CHAPTER TEN

DEVELOPING YOUR PERSONAL WOODLAND PORTFOLIO

You Need a Comprehensive Forest Management Plan

Your long-term financial success will depend on your ability to determine first, where you are going, and secondly, exactly how to get there. Intuitively doing whatever seems right at the time will not yield favorable results. Top results will only occur if you make the effort to develop a thoroughly researched, well thought out plan of action for your woodlands. At Tennessee Timber Consultants, we specialize in the development of personalized forest management plans for our clients.

Developing anything, whether it be your financial portfolio, a shopping mall, or even landscaping your yard begins with knowing exactly what you want or hope to attain. That is, you need realistic short, intermediate, and long-term goals.

Goals relate to the general question of why you own woodlands in the first place. Presumably you have some reason, or reasons in mind for owning the property. What are they? What is your management timeline? Will your woodlands be a part of your estate and serve as a legacy for your heirs, or do you simply intend to divest yourself of your woodlands at some point in the future?

As examples; Woodland owner #1 plans to retire in about twenty years, so has elected to manage his property for the sole purpose of obtaining maximum income from the production and sale of timber for retirement purposes. Woodland owner #2 purchased land as a weekend retreat, but wants to improve timber values and receive periodic income. He further intends to leave the property as a valuable and scenic legacy for his children. These two owners have divergent, but potentially attainable goals.

Defining objectives requires that you be somewhat more specific. Objectives are measurable statements of your expectations of the benefits you hope to receive from your woodlands. Those could include maximizing dollar returns, improving habitat for specified species of wildlife, protecting scenic values over the property as a whole or only in certain areas, and protecting personal, private values like the old beech tree with grandpa and grandma's names carved into it. You cannot expect to attain your objectives if you cannot first clearly express what they are.

You may have one objective or many, but obviously they must be attainable and make sense. You cannot say that you intend to maximize long term revenue from the sale of timber without intending to make needed investments to do so. So, objectives must be realistic and practical. Where more than one objective is needed to attain the overall goal, they must be compatible, and any trade-offs scrutinized in very close detail. So, do not plan to maximize squirrel habitat while simultaneously planning to clearcut your entire property.

Policies are akin to your own personal "Rules of the Road." If you have any restrictions in mind for the management or use of your property then you must make them known to those who might be affected by them. Policies could include things like protecting fences during logging operations, restricting logging during rainy seasons, or protecting the view from your neighbor's house. One client several years ago refused to sell her timber to the highest bidder (a barrel stave manufacturer) because she disapproved of her white oak trees being used to support the whiskey industry. That was her policy, so she sold her timber for less money to a buyer who intended to saw the logs into lumber.

You will need a forester to provide guidance and information throughout your planning process. Foresters can put you on the road to success, but they are not mind readers. Before they can provide you with applicable, comprehensive information, you must first be able to fully express what the goals, objectives, and policies are for your woodlands. Think them out, and write them down.

Property Inventories

Goals and objectives must be based upon the reality of what you own. So, before you can have a clear understanding of whether or not your goals and objectives are attainable, you must have a detailed description and assessment of your property. To obtain this vital information, an inventory must be conducted, stand by stand, to determine current and potential conditions. A properly presented assessment should, as a minimum, contain two vital components.

First, you need a detailed inventory and description of the current and potential conditions in each stand. The information should include the size of the stand, the species of trees represented, current stocking, stand age, and site productivity. Other data could include current volumes, average diameters, tree grades, annual growth rates, and current value.

Secondly, you need a property map showing the location of each stand. Other map features could include houses, barns, fields, fences, roads, streams, cemeteries, wildlife openings, and other assets relating to the management of your woodlands.

A thorough and reliable property assessment is absolutely essential to responsible decision-making. With adequate study, woodland owners can prepare to do much of the planning themselves, but our professional advice will be required to complete the technical aspects of the plan.

Tennessee Woodland Portfolio Options

A personal financial portfolio normally contains several or many very different investments that you selected to meet your financial goals. In like manner, structuring your woodlands portfolio begins with determining all the alternatives that may be available to you. By knowing your investment options, you can finally select those that will yield the highest returns on your property.

Your attention is invited to Appendix I, containing our unique Tennessee Timber Consultants definitions for seventeen stand types most commonly found in Tennessee. More specifically, the table displays very broad comparisons among fifteen common woodland investment alternatives, plus two non-commercial stands. There are less common investment options that were not listed, as well as variations of those on the list. Yet for most landowners, the fifteen commercial stand types in the table offer the most favorable Tennessee woodland investment options. An approximate length of investment, cost, return, and risk was established for each stand. However, the information should only be used as a very general guide. Therefore, you are advised to use our table to initiate further, much more in-depth, investigations into your own specific investment opportunities.

Appendix II. offers our unique prospectus for each of the seventeen stand types just discussed. Each prospectus defines a financial objective, offers a management strategy, discusses associated benefits, and analyzes costs and risks. Most of the stand types can be found across the State, although others are specific to a limited region. Again, this information is offered to our clients only as a place to start thinking about establishing specific stand objectives and management strategies, while considering potential costs and risks.

You may not be able to match your existing stand conditions to the idealized conditions offered in the prospectuses. That is especially true for the majority of Tennessee’s hardwood stands, which have been neglected or abused for generations. Therefore, it probably is not realistic to expect that they can achieve the high quality, and very high financial objectives defined within the best hardwood prospectuses. If that is your situation, the best you can do (with this generation of trees, anyway) is to manage what you have to approximate those same results. However, if you have well-stocked young hardwood stands on the right sites, or a thrifty stand of pines, then these prospectuses offer a basic outline for success.

Selecting Your Best Options

Our foresters can help you select the best financial alternative on a stand-by-stand basis. Once all of the selected options and new stands are drawn on your property map, you will see that you have created your own patchwork quilt, and diversified your portfolio!

Planning horizons must, of course, be determined for each stand including scheduling all activities such as intermediate and final harvests, reforestation components, establishing wildlife habitat projects, protecting scenic values, and so on. So, over time the pattern of your quilt will change. Walnuts may be planted in a field this year, a poor hardwood stand on a ridge may be sold and converted to pine next year, and a thinning may take place in a small hardwood stand five years from now. On a practical note, don’t plan more than ten years into the future. After ten years, review the plan with our forester, “tweak” it as needed, schedule ten more years of activities, and proceed.

Your forest management plan will be a one-of-a-kind document. It will be your personal guidebook to long-term financial success through the thoughtful application of responsible forestry practices on your own private piece of the planet.