Timber Prices “Light and Variable” During First Quarter, Tax Reform Troubling For Timber Owners

The economic recovery of the forestry sector continues at a painfully slow pace while Congress mulls tax reform legislation that could eliminate timber tax provisions that will have a negative impact on small private forestland owners, one of the nation’s largest forestry consulting firms reports.
Marshall Thomas, president of F&W Forestry Services, Inc., one of the nation’s leading forestry management and consulting firms, reports in his firm’s quarterly newsletter that timber price increases during the first quarter were “light and variable.”

“Wet weather (in this case snow)—normally a harbinger of higher timber prices—actually caused a significant drop in February housing starts, perhaps contributing to the lack of excitement in local stumpage markets,” Thomas writes in the spring 2015 edition of the F&W Forestry Report. “Fortunately as we enter the warm season, it looks like El Nino has a good chance of staying with us and should have its predictable positive impact on stumpage prices.”

“As our painfully slow recovery continues, a real threat to forest landowners is coming from our politicians [in Washington] in the form of tax reform. The proposals for forestry include the elimination of capital gains, annual expense deduction, amortization of reforestation expenses, and tax credits for reforestation expenses,” Thomas said.

“If made, these changes could reduce long term returns for small private forestland owners by as much as 25 percent … That’s more than enough to offset the recovery for the next five years or so,” he added.