CASE #1 - RICHLAND TOWNSHIP WOODS

Sixteen years ago in January of 1981 at the age of 31 my wife and I purchased our first woodland which was justified as an investment. I paid $1,150 per acre for the 16 acres. Four acres was a cornfield which I planted to trees in the spring of 1981. Of the remaining 12 acres, 1.5 acres was a young stand of American elm which I cleared. I sold the elm as firewood and planted the opening to walnut trees. These 5.5 acres of tree plantings are doing very well, however, the 16 year record of the investment value of the remaining 10.5 acres of woodland is the subject of this report.

This 10.5 acres of woodland is located on rolling glacial till sandy loam soils. There is a stream and a small wet area in the north end that only contains water during wet periods. There is a 1/2 acre opening in the corner that is used for a log yarding area. The woods was badly managed before we bought it having a long history of livestock grazing and high grade harvesting. This history resulted in the overstory, (the larger trees), being mostly hickory and low quality oak. Hickory is slow growing and a low value species making it a poor tree to have as your main species in an investment woodland. The younger trees were much more encouraging and were the reason I purchased this property. These younger trees were mostly less than 12" DBH and included many good quality black walnut and black cherry trees. My inventory at the time of purchase showed there to be 55,865 board feet which is 5320 Bd. Ft. per acre. This woodland is capable of much more volume per acre, but this is not bad considering the woods past history. I appraised this beginning volume of 55,865 Bd. Ft. to have a value of $10,608. Of this beginning volume the main species and 35% of the total volume was hickory.

The first step in the management of this woods was to have an improvement type timber harvest during 1981. This sale included 66 trees of which 35 were hickory. Harvesting a high percent of the hickory was an effort to convert the woodland to more productive oak, walnut, and cherry trees. This first sale also included overmature and defective oak. The income from the timber sale was $3,108. The treetops were sold to a firewood cutter for $330. The timber sale and firewood cutting was followed by timber stand improvement work to kill the cull trees and to complete openings made by the harvest to help establish desirable regeneration. Being a consulting forester I did the TSI myself but for the purpose of this economic study I have treated the TSI as though I paid the going rate per acre to have it done. The cost of the TSI would have been $294 less 65% cost share which would result in a final TSI cost of $103.

The second harvest I had in this woods was in 1995. This harvest was also an improvement cut which included 50 hickory trees out of a total of 99 trees harvested. The other 49 trees were again mostly overmature lower quality oak trees. The income from this sale was $4,813. The sale was again followed by timber stand improvement work to complete the openings created by the harvest to make way for desirable regeneration. The cost of the TSI after cost share money would be $147. The interest and markets in firewood have greatly diminished since 1981 and the treetops from this sale were not sold.

I conducted a 100% inventory of all trees 12" DBH and larger in this 10.5 acres in January of 1997. This inventory indicated a slightly less than the 55,865 Bd. Ft. that I started with in 1981. My 1981 and 1997 inventories and my harvest volumes indicate that this woods has produced 224 Board feet per acre per year for the 16 years that I have owned it. Appraisals of these 1981 and 1997 volumes and incomes from the two timber sales show that this woods has produced $126 per acre per year of timber. When the income from firewood and the cost of timber stand improvement work are figured along with the timber values produced, my original investment has earned me a return of 9.25% per year.

When I purchased this woodland it had a timber value of $1,010 per acre. It now has a timber value of $2,277 per acre despite the fact that there is slightly less volume per acre. Part of this value increase is due to the increase in stumpage prices. The largest part of the gain in value is due to the fact that the two improvement harvests followed by TSI have greatly improved the species and quality of the crop trees. When I purchased this woods the main species was low value hickory. Now the main species are white oak, black cherry, burr oak, black walnut, and red oak, all higher value species. This woods has earned $126/ac/yr during a 16 year period while I have been managing it back to productivity. Now that this woods is growing quality trees, many will be veneer quality, and it will do far better than the $126/ac/yr. and 9.25% return on investment for the rest of my years. Being a consulting forester, the purchase of this woodland has additional meaning to me. This woods has been a valuable learning experience, a teaching tool, an enjoyable project, and a test of the investment values that I have consistently stated woodlands represent.

CASE #2 - THE OSBORN 20 ACRE STARKE COUNTY WOODLAND

On September 16, 1931 Charles Deam, who was Indiana's first state forester, visited the 20 acre Osborn woodland located in eastern Starke County for the purpose of putting this woods into the Classified Forest Program. The application was approved and signed by Charles Deam and Ralph Wilcox who was the state forester in 1932. In this first report Charles Deam describes this woodland as being mostly flat with a buttonbush swamp in the northwest corner. The main tree species were red oak, white oak, black oak, with lesser amounts of hickory, ash, basswood, tulip, red maple, cottonwood and black gum. This was a young pole sized woodland with most trees being less than 15" DBH (diameter at breast height). The woods was well stocked with good quality, vigorous trees with no grazing or fire damage.

Charles Deam's only management recommendation at that time was to plant black walnut trees in the few openings that occurred. He stated in his report that there were no walnut in this woodland, but a woods that grows such fine red oak should be a good walnut site. I found no written record that the Osborns followed this recommendation, bull did find a grove of quality black walnut trees in an old opening in the south end of the woods that would be about the right age. Some of these walnut were included in recent timber sales and there were still some veneer quality walnut trees remaining.

A classified forest report from 1945 completed by DNR forester Richard Rambo recommends that grape vines be cut and that the harvest marked by the forester from South Bend be sold and harvested. This report indicated a harvest and shows the growth and progress of the young stand of trees reported by Charles Deam 14 years earlier.

In 1972 DNR forester Jack Nelson reported that there was desirable walnut and tulip regeneration in the openings created by the timber harvest completed in 1968-69. Jack stated in his report that "this is one of the best woodlands that I have seen in Starke County". He recommended that timber stand improvement work be performed to complete harvest openings, cut vines, kill cull trees and to do some crop tree release among the pole sized trees. In 1978 the Osborns contracted with me to do the timber stand improvement recommended by Nelson in 1972.

In 1987 I marked and sold a timber harvest for the Osborns. The sale included 149 trees, having 44,000 Bd. Ft. and was done with the idea that there would be a harvest every ten years. The trees were sold to Sanders Lumber Company of South Bend who did a good job of logging. Sanders Lumber Company had the high bid among 8 bidders of $13,438. Timber stand improvement was not needed after this harvest because it had just been completed 9 years earlier. One half of the volume was mature black oak. A lesser amount of white oak was involved because it is a more durable and longer lived species. The list of species sold in this harvest looks nearly the same as Charles Deam's species list from 56 years earlier. During those years the trees had grown from vigorous young pole sized trees to mature harvest trees.

In December of 1996 I marked and conducted another timber harvest for the Osborns. This sale included 118 trees having 33,800 Bd. Ft. and resulted in income of $16,291. Sanders Lumber Company was again the high bidder and again did a fine job of logging. The species mix of this sale was similar to past sales. Very few of the red and black oak described by Charles Deam still remain because of their maturity. The main species are now the longer lived white oak on the higher ground and fast growing red maple that regenerated after earlier harvests on the wetter areas. I completed timber stand improvement work for the Osborns after this harvest to complete the openings created by the last two harvests.

This 20 acre Osborn woodland has 65 years of management with records of at least 4 harvests, timber stand improvement twice, grapevine cutting, walnut planting and protection from grazing and fire. In January, after this most recent harvest, I conducted an inventory to determine what the current timber volume and value is after 65 years. I used 17 point samples in my inventory and 1 did a 100% inventory of all veneer trees. White oak now represents 36% of this stand up slightly from Charles Deam's estimate of 30%. Red oak and black oak now represent 22% of the stand down from Deam's 50% estimate. Charles Deam barely mentioned red maple which now makes up 21% of the volume in this woodland. The quality of the remaining trees is very good especially the white oak of which 81 were veneer quality. My inventory shows a current total of 832 trees 12" DBH and larger, having a total of 137,444 board feet. If you subtract the 2 acre buttonbush marsh at the north end, the remaining 18 acres has 7636 bd. ft. per acre. I appraised this current timber to have a value of $64,538 which is $3,585 per acre. This is very good when you consider that during the last 10years the Osborns sold 78,000 bd. ft. having a total value of $29,729 or $1,651 per acre.

The woods is still in the Osborn family and future management includes enjoying the woodland's beauty and wildlife, and continuing to have timber sales every 10 years. They plan to do timber stand improvement if and when it is needed. The boundaries are well marked and the woods continues to be protected from fire and grazing. It is still a classified forest as certified by Charles Deam, Ralph Wilcox, and the Osborns in 1932.

DELONG WOODS (THEN AND NOW).

I purchased this 13.3 acres in December of 1982. Eleven and one half acres were wooded and I planted the remaining area to trees. This woodland had a very heavy high grade timber harvest in the 1960's. This sale resulted in a well stocked woodland in 1982 with mostly young pole sized trees, a very bad grape vine problem, and scattered larger lower quality trees. This woodland is located on flat very productive soils with good access. The quality of trees in this young woodland was and is very good.

In January of 1983 I did a 100% inventory of all trees 12" DBH and larger. The main species in number of trees and volume was red elm. Red elm is a fast growing lower value species and is likely to die of the Dutch elm disease at any time. Tulip, black cherry, basswood, sugar maple and red oak were also well represented in January of 1983. There were 2,979 board feet per acre of volume having a value of $472 per acre. This stand was well stocked with trees but the volume per acre was low because of the small diameters of most crop trees, 8" to 16' DBH. During the winter of 1982-83 I cut the grapevines, and completed timber stand improvement work that was mostly in the form of crop tree release. I also had a small harvest of 21 red elm having 2,178 bd. ft. I did the logging myself and had the logs sawed into lumber that I used to build my workshop. This harvest also helped convert this woods from elm to more valuable species.

In 1988 a severe storm blew down and damaged a number of trees. As a result I conducted a salvage and improvement type timber sale. This sale included a number of high quality black cherry that blew down, but also included the larger low quality trees in the woods and more of the red elm. This sale included 100 trees, 21,476 bd. ft. and resulted in $3,026 of income. After this harvest I again performed timber stand improvement work including crop tree release and completing the harvest openings. Very little grapevine cutting was needed in 1988 because the 1983 cutting of the heavy grapevine problem was quite effective. Except for the blown down black cherry this harvest was very important to my continuing effort to convert this woodland from red elm to the higher value species.

In January of 1997, 14 years and two timber harvests later I again conducted a 100% inventory of all trees 12" DBH and' larger. This inventory shows that tulip and red oak are now the main species in the woods and red elm has dropped to third. Black cherry, basswood, sugar maple and black walnut are also among the main species in the woods. Diameters of the crop trees are now mostly 12" to 22" DBH. Tree quality, tree vigor and tree stocking levels are quite good. The volume per acre is now 4,775 Bd. Ft. per acre and increasing at a rate of 275 Bd. Ft./ac./yr. which is an average value of $95.70 per acre per year for the last 14 years.

This woodland will perform much better in the next 14 years because the main species are now high value fast growing species, and the average DBH of crop trees is increasing. During the last 14 years the timber value of this woodland has increased at a rate of 11-3/4% per year. Because of volume growth, improvement in species and quality, and increases in timber prices this woodland should easily out perform the stock market as an investment well into the future. In addition the springtime wildflowers in this woodland are far more beautiful than any stock market investment.

Bruce & Jane Wakeland's 1.5 acre Delong Woodland after 14 years

1983 Timber volume at time of purchase 34,259 Bd. FI. (2,979 Bd. Ft./acre)

1983 Timber value at time of purchase $5,432 ($482/acre)

1983 Timber harvest 2,178 Bd. Ft. $240 income (75% elm)

1983 Timber stand improvement $109 cost

1988 Timber sale 21,476 Bd. Ft. $3,026 income (salvage & improvement)

1988 Timber stand improvement $368 cost

1997 Timber volume 54,913 Bd. Ft. (4,775 Bd. Ft./acre)

1997 Timber value $19,139 ($1,664/acre)

Volume growth 275 Bd. Fl./acre/ year = 6%/ac/yr. (average for 14 years) $95.70/ acre/year (average for 14 years) return on timber investment 11.75%/year for 14 years

Future returns per acre per year should be much better because the woodland has been converted to producing high value trees.