Logging and Selling Timber
Oregon remains the leading state in the nation for timber harvesting and lumber production. While a majority of the timber volumes originates from industrial forestry, small woodland owners also play a significant role in the supply of material to Oregon’s mills. Most small woodland owners throughout the state are well-versed in planting trees, vegetation control, pruning, road maintenance and general stand management, but planning a timber harvest and selling the logs is a task that occurs infrequently and with terminology many owners find confusing.
A timber sale is the culmination of many years of forest management and the most significant opportunity for a return on forestry investments. The lack of experience in planning, conducting and monitoring a timber sale can make the process seen a daunting task. Many publications and programs are available to owners to assist them in harvesting operations, be it an owner/operator, small volume/small scale operation or contracting an operator for a full-scale operation. Big or small, the process remains the same. It takes time and preparation to research markets, ensure access, interview loggers and log buyers, develop a written contract and understand the tax implications – all the while meeting individual goals and objectives.
We can assist you in the process. A comprehensive listing of videos, publications and programs designed to meet the myriad goals and objectives of woodland owners throughout the state can make the somewhat esoteric task of conducting a timber sale a “walk-in-the-park.”
|For more information, please conact:
Steve Bowers, Oregon State University Extension Agent
20 THINGS YOU SHOULD KNOW BEFORE CONDUCTING A TIMBER HARVEST:
1. Who pays for set-up (moving-in the equipment required to do the job)?
All logging contractors have fixed and variable costs. A major fixed cost includes the cost to move equipment to the woodland owner’s property to begin a job. The cost for moving their equipment is the same whether logging 1 truck load of logs or 100. That is one of the primary reasons why contractors charge relatively large percentages or $/MBF to perform small jobs.
2. Does the price quote include hauling and how is it determined?
When a logging contractor submits a bid for a job, be sure hauling costs are included in their offer. The owner does not necessarily need a line item cost for cutting, skidding and hauling (the 3 primary costs in a logging operation), just be sure you inquire whether the offer does include trucking. Trucking costs usually are determined by the load, hourly or $/MBF or ton, with by-the-load the most popular method for small operations. All of this information should be included in a written contract prior to conducting any operations.
3. What method of logging and equipment will be used?
Matching equipment to a specific site is extremely important for the contractor and the woodland owner. The contractor needs to utilize the most efficient system to increase production and reduce operating costs and the woodland owner desires a system(s) that minimize residual damage to the property. In many aspects, it is not the type of equipment, but rather the equipment operator that determines the amount of residual stand damage.
4. Does the logger have proof of insurance?
Any operation on your property should come with a written contract. One of the pre-requisites of any written contract is proof of insurance, including liability and property damage. Be sure to observe the actual policy and check for beginning/ending dates of coverage. Also, consider having your name added to the contractor’s policy as an “additional named insured,” meaning you are covered under the logger’s policy for the time they remain on your property.
5. Who markets the wood?
Many owners assume the logger is the best individual to sell their logs because they are in the logging business. Loggers are in the business to harvest timber (a measure of activity) not necessarily sell the logs (a measure of market strength). They might select the proper mill, but owners should consult with individuals who buy and sell logs for a living (log buyers and consultants).
6. Does your logging rate include slash piling?
Slash disposal is one of the most-often overlooked elements in a logging contract. Some owners assume slash disposal is a pre-requisite for the completion of any operation. Not true. How logging slash is managed should be part of any written contract, including the type of machinery (dozer, excavator, manual) and method of disposal (windrows, piles, on the landings) or none at all. Also, burning the slash is a separate issue. By the time burning is possible, the logger is off to other jobs, so the contract should specify not only who piles the slash, but the agent responsible for burning the material when burning season opens.
7. Does the logging cost include rock/road building and repairs after the operation?
The logger may recommend improvements to a woodland road to accommodate logging traffic (big, heavy trucks) along with measures required to restore the road to “equal or better condition prior to operations” before leaving the site. Those costs can be included in the bid or a separate line-item, both to be paid by the owner. The best way to establish measurable parameters is take pictures of the road prior to beginning operations and after completion of the job.
8. Who marks the trees, the logger or landowner?
In a thinning or partial cut, tree marking is imperative. If the owner is not educated in tree selection (spacing and health), the logger can be of assistance, but remember their vested interest is to harvest trees, not save them. Consider a knowledgeable neighbor or a professional forester to assist you. Mark trees (paint or flagging – preferably paint) to be harvested at breast height and ground level (below stump height to be identified after cutting) ensuring removal of only marked trees.
9. How do you track loads sent to the mill?
Timber theft is a somewhat overrated concern, but in consideration of peace of mind to the owner, there is an easy procedure that will ensure credit for your trees. Be sure someone (other than the logger and trucker) is on or near the site so any trucks leaving the property can be identified. Each load of logs should come with a trip ticket to the owner noting the time and number of logs on the truck. When the owner is paid by the mill, there will be a listing of the number of loads and the time and day they were delivered, making for easy cross-checking with the original trip tickets.
10. Does the logger subcontract any of the work?
Subcontracting is a common practice in a logging operation, especially the cutting and hauling components of the job. Be sure the written contract with the primary contractor has a clause that states any sub-contractors utilized are under compliance with all of the stipulations of the original contract. If hauling is subcontracted, be sure a price has been negotiated prior to any hauling, with that information included in the contract.
11. Is the logger certified?
In order to sell logs in Oregon, woodland owners are required to have a written management plan or have their logging done by a certified logger. Considering the majority of woodland owners do not have a written plan means their logger must be certified. To become certified, contractors must take a number of extended education classes in addition to yearly “updates.” The choice is yours, but remember the prerequisites to selling any logs.
12. Should I ask for references for recent jobs completed for small woodland owners?
There are a number of options in finding and retaining a logging contractor. Once you have identified one, the best evidence of them successfully completing operations similar to the one you are planning is documentation of prior jobs. If the contractor refuses, or has no documentation of prior work experience with small owners, you should be very wary in retaining them.
13. If a job extends into late fall, how do I determine when it is too wet to work?
The vast majority of operations by woodland owners are done during the summer months. With so many owners seeking a limited number of contractors, occasions will arise when weather becomes an issue in completing the contracted work. There are no set guidelines in suspending operations, but you should develop some sort of parameters in the contract regarding the suspension of activities on your property, most often related to impacts on haul roads and residual stand damage (erosion, rutting and possible stream sedimentation) on and around the logging site.
14. Who does all the paperwork, including the Notification of Operations, purchase orders and logging contracts?
A Notification of Operations can be completed by the owner or logging contractor. This is the document you file with the state in order to conduct most activities on your property. You must have a notification number (it comes with the permit) to sell your logs! There are no exceptions. If the landowner owns the logs, they need to sign the purchase order, not the logging contractor. If the contractor has purchased the logs from the landowner, then the contractor owns the logs and they sign the purchase order. The logging contract requires signatures of the landowner and the logger and can originate from either party.
15. Who is responsible for reforestation?
Typically, reforestation is done by the landowner. Occasionally, logging contractors will perform this activity, but in nearly all cases will sub-contract the actual tree planting. Regardless of who performs the activity, the Oregon Department of Forestry (ODF) will hold the landowner responsible for any violations regarding replanting, the primary reason most landowners assume responsibility for planning and carrying-out reforestation projects.
16. How do you prevent a logger from taking more trees than was agreed previously?
In a thinning or partial cut, trees designated for removal should be marked. In a clear cut, the boundaries of the harvest area should be designated with paint or flagging. There may be occasions when an owner begins a logging operation and as the process unfolds, realizes they made a mistake and want to suspend operations. There is no easy way out of this quandary, which most likely could have been avoided by the owner having a written management plan; evidence they have thought-out various goals and objectives and the ramifications/impacts of those plans on their property.
17. On the Notification of Operations, is the landowner the owner of the timber and therefore responsible for paying the harvest and severance taxes?
The Notification of Operations requests information on the owner, operator and timber owner. Usually, the owner and timber owner are the same party. If the owner sells the trees to the operator (the logger) prior to harvesting, then the operator becomes the timber owner and they are responsible for the taxes. The easiest way to determine who owns the timber is whose name is on the check when it arrives from the mill? If you get the money – you pay the taxes.
18. If the logger removes pulp logs or non-merch trees, will the % split previously agreed upon on for the sawlogs be the same for the pulp?
Oftentimes, a contractor will make a separate bid for non-merch material because it is of such low value. If a different split is not specified in the contract, the contractor receives the single amount specified in the written agreement. If a different rate is negotiated, then it needs to be included in the contract. For example, the contractor might be paid 40% of the value of the merchantable material and 80% of the value of the non-merch (cull or chip) logs. The concept is the logger will make approximately as much money, regardless of the type of material being harvested, whereas the landowner will make very little on the low value (non-merch or cull) material.
19. How much damage can I expect to residual trees?
Residual stand damage (direct damage to the trees in addition to soil compaction) will be determined by the equipment selection and the quality of the operator (the operator is the greatest factor). When you develop the written contract, establish a quantitative measurement. For example, “residual damage to trees will not surpass 5%.” This means the logger must show no visible impacts on 95% of the trees in the harvest unit. Whatever the measurement, stipulate in the contract any repercussions of violating the requirement. This may be as extreme as suspending operations or a specified reduction in payment.
20. Can you itemize costs of work to compare on a similar basis from more than one logger i.e. for slash piling, road maintenance or construction and trucking to different locations?
Estimates from logging contractors may come as single unit cost or itemized according to specific tasks such as cutting, skidding, trucking and slash disposal, to name a few. The owner may want to see the costs associated to each portion of the job. There is nothing wrong with this request, but keep in mind that in small scale operations, the chances of hiring multiple contractors to complete the operation is highly improbable because of the associated fixed costs of each entity.
LOGGING AND MARKET RESOURCES TO GET YOU STARTED:
- Producing and Selling Logs for Maximum Revenue A woodland owner must take certain steps to produce and sell logs for maximum revenue. This publication includes best practices for obtaining bids, selecting a buyer, and writing purchase orders; using the Scribner log rule, making decisions about bucking, selecting log lengths and diameters, and bucking to remove defects; and comparing markets.
- Contracts for Woodland Owners This publication describes basic principles of contract law as applied to planting; growing; maintaining; harvesting; road construction, maintenance, and repair; and selling logs and timber. Includes definitions of common contract terms and sample contracts.
- Measuring Timber Products Harvested from Your Woodland Managing woodland property offers you the opportunity to harvest a variety of products, depending on timber quality and quantity, harvest economics, and market availability. Among these products are saw logs (for lumber or plywood), peeler logs (for plywood), pulpwood, fuelwood, poles, piling, and posts.
- Timber Harvesting Options for Woodland Owners A publication created by the OSU Extension Service
- Selling Timber and Logs A step-by-step manual of selling timber and logs provided by the OSU Extension service.
- Designing Woodland Roads This publication looks at issues involving designing and building a new woodland road suitable for transport of timber products versu light vehicle traffic such as cars and pickups.
- Safe and Effective Use of Chainsaws for Woodland Owners The chainsaw, along with a planting shovel, is probably the most recognized and used tool in any forestry management regime. The publication discusses the aspects of correct usage of a chain saw, including felling and bucking techniques and the required safety features and operations.
- Harvesting Timber and Timber Taxes All timber harvested in Oregon is subject to the Forest Products Harvest Tax. In addition, harvests may be subject to the Small Tract Forestland (STF) severance tax.
- 2015 Understanding Oregon’s Timber Tax Programs and How to Complete Forms Forests contain one of Oregon’s most valuable natural resources—trees. The policy of the State of Oregon is to protect these forest resources and encourage the long-term management of the state’s forests through its laws. Oregon offers special assessment programs to forestland owners if they agree to manage the property primarily for growing and harvesting timber. These programs reduce the property tax the landowner pays on their forestland.