Using Forest Products in Agriculture
Summary: Kendall and Rebecca discuss the benefits of forest management plans for farmers with Andrew Fast, an Extension forest industry specialist. They explore how forested land can be integrated into farming operations, emphasizing the importance of understanding land assets and setting goals. Andy explains the process of creating a forest management plan, which includes resource assessments and prescriptions for action. He highlights the financial aspects, such as the cost of hiring a forester and potential tax deductions. They also discuss various forest products like maple syrup, firewood, and timber, and the importance of training and safety in forestry operations.
Show notes:
Extension directory of licensed foresters: nhwoods.org
Natural Resources Conservation Service (NRCS): https://www.nrcs.usda.gov/NewHampshire
Andrew Fast: andrew.fast@unh.edu
Women in Ag Newsletter signup - https://unhoutreach.tfaforms.net/217751?CID=701G0000001AiKCIA0
Kendall Kunelius – kendall.kunelius@unh.edu
Rebecca Dube – rebecca.dube@unh.edu
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Andrew Fast
University of New Hampshire Extension Specialist, Forest Industry
Transcript
Kendall Kunelius 0:09
Welcome to this episode of Shared Soil, a podcast dedicated to creating community, honoring challenges and encouraging personal and professional growth for all people in agriculture. My name is Kendall Kunelius, and I'm a field specialist for agricultural business management. And, I'm an Extension Assistant Professor for UNH COLSA.
Rebecca Dube 0:29
And I'm Rebecca Dube, providing administrative and technology support for the specialists of Extension.
Kendall Kunelius 0:35
So Rebecca, in our previous episode, Working with Wildlife, we touched on a lot of interesting topics. But there were a couple of things in there that I put a little pin in, in the back of my mind, and I said, Ooh, there's an opportunity to expand here and talk a little bit more about what Matt Tarr was talking about when it comes to a forest management plan. Now I'm very lucky that my husband is a forester, so I know just enough to be dangerous in the forest industry. But I also am familiar with some of the processes and procedures that farmers could be more aware of in terms of timber harvesting on their land, or really understanding how to utilize the land that they own as part of an enterprise from a holistic point of view on their farms. So today we're going to get a little bit of a deeper dive into that. We're going to get a little more into the nitty gritty of understanding what it means to utilize a forest management plan to enhance your farming operations. And we're going to get into the topic of understanding the goals that farmers may have for that land, like managing wildlife habitat or using that as a long term asset to their farming operations and their property.
Rebecca Dube 1:44
Right! So today, we're going to talk with Andrew Fast, who is a forest industry state specialist. So Andy, can you tell us a little bit about yourself, your experience in the forest industry and what you currently do at Extension?
Andrew Fast 1:57
Yeah, thanks so much for having me on. I really appreciate it. So I work as a forest industry specialist with Extension, so most of what I do currently is work with forest-based businesses and that sort of downstream businesses in the supply chain. So mostly loggers, different forest based businesses like sawmills, forest products, processors and so on; secondary manufacturers, things like that. But also I spent 10 years as a county forester with an Extension, and we can talk a little bit about what they do. And so in that role, I also work directly with forest landowners, different farmers as well, different communities, different private landowners, to help them understand how to manage their property for different goals and objectives. So it's very much in my wheelhouse. And I look forward to talking about this topic with both you.
Rebecca Dube 2:48
Great, and we knew we had the right person to talk to for this one.
Kendall Kunelius 2:51
No question.
Rebecca Dube 2:54
Well then Andy, I had a question for you. We're talking with farmers on this podcast a lot, so we're wondering where would a farmer start if they're considering utilizing some of their forested land as a part of their overall operation?
Andrew Fast 3:08
It's a great question, and I'm glad, Kendall, you mentioned the asset piece earlier. I don't know a lot about farming, but it seems to me that it's a pretty tough business, and it's hard to be real profitable, so I think being strategic and maximizing the value of all your assets, to me, would probably be an important thing for farmers to consider on keeping a viable farm. So historically, a lot of farms have had forest land attached to it in one way or another that they may not be able to cultivate, but it's still this asset that's oftentimes forgotten about. So as a landowner, any landowner- now, let's say if you're a farmer, the goal would first be to understand what your assets are, and then think a little bit about what you want to do with them. Some farmers may see forest land, and they may have historically done something with it, and they want to just do that. They don't want additional information. They don't want to change anything. That's okay. Other folks, they may want to get more information and figure out how to use that forest land in a more productive way, or to more deliberately accomplish their goals and objectives. And so I think the first step is always to work with a trained professional. So I'm biased, but Extension is a great resource. We have county foresters in each of the 10 different counties that can come out, meet with landowners and talk with them about this process, help them evaluate the forest land, talk with the farmers about their goals and objectives, and then set them along on a path towards achieving those goals based on the resources that they have - and we can talk more detail about what that process looks like.
Kendall Kunelius 4:45
I think one important thing to note in here- so in terms of proportion, or the amount of forested land in New Hampshire that we have versus open land is significant, right? I think it's something like what 82, 83% forested. Which being a small state that we are, that is a significant portion of the available agricultural land, which is taken up by forest. And I say that in a very positive way, because I see opportunities within that forest product realm that we'll talk about in a little bit. But I think the first step, like you were saying about contacting a county forester to get you started down that path, will also help you understand that. So farming is such a generational thing, right? That is an issue that I see consistently come up in the ag biz world, is succession planning. How do we keep this farm business going, if we are successful. I think that a forest management plan is a very unique piece of a succession plan, because that forest is such a long-lived thing, and if it's well managed, it can be a very valuable asset for that farm. Yeah, so I that's kind of where I was going to end with that, and then see if you wanted to add anything else to that end of just being like, how do you see this forest management plan piece fitting into the longevity of of a potential farm operation? And then also speak to how we talk about forested land versus open land when it comes to that ag concept of like, we're not talking about just clearing a bunch of land. We're talking about utilizing that as a piece of that farmland operation.
Andrew Fast 6:19
Yeah, and if I slip into some jargon, just point that out, and I'll try to define specific terms. But we start with goals and objectives, and that can mean different things to different people. Usually, as a forester, when you're meeting with a landowner, there's a number of different categories that we think in terms of, so one could be generating income. That could be a goal and objective. Another one's wildlife management, either for specific species or for diversity. So trying to get the greatest number of species across the land. It may be for declining species. So there's different goals associated even with these different categories. There can be recreation and access. There could be esthetic qualities. Some farmsmight have some sort of events or other ways of generating income. So we have these different categories: water protection I mentioned; rare, threatened, endangered species. You have all these potential different categories to think about [for] your property. And a lot of foresters approach it in a fairly regimented way, where we're looking and asking about these specific categories, and that all feeds into a forest management plan. Stepping back, looking at a forest management plan, that's a pretty specific document that's structured in a certain way. It's not supposed to be overly bureaucratic. These things are living documents, but there is a very defined structure.
Big picture, it outlines the goals and objectives for a landowner, usually around those different categories I talked about, though it could be other things specific to that individual. Then it's basically a resource assessment of that forest land. So understanding different attributes of the land itself in these different categories. What are the soils? What are the different species that are there? What are the timber products? What are the non-timber products that could be used: wildlife and so on, water resources? The third part is prescriptions. These are action items over a given timeline, usually 10 years. Could be 15 years, but usually that's the general duration of most forest management plans. So these are action items to meet your goals and objectives based on the resources that have been identified. So hopefully we can talk a little bit about, let's say, sugaring as a potential option for some different farms. But you may say, I want to do sugaring, but you do a resource assessment, and there's no sugar maple, and there's not really viable maple to be tapped. You know, it's very hard to do that. So it's this integrated plan: looking at the resources, understanding what you're trying to do and then really being deliberate about moving forward. And that's what I see as being the goal of the plan. And what any of these county foresters will do when they meet with a landowner is, you know, we're not trying to steer anyone in a given direction. We want to help have people have the knowledge to reach their goals and be deliberate in their planning process, because that's going to result in the greatest outcomes. So that's the management plan piece. And then I think one other really important part of it is usually associated with these management plans is, you know, I mentioned you're assessing the resource, and part of that's a forced inventory where you're figuring out the species, the sizes, the products with that information. You can assign values to those products and get a timber appraisal so you can understand the value of the asset and start making decisions about how you can manage that over a period of time to meet your goals.
One of those goals could be asset appreciation: generating revenue, cash flow, all those kind of things. And it also serves as a really important, or can serve as a very important tax document for when someone does harvesting, and they can take advantage of certain timber tax deductions to reduce their federal tax liability. So there's just a lot that goes into it. It serves a bunch of different benefits for landowners, but again, it's very adaptive. Folks can use it as much or as little as they want and adapt it over time.
Kendall Kunelius 10:30
Okay wait, as a business person, I heard money a lot in those last couple sentences, so that pings a bunch of things in my brain to ask about. But where I want to start is to say this sounds like a very important document. Who can write a forest management plan and/or, how do I find the right person to write the management plan that will best align with my goals as a land owner?
Andrew Fast 10:55
That's a great question. I mentioned county foresters. These are licensed foresters. So forestry is licensed in the state, which means if someone says they're providing forestry services, they need a license. And so we have our county foresters that are licensed. They have all the knowledge associated with forestry, but they don't provide certain services that compete with the private sector. The benefit of this is that they don't have a financial interest in your property. They're unbiased in the information they're providing, and they're not making money off you based on advice they're providing. So there are private consulting foresters, or I should say, private foresters that are licensed, that can provide a number of different services. One of those is the forest management plan. They also lay out and administer timber sales. Many of them have diversified knowledge bases and services they provide so they can do other things related to restoration, wildlife management, recreation and so on. But essentially, the forester is acting- Typically, when we say there's a private consulting forester, usually that forester is acting on behalf of the landowner. So when you have a timber sale, for instance, this is a real estate transaction, and you can think of that forester, that consulting forester, as a seller's agent.
You don't have to use a forester, and that's For Sale by Owner. Some people do that. I've heard it can sometimes be a nightmare. Maybe you get a little bit extra money because you don't pay a commission. And with timber sales, foresters work in the same way. They'll charge a commission to oversee a sale and take care of a lot of the administration of that that a landowner wouldn't know. So there's a cost, but that's your insurance policy in this real estate transaction that's selling timber. Usually the logger is the one buying the timber. They're the buyer in this real estate transaction. Sometimes there's a forester that works for a logging outfit or works for a sawmill that could be buying the timber, and you just want to be sure, in most cases, that the forester is your agent. They have a fiduciary responsibility to you. Sometimes, if they're working for the buyer, that's not the case. This doesn't mean you shouldn't work with a forester that's working with a logger. There's some great foresters that have worked for loggers. I don't know if Kendall, you agree with that or not, but...
Kendall Kunelius 12:19
I do! Andy is saying that because that was my husband's background. He was a forester who worked for a logging company. But yes.
Andrew Fast 13:33
Yeah. So you know, there's some really great, competent folks that are foresters working for mills or loggers or so on, but it is important to realize that their interest is for the business they're working for. They don't have a responsibility to you to - you know, there's certain ethics rules which are required for licensure, so they should be meeting certain ethical standards. But beyond an egregious ethical violation, they don't have a fiduciary responsibility to you, so it's a little bit of a different relationship. We have a list of licensed foresters on Extension's website. Our county foresters can help landowners access those consulting foresters and get those lists. And then again, if you're working with the county forester, they'll remind you, I'm sure, about the role of a consulting forester that's representing you versus buying timber. But again, I just kind of want to emphasize that point. It's something to be aware of.
Rebecca Dube 14:31
We'll put a link to that list in the show notes, where you can request a visit with a county forester. And I believe and correct me if I'm wrong, Andy, that if you talk to your forester, they also, our county foresters can provide you with a list of other foresters in the state, professional foresters.
Andrew Fast 14:46
Yeah. So they provide that list. You know, we can't steer business to anyone, so sometimes it's a pretty big list. Usually they'll encourage you to look a little bit closer to home, maybe first. You know sometimes that makes sense, because if a forester is visiting a job, they may get out to that job if they're more, if they're 15 minutes away than four hours away. But also, you should check references. Someone 15 minutes away may not have the same reputation as someone further away. But overall, we have a really great consulting forester community, and then, yeah, I can't say enough about our county foresters. They're just exceptional in their knowledge and how they work with people.
Yes, you are, I always said. I said, yes, you guys are, your county foresters, your whole natural resources team is just - you are cool. You're like the cool kids!
I think they're the greatest folks to work with.
Kendall Kunelius 15:43
Not to say that other people - Extension is great as a whole, but as a as an ag biz person on the Food and Ag team, I always enjoy collaborating with folks on the Natural Resources team, because I feel like I'm always learning. It's like a professional development opportunity for me, and it's a great piece of teamwork. It's a way for us to show our collaborative efforts when we're out in the community working.
Andrew Fast 16:07
This is why it's so great to be here, because it makes too much sense for farms. Any farmer should really be looking, if they have any sort of forest land, should be thinking about this kind of thing. And I'm not sure, at least in my experience, you know, when I was a county forester; I didn't see those pieces of forest land, typically, on the whole managed as deliberately as they could be, with as much focus as they potentially could have managed them. And you know, that's up to everybody. We're all busy, but if someone's able to, I think it makes a lot of sense to do that.
Kendall Kunelius 16:41
So just briefly, before I move into the next topic; I want to summarize quickly what you said about the procedure that folks have options with in terms of, if a farmer is interested in potentially managing some of their land, whether it's, I don't know, like, 10 acres, plus? Is that kind of like, what's the starting point?
Andrew Fast 17:02
That's a great cut off. And I'm glad you brought up acreage. Yeah, so 10 acres is a great cut off in terms of thinking about this, because it makes the land eligible for current use. I'm sure many farmers have their farms enrolled in the Current Use Program. They may or may not be aware that forest land is also eligible for that program. So they may want to check their tax bills. I'm sure we all have. So they probably know or they're noticing something, but it's always good to check. And if they have 10 or more acres of forest land and that's eligible, they can work with a forester. Again, this is something where they can type map it for them and help with that current use map that gets sent into the town; as we know with current use that allows the property to be assessed based on how it's generating income. So it'd be taxed based on its ability to produce income as forest land, not for its highest and best use, which is typically development, greatly reducing the tax burden. So 10 acres is good. Folks could look at opportunities around current use, or just make sure they're enrolled if they want to do that. That, I think historically, is a number that we use because of current use and because the scale of operations have been smaller. Looking back decades, 10 acres is pretty tough to be doing ongoing management with a commercial logger. So 10 acres is great. You can certainly do some other things that can help generate income while improving the forest or meeting other goals with 10 acres. If you're having a timber sale, to generate income, 10 acres is fine, but just the 10 acres may have to look very different at the end of it than at the beginning, and it might be more of a one and done sort of thing if you're working with a commercial logger, just because the economy is a scale. That doesn't mean it necessarily is done poorly. I would just be very deliberate again, in terms of making sure that it's good management on 10 acres, that the treatments make sense, because there'll have to be a certain amount of volume and value for someone to move in. So 20 acres might work a little bit better commercially.
Kendall Kunelius 19:17
I think actually, that's a good segue. I was gonna quickly summarize the process and procedure here, and then I'll segue into the products, because I see a good link there. So let's say I'm Farmer Kendall, and I have 35 acres. And of that 35 acres, let's say 30 of it is forested land. And I'm gonna say, okay, I in the next, I don't know, five or six years, I'd like to build a barn. I'm into chickens. I want to build an egg production facility, and maybe I think I have an opportunity to do some timber harvesting, because that'll give me a little bit of cash to go ahead and use as a capital fund to build my barn. My first call is probably my county forester, and then my county forester is going to be able to help me work through my goals, my objectives - kind of give me a start to where I could potentially go in terms of, do I want to hire a licensed forester to write me a management plan, or do I want to do this on my own kind of thing and hire a logger and hope for the best? But anyways, they're a good - I'm thinking of like a little decision tree in my brain. They're a good first stop in that decision tree, regardless of if you decide to just have a forester write a management plan, or if you just hire a logger.
Andrew Fast 20:31
And it's also a basic assessment of the property, so they'll help with the goals and objectives, and then also walk the property and point out certain attributes that the landowner may not be aware of.
Kendall Kunelius 20:42
I also want to say too, that hiring a forester isn't free. There are costs that are associated with actually creating a forest management plan. But I'm going to put a little disclaimer: at the time of the recording of this episode, NRCS does offer monies to reimburse landowners for having a forester write a land management plan. Now, that is taxable income. I've actually worked with a farmer who was like, I want to do this. And I'm like, oh, go talk to NRCS. They do have funding. They have programs available, but it is taxed. But that can help cover that cost, which you know, if you have a good forester and they're doing their due diligence, it's probably going to cost, I don't know, like, maybe a couple thousand dollars? What's the estimate, Andy, for maybe a 30 acre piece?
Andrew Fast 21:28
So usually we don't talk too much about the pricing, but yeah, if you think of maybe in the 20, 30 dollars per acre. So you start looking at that. So as you get smaller properties, the price per acre may go up, and also depending on how comprehensive the plan is. But a thousand plus dollars seems pretty reasonable. There's some variation, but it's more in terms of orders of magnitude. Not $10,000 but closer to that, let's say $30 an acre, plus or minus.
Kendall Kunelius 22:04
Yeah, that's kind of what I'm getting at. This is the kind of thing that like: don't let the price be the barrier to getting a really good timber management or, excuse me, a forest management plan, because there is financial assistance out there. There's opportunities for financial assistance. Just don't be surprised if it ends up being more expensive than maybe you initially thought. Or as you're pricing things out, it's just helpful to have a little bit of an idea of where your finance, your financial ability, stands in terms of your overall long term goal, of where that initial investment is going to get you with this forest management plan.
Andrew Fast 22:38
Absolutely, yeah. And I'm really glad too with, in terms of NRCS, you bringing that up, since I'm sure many of the farmers are familiar with Natural Resource Conservation Service and some of their programs. They're great partners. And then also, when you talk to your county forester, and then also NRCS, sometimes they can be helpful in helping you understand how involved some of these practices are. And I'd say the forest management plan practice is a very streamlined practice that's very accessible, versus some other practices that may be more involved, let's say, like -
Kendall Kunelius 23:13
Like putting in a manure bunker! I was looking at that the other day, and they have all those scenarios. And I was like, Whoa!
Andrew Fast 23:19
And so that's not saying you shouldn't participate in those more involved practices, but this is a very easy one. Oftentimes, things work out fairly well in terms of the reimbursement rate for the plans. And so it's just, it's a win-win usually for everybody, and gets you a really important, valuable document that will yield, increase returns, however you define those in the future.
Kendall Kunelius 23:45
Well let's do the future right now. Let's define those returns. I've been super-excited to get to this part of the episode, because we get to talk about actual forest product, your wheelhouse. And I'm really excited to pick your brain about how could farmers potentially take advantage of their forest assets on their land? So the three things very in-particular that I'm thinking about are the maple products industry, firewood sales and timber harvesting. And we already kind of talked about timber harvesting, but I'd love to define what exactly each of those looks like, how they fit into a forest management plan. And then also, a really important piece of this puzzle is seasonality. Because forest industry, technically - I mean forests, they grow year round, but the actual harvesting of those products is actually to my understanding, highly seasonal. Maple especially, but farming is inherently seasonal as well. So this is my personal opinion, a little bit professional opinion, but I do see forest products as a strong complement to farm products, because of how seasonal farming is, and these products fit in nicely with the off season of farming. It's usually happening during the late fall, winter, very early spring, before someone like a fruit and veggie farmer, or even broilers and the broiler chickens, or even a dairy farmer, in the off season when they're not chopping corn or doing fodder, any of that kind of stuff. So yeah, after all that, I don't know if I have a question in there, necessarily, but I'd love to hear your thoughts about how those types of things can fit into an existing portfolio of agricultural operations.
Andrew Fast 25:30
I think you hit the nail on the head in terms of you just mentioned a few very common either enterprises or activities folks engage in to generate some revenue related to forest land. Each of them have these unique attributes about them, and I think they're also representative of even other things people could do on their property. But if we look in these different buckets- You have sugaring, for instance, as you mentioned. It's a late winter, shorter duration, highly intensive activity where you need the right resource, maples. You can tap red maples, which is interesting. You don't just need sugar maples. There's different ways of doing it. So you can have buckets, which is more traditional, or tubing. But I think stepping back, a farmer would want to think about the seasonality. How much time do they have and how much do they want to invest in a specific activity? Do they want it seasonally, like sugaring, and do they want to do it themselves, or contract out or lease out? So when I think of sugaring, you can lease out, but also, I think of that as being short duration, something they do themselves, as many farmers are comfortable doing. Then you have a year-round activity, something like firewood. That's something people could be harvesting year round, a little bit, doing it themselves. And then you have your formal timber sales, where that typically makes the most sense to contract it out. But folks could learn how to cut logs and do roadside sales so they get a little bit more of the value added. I want to talk about each of those specifically. But I also think about those decisions, and maybe it's iterative, thinking about - okay, as you learn more about the specific activity you may want to do, going back and forth to understanding your time commitment and that seasonal piece and how much value added you want to capture versus hands off. I can make more money over here. I'm too busy doing this. I don't need to add more to my plate.
Kendall Kunelius 27:33
I absolutely agree. Any farmer's greatest asset is their time. Time and labor are just so expensive and in such short supply. I think one of my favorite things about forest products is exactly what you said. The farmer could choose to do it themselves, but for every single one of those options I mentioned, like the maple, the firewood or the timber, it's also something that they could they could manage passively and have someone else do on their behalf. Or maybe I should say, there's an option, right? There's a lot of options and a lot of latitude within that, and what helps is understanding the decision making process around the numbers.
Andrew Fast 28:14
I find, at least with the forest industry, you may feel the same way with agriculture, sometimes folks are a little traditional. "We've done it this way a long time, so maybe we'll keep doing it." "That's crazy. We tried that 30 years ago, not going to work," you know, when there is something new or you suggest something. I'm a big believer in bad ideas, so I talk to all sorts of people and suggest terrible ideas that get shot down. I think it can be really important and valuable to go through those 100 ideas, shoot them down to do something a little bit different that makes things more efficient and creates opportunity. I think there's a lot of potential synergies between agriculture and forestry, and having that forest land that folks traditionally may not be thinking about or looking at. A lot of them may be bad ideas when you start working through them, but there could be some really good ones that make things easier in a very difficult business with slim margins. And as an example: wood. Wood's not particularly efficient when generating energy, but for heat, it's incredibly efficient and really good or in cogen type situations. So if there was a much larger, let's say, farm that was using a lot of heat, you could have cogen structure boiler, where you're bringing in wood, using wood for heat and a little bit electricity, even if it's just heat. People could think about how they're heating their greenhouses and whether they can use their own fuel. And again, it may not make sense in terms of you need to be able to do it efficiently. There's also grants related to forest products manufacturers and people that want to do firewood or looking at wood energy, like using wood for heat. There's grants out there, and that's supported. This gets into the minutia of the forest products industry, but there's been a lot of low grade market that we've lost. So those are markets for junky wood, firewood chips, things that don't have a lot of value - baby carrots, I guess that get weeded. You know, we can't sell those anymore. We can only sell the big carrots. One of the ways of building resilience, the forest industry sees this and funders and so on, is having a lot of smaller markets using this, using firewood, using chips and so on. So there is a bit of money out there. And again, I'd say efficiencies that could be built in between using your own wood for agricultural purposes as well. And so just throwing that out there, and that's where working as an integrated team with someone like you or county foresters, we can look at some of those ideas with a farmer and then toss out 99%. But if they're open to that 1% there really are good pathways that folks move down.
Rebecca Dube 31:12
What are some of the current firewood sales regulations in New Hampshire, as we're speaking on that?
Andrew Fast 31:19
So let's see in terms of firewood sales. First, if someone's harvesting their own firewood, or anytime someone's harvesting timber, they need to file an intent to cut, which means when you harvest timber and make money off that, there's assessment or tax, a 10% tax on on the gross revenue. So the way they track all that is filing an intent to cut. However, if you're using 20 cords of firewood and 10,000 board feet - so again, if you're using 10,000 board feet and 20 cords of firewood for your own purposes - you're exempt. You don't have to, and there's some other exemptions. That's one; also exemption for cutting for maple as well. So there's one law in terms of intent to cuts. Additional laws in terms of if you're selling that firewood, it can't move across state boundaries, because there's a lot of insect issues that, invasive pest issues that are caused by firewood, or that's one of the main factors for moving these invasives around. Best management practices are keeping that firewood as local as you can, selling as local as you can, but the hard line is moving it out of state, with the exception unless it's heat-treated at an approved facility. That's another example where someone could have a kiln, and now you're moving more into forest products, but someone could potentially get a kiln with a grant and work with Department of Ag, Markets and Food that provides compliance agreements to make these facilities, you know, basically approve these facilities to transport wood. And so you're looking at a bunch of value added processes there. So those are some of the things, some of the main laws related to firewood. Oh, firewood also needs to be sold by the cord.
Kendall Kunelius 33:13
Okay, so for our listeners, correct me if I'm wrong, a cord is defined as four feet wide, four feet high and eight feet long. As a volume of firewood.
Andrew Fast 33:26
Yes. And by the letter of the law, Weights and Measures requires wood to be sold by the cord. So "Hey, yeah, I'll sell you the truckload." You know, that's not really an accepted unit of measure based on the law. So everything should be sold by the cord. Often times there's an equivalent. We know what those equivalents roughly are, in the bed of a truck or a log length firewood. You hear about that a lot. But ultimately, that's a certain amount of cords being bought and sold, and so people should be aware of it.
Speaker 1 34:03
I also hear about a grapple load. Is that a technical term? Or is that a Weights and Measures term?
Andrew Fast 34:09
I think sometimes, and I don't want to get too far out over my skis. We're non regulatory, so often people will talk about grapple loads, but that's a certain amount of cords. So if you're getting 10 cords, 8-10 cords or what have you, by log length, but it's really sold by the cord. So that truck load with a grapple that's loading or unloading those log length pieces of firewood.
Kendall Kunelius 34:39
Speaking of logs and equipment: Another interesting piece of this forest products puzzle is the equipment piece I'm thinking through like, okay, barriers to entry. If a farmer has land, is maybe interested in doing their own firewood because they have a maple evaporator, or maybe they just want to sell it as a product at their farm stands, something of that sort. Do you see equipment or specialized equipment as a barrier to entry, or how would you talk to a farmer or a landowner about assessing whether or not they need specialized equipment for that?
Andrew Fast 35:11
I don't see it as a barrier. In fact, I over plan. I think it's very easy to not account for costs, not really understand costs of production.
Speaker 1 35:23
Yes where I'm going. Yeah.
Andrew Fast 35:27
So I think, you know, going back to - training. And that's another thing, I think sometimes career- this is just my bias, you know, listeners can push back. I'm glad we don't have people calling in, I guess. Just listening, as opposed to calling in. But I think some of the traditional forest products people I know at least, when you talk about training, it's a little bit of a "Oh, I know what I'm doing." We can all learn a lot from each other. I learn a tremendous amount from career foresters, career loggers. I have so much respect for the specialized knowledge they have. But I think I'd also encourage people to go through some formal training around some of this stuff, especially around safety. A good example would be safe felling. We have a professional logger program. If a farmer is going to become a logger part-time. That's essentially what they're doing, if they're cutting trees and doing all that. They may know how to do it. They may have learned from their parents, their grandparents used to do this, but there's a an efficient and safe way, and we can all learn how to do things a little safer. So I'd encourage them to go through the professional logger program, which is a series of classes: Basic, Advanced Felling, first aid, some of the forced timber harvesting laws; just so they know what they're doing. Because that's another thing that I didn't mention. There's wetlands laws that I'm sure many are familiar with related to stream crossings and all that with harvesting operations. So I think safety and training is absolutely critical. And that could also be with equipment, because using a tractor for farming is different than using a tractor in the woods in terms of protection and things like that as well. So I'd be very careful around that, and we can talk and work through that. County foresters can help with it, with the equipment. I don't think people need specialized equipment. And when you go and talk about barriers of entry, wood's a commodity, I think farmers are going to end up running into the - if they see this as a way of getting rich quickly, that's not necessarily the case. Anyone with a chainsaw is now a logger, and figuring out how to do things a little bit more efficiently. So if they already have these sunk costs, they already have the equipment. I see, there can be a bit of benefit to trying to diversify, getting different revenue streams throughout the year. If they're going out purchasing a bunch of new equipment to use only part of the year when they're quote "competitors" in some ways, because they really are competing in this regional Forest Products economy to some degree. Those people are using specialized equipment year round and trying to make it work. So I don't know how well I'm answering the question, but I'd say training, not necessarily new equipment, and then really working through the plan, before you start just jumping in, working through a plan of how you're incrementally getting to where you want to be. There's all sorts of great ag resources and staff I know that can help them with some of this business planning and using some of our foresters as resources as well.
Rebecca Dube 38:38
Great.
Kendall Kunelius 38:38
It definitely goes right to where I was hoping you'd go. So that's exciting. I did take the basic felling class, those offered for the professional logging program, and it was excellent. I think several things stood out to me: watching how other people were learning, watching the professionals give demonstrations about how their felling techniques have developed, and also knowing the type of equipment to use. We've already done a chainsaw episode on this podcast. But I guess where I was hoping to go with understanding the equipment barriers to entry in the production is that it's never so simple as to just pick up a chainsaw and go out and cut a tree and chop it up and sell it. There's the whole production piece to it, and that's tying back into anything to do with agriculture. It's never so simple as to just buy a chicken, squeeze an egg out of it, and sell it, right? That's kind of like how we perceive it. But it's not quite like that. And also, I think I want to tie this back even further to the beginning of this episode with our forest management plan. I see it as guardrails, kind of like thinking, like bowling, right? Like, I'm thinking, really important guardrails. That helps us say, okay, when we developed this plan, when I had a professional person write this plan, they talked with me about my goals. If I am deciding I want to start a maple operation, that may mean that I did that resource inventory. I know I have the right kind of trees, but does that then mean I need to go out and do some TSI, timber stand improvement? I need to cut some brush or I need to start incentivizing the growth of future generations of those maple trees by clearing out other things. So I'm releasing those trees. Chainsaws in my brain don't always equate to cutting down a tree. For me, that's like a maintenance piece of equipment that helps me achieve my goals. But definitely, the safety piece. An ounce of prevention is worth a pound of cure. So, anytime you can manage risk also means that you're saving dollars.
Andrew Fast 40:35
That's a great point. So you mentioned a couple of things in there, that just made me think: going back to bad ideas, but just thinking creatively and doing things, we're thinking in terms of a very traditional way. You're a farm, you have some forest land attached to it, and so how do you go in and manage that? I think there's other ways of looking at this whole topic in a different way. It may not be a good one, but let's say you're processing your own firewood. Someone could think about, you know, they have a processor, and could be, well, they could be processing their own firewood. They can buy in logs as well. So there's a lot of loggers that want to move firewood, and they could buy in wood. And there could be a lot of value in having a retail shop, having an existing customer base. I think in terms of brokering as well, let's say you want to be hands-off. I always think of the smartest business people as not, or I shouldn't say smartest. I respect manufacturing, because that's like the real stuff. You get your hands dirty. People that broker have unlimited earning potential. They're not limited by machine productivity and all these other things. So there could also be ways of being able to have someone else sell their firewood at a farm's retail shop, and then you're saying, all right, for each cord I want X, Y and Z. It could be you have a customer base, and you're diversifying your own products. And you could refer to another logger that delivers firewood, but just that brokering piece. If I refer someone to you, and this is where it gets tricky, because people you know will go around you. But I think there's a lot of different ways of diversifying revenue streams, thinking about forest products as part of the overall operation. And I think a lot of times for good reason, we want to get our hands dirty. But there's also ways of getting a little bit more cushion, yeah, and diversifying, even though it doesn't feel as good in some ways, or at least to me. But it's important to keep things viable, I think.
Rebecca Dube 42:35
And that's what we're all about, letting farmers know all their various options.
Kendall Kunelius 42:39
Yeah, and one thing you said earlier, Andy, that stuck in my brain is cash flow. As a business person, I'm always thinking about that cash flow, like when does the money come in and when does it go out? If someone's doing a maple operation: we're collecting the sap, we're boiling the sap, we're selling the syrup. That's, in theory, how you'd be making money or generating revenue from that enterprise. For firewood, we definitely covered that you're either buying it in processing it, selling it. What we didn't really cover is, how do we help people? I'm gonna say people, because I actually think this is one of the misnomers of the forest products industry. What about timber? What does the money flow look like in terms of the timber going from a standing tree that has been designated to be cut because we've got a forest management plan, and we know that that's a tree that we're okay with removing, to the actual cutting, pulling out, and then where does the money appear? How does that happen?
Andrew Fast 43:31
Yeah, so that's a good question. And so I guess to start with, it depends on the size of the forest land. So usually, with most of the landowners that we encounter, they may be able to treat a portion of the property. So once you have a timber - so trees take a while to grow. Let's say it's 80 years for a seedling to become mature timber for a final harvest. In 40 years, maybe you could come in and do some thinning, or what have you, or a little bit of commercial thinning, you know, with a 40-year-old tree, that's like processor firewood, essentially. But trees take a long time to grow, so if you do a cut, it's not an annual crop. It's not bi-annual, right? What's 80-annual?
A long time!
We'll call it a rotation. Folks think about 100-year rotations. But trees are mature a little bit earlier than that. But if you treat the whole property, it's very hard to come back and do it again - not for sugaring and things like that, where you keep these trees and you're just thinning brush, but if you're doing a commercial timber harvest, harvesting logs. So if you have a larger acreage, there's an opportunity to go in intermittently, and that's more of a decade, couple decades.You come in and harvest a bit. So it's this intermittent cash flow, and pulling out a certain amount of the volume. We always encourage doing good forest management. And so that's, I guess, just like your garden, right? We use the garden analogy, which is always problematic talking to ag folks, because they'll say, You're wrong, right? Or, you're using the wrong fertilizer! But you're basically thinning, so taking out the weaker trees with the smaller tops, your little carrots, and leave the bigger carrots to grow later in the season, when you're going to harvest them, right? So you're just sort of weeding, essentially. And we use the term weeding and thinning to leave the bigger trees that have the bigger crowns, that are getting all the energy. Those are our crop trees. So a very simplified model would be over time, you're concentrating growth on those big trees to help them get bigger faster, and they also have the best form and can be utilized to the highest value products we possibly can. So we're concentrating growth on higher value wood, which is increasing return. You're growing your veneer $200 per ton tree,
Kendall Kunelius 46:10
That lovely oak!
Andrew Fast 46:11
Yeah, you're growing that, and it's growing a ton per acre per year, and you're concentrating it on that veneer, veneer tree. So 200 tons, or $200 per ton, 200 and a ton per year. It's $200 essentially back in the envelope path on that one tree, versus chip wood is negative money for a logger to cut. So let's use pulp wood instead. And let's say it's $4 a ton. You're making $4 a ton. So if you, let's say, go in and cut all the healthiest trees, too early? Forests, in aggregate, are going to be growing all those $4 a ton per year trees, they don't suddenly change to $200 per ton. You can harvest the best trees (we call this high-grade) and you can go in once and cut just the best trees. That actually really hammers your long term returns. It's very short-sighted, undermines forest health and resilience. So it doesn't mean you shouldn't ever cut those valuable trees, but there's a way of doing it. Instead of leaving the junky ones, maybe you cut some of the good ones, and then also cut a lot of the junky ones so the whole garden can start up again the next season. You're replanting naturally, using that same analogy, and that's what foresters do. That's why you're hiring a forester, because they study silviculture instead of agriculture, art and science of growing and tending trees. And they know these different strategies for different species to optimize growth and optimize returns over time. Again, it's this long time horizon I've talked with people. I'll just give kind of a short story, which is, it's just funny. This, again, shows my own ignorance. But when I first started as a county forester, you know, we have it so ingrained in our mind to do good management, and want to increase the value over time, and all this sort of stuff. And so I met with someone, and I'm explaining all this stuff why they could do good management. And he's like, "Well, I'm 80 years old. Why do I care what's going to happen in 60 years, let alone 10?" So I think there is this sort of, at certain points, someone's own incentives can conflict with what's best in terms of forest management, and it's everyone's right to do what makes sense for them. I think all of us, most foresters, have the bias of trying to encourage good management over time for themselves. And you mentioned future generations, or this sort of successional planning as well. So I just kind of want to share some of that.
Kendall Kunelius 48:47
Yeah, I want to pick up where you were heading with following the money piece, though. So at the end of the day - I love that you talked about the markets, the high grading them, how the management ties into the money aspect of receiving money from a logging operation or a timber harvesting operation. I just laugh at this term, like, stumpage check, yeah. What does that mean? So one of the goals that we have with this podcast is to equip people with the right language to use to talk to the key players in any of these industries. So like, again, this is, this is me being like, I know just enough to be dangerous! I know the term "stumpage", but if I was to say that to a logger, what would I be saying that I didn't know I'm saying?
Andrew Fast 49:30
Yeah, thanks so much for keeping me on track here, I'll go down those rabbit holes. So stumpage is timber that's on the stump. So when a landowner sells timber, usually the logger's buying it, and so they're buying it on the stump, and that's stumpage. And so they'll say, oh, I'll pay you a certain amount per 1000-board foot. So the units of measure where wood is bought and sold, or logs or trees are bought and sold, is the 1000-board foot for saw timber. So higher value products that are selling into lumber or veneer, and then typically, cords are really usually tons. I see more tons for lower value products, which could be pulp wood, firewood; could be cords, but also tons and chip wood, if it's a whole tree chipping operation. So different loggers have different types of equipment setups. So when there's stumpage, you're doing a stumpage sale. You're selling your timber on the stump so that forester could be either doing a bid sale, where they mark a bunch of trees. There's certain volume associated with that, and selling that stumpage to the highest bidder. Oftentimes, foresters have a suite of loggers they work with, so maybe a few different loggers that they work with very regularly. It's not that they're in cahoots, you know, necessarily, it's just the forest are still supposed to be representing the landowner, but they understand the quality of the work of those loggers. It's not a bid sale. The trade off is maybe you get a little bit lower money. I think there's research that shows bid sales, you might get a little bit more money. But there could be a qualitative difference, because you're trusting that the forester understands the work of the logger. So that's stumpage sales. There's also roadside where, you know, we talked earlier about a farmer could essentially become a seasonal logger part of the year, or be cutting a small volume of logs off their property, skidding it out to use it like tractor or whatever. But taking it out of the woods to their landing, stacking it all there, and a truck can come in and pick it up. A logger doesn't have to go in. They don't have those operating costs. That's being absorbed by the farmer so they can charge a premium. Or basically, they're buying their own stumpage, cutting it and then selling it roadside at a higher price, and then it just gets trucked to the mill. In that case, you're probably selling directly to a mill and cutting out the logger as the middle person. So there's that, and then there's delivered prices to the mill or gatewood, where, I'm sure some larger agricultural operations maybe have flatbeds that could be converted. I know at UNH we have our flatbed ag truck that moves logs around. And so, some farming operations may be able to actually transport their own wood to a mill that way. They don't have to pay a trucker and deliver it to the mill. You know, it's a learning process, and just like agriculture, there's some risk if you're also a logger now; not just physical risk, but also financial risk, versus working with trained professionals that do this all the time. As just a quick example, you may sell logs, or mills could be buying logs based on eight feet, 10 feet, 12 feet, 14-16. They expect there to be trim. So what that means is, when they buy an eight foot log, it may need to be eight foot four inches, or may need to be, 10 feet, four inches, and different mills may have expectations, but it's four, six inches more than the actual stated eight foot log. Let's say you don't know that; it's your first time doing a bunch of harvesting, and you get this giant mountain of eight foot logs that you're going to sell. They won't accept an eight foot log. You lost all that money. If you deliver a 10 foot log that's a little short, you know, it's right on 10 feet, it gets downgraded. They're only going to pay you for an eight foot log because they can't make a 10 foot board out of it. They need that extra six inches when they mill up the lumber for it to dry and it'll check, so there'll be cracks on the ends, and then they cut it down uniform, so it's a nice piece of lumber. If it's not a little bit long, then they're gonna end up with boards that have cracks at the ends. And so there's a legitimate reason that the mills do that. They're not trying to work over the people delivering the wood, but if you don't know some of these things, there's this financial risk associated with it.
Kendall Kunelius 54:03
Totally. Andy, I can't thank you enough for coming on the podcast today. This is a topic I've been wanting to do since the beginning, and really, as I've been working with more and more farmers and landowners, I really agree with you. I see so much overlap, so I'm thrilled to pieces that we've finally gotten this content out there. We've addressed this topic, and I want to offer to our listeners, if there are any other topics you want to hear from us, in terms of forestry or land management, the good news is we have the people. We know the people in Extension who can help us get that information out there. So please don't hesitate to find our contact information in the show notes and let us know if you have any other questions.
Andrew Fast 54:41
So I just want to say thank you both so much. I have so much respect for the work you do, and just appreciate the opportunity to talk for a little bit. So thank you.
Rebecca Dube 54:49
Well, thank you Andy very much, and we'll be talking with all of you again soon on the next episode of Shared Soil.
Kendall Kunelius 55:00
Shared Soil is a production of University of New Hampshire Cooperative Extension, an equal opportunity educator and employer. Views expressed on this podcast are not necessarily those of the university, its trustees, or its volunteers. Inclusion or exclusion of commercial products in this podcast does not imply endorsement. The University of New Hampshire, US Department of Agriculture and New Hampshire counties cooperate to provide extension programming in the Granite State. Learn more@extension.unh.edu
Transcribed by https://otter.ai. Edited by Rebecca Dube.
