Jan Shepel
Associate Editor
SAUK CITY
Farmers who have been struggling to pay their bills with low milk returns may have another resource that they haven’t thought about — the woodlot on the back 40.
Tommy Brennan, a banker at the Bank of Prairie du Sac, said he and his colleagues are urging their farm customers — which make up about 20 percent of the portfolio at the bank — to look at the possibility of managing those forests as more than just a place to hunt deer.
Because there may be more options for managing woodlands, the bank invited Mark Rickenbach, a forest and wildlife ecology specialist from the University of Wisconsin-Madison to a session for farmers in Sauk City Feb. 24.
Rickenbach told the farmers first of all that they should try to work with the woodland. “You should grow what grows there naturally,” he said. He gets calls all the time from landowners wanting to learn how they can go about planting black walnut trees on their land.
Those trees can be very valuable — from $6,000 to $20,000 for an individual tree — but walnuts will not grow in certain areas, he said. “The trees that naturally grow there are probably the ones that you should grow.”
Because forestry is a very long-term investment, with saw timber taking up to 60 years to mature and pulp trees requiring 30 to 40 years of growth, “what you’ve got is what you’ve got,” he said. “And that’s what will allow you to gain some income now.”
Rickenbach said it’s hard to realize a profit from planting hardwood trees in Wisconsin although it can work in the southern areas of the United States where there can be a 40-year rotation for timber.
Some trees like oak will always be more valuable, he said, but there is no high-value magic bullet in terms of species. That concept may change though if biomass tree crops ever become an actual business. That system would require short rotation, quick-growing trees like poplar and willow, he said, and will be treated more like an agricultural crop.
When looking at their woodlands, farmers should consider the value of the land for not only timber production, but also for other things it provides, among them recreation, hunting and forestry. “Leasing isn’t as common here but hunt leases are huge in the southern United States, providing a large part of landowners’ income,” he said.
Even with all its potential value, woodlands will never equal the type of income that comes from intensively farming cropland, he said, but it can be looked at as a hedge against some future event — an unexpected expense or putting the kids through college, he said.
Insurance companies invest in forestlands, he said, because they are considered a low-risk long-term investment.
Wildlife in the woodland may be part of its appeal but may also create challenges for forest management. Rickenbach said deer numbers have a huge impact on forests. They love to eat small oak trees, and since oaks are one of the desirable trees and one that foresters would like to see a lot of in a managed forestland, deer are a problem.
That’s one of the reasons there is a lot of scrubland in Wisconsin, he added. It’s been cleared and when it starts to regenerate, the deer eat off the desirable oaks, he explained.
Selling Timber
But for those who have desirable existing timber to sell, there are a whole new set of challenges in the present. One farmer at the meeting commented that it’s like selling a cow by weight, but you never know the weight.
Others agreed that when dealing with loggers the timber seller never really knows if he’s gotten a good deal or not. Rickenbach agreed. “You can’t look up a fair market value. There are no newspapers showing the market price for logs. There’s very little information about price that’s available to landowners.”
In addition, there are daily and weekly fluctuations in the prices paid by mills and loggers probably know the most about that since they deal with it all the time, he said.
When he was a student at Penn State, Rickenbach said he worked on a quarterly survey of what mills and loggers were paying for timber but Wisconsin doesn’t have anything like that.
Rickenbach advised farmers planning to make a sale of timber to work with a forester. “You may have to pay for that service but it’s worth the investment,” he said.
Gatherings of woodland owners — common this time of year — are a good place to start. Other woodland owners can offer their recommendations on foresters and loggers they have enjoyed working with.
But the back 40 woodlot may not help the bottom line right now. His advice was to start working on a logging project three to four years ahead of the actual logging process. “Talk to a lot of landowners who are really interested in this,” he said.
“A good forester should visit the land and see the job. Similarly when selecting a logger it’s important to ask not only about the money but also about how they will take care of the land for the future.
“For me it’s a major red flag if the person doesn’t care what the land will look like after the timber is off. Forestry is a very visible practice,” he said. “When you’re thinking about a timber sale you have to think of not only what this stand looks like, but also what it will look like in 20, 30 years.”
He advised the farmers at the session to “be prepared” in case someone “knocks on their door and offers them $30,000 for what’s on the back 40.” They will need to know if that’s a good deal or not, and some prior research is the best way to do that.
As well as woodland owners’ conferences, there are several websites Rickenbach recommended, especially www.woodlandinfo.org
Managed Forest Law
Rickenbach mentioned special woodland property tax programs that can vastly reduce property taxes on woodland, but require working with the Department of Natural Resources and include some restrictions, like allowing public access to the land. The Managed Forest Law required a DNR-approved plan for the land.
The plan must be written by a certified plan writer and the landowner must adhere to the plan as it was written. There are some serious costs for withdrawing from the program including all the back taxes and additional penalties, he said.
“It’s a good program but it’s not for everyone,” Rickenbach said.
Carbon Credits at some point
At some point it may be possible to get an income stream from forests as a carbon credit but in the current economy that type of market as tanked, he said. “It’s a small amount of money and its voluntary, unlike programs in Europe, and in a bad economy voluntary programs aren’t looking good.” Until Congress does something, the carbon credit system will probably not be much help to woodland owners, he added.
If and when that happens, land would need to be certified as sustainably managed and the plan for the forest and the execution of that plan would need to be consistent with guidelines, he added.
Rain forests in South America have gotten carbon credits and in other places in the developing world, but forests in Russia, Canada and the United States weren’t eligible under the Kyoto agreement on climate change. “That’s one of many reasons the U.S. didn’t want anything to do with Kyoto,” he said.
