Cutting for a percentage or buying timber

[ShearHeadMS]

Hey guys, just started my first job on about 12 acres, using my JD 6420 and trusty chainsaw. I'm cutting this for a 70 30 split, the land owner gets 70 and I take the 30. I'm actually glad the way things are working, no dead line and I'm getting 22 a ton for paperwork, I haven't hauled the saw logs yet, mostly focusing on the more abundant wood. But my main question is. Is it better to cut for a good percentage or to buy timber out right? Iv had some experience with both but I wasn't running the show. They paid us just the same for both, but I'm just worried if I go buy some bigger equipment if ill ever make any money on a percentage price.

 

[northmanlogging]

You get 30%...

Most crews don't cut for under 60% and that is real prime wood and flat hard ground, with a short commute to the site... unless you are getting insane prices for the timber you are probably going to lose money, just a prediction. With fuel, time, maintenance, paying yourself (you are getting paid rite?) Gods forbid if you have any kind of breakdown. And at the end of the day you need to but a little in the bank for lean times and hard times...

Food for thought good luck.:msp_wink:

As far as buying the standing trees versus percentage from the mill... buying timber means having a real good idea on what it costs to move wood and having a finger on the pulse of the timber economy, or just being a straight up crook (not that all folks that buy timber are crooks but some are...) going with percentage you get paid more or less the same day the land owner does (depending on how slow the usps is...) and your still dependent on timber prices but you at least get something in your pocket after 3 weeks of working yer butt off. There are other methods like paying x amount down and the anything else above x amount is paid out in percentage shares, many ways to scalp a forest.

 

[DavdH]

Buy and sell the timber,greater risks and sometimes much greater rewards. Your split is backwards, we do lots of jobs for 75% the remainder to the land owner. We do every thing for that, management to sales, sometimes they want their share left on site ready to ship.

 

[ShearHeadMS]

The only reason why I went so low is its a family friend of mine who just lost her husband and needed a little cash to make it through, and thanks for the tip, if I had 3 trucks, a feller, skidder and loader I'm sure I would have had to take 60%, but I'm comfortable with what I'm making right now considering I'm 20 miles from the paper wood yard and mill. I'm only doing this on the side anyway so I'm not pressed with it that bad. But if I was to start buying equipment I see we're the 60% comes into mind, I just don't like the way local loggers do people around here when they buy timber out right....

 

[northmanlogging]

60% is a starting point, my percentage goes up from there. While its awesome that you are helping a guy out, you still want to make a little money at it, I doubt that 30% will even cover your costs.

The outfits that buy wood outright can be good and bad, its a matter of morals on their end, and the homeowner doing a little research or hiring a forester.

As far as mills being close, most of the mills I deal with are within 30 miles of me max, I still want 60% or better.

 

[Franny K]

I thought 25 % of the yield returned in the form of lumber was a bit lean. The guys logging next parcel over , well the sawmill owner as well came over and offered me a price I had to twist his arm kind of just to get him to tell how much a board foot he was offering. Never asked permission to come on the property or walk the area.

How much is done with a forester marking which trees to cut. Marks the tree and where on the stump to cut so you can see they only took what they were supposed to. Then put it out to bid. I think he wanted 12% of the total bid but might not remember right. I belong to a club that owns some property and a forester came to a meeting proposing to do that.

Fran

 

[northmanlogging]

I thought 25 % of the yield returned in the form of lumber was a bit lean. The guys logging next parcel over , well the sawmill owner as well came over and offered me a price I had to twist his arm kind of just to get him to tell how much a board foot he was offering. Never asked permission to come on the property or walk the area.

How much is done with a forester marking which trees to cut. Marks the tree and where on the stump to cut so you can see they only took what they were supposed to. Then put it out to bid. I think he wanted 12% of the total bid but might not remember right. I belong to a club that owns some property and a forester came to a meeting proposing to do that.

Fran

25% is kind of an average, for me it largely depends on how much work its going to be to get the trees out, is there a road, how hard is the ground, how steep, how big are the trees, what kind of wood is it a small parcell or am I going to be able to spend a few weeks/months really working it over... all these things become factors, and many more.

Personally I find the x% left as lumber to be a little weird, who really needs that much lumber laying around the place... I would rather have the cash.

 

[northmanlogging]

but wait there's more... Loggers and what not just wandering on to your property, its kinda rude, they should at least knock and ask permission. However you can see trees from quite a long ways away... so they don't necessarily need to walk your property to see whats growing there, chances are they where in the area and figured you have/had marketable timber and rather than moving there equipment they could just keep logging.

 

[Franny K]

In the Connecticut state forest various pieces of ground's timber is put out for bid. The description and board feet are pretty well spelled out. I am not a logger but with the winning bids in the neighborhood of $17,000 it seemed like it wouldn't take an extremely large outfit to participate. Never seen a logging outfit with buldozers making roads and them spreadiong hay when done on those areas. That was a few years ago I expect it is still similar there are certainly fresh cut areas now.

You guys out west how does it work on federal land? Is it like above logger gets a percentage of whatever the mil pays that day? Kind of doubt it though never had any need to know.

 

[northmanlogging]

Federal (Forest Service) and DNR land is done on a bid basis, most times the big mills such as Hampton, will bid on it and then contract the work to a logging outfit, once again on a bid basis.

Foresters go in an make a fairly detailed description of the wood, and spell out whatever restriction etc. then based on that or cruising it your self you can make a bid, but considering that most of the FS and DNR units are in the neighbor hood of 80 acres you would need a considerable amount of money to make a decent bid (they do have minimums). So I don't work them jobs....

 

[slowp]

On Federal land, the purchaser has to put down a lot of money to guarantee the work getting done. Up front, bidders have to put down a bid guarantee, which is returned if they don't get the sale. This keeps jokesters and non-serious bidders out of the running, we hope.

Then, should you get it, a payment guarantee is made. This is a percentage of the value bid.

Now it can really get confusing as there are two main types of timber sales. There are scaled sales, where the purchaser pays for what is actually scaled after cutting, and payment unit sales, which are paid for by what is cruised. The latter can be good for the purchaser, or bad, and they need to really do a good timber cruise before bidding. Whatever it is, cash has to be paid before logging. In the case of a payment unit sale, the payment unit must be paid for and a bit of extra money put down before any tree is cut in it. The extra money is for operation trees--trees that were not designated for cutting originally but have to be cut for landing room, skid trails, or when one of the faller gods gets a tree hung up:msp_smile::msp_smile: and needs to cut another tree to get the hang up on the ground--safety. Scaled sales require the purchaser to have money in their account to cover the amount of timber to be cut in the current month, plus timber on the ground, plus ten days cutting in the following month, at a minimum. The big companies put down a payment bond to cover that, and then pay cash each month for what is scaled.

Our Forest Service is getting away from marking timber. The contracts are put out as designation by description/prescription. That means another cost is put on the purchaser--paint and labor to get the trees marked. Marking is not required, but our prescriptions are fairly complicated so most loggers hire a forester to mark the units. I think most markers bid by the acre.

So, it takes a pile of money to get a timber sale from the feds. There are a few loggers, who will buy sales and then sell the timber to the mills. Then there are the mills that bid and hire loggers.
Both happen here.