Understanding the timberland industry

The majority of the Timber industry is owned by large companies/organizations. These company’s increasing ownership in timberland has negatively affected independent logging companies and saw mills which inevitably has a negative effect on the independent timberland owner.

As competition decreases, prices assigned to the actual timber owners gets less and less competitive. This coupled with the same large companies control of the market has created relatively flat market prices as depicted in the charts below.

The most obvious example of this price control was reflected in the recent COVID pandemic. If you compare the lumber prices below with the raw lumber prices above you will see that although lumber increased significantly, there was no noticeable change on the price received by the owner of the timber.

Timber is a difficult asset for families to manage for the following reasons:

1 -The actual methods of harvesting standing timber plays a vital role in the success of the replant.

  • More often than not, speed of harvesting is valued over quality of the harvest.
  • Poor harvesting practices directly affects the survival rate of the next generation of timber as well as foundational growth (root system) that takes place in the first few years after replanting.

2 - Timber has an approximate 30-year growth cycle from planting to harvesting saw logs.

  • Most mistakes are made in the planting stage which is often unnoticed until years down the road, prolonging the cycle even more.

3 - Decisions are made  (typically by families, not in-tune to the industry) once every decade or so.

  • Once planted/replanted, most people do not touch it or think about it again for 10-15 years.
  • Hence the importance of a good replant.

4 - As a side effect to the aforementioned, the revenue tends to skip generations.

  • By the time someone takes over the management role of family owned timber land, it is often too late to use the industry’s “best practices” methods to positively affect the crop.

5 - Finding reliable consultation is getting increasingly more difficult as time goes on.

  • Most advise is sought through groups that count on current/near term revenue to stay afloat.
    i - Conflict of interest often occurs when contemplating short term gains verses the longevity of your timber crop.

What we are seeing is a lot of mismanagement of timberlands that negatively affects the markets as well as the owners bottom line.

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If you're interested in discovering how DR Timber can assist you with your timberland assets, we encourage you to reach out to us today. We are here to address any inquiries you may have and to offer you the knowledge and choices necessary to make well-informed decisions. Contact us now to explore how DR Timber can support your timberland endeavors.

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