Historically, standing pine timber was appraised and purchased using volume units of measure; MBF (thousand board feet) for sawtimber products and the cord for pulpwood products. Ultimately, however, each load of cut timber is purchased by weight and not volume: it is the weight of a load that is measured when a truck full of timber crosses a scale at the mill. Unfortunately, when converting from a measure of volume to a measure of weight, variability in results is inevitable.
When timberland owners offer a tract of timber for sale, multiple dealers bid on the right to harvest the timber. Often, every dealer interested in harvesting the tract will submit a bid that estimates a different volume for each type of timber product since each uses different scaling practices (i.e., a different way of measuring trees and calculating log defects). This is necessary because trees on the stump cannot be weighed on a scale. A variety of conversion methods are used to transfer standing timber volumes to weights. The most common of these are the Doyle and Scriber Log Rules. These rules provide a per-ton conversion factor for each specific diameter and length (for Scribner, a form class is also taken into account.)
The Doyle log rule is the most commonly used log rule in the South, but it often underestimates volume on small logs and overestimates on large logs. Although it is considered intermediate in accuracy, the Scribner log rule tends to underestimate volume as well.
In most cases, the ton (2,000 lbs.) has replaced MBF and the cord as the industry standard. A ton is a consistent, objective measure (no matter the species or size of tree) and is used by mills when purchasing wood.
When a landowner gets a bid in which volume is reported in MBF or cords, he or she must convert those units to tons in order to gain an accurate understanding of what a mill will pay for the timber. Unfortunately, when converting a pine sawtimber MBF price to a ton basis, different log rules affect the conversion.
The two conversions can give very different prices. For example, a price of $350/MBF Doyle for a stand with an average diameter at breast height (DBH) of 14” may convert to around $38/ton, whereas a price of $335/MBF Scribner at the same diameter would convert to around $49/ton. Without knowing the details, one might assume that the $350/MBF bid is the better offer. Once the likelihood of underestimation is understood, however, it is clear the $335/MBF price would yield considerably more profit for the seller.
One solution to this problem would be to require all potential buyers to submit their bids in dollars per ton ($/ton). This requirement can be made clear in the timber sales notice when it is published.
At the very least, however, sellers should always be aware of what methods a buyer is using to determine the value of a stand of timber and have this information included in every contract. An understanding of how the different methods relate to each other is helpful. Only then can a landowner truly make a like-kind price comparison.
Are you planning a timber harvest? Learn the value of your timber with Forest2Market's Timber Owner Market Guide. Volume weighted average prices are reported for pine sawtimber, pine chip-n-saw, pine pulpwood, hardwood sawtimber and hardwood pulpwood for 39 local wood basins in the US South. Based on actual timber sales agreements.
Comments
Robert Crosby
06-11-2014
Excellent article. Not understanding conversion rates has put sellers at a disadvantage in the past. Today you need to know not only the per ton price for a product, but also if a premium is being given to specific sizes. ex. large pulpwood may be valued higher than a standard pulpwood price. If it is a lump sum sale then once your paid up front your done. But if it is pay as cut, you need to see load tickets to reconcile with your payments. This is basic stuff, but with volume starting to move again, timberland owners need to review the basics .
Comments
R. Roth
07-01-2014
It is too bad this whole process is not more transparent to the seller. This was a good article. Seems like what’s needed is a taper equation that can give cubic volume by log position and then convert to tons and forget about board feet if the mills buy on the ton.
This means someone would need to cruise it though. Maybe the private non-industrial owners don’t want to pay for that.
Comments
John Carl Schmarkey
07-02-2014
Great stuff—-I have about a thousand acres of south alabama plantation planted in loblolly mainly. In the last several years, pulpwood is our primary product due to depressed sawtimber prices. I have asked the purchasers to provide mill tickets but they refuse to do this. I have no way of accurately determining the correct price. What can I do?
Comments
Danny Wells
07-03-2014
Mr. Schmarkey, in my opinion, with a thousand acres of plantation, you have property worthy of a professional consulting forester’s assistance who would know the markets and should know reputable buyers willing to provide the scale tickets. A potential purchaser unwilling to provide the scale tickets is immediately suspicious, and I would not recommend selling to such a purchaser. Also a well written sales contract requiring provision of the scale tickets with payment on a weekly basis, as well as other provisions for protecting property is a necessity.
Comments
John Bray, RF
08-11-2014
On any pay as cut or per unit type sales, the buyer should willingly provide the load tickets. A pre and post thin inventory will yield the estimated total tons and tons harvested. This can be used to compare to your load tickets to validate. Though this is not exact, this will give you a close estimate. A Consulting Forester and good sales contract are very helpful.
Suz-Anne Kinney
Forest2Market: July 14, 2023
