Forest management can be a profitable enterprise, if you (1) choose and follow through with the forestry practices best suited for you and your timberlands, (2) seek and follow the advice of a professional forester, (3) take advantage of tax incentives and financial assistance programs, (4) use proper marketing methods, and (5) maintain good business records to guide you in making financial decisions.
Personal Considerations
Forestry requires a relatively long-term commitment of interest and money. Before you make such a commitment, you should consider your ownership objectives. Why do you own timberland and what are your short and long-range goals regarding the use of these lands? How interested are you in learning about forestry practices? Do you have time to take an active role in management? Are your children interested in the land? Your age and family structure are also important.
Economic Considerations
Some forestry practices require heavy equipment or much labor and are too costly for many timberland owners. You may be able to achieve the same end result for less money by using a less intensive practice. Different alternatives may produce the same result, so you don't have to spend much money to get your timberlands into full production. As you decide how much money you can afford to invest, don't overlook the tax benefits and cost-sharing programs available to you. You may be able to afford more than you think. Provisions to help you pay for or recover your costs include investment tax credit for reforestation, the amortization recovery of reforestation costs, capital gains tax treatment, depletion deduction and cost-sharing programs.
Land-Use Considerations
What is your primary ownership objective -- to produce maximum income, wildlife habitat, recreational opportunities, or all three? You can produce timber and still have wildlife and recreation, but you may not have all three uses on the same acre during certain times in the production cycle. The management alternatives you choose will enhance some uses more than others, depending upon the way they are applied and their intensity. If your ownership acreage is small, you may have to decide which forestry practice is best suited to your primary ownership objective. The location and size of your timberland may influence the cost and practicality of some practices. For example, the use of large equipment may be too costly for small, inaccessible tracts of land.
Management Alternatives
A management system is a comprehensive, planned program of cultural treatments during the life of a timber stand. It provides for managing the existing stand as well as making preparations for the next crop. Following a management system can reduce the cost of good forestry because you can choose practices that fit your ownership objectives, timberland conditions, and pocketbook without reducing timber production. Many timberland owners cut their timber as it matures without prior planning. The result may be a costly clean-up before a new crop can be established. If you are caught in this situation, you have only two alternatives: spend a lot of money for mechanical site preparation and tree planting or do nothing. If you do nothing, you will end up with worthless brush. There is no rigid set of forestry practices that every timberland owner must follow. A forester can help you develop a management program for your timberlands that is tailored to your individual situation. The management program you choose should be described in a written management plan. The management plan will outline the alternatives, describe the current conditions and needs of your timber, provide a time table for prescribed practices, and estimate the costs and returns for anticipated products during the production period (called rotation length). Your ownership objectives will determine the type and intensity of prescribed management practices, the desired tree species and product, and the time, money, and protection that are needed.
Financial Assistance Alternatives
Two cost-sharing incentive programs that will pay up to 50 percent of the cost of approved forestry practices, such as site preparation, tree planting, timberstand improvement practices, and practices for natural regeneration are the Forest Resource Development Program (FRDP) and the Forest Incentive Program (FIP). For more information about FRDP and FIP, contact your county forester, local ASCS office, or county agent.
Tax Alternatives
Reforestation incentives -- Beginning January 1, 1980, you can receive a 10 percent investment tax credit and can amortize over a 7-year period the direct costs of reforestation by planting or by artificial or natural seeding up to $10,000 per year.
