SPECIAL FEATURE. Cost & Cost Trends. Forestry Practices FOR IN THE SOUTH BY: REBECCA J. BARLOW AND MARK R. DUBOIS

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1 SPECIAL FEATURE Cost & Cost Trends FOR Forestry Practices IN THE SOUTH BY: REBECCA J. BARLOW AND MARK R. DUBOIS fla_0111_costofforestry.indd 14

2 Landowners and land managers are taking a close look at their property before making management decisions in an attempt to balance both cost of practices and the needs of the land that they own and manage. fla_0111_costofforestry.indd 15

3 In 1953, results of the first survey of cost estimates and changes for 10 common forestry practices were reported in Forest Farmer magazine. The survey was next conducted in 1962 and approximately every three to five years after that through the early 1980s. Since 1982 the survey has been conducted on two-year intervals (see the bibliography). The results presented here represent the 21st version of this report, which summarizes forestry practices costs in the South in Current costs and their cost changes since 1952 are also reported, which may serve as a standard reference for forestry financial analysis. Methods The tables presented in this report follow standards from prior surveys and are based on the responses to a questionnaire sent out to 262 individuals, private firms and public agencies from 14 southern states. Respondents were requested to provide a detailed breakdown of their costs for 10 major forestry practices. Of those mailed for this current survey, 28 surveys were returned as undeliverable for a total of 234 surveys distributed. Of those, 56 questionnaires were completed and returned, for a response rate of 24%. Survey response increased in 2010 from the 2008 survey by four usable surveys. Of the 53 questionnaires that were considered usable: 23% were from public agencies, 28% were from forest industry, 42% were from consultants, and 7% did not report their organization type. This is a notable shift from the 2008 survey in which 46% of the surveys were from public agencies, 37% were from forest industry, and 17% were from consultants. Tables 1 through 10 summarize costs for each of the forestry practices included in the survey. Total costs are presented by region and by treatment or method on a per acre basis, with the exception of planting costs, which are also presented on a per seedling planted basis. average costs are also included in the tables. costs presented include inflation. Tables 11 through 13 summarize the general cost trends in the South. Table 11 summarizes the cost of forestry practices from 1952 to Table 12 shows the cost changes from the two prior surveys, including inflation, while Table 13 compares the southern forestry practices costs indices from 1967 to 2010 to forest products price indices. For this survey we considered three physiographic regions in the South: the includes the area south of the Fall Line and the Savannah River; the includes the area east of the Fall Line and north of the Savannah River; and the includes the region in the Southeast between the Fall Line and the mountains plus the upland areas from Alabama westward through Arkansas (Figure 1). figure 1. Map of the three physiographic regions in the South fla_0111_costofforestry.indd 16

4 Table 1: Mechanical site preparation costs per acre, Site Preparation Treatment cost per acre 3-in-1 plow Single chop Shear, rake, pile, and bed Subsoil Bedding, all types 21,841 4,069 3,058 2,588 9, multi-pass single pass types 26,907 15,444 45, Too few responses Activities not reported in this region Results Mechanical Site Preparation Forty-seven percent of the land managers who returned the survey reported that they did not complete any mechanical site preparation in Of the 53% who did report mechanical site preparation operations, they completed these activities on slightly more than 45,000 acres (Table 1). The majority completed mechanical site preparation through multi-pass operations (60%), which is similar to the 2008 report where 55% reported using multi-pass operations. The most frequently reported site preparation technique in 2010 was the 3-in-1 plow, costing an average of $ per acre south-wide and representing approximately 48% of the total area. Planting hand planting costs (excluding seedling costs) of all bareroot pines on cutover lands were $43.57 per acre, 17% percent lower than they were in 2008 (Table 2). Respondents reported planting an average of 496 bareroot, pine seedlings per acre in 2010, down from a high of 593 in The majority of all bareroot pine seedlings planted were loblolly pines (Pinus taeda). Other species of bareroot seedlings planted included slash (Pinus elliottii) and shortleaf (Pinus echinata) pine, but their numbers were too few to include in this report. average cost per thousand reported for pine seedlings in 2010 was $51.00 for bareroot and $98.00 for container seedlings. Planting of containerized seedlings increased for this current survey with an almost 60% increase in the acres of containerized seedlings planted over the prior survey (Table 2). Continuing a trend from the 2008 survey, sufficient numbers of containerized longleaf pine (Pinus palustris) seedling were planted to warrant reporting. Containerized longleaf pine seedlings were planted on over 4,000 acres of cutover sites at a density of 551 trees per acre. cost of these plantings was $62.13 per acre. Containerized longleaf pine seedlings averaged just over $140 per thousand in Machine planting of seedlings also continued to be practiced, especially in the region (Table 2). The majority of all machine planted acres were in bareroot loblolly pine seedlings. Per acre, machine planting of bareroot pines was reported to cost more ($97.86), and densities are slightly higher (585 seedlings per acre) than hand planting in the region. Prescribed Burning The overall cost of all types of burning decreased slightly over the past two years from $29.31 per acre in 2008 to $25.79 per acre in 2010 (Table 3). It should be noted that one data point was removed from the data used for this report because of its influence. However, there were still over 295,000 acres reported as being prescribed burned in 2010, more than two times the acres reported in The majority of acres burned were ignited aerially using ping-pong balls. The cost for this treatment averaged $25.38 per acre. About 12 percent of acres reported were burned using a ground drip torch costing an average of $24.24 per acre. The purpose for burning using this method was split between post chemical site preparation and mid-rotation hardwood control. Sixty-two percent of respondents who burned reported that prescribed burns were performed by company crews in 2010, accounting for 90% of acres burned. The total cost per acre for burning was almost 12% less when completed by company crews. The average tract size burned in 2010 by company crews was approximately 50 acres and approximately 90 acres for vendor operations. Forest Landowner November/December fla_0111_costofforestry.indd 17

5 Table 2: Hand and machine planting cost per acre and per seedling for cutover pine sites, average planting costs do not include seedling costs. Planting Method Hand Planting, Loblolly Pine, Bareroot,266 Coastal Plain Coastal Plain cost per acre Planting Cost Cost Per Seedling Seedlings/ Acre 496 Hand Planting, Pine, Bareroot, Hand Planting, Longleaf Pine, Container 4, Hand Planting, Pine, Container 13, Machine Planting, Loblolly Pine, Bareroot 5, Machine Planting, Pine, Bareroot 7, Machine Planting, Pine, Container 2, Too few responses Activities not reported in this region Chemical Treatment Chemical treatments included in this report consist of various herbicide application methods to control herbaceous and woody plants. The number of acres treated with chemicals reported in 2010 decreased to 223,179, or almost half the number of acres reported in 2008 (Table 4). Seventy-five percent of respondents reported using chemical applications, at an average cost of $47.68 per acre. Respondents reported using a total of 26 different combinations of chemicals. The three most used chemicals were imazapyr, sulfometuron and glycophosphate, which were applied either alone or in mixture to 80%, 33%, and 17% of the total acres, respectively. Thirty percent of the treated acres were treated for site preparation, 26% for herbaceous weed control, 14% for mid-rotation release, and 28% for early release. The remaining 2% were treated for invasive species control. applications were primarily aerial (75%), with some broadcast ground machine (12%), backpack (12%), and band ground machine (1%). cost of all aerial application methods for site preparation, weed control and release activities, was $49.17 per acre. Almost % of the chemical operations reported in this survey were conducted by vendors. Fertilization Sixteen out of the 53 respondents reported using fertilization on a total of 121,659 acres, costing an average of $62.79 per acre (Table 5). The majority of lands fertilized were established stands (67%). The average price per acre to fertilize an established stand was $69.20, down from $ reported in the 2008 survey. Almost one-quarter of the acres reported were fertilized at plantation establishment, costing land managers and owners an average of $37.90 per acre. Over all acres, fertilizer was primarily applied aerially (62%). Over 60% of acres fertilized were reported to be treated with diammonium phosphate (DAP) or DAP + Urea. fertilizer applications were completed by contractors. General Fire Protection Fire protection costs include costs associated with detection of, the ability to respond to and suppression of wildfires. Twenty-two 18 fla_0111_costofforestry.indd 18

6 Table 3: Burning treatment costs by ignition method, Ignition Type Burning Purpose cost per acre Ground drip torch After chemical site preparation 12, Ground drip torch Mid rotation hardwood control 12, Ground drip torch 34, Ping pong balls 247, types 295, Too few responses Activities not reported in this region Table 4: Chemical treatment cost per acre by treatment purpose and application method, Treatment Purpose Application Method cost per acre Site Preparation Aerial 61, , Site Preparation Ground machine (broadcast) 4, Herbaceous weed control Aerial 33, Herbaceous weed control Backpack 23, Early release Aerial 59, Mid rotation release Aerial 13, types 223, Too few responses Activities not reported in this region percent of respondents reported general fire protection totaling over 60 million acres (Table 6). The cost of protection and number of acres burned varied widely with several reports of greater than 1,000,000 acres protected in The weighted average cost of fire protection for all areas reported was up over prior years at $2.11 per acre. The reported overall cost of general fire protection has fluctuated over the past several years, costing $0.70 in 2004, down to $0.40 in 2006, and back up to $0.87 in Timber Cruising Survey respondents reported that 663,704 acres were cruised with an average price per acre for all cruising types of $6.56 (Table 7). Approximately 3/4 of those responding used point sampling, which cost $6.36 per acre. The other predominant method used was 1/10 and 1/5 acre plot based cruises costing an average of $6.98 per acre. Highest per acre cost of cruising was in the region at $10.19 per acre. When cruising purpose is considered, respondents stated that the majority of their cruising was for inventory and reconnaissance work, followed by timber or timberland sales and acquisitions. Vendor operations cruised about half of the acres reported. Timber Marking Survey respondents marked 20,232 acres of timber in 2010 (Table 8). The overall average price for marking timber decreased in price over the past two years, from $86.99 to $48.80 per acre. Forest Landowner November/December fla_0111_costofforestry.indd 19

7 Table 5: Fertilization cost per acre, 2010 Time of Application Application Method cost per acre Plantation Establishment 26, Catch-up Fertilization 13, Established Stand 82, Aerial 75, , Too few responses Activities not reported in this region Table 6: General fire protection cost per acre, 2010 cost per acre 60,545, Data is limited and widely variable Table 7: Timber cruising cost per acre, 2010 Cruise Method or Cruise Purpose cost per acre Method: plot sampling 27, Method:Point sampling 10 BAF 197, Method:Point sampling 20 BAF 316, Method: point sampling 513, Purpose:Inventory/reconnaissance (10 BAF) 112, Purpose: inventory/reconnaissance 262, Purpose: sale/acquisition 185, Purpose: Appraisal 117, , Too few responses Activities not reported in this region Table 8: Timber marking costs per acre, 2010 Timber Marking Purpose cost per acre 20, Too few responses 20 fla_0111_costofforestry.indd 20

8 Forty-two percent of the total acres marked were marked for multiple products on the same pass rather than a specific product such as poles or pulpwood. The majority of acres were marked for thinning natural stands (47%), thinning plantations (29%), and seedtree or regeneration cuts (15%). timber marked for poles was located in the region. Eightytwo percent of the operations were marked by company crews, accounting for 74% of the reported marked timber. Pre-Commercial Thinning In 2010 respondents reported only 8,554 acres treated with precommercial thinning (Table 9). This is down from 36,085 acres reported in average cost per acre was $166.66, greater than two times the average cost per acre of $80.18 in About half of the acreage was thinned using a backpack bushwacker saw (44%), and a 36% of the acres were treated using other methods including a brush saws and weed-eater with a saw head, costing $ and $ per acre respectively. Most precommercial thinning operations were completed by vendors. Custodial Management Custodial management costs may include items such as boundary line maintenance, road construction and insect and disease management, but is not limited to these activities. Thirty-one percent of the respondents reported custodial management costs on almost 3 million acres (Table 10). Custodial management costs ranged from $1.00 to $50.00 per acre with the overall average cost of $9.98. Changes: Changes reflected in current dollars. Costs of major forestry practices surveyed from 1952 to 2010 are presented in Table 11. The majority of practices reported here were part of the original survey with the exception of precommercial thinning costs, which have been reported since 1976 and fertilization costs that were included for the first time in Costs for fertilization in 1984 were adjusted according to the Producer Price Index- Commodities in order to establish a cost for the base year These are average dollar costs from each survey and are based on observations for all regions of the South. costs are presented on a per-acre basis, except planting costs, which are also reported on a per seedling basis. The overall average percentage changes are nominal values that include inflation. Comparisons to 2008 averages show that seven of the nine practices recorded costs decreased in 2010 (Table 12). Machine and hand planting demonstrated the Forest Landowner November/December fla_0111_costofforestry.indd 21

9 Table 9: PrecoMMercial thinning cost per acre, 2010 Precommercial Thinning Method cost per acre 8, Too few responses Table 10: Custodial management cost per acre, 2010 cost per acre 2,931, Data is limited and widely variable Table 11: Costs of major forestry practices surveyed from 1952 to 2010 Survey Year Forestry Practice Prescribed burning Removing undesirable trees (chemically) Timber cruising Marking trees for harvesting Mechanical Site Preparation Planting: by hand by machine Precommercial thinning Fertilization costs are $ per acre except for planting costs which are $ per seedling planted. 2Table does not include costs from the 1961, 1974, 1979, 1984, 1988, 1992, and 1996 surveys. largest decreases in 2010 over the prior survey at 66% and 53%, respectively. Costs reported for marking trees for harvest and fertilization in 2010 demonstrated decreases greater than 40%. Chemical treatments (-2 %) and timber cruising (4%) remained relatively unchanged from the 2008 survey. The only notable price increase was for precommercial thinning at 108%. While price changes since 2006 are considered trends, they are similar to with five of the nine practices decreasing since Those activities that increased in price since 2006 were prescribed burning (3%), mechanical site preparation (17%), timber cruising (25%), and precommercial thinning (183%). Cost changes related to price changes Table 13 presents changes in forestry costs over the last thirteen surveys, 1967 through 2010, as related to the general wholesale price level (Producer Price Index PPI), and the softwood lumber index. These indices provide a basis for comparing the costs of selected forestry practices with both forest product prices and with general economic trends. The softwood lumber price index was used instead of stumpage prices because the lumber price index is more broadly based and may give a more reliable picture of price trends. When comparing the costs of selected forestry practices with the price index; prescribed burning, and marking trees for 22 fla_0111_costofforestry.indd 22

10 harvest, although down from the prior survey, were both at a rate substantially greater than PPI in 2010 (Table 13). Values for precommercial thinning and timber cruising were also greater than the PPI and also greater than the values reported for these activities in the Several practices were down compared to 2008 and were slightly lower than the PPI as well; removing undesirable trees chemically, mechanical site preparation, planting by hand and machine, and fertilization. The softwood lumber index increased slightly from 2008 to When the 2010 survey was mailed, the United States was in a period of financial uncertainty. Unemployment rates, although somewhat improved over prior years, still hovered around 10%. Mid-year, government stimulus programs came to an end and a double-dip recession was projected as national and world economies faltered. The demand for wood products was also low during this time due, in part, to high levels of personal debt and the weakest housing market in 10 years. Pulp and paperboard production improved in 2010, but did not return to 2008 levels. In addition, the solid wood price decline and reduced stumpage prices may have influenced choices made by landowners and land managers over the past two years, thereby causing the reported decreases in costs of forestry practices. For example, planting costs were down for this current survey, and there was an overall decrease in the number of acres and the number of seedlings per acre planted. Timber cruising was the one practice that did see acreage increases in This suggests that landowners and land managers are taking a close look at their property before making management decisions in an attempt to balance both cost of practices and the needs of the land that they own and manage. Table 12: Changes in cost of forestry practices in the south from 2006 and 2008 to 2010 Forestry Practice Prescribed burning Removing undesirable trees (chemically) Timber cruising Marking trees for harvesting Mechanical site preparation Planting by hand Planting by machine Precommercial thinning Fertilization % Change: % -40% 25% -17% 17% -41% -60% 183% -19% % Change: % -2% 4% -44% -11% -53% -66% 108% -43% Table 13: Cost indices table from 1967 to 2010 Survey Year Forestry Practice Prescribed burning Removing undesirable trees (chemically) Timber cruising Marking trees for harvesting Mechanical Site Preparation Planting: by hand by machine Precommercial thinning Fertilization Producer Price Index Softwood Lumber Index Data from Bureau of Labor Statistics ( Forest Landowner November/December fla_0111_costofforestry.indd 23

11 Bibliography Albert C. Worrell, What Does it Cost to Practice Forestry in the South, Forest Farmer, May,1953. Seymour I. Somberg, Larry D. Eads and James G. Yoho, What It Costs to Practice Forestry in the South, Forest Farmer, September, James G. Yoho, George F. Dutrow and James E. Moak, Cost and Cost Trends - What It Costs to Practice Forestry, Forest Farmer, March, James E. Moak and James M. Kucera, Current Costs and Cost Trends for Forestry Practices in the South, Forest Farmer, James E. Moak, James M. Kucera and William F. Watson, Current Costs and Cost Trends for Forestry Practices in the South, Forest Farmer 22nd Manual Edition, James E. Moak, William F. Watson and Paul Van Deusen, Costs and Cost Trends for Forestry Practice in the South, Forest Farmer 23rd Manual Edition, James E. Moak, William F. Watson and Mark S. Watson, Cost of Forestry Practices in the South, Forest Farmer 24th Manual Edition, Thomas J. Straka and William F. Watson, Costs of Forestry Practices, Forest Farmer 25th Manual Edition, William F. Watson, Thomas J. Straka and Steven H. Bullard, Costs and Cost Trends for Forestry Practices in the South, Forest Farmer 26th Manual Edition, Thomas J. Straka, William F. Watson and Mark R. Dubois, Costs and Cost Trends for Forestry Practices in the South, Forest Farmer 27th Manual, Mark R. Dubois, William F. Watson, Thomas J. Straka, and Keith L. Belli, Cost and Cost Trends for Forestry Practices in the South, Forest Farmer 28th Manual Edition, Monique L. Belli, Thomas J. Straka, Mark R. Dubois, and William F. Watson, Costs and Cost Trends for Forestry Practices in the South, Forest Farmer 29th Manual Edition, Mark R. Dubois, Kenneth McNabb, Thomas J. Straka, and William F. Watson, Costs and Cost Trends for Forestry Practices in the South, Forest Farmer 30th Manual Edition, Mark R. Dubois, Kenneth McNabb, and Thomas J. Straka, Costs and Cost Trends for Forestry Practices in the South, Forest Farmer 31st Manual Edition, Mathew F. Smidt, Mark R. Dubois, and Bruno S. Folegatti, Costs and Cost Trends for Forestry Practices in the South, Forest Landowner, March-April pp Bruno S. Folegatti, Mathew F. Smidt, and Mark R. Dubois, Costs and Cost Trends for Forestry Practices in the South, Forest Landowner, September/ October pp Rebecca J. Barlow, Mathew F. Smidt, Jennifer Z. Morse, and Mark R. Dubois. Costs and Cost Trends for Forestry Practices in the South, Forest Landowner, September/October pp fla_0111_costofforestry.indd 24