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Why invest in timberland?. Biological GrowthProduct Class MovementPulpwood to SawtimberPrice AppreciationRecreational Opportunities?I just want to own trees". Income opportunities from timberland. Timber SalesHunting LeasesRecreational LeasesPine Straw. Costs associated with timberland. Prop
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1. investing in treesGlen WorrellF&W Forestry Services, Inc.
2. Why invest in timberland? Biological Growth
Product Class Movement
Pulpwood to Sawtimber
Price Appreciation
Recreational Opportunities
“I just want to own trees”
3. Income opportunities from timberland Timber Sales
Hunting Leases
Recreational Leases
Pine Straw
4. Costs associated with timberland Property Taxes
Land Use
Insurance
Management Fees
Lawyer Fees
Accountant
Silviculture Activities
5. Silviculture activity costs Reforestation
Site Prep
Seedlings
Planting
Herbaceous Release
Release
Fertilization
Timber Sale Costs
6. Use of financial decision tools Purchase Properties
Look at Management Alternatives
Vary Management Scenarios
Timing of Activities
Scope of Activities
7. What’s needed? Assumptions!! Costs of Activities
Timber Prices
Timber Mart South, F2M, RISI
Discount Rate
Growth Response to Treatments
Growth and Yield Models
Holding Period
9. Purchase Cutover land and reforest Assumptions Bare Land – ($800)
Reforestation – ($80)
Release age 1 – ($45)
Thin age 15 – $300
Harvest age 25 – $2,500
Sell Land after harvest – $1,000 Results NPV @ 5% = $248
NPV @ 6% = $11
NPV @ 7% = ($176)
IRR = 6.05%
11. Convert cropland to timberland
12. 15 Year Old Stand – Clearcut now vs. thin Two Thin Management Regime
13. 15 Year Old Stand – Clearcut now vs. thin Clearcut 15 year old stand, replant, cut at age 14
14. Quality Hardwood Stand – Orange Co. VA
15. Quality Hardwood Stand Without Land Sale
16. Timing is Everything – Final Harvest
17. Timing is everything – analysis of fertilization in 2004 projected through 2011
18. Timing is Everything – Fertilization Analysis 2004 prices Pine pulpwood - $10/ton
Pine CNS - $27/ton
Pine Sawtimber - $42/ton
2011 Prices Pine Pulpwood - $8/ton
Pine CNS - $14/ton
Pine Sawtimber - $20/ton
All other costs unchanged
19. Timing is everything – analysis of fertilization in 2004 projected and using 2011 timber prices
20. Summary Assumptions – How Good Do You Feel?
Timber Prices
Costs
Management Regime
21. Questions?? E. Glen Worrell, Jr., CF, ACF
Charlottesville Branch Manager
F&W Forestry Services, Inc.
404 8th Street NE, Suite C
Charlottesville, VA 22902
O: 434 296 1464 F: 434 296 5700 C: 229 343 8049
gworrell@fwforestry.com
www.fwforestry.com