| | By far the most common concerns that woodlot owners and landowners have are related to the price of their standing timber and the value of compensation for damages to standing forests from industrial development activities.
The Woodlot Association of Alberta is a resource that can be used to research issues such as compensation and timber prices so that owners can make informed decisions. When it comes to determining a fair price for standing timber, both sides of the equation need to be considered. The seller wants to make as much as possible, and the buyer wishes to pay as little as possible.
"We at the Woodlot Association want to ensure the woodlot owner gets paid; gets paid what they desire; and, gets paid for what is deserved," says Ken Glover, chief administrator with the Woodlot Association of Alberta. "The highest price may sound extremely attractive, but it means nothing if the timber is not harvested in a manner desired or if payment is not received at all."
In Alberta, private timber is usually purchased by third party logging contractors, timber brokers and mill-direct private timber buyers. There is not 'one' best or safest type of buyer. The seller must assess the risk with any type of buyer.
"Obtaining professional assistance or becoming self-educated definitely helps reduce risk," says Glover. "Regardless the type of buyer, in almost every situation the timber is purchased on an 'at-the-stump' or 'standing' per tonne basis."
The landowner (seller) usually receives an offering price based on anticipated logging costs (difficulty), hauling costs (distance to receiving manufacturing facility), quantity, and quality. The seller is in the best position to negotiate this offering price if they have a strong idea of their own management objectives, possess a good understanding of their timber resources, and is knowledgeable and aware of the private timber market.
The Woodlot Association usually extends considerable advisory support to its members; however, following the Private Timber Sale Check List is a good preliminary guide for woodlot owners and landowners:
- Assess personal objectives - before the timber buyer comes calling and definitely before a contract is signed, the owner must determine what it is they wish to do with the land. Determine the reason for the harvest and sale of the timber. Coming to grips with this will influence the decisions on the timber harvesting process, and on all aspects of the timber sale agreement. Furthermore, by understanding the reason for entertaining harvest and sale, the owner reduces the chance of disappointment and disagreement.
- Understand the resource - to the extent possible, owners need to know their private timber resources. This may be achieved through a self-management planning exercise or by obtaining a professional assessment. The more that is known about the resource, the more favourable the negotiations for a fair price can be and the better the owner will feel about the decision to harvest and sell any timber.
- Understand the markets - while fair price is relative, it's good to have some idea of what a fair price could be. The price is fair only if the seller feels happy with what they can sell the timber for, and the buyer feels happy with what they are paid for the timber. The coffee shop is often a common source of market research and, in some instances, provides a good ballpark local figure. Another source of market value information can be obtained on-line by visiting www3.gov.ab.ca/srd/forests/fmd/directives/currdues.html. This website details the stumpage dues paid by Alberta forest product companies, which is based on the type of forest or wood product (e.g. dimensional lumber, OSB, plywood), US-Canada dollar exchange rate, commodity prices, and other factors. While this site offers a closer look at 'real prices' for Crown timber, it is not realistic to expect to automatically receive this price.many more factors come into play with private timber sales.
- Assess trust and risk - it is imperative to assess trust. This is perhaps the most significant element of risk. Therefore, strive to reduce risk through investing in one or more of the following:
- research and education
- professional assistance
"In Alberta, there are private timber sale alternatives such as Lease Agreements and Resource Management Agreements," says Glover. "Lease Agreements are most common among the primary forest product companies where a long-term agreement is signed to manage, and in some cases plant, timber on the owner's land and promise to pay a specific market price. Resource Management Agreements are less common and mostly available through consultants or contractors who manage private timber resources and/or execute timber sale for a fee based on revenues. Whatever decision is made, be sure it is an educated decision."
This article, created by the Alberta Woodlot Association, was forwarded to Agri-News by the Farmers' Advocate Office. An additional article covering compensation values for damages to private timber resources incurred through industrial development will be carried in the next issue of Agri-News.
For more information, call the Alberta Woodlot Association at (780) 489-9473.
Contact:
Farmers' Advocate Office
(780) 427-7950
Alberta Woodlot Association
(780) 489-9473 |
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