Standing trees (stumpage) prices are up across almost all wood categories in 2021.

That’s the assessment of F&W President Marshall Thomas, who has been following timber market trends from the grower’s perspective for years.

“They’re up. Across almost all categories, some more, some less, some earlier in the year, some later,” Thomas writes in the fall issue of his company’s quarterly newsletter, the F&W Forestry Report. “But overall, they are up. It has been at least since 2012, and maybe as far back as the early 2000s, that I have been able to say that.”

Thomas said timber prices are mimicking the positive trends from the 1990s, but since it has only been a few quarters, forest landowners will have to wait and see if the price increases hold.

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Democrats in Congress are working to pass President Biden’s “Build Back Better” plan, legislation related to soft infrastructure that also contains several initiatives to address climate change, including funding for conservation programs to assist private forest landowners in implementing climate mitigation and forest resilience practices. But these same landowners are likely to end up paying more taxes under changes being proposed to federal tax laws in order to pay for the plan.

The Democratic tax plan proposes to increase the top capital gains rate from the current rate of 20 percent to 25 percent, which would have a direct impact on the taxes landowners pay on timber sales. The plan also calls for an increase in the top income tax rate to 39.6 percent from 37 percent, adds 3 percent surcharge on Americans with an adjusted income of more than $5 million per year, and implements a 3.8 percent net investment income tax on income from pass-through entities such as S corporations, partnerships, trusts, and estates.

As far as inheritance taxes are concerned, the tax plan does not eliminate the step-up basis at the death of taxpayer or the imposition of a capital gains tax on the appreciated assets, two measures floated by the Biden administration. But it does propose to end the temporary increase in the estate and gift tax exemption amount, currently set at $11.7 million, at the end of 2021, four years before it was due to expire. If this provision becomes law, the estate tax exemption reverts back to $5 million, indexed for inflation.

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For the first time in nearly a decade, timber stumpage (standing trees) prices are up significantly over the past year, with pine and hardwood sawtimber improving markedly, reports the head of one of the nation’s largest forest management firms.

Marshall Thomas, president of F&W Forestry Services, writes in his company’s quarterly newsletter that the timber price increases are long overdue.

“Pine sawtimber in the Southeast is the star, up about 20 percent year-over-year, but hardwood sawtimber in the Northeast is also up dramatically, depending on species and region,” Thomas said.

Thomas notes that lumber prices—which reached record highs over the last year and have been up as much as four times pre-pandemic levels—appear to have peaked. While landowners haven’t benefited much from the run-up in lumber prices, he said eventually some should trickle down. He added that sawmills are increasing capacity to meet new demand, which is good for landowners long term, especially those near mills located in weak market areas.

“The news on prices and increasing consumption is good for landowners…it feels good to see the foundation developing for improved stumpage prices,” Thomas said.

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A new program by NCX (formerly SilviaTerra) offers forest landowners of all sizes access to carbon offset markets at no cost to the landowner and no long-term commitment.

NCX pairs forest owners—big and small—with companies wanting to purchase carbon credits, an emerging market that is gaining traction as the world focuses on climate mitigation strategies.

Eligible landowners enrolled in the program are paid to delay harvest for one year. The program is limited to landowners with merchantable timber, there is no cost to participate and contracts are for one year at a time.

F&W is partnering with NCX to provide information about the program to forest landowners and assist them in enrolling.

“We were able to assist several clients in successfully selling carbon credits in the initial market offering and look forward to the expansion of the exchange to other areas of the U.S. It’s great to see the innovative use of technology and information by NCX benefit both landowners and the environment,” said Stephen Logan, F&W’s chief information officer.

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As promised during his campaign, President Biden has focused on climate change since taking office in January, and the role that forests play in capturing carbon from the atmosphere continues to be elevated in discussions around potential solutions to the nation’s environmental challenges.

Thus far, Mr. Biden has signed two executive orders focusing on climate change. Of the many concepts included in these orders, the 30×30 initiative is presently at the forefront of those expected to have a direct effect on private forests. This initiative aims to conserve at least 30 percent of U.S. lands and waters by 2030 and the USDA is currently collecting input on this policy from foresters, farmers, and other stakeholders.

As the president and Congress begin to shape far-reaching environmental and tax policies, it is imperative that the forestry community work to educate our elected officials on the many significant contributions that private working forests not only make in the ability of trees to capture and store carbon, but in clean water and air, wildlife habitat, jobs, supporting rural communities, and a sustainable supply of wood and fiber for building products, paper and packaging, and hundreds of other items consumers use every day.

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