A match on a windy summer day would be a hell of a pay back if i didnt get my shucks back.

Alclearcut obviously per your screen name you have a good view from the Timber co. Side I can't see the lose of lease revenue not hurting thier bottom line it's constant revenue with what i would think very little cost involved. It takes a while to replace a tree

I don't know what value any specific timber company puts on leases, my only point was I'm sure there was a written contract that stated both side's obligations. I think it's a little extreme to say you would burn someone's property because they exercised their rights according to the terms you agreed to on the front end.

I find it hard to believe that they wouldn't let them remove their stuff. I have always worked with people. Except those that call up after hunting season has started and say they left something. It is not the current lessee's issue and should not be inconvenienced.

If a company's land is growing 2 cords of wood per year, that's a stumpage value of about $20 per acre per year. It's not uncommon to get $10 per acre per year for the hunting rights of the same land, so the hunting lease is not an insignificant amount of money. Can't blame them for getting all they can, but it sure looks like they could let the man get his stands.

There isn't any commercial 'timber companies' relying on $20/acre from their timber assets. At least not in the southwest from commercial pine forest. They would all be bankrupt tomorrow if this were the case.

MacMillan Blodel set up their type A leases for 1.5 cords per acre per year for better land, and just 1 on some of the poorer sites. There was an overcut sometimes, but I never saw a dime of overcut on the first 2 thinnings before buying out the contract. Their initial 1.5 estimate was not all that far off, so I thought I was being generous by saying 2.

But you are right that $20 an acre is too low. It's late and I'm tired and I was thinking ton prices; sorry about that and thanks for correcting. But I think my point is still valid; the hunting leases are a significant source of income and they need to make all they can.

I bet the net on hunting leases isn't as lucrative as we think it is. I don't know what the total overhead is, but I would imagine they have to lease 10-15 thousand acres to pay the salary, benefits, truck, gas, payroll taxes, etc. for each person they employ to handle leases.

For easy math, let's say they get $10/acre/year for hunting lease. Over 15 years, the gross $150/ac. Over that same 15 years, say they grow 1,000 tons/acre - at $10/ton - that's $10,000. I know I'm using rounded numbers, that they don't normally clear cut at 15 yrs, and there are present value factors. But, just trying to compare generally, it seems like a $1-$2 move in stumpage has a greater impact on net revenues than hunting leases.

Ok, I wasn't thinking well last night and put the timber growth in cords and used ton prices. So my $20 figure was way too low and should have been a little under $50. I was too low but you are way too high.

A tract I planted in 1993 cut enough on the first thinning to recover the planting cost. I figured a while back that I would get around $33 per acre per year if I clear-cut it now at current prices. Timber prices are down and going further down.

Many timber companies have recognized the trend and sold off all their land. As they make less on timber, they are gonna want more from hunting.

The recreational value of forest land has really ran up the price over the past 30 years or so. If you are gonna buy land for no other purpose than to make money growing timber, then I don't think much land in AL is worth over $500 an acre. It sells a lot higher because of the recreational and speculation possibilities.

Did you mis-figure that $33 per acre part?

The present value of a $10/ac hunting lease (annuity) for 20 years is $105/ac

The present value of a 20 year old plantation worth $2,000/ac is $702/ac.



Not going to get into costs. Some are shared some are not.

PCP is right. The pure economic value of land for timber is dang low. $500/acre isn't far off. If Reb says $700/acre I'd accept that too, but it's not $1,500/acre or more just due to timber. It's all about deer and turkey.

Me either, I meant 100/tons/acre = $1,000/acre

No, that was based on the prices I was offered for it when I had a crew on the place in 2015. I decided to let it grow some more; probably a mistake from an economic view. I don't think it would produce that $33 figure now that prices are even lower. For reference, land planted in 1979 cut out at right at $1000 per acre. Parts of it had been thinned 3 times, and some just twice, so it's really hard to put a price on what that land actually returned, but it was nowhere close to $2000, and that was a 36 year rotation.

The superior trees that they are planting now will make more money than this tract, but you better have a whole lot of poles if you are gonna cut $2000 per acre at today's prices.

The contract I had with MB was at one cord per acre per year and was tied to a commodity index, and I was getting about $24 a year from the lease. I would have been better off financially to have stayed in the lease. On the other hand, I am pretty sure I could get $10 for the hunting rights. Only point I was trying to make is the hunting rights have become a very significant part of the income on timber land.

I agree with PCP. Think about it like this... You should be making enough off the leases to cover some hard costs. After you achieve that threshold now you aren't taking your cash flow from what is currently producing to pay for something that is not producing (what is idle)... So you've got a breakdown over here that says what I'm growing cost me "X" amount to just hold this period. It is part of that piece.

I would not pay someone to lease 10k acres full time. That's a joke. You're going to have to multiply to get to my number. A little money is made off the leases but it is more about budgeting and controlling the hard costs like taxes than anything.

So big dog up in his NYC office - Don't assume he doesn't know what he's doing. He can't start a chainsaw but if he's any kind of timber man offsetting his hard costs are at least a small element of what he is looking at when the reports come across his desk. When you talk about holding something that long covering becomes fairly significant on the whole. Several hundreds of thousands of acres... yea it is a factor.

Taxes, as in property taxes, would be a small number. Wouldn't cost but about $1.25 or there about per acre. Maybe less if some deals have been cut. $1.25+/- is set by the state and should be the same for areas. For some reason I want to say its based on soil type but that doesn't seem right.

Ok so you are looking at the reports your accountant prepared and you are trying to figure out your carrying costs vs production costs. Dirt vs Trees. If you lease for $7.50 then you take out $1.25 for property taxes you have $6.25 left before you start losing money and out of that you pay for insurance as well as someone to handle the leases. Then the deal breaker is how it is financed. It may not have a mortgage a big company may have financed via some type of debt offering or credit facility, etc. They hopefully own a lot of land outright with no interest and your accountant takes all that and put is on paper to show you how much money you lost just carrying the land. Any loss that is cash flow has to be made up on the production side or you are going out of business.

If your numbers are correct, lease revenue provides an additional 15% incremental profit on the same asset as well as residual annual cashflow while the timber is growing and generating $0 in cashflow. As a CFO, I can tell you that based on those numbers, leasing is important to timber companies.

If they understand what you just said I think you pretty much just hit the nail on the head.

Hunting leases are nothing. They don't even cover land taxes. The only reason timber companies lease hunting rights is to supplement their losses. They are in the timber business, your hunting experience means nothing in their schedule and planning.