and fulfills all the requirements of the contract. Refund performance deposits promptly when the sale is completed and all conditions of the contract have been met.
    
    
11. Evidence that the logger carries workers' compensation insurance for all members of the logging crew and has adequate liability insurance. Workers' compensation insurance will avoid possible legal complications if one of the logger's employees is injured while working in your woodlot. The logger should carry his or her own liability insurance plus insurance for all employees and for equipment used as part of the operation. Make certain that the buyer includes the amount of liability insurance on the bid form. Ask to see the buyer's certificates of insurance to be sure that both workers' compensation and liability insurance are in effect.
    
    
12. The method that will be used to scale products -by the landowner, by the professional forester, by the logger, or by the mill.
    

Specify the length of time that will elapse before the successful bidder will be notified after the bids have been received. A 7-day period is frequently used. Also, indicate how much time the buyer has to sign the timber sale contract and to provide the necessary down payment after being notified of an acceptable bid. The buyer is frequently given a 10-day period. Finally, include a statement indicating that you have the right to reject any or all bids.

On the date and at the time and place specified, open the bids or conduct the oral auction to select the buyer. Select the highest bidder unless there is some reason to exclude that particular buyer. Exercise caution in selecting new operators or operators who have not previously logged in your area. A professional forester may offer advice about the desirability of selecting a particular buyer on an individual sale. Most buyers perform satisfactorily when all the trees in an area are to be cut. Only experienced and careful buyers should be selected for timber stand improvement or for a selection harvest in which valuable trees will be left standing.

Before making a final selection, ask the potential buyer for the names of a few woodland owners with timber similar to yours that the buyer previously has harvested. After obtaining permission from those woodland owners, visit at least one of the woodlots to see what to expect. Conditions to look for include: (1) standing trees with scraped bark, (2) small trees that are damaged or destroyed, (3) severe rutting throughout the woodlot, and (4) trash on the site. You may not want to select a potential buyer if any of these conditions appear to be excessive.

Contracting With a Logger

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A signed written contract between you and the logger who will actually perform the harvest will help reduce the possibility of misunderstandings and disagreements. A sample timber sale contract that contains many of the appropriate clauses is shown in the Appendix. Your professional forester may also have a sample timber sale contract available. The written contract does not need to be a complicated document, but it should indicate what you and the logger have agreed to with respect to the sale. It provides each party with legal assurance that the other will abide by the terms of the sale. The content of the contract should be similar to the timber sale notice described above. Be sure that you discuss all of your concerns about the harvest with the logger before you sign the contract.

Sale Inspection

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Before harvesting begins, review the timber sale contract with the logger and point out the sale boundaries. If possible, request that you be informed several days before cutting begins so you or a professional forester can be present on the first day of the harvest. This will provide an opportunity to discuss the operation with the logger on the site.

No matter how carefully you write the timber sale contract, it is no substitute for inspecting the operation. Once the timber harvest begins, visit the area frequently to make sure the harvest is proceeding according to terms of the contract and to discuss questions that might arise. Frequent visits will help you become familiar with timber harvesting operations, which may be useful when making future timber sales.

Use good judgment and discretion when checking the harvest operation. Logging is a dangerous activity. Do not endanger yourself or the loggers by getting too close to an active operation. Unless you discover a flagrant violation of the contract, a simple suggestion to the logger in charge of the operation usually will solve the problem. Deal directly with that logger or that logger's designated representative. Do not complain or make suggestions to other individuals on the job.

If you decided to require less than full payment before cutting begins, make sure that you receive full payment before the last harvested products and the logging equipment are removed from the site. After the job has been completed and all provisions of the contract have been fulfilled, write a letter releasing the buyer from the contract and return the performance deposit. Contact your forester for follow-up recommendations.

Additional References

If you want to learn more about marketing timber, forest products, and price information, request that your name be placed on the mailing list for the following free publications:

• Minnesota Forest Products Bulletin and
• The Market Place.

To receive these publications, write:

Extension Forest Products
Department of Forest Products
University of Minnesota
2004 Folwell Avenue
St. Paul, MN 55108

• Wisconsin Forest Products Price Review.

This review is published periodically in three segments. Market information about sawtimber, tie logs, and sawn ties is issued in the timber edition. The boltwood edition provides similar information about pulpwood, posts, poles, piling, box and excelsior bolts, and firewood. Hardwood and softwood lumber prices are reported in the lumber edition. To receive these publications, write:

Extension Forester
Department of Forestry
University of Wisconsin - Madison
1630 Linden Drive
Madison, WI 53706

The publications shown below are available from:

Extension Store
University of Minnesota Extension
3 Coffey Hall, 1420 Eckles Ave.
St. Paul, MN 55108
Tel. (612) 625-8173

There is a charge for some of these publications.

• Income Tax Guide for Woodland Owners. NR-BU-3934
• Minnesota Forest Products Directory. NR-BU-1390
• Minnesota Woodland Owners' Resource Directory. NR-BU-2328
• Property Tax Guide for Forest Landowners. NR-BU-5632
• Sampling and Measuring Timber in the Private Woodland. NR-BU-3025

For an updated listing of consulting and industrial foresters and DNR forestry offices or information on timber harvesting, contact:

Extension Forest Resources
Department of Forest Resources
University of Minnesota
1530 North Cleveland Avenue
St. Paul, MN 55108

Listings of foresters can also be obtained from your local DNR forestry office. Timber harvesting information is also available from your professional forester.

Address specific questions about the properties and uses of native woods to:

Extension Forest Products
Department of Forest Products
University of Minnesota
2004 Folwell Avenue
St. Paul, MN 55108

APPENDIX

Sample Timber Sale Contract

SECTION I.

SECTION II.

SECTION III.

SECTION IV.

SECTION V.

IN WITNESS WHEREOF, the parties hereto have set their hands on the dates shown below. WE HAVE READ AND UNDERSTAND THIS AGREEMENT INCLUDING THE REVERSE SIDE AND ANY ATTACHMENTS, ADDITIONS, OR DELETIONS.

SECTION VI.

SECTION VII.

1. CUTTING AND SLASH DISPOSAL REGULATIONS, as attached, shall be observed. See Estimate of Timber Volume or other attachment.
2. UTILIZATION - Trees cut for pulpwood shall be utilized to at least 4" top diameter and those cut for sawlogs utilized to at least an 8" top diameter unless otherwise specified in the cutting regulations or unless decay or branching limits merchantability.
3. STUMP HEIGHTS shall be as low as practicable, but not to exceed one-half (1/2) their diameter in height.
4. SAWTIMBER SHALL BE SCALED by the Scribner Decimal C rule and Pulpwood according to 128 cu. ft./cord for 8' wood and 133 1/3 cu. ft./cord for 100" wood or State of Minnesota (DNR) Standards for Weight Scaling.
5. REASONABLE CARE SHALL BE TAKEN TO PROTECT the residual and neighboring stands from damage.
6. ONLY TIMBER DESIGNATED IN SECTION V shall be cut and removed. Whenever any undesignated trees are cut or needlessly damaged, the Purchaser shall pay for them at a rate of three (3) times their scale value.
7. THE PURCHASER SHALL REPAIR, at his own expense, damage beyond ordinary wear and tear caused by Purchaser or Purchaserās agents to waterways, trails, roads, gates, fences, bridges, or other improvements on the Sellerās property.
8. LOCATION OF ROADS, landings, etc., shall be mutually agreed to by the Purchaser and the Seller or their agents. Only nonmerchantable wood may be used for construction purposes in connection with the logging operation.
9. BEST MANAGEMENT PRACTICES for water quality shall be observed by the Purchaser for the duration of this contract.
10. THE PURCHASER SHALL REMOVE all sale-generated debris within twenty (20) days of sale expiration; including machine parts, oil cans, paper, and other trash, and Purchaserās equipment and structures. Items not removed are deemed abandoned, become the property of the Seller, and may be removed or disposed of at the Purchaserās expense, including but not limited to the per- formance deposit.
11. FIRE - Care shall be exercised at all times by the Purchaser and Purchaserās agents against the start and spread of wildfire. The Purchaser agrees to pay for any and all damage and the cost of suppression of any fires caused by Purchaser or Purchaserās agents.

SECTION VIII.

1. LIABILITY - The Purchaser agrees to save and hold harmless the Seller from any and all claims, penalties or expenses of any nature, type or description whatsoever, arising from the performance of this contract, whether asserted by itself or any individual, organization or governmental agency or subdivision.
2. WORKERSā COMPENSATION INSURANCE, as necessary, and to at least the minimum extent required by law, shall be bought and maintained by the Purchaser to fully protect both Purchaser and Seller from any and all claims for injury or death arising from the performance of this contract so as to comply with Minnesota Statute Chapter 176.
3. THIS AGREEMENT SHALL NOT BE ASSIGNED in whole or in part by either party without the written consent of the other party.
4. ALL TIMBER included in this agreement shall remain the property of the Seller until paid for in full.
5. THE SELLER GUARANTEES PROPERTY BOUNDARIES which are marked or otherwise designated. The Seller also guarantees that Seller has full right and title to the timber included in this sale.
6. WHEN CUT PRODUCTS ARE SCALED, the Purchaser agrees to pay or the Seller agrees to refund any difference in value from the original payment based on the actual scale at the rates specified in SECTION V within thirty (30) days of harvest completion.
7. THE SELLER SHALL REFUND ANY PERFORMANCE DEPOSIT or notify Purchaser of intent to retain said deposit within thirty (30) days of sale expiration. Seller may suspend or cancel all operations for violation of any term of this agreement by the Purchaser, and for cause may retain all monies deposited.
8. IN CASE OF DISPUTE over the terms of this contract, the final decision shall rest with an arbitration board of three persons, one to be selected by each party to this contract and a third to be selected by the other two members.
9. SPECIAL STIPULATIONS (if any) are to be listed in an addendum.

SOURCE: Minnesota Department of Natural Resources, Division of Forestry.

Glossary

Board foot

A piece of wood of any shape that contains 144 cubic inches of wood (12 inches x 12 inches x 1 inch; 6 inches x 6 inches x 4 inches; etc.).

Bolt

A timber measurement term for a tree section that is 8 feet in length (also known as a half-log). A minimum diameter may be specified for the small end of the bolt.

Cord

A standard cord contains 128 cubic feet of wood, air, and bark. It is the equivalent of a stack of logs that is 4 feet x 4 feet x 8 feet.

DBH

Diameter of a standing tree at breast height (measured at 4.5 feet above the ground on the uphill side of the tree).

Escrow

A fund, deposit, or sum of money delivered to a third person to be returned to the grantee only upon the fulfillment of a condition.

Merchantable height

Usable length of the tree estimated as the distance between stump height (generally 1 foot) and the upper limit of utilization in the tree. The limiting point may occur at a main fork, at a serious defect such as a hollow or a point of decay, where excess limbs or a fork occurs, or at a minimum top diameter.

Overstory

The highest layer of tree crowns in a timber stand.

Pulpwood

Wood used to produce pulp or chips. Pulpwood usually is wood that is too small, of inferior quality, or of a species that is not used in the manufacture of lumber or veneer. It is sold by the cord. To estimate volume in pulpwood trees using Table 3, trees should have at least a 5-inch DBH and a minimum diameter inside the bark at the top of the bolt that is the larger of either 4 inches or 50 percent of tree DBH.

Sawtimber

Trees that are large enough and of high enough quality to produce logs that can be sawed into lumber. To estimate volume in sawtimber trees using Table 1, trees should have at least a 10-inch DBH and a minimum diameter inside the bark at the top of the log that is the larger of either 8 inches or 50 percent of tree DBH.

Scaling

The process of measuring the volume of wood products after the trees have been felled.

Stumpage

Standing timber; trees "on the stump" before they are harvested.

Top diameter

Small end diameter of a bolt of log.

Understory

Low-growing vegetation that forms a layer beneath the overstory.

Veneer tree

Tree that is large enough and of high enough quality to produce logs that can be sliced or peeled to produce veneer. Veneer trees should have at least a 16-inch DBH and a diameter inside the bark at the top of the log that is at least 10 inches.

Approximate Conversion Factors

1 cord = 500 board feet
1 cord = 79 cubic feet of solid wood
1 acre = 43,560 square feet

Editor: Rich Sherman
Graphic Designer: Michael Mechavich
Lewis T. Hendericks was formerly an Extension Educator, Forest Products

Produced by Communication and Educational Technology Services, University of Minnesota Extension.

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