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Betsy Bates

Driving Down Production Costs Key To Surviving Poor Timber Markets

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With timber prices roughly the same as they were in the mid-1980s, how are tree growers surviving in today’s markets?

That’s the issue Marshall Thomas, president of F&W Forestry Services, one of the nation’s largest forestry consulting firms, tackles in his firm’s fall newsletter, the F&W Forestry Report.

Comparing tree growers to computer manufacturers, Thomas says forest landowners are making it today because they have driven production costs down.

“Given that we can’t control timber prices, perhaps we need to recognize where our success has been and focus on that in the future,” Thomas writes.

Thomas notes that landowners have reduced costs related to site prep and herbicides but have also been utilizing more advanced silvicultural practices and genetically-advanced tree seedlings, resulting in a significant increase in overall timber productivity.

“So we may need to recognize that success in the face of low prices could be based on continuing to spend money in the right places, and by increasing expenditures in some cases—as long as the additional expenditures increase yields enough to drive down overall cost per unit,” Thomas concludes.

TO SEE THE FULL ARTICLE IN THE FALL 2017 F&W FORESTRY REPORT, SUBSCRIBE NOW

Betsy Bates

GOP Releases Tax Reform Blueprint, Impact on Forest Owners Uncertain

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In late September, President Trump and Congressional Republicans unveiled a “unified framework” for reforming the tax system with goals to simplify the tax code, boost economic growth, create jobs, and promote investment.

The framework proposal lacks crucial details so it’s difficult to predict how forest landowners will fare under it.  The proposal does contain several elements favorable to private timberland owners, including the repeal of the estate tax, allowing businesses to immediately expense the cost of new investments, and cutting tax rates for pass-through businesses.  However, it also proposes to eliminate most itemized deductions, such as the current write-offs for state and local income, property, and sales taxes.  The elimination of the property tax deduction could potentially have a huge impact on the taxes paid by landowners, particularly those living in high-tax states.

Also unknown at this point is the future of the federal timber tax provisions that are currently part of the tax code.

With the tax blueprint in hand, Congressional lawmakers will now spend the next several months hammering out specifics and negotiating critical details of a tax overhaul bill, which may or may not make it to a vote before the clock runs out at the end of the year.

TO SEE THE FULL ARTICLE IN THE FALL 2017 F&W FORESTRY REPORT, SUBSCRIBE NOW

Betsy Bates

Agricultural Land Values Hit New High in 2017

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Agricultural land values, a measurement of the value of all land and buildings on farms, hit a new high in 2017, according to the annual survey conducted by the U.S. Department of Agriculture.

The United States farm real estate value averaged $3,080 per acre in 2017, up $70 per acre or 2.3 percent from 2016.  The USDA said regional changes in the average agricultural land value ranged from an 8.7 percent increase in the Pacific region to a 1.8 percent decrease in the Northern Plains region.

In the F&W 25-state service region, which encompasses the eastern U.S. from the Texas Plains across the Southern Pine Belt to the Northeast and New England, the average agricultural land value was $3,568 per acre in 2017, $488 above the overall national average.

Drilling down further, farm land values in the nine states comprising the Southeast, Delta and Southern Plains regions were up 4.1 percent to an average of $2,943 per acre.  In the Appalachian region, farm real estate values increased by 1.1 percent to an average of $3,800 per acre, and in the Northeast, agricultural land values increased 0.8 percent to an average of $5,050 per acre.

TO SEE THE FULL ARTICLE IN THE FALL 2017 F&W FORESTRY REPORT, SUBSCRIBE NOW