LESSON 3: ESTIMATING THE VALUE OF YOUR WOODLOT

To estimate the value of the trees in your woodlot, woodlands owners need to be able to assign a value to each tree while it is growing in their woodlot. This value is referred to as “stumpage value” and by definition it is the value of the products (firewood, pulpwood, and/or lumber) that can be obtained from each tree at a processing plant or sawmill minus the cost of harvesting, transportation to the mill and conversion to an end product such as lumber. In addition, each contractor can be expected to include a reasonable profit in operating their business. At first glance this seems as though it would be a difficult undertaking, as most woodland owners may only harvest once in their lifetime and are not in the business of tracking mill prices and harvest costs. An easier approach is to obtain stumpage prices for other timber sales that have been reported for you area. Before we discuss how to obtain these estimates for stumpage prices, a short discussion of the factors that affect these prices would be in order:

Current Market Trends: Just like any other product on the market, timber prices fluctuate regionally, from year to year, and within the year. Timber supply, manufacturing needs and weather conditions can affect current stumpage prices.
Woodlot Location: Stumpage prices vary within a state and are usually reported for multi-county areas common referred to as price regions. One would select those prices based on the price region closest to your woodlot. In addition, since transportation and harvest costs are part of the stumpage value equation, those woodlots closest to a mill or processing plant and those with good access (close to existing road networks) may obtain slightly higher stumpage values.
Woodlot Size: Since the timber harvester will have to move equipment to the site, the woodlot must be large enough to offset these costs and still provide the timber operator a reasonable profit.
Tree Species: In the Appalachian hardwood region, stumpage values are usually reported on a species basis. Black cherry, sugar maple and black walnut are usually our most valuable species while blackgum, beech and hickory are of lower value. If you do not find one of your tree species in the stumpage price list, consider using a species in the list that is similar in shape and wood characteristics. For example, many times basswood and cucumbertree are sold at prices similar to those for yellow-poplar.
Tree Size and Grade: Refer back to Lesson 2 for specifics, but as a general rule larger trees and trees with straight clear boles free of defects, may bring higher stumpage values.

How do I obtain stumpage values?

As we have mentioned, timber stumpage prices vary by state and price regions within a state. First determine which areas are closest to your woodlot. Realize, that neighboring states that are also close to your woodlot are a good resource as well. The following contacts are listed for West Virginia, Maryland, Pennsylvania and Ohio:

West Virginia:

Timber Market Report
West Virginia University
Appalachian Hardwood Center
(304)-293-7550
www.ahc.caf.wvu.edu

Pennsylvania:
The Pennsylvania Woodlands Timber Market Report
Penn State University, School of Forest Resources
814-863-0471
www.sfr.cas.psu.edu/tmr

Maryland:
Stumpage Price Report
University of Maryland
Cooperative Extension Service
410-827-8056
www.naturalresources.umd.edu/Stumpage_Prices.cfm

Ohio:
Ohio Timber Price Report
Ohio State University
Agricultural Research and Development Center
614-265-6703
www.ohiodnr.com/forestry/industries/pricing.htm

If additional help is needed, university and county extension agents, state division of forestry personnel, industry foresters, consulting foresters or USDA Forest Service personnel can be a valuable resource.

How Do I Estimate My Woodlot Value?

Sawtimber
The question is how do I apply the stumpages prices to estimate my woodlot value? As can be seen in any of the reports listed above, stumpage prices are listed in dollars per thousand board feet ($/MBF). Since stumpage value changes by species and is listed in $/MBF, the job comes down to making a tree list for your woodlot that records species, diameter (dbh) and sawlog height of each tree. Measuring diameter and sawlog height is covered in Lesson 2. We will start with an unrealistically small list of 5 trees in a woodlot (your’s will most likely be a much larger list). For each tree we will list the species, diameter (DBH) and number of 16-foot logs to the nearest one-half log:

   Species     DBH            Logs
      WO           18              1.5
      RO             20              2.0
      RO             22              2.5
      BC             19              2.0
      RM            20              2.0

Where:
            WO = white oak
            RO = red oak
            BC = black cherry
            RM = red maple

Using the board foot volume table on page 31 of the booklet “How to estimate the value of timber in your woodlot” by Dr. Harry V. Wiant, Jr. (see link on the web page), we can assign each tree in our list a corresponding tree volume estimate. For example, our 18-inch 1.5 log white oak has 132 board feet and the 20-inch 2.0 log red maple has 223 board feet. Completing the entry for each tree we get the following updated table:

   Species     DBH            Logs          BF Volume*
      WO           18              1.5                   132
      RO             20              2.0                   223
      RO             22              2.5                   344
      BC             19              2.0                   195
      RM            20              2.0                   223

      Total                                                    1,117

* Doyle board foot volume, form class 78

Now to estimate value, we have to apply appropriate stumpage values (described previously) by species. We will use the stumpage values for Region 2 of West Virginia as reported by the Appalachian Hardwood Center for the 4th quarter of 2006 (Select AHC Resources link then click on Timber Market Report and select Quarter 4, 2006). Be sure to use the Doyle values! Since the prices are listed as $/MBF (dollars per 1,000 board feet) we will update our table with an MBF (divide volumes by 1,000) and $/MBF field:

   Species     DBH            Logs          BF Volume*         MBF*       $/MBF      Value
      WO           18              1.5                   132                  0.132            207           27.32
      RO             20              2.0                   223                  0.223            216           48.17
      RO             22              2.5                   344                  0.344            216           74.30
      BC             19              2.0                   195                  0.195            543         105.89
      RM            20              2.0                   223                  0.223            187           41.70

      Total                                                1,117                  1.117                           297.38

Based on our very simple example, our stumpage value of the five hardwoods in our list equals $297.38. Note that this value is for sound (not rotten) trees of average sale value. Tree with obvious rot would have to have their volume reduced to reflect the loss due to the amount of volume that is not sound. If trees are of above average grade, a slightly higher stumpage value could be used.

Lesson 1

Lesson 2

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