Forest Owner Associations


Situation:

You own forestland

Action Plan:

  • Join Forest Owner Association!
  • Insure most favorable property tax rate
  • Develop forest management plan
  • Consider…….

Oops! Did you forget step 1 — join your state’s Forest Owner Association? Unfortunately, many people do forget, and all landowners suffer.

These organizations play a critical role in promoting forest owners’ interests, while providing wonderful educational opportunities. In state legislative sessions, it is only the Forest Owners Association that strictly focuses on your welfare. In fact, securing step 2, low property taxes, falls directly under the associations’ protective umbrella.

Okay, you say “that is all fine and good, but what do I personally get from membership?” Good question—the answer— knowledge and camaraderie. Membership in the Idaho Forest Owners Association or the Washington Farm Forestry Association includes a subscription to Northwest Woodlands magazine. This is an excellent publication that provides down-to-earth information targeted toward helping landowners manage their forestland. In addition, educational meetings and tours sponsored by these groups help to increase your knowledge as well as providing opportunities to meet other people with your interests.

The annual membership fee for the Idaho Forest Owners Association (IFOA) is $25.00, and $50.00 for the Washington Farm Forestry Association (WFFA) membership. Contact Arleen Pence at 208-762-9059 for information about the IFOA. Additional information regarding membership in WFFA can be found at the web site www.wafarmforestry.com.

If you’re not a member—join now! If you are a member—good job, you’re helping yourself and other forest owners.

Fewer Mills, More Production


There is an odd occurrence taking place within the Idaho forest products industry. We are losing sawmills and increasing lumber production! Since 1995, we have lost a substantial number of sawmills. In northern Idaho alone, five mills have shut down within the last six years. However, lumber production has increased by over 15% during the same time period (see accompanying graph). What’s going on here?

Well, as you might guess, it all comes down to mill efficiency. In general, sawmills are becoming more efficient and have the ability to cut more lumber while processing a higher log flow. For this same reason, we have seen demand for logs remain steady, even though fewer mills exist. This fact has helped keep our log prices up with fewer competitors.

Long term impacts

Unfortunately, if this trend of losing mills continues, there will be a point at which our log prices suffer. Extreme cases of this situation are vividly illustrated in southern Idaho and central Oregon. We recently met a central Oregon landowner that owns 4,000 acres of timberland. Two sawmills near his property have shut down within the last year. In the past he has supported his family by completing the forest management and logging operations on his property. But because of the long log hauling distance to the nearest operating mill, he is very concerned about being able to economically harvest timber and maintain his livelihood.
Thankfully, we are still blessed with a variety of sawmills in the eastern Washington/northern Idaho region. Hopefully, this situation will continue and our log prices will remain competitive.

lumberprod

Colors of Fall


Every fall deciduous trees put on a wonderful show of color before dropping their leaves in preparation for the winter months. Although the trees of the Inland Northwest aren’t quite as famous for this display as their cousins of the Midwest and East Coast, the colors that blanket the land each autumn are still impressive.
As most people know, deciduous trees are those that drop their leaves annually. Although primarily hardwoods, there is one local conifer, the western larch, that partakes in this ritual. Larch trees have been known to meet an early demise when landowners not familiar the species notice that “the beautiful evergreen tree in the yard seems to be dying!”

Why do some leaves change color in the fall? It is often assumed that colder temperatures are the cause; whereas in reality, a phenomenon called photoperiodism, or the relative amounts of day and night, regulates this and a number of other biological processes in a tree. As days become shorter, the amount of chlorophyll, the substance that gives leaves their green color, is reduced. In addition, there is a broad spectrum of other colors present in all leaves, but green is reflected so strongly by the chlorophyll that it is the color most visible to the human eye. As the amount of chlorophyll lessens, other colors become apparent, producing the wonderful colors that we enjoy each fall.

Fall-Colors

Forest Certification


Certification – The newest forestry buzzword. We’ve all heard of accountants being certified, but now forests? That’s certainly the current direction for some forest landowners.

What is forest certification? In essence, forest certification is a process whereby landowners are recognized for growing wood products under a set of specific forest stewardship principles. These principles generally include sensitivity to wildlife needs, natural diversity, logging standards, forest sustainability, social and economic needs, and a written management plan. In some cases, this “certified” designation is then attached to the final product (i.e. lumber). The purchasers then buys certified lumber knowing the wood was harvested from trees that were grown and logged in a ecologically friendly manner.

The primary drivers behind this program are lumber retailers and environmental groups. Proponents have lobbied large retailers, such as Home Deport, to demand they sell only certified wood products. This in turn has forced retailers to seek out suppliers that can meet the certified lumber requirements. Although this concept is relatively new, it is gaining momentum.

Originally it was hoped that consumers would be willing to pay more for certified wood products, but it appears that may occur only in isolated situations. It does seem likely that some log purchasers will ultimately purchase only logs that are “certified.”

There are numerous certification programs. In the United States, the most prevalent ones include the Forest Stewardship Council (FSC), Sustainable Forestry Initiative, Green Tag Forestry and American Tree Farm System. Each program has its own standards and forest stewardship monitoring approach, with the FSC having the most stringent requirements.

With so many competing programs, it is confusing to sort out which, if any, program is appropriate for a specific landowner. Not all programs are well accepted with environmental advocates. To further compound the issue, certification costs and accountability vary widely between programs. The Tree Farm Program is currently free, while FSC can cost $3,000 to $7,000 for a 200-acre parcel. Since the FSC has tougher standards and auditing requirements, it is currently more accepted by environmental groups and retailers.

What’s required for a forestland to meet certification standards? Of course, that depends upon the particular certification program. Standards such as a written management plan, compliance with forest practices laws and forest sustainability are universal requirements among all programs. More stringent programs require detailed record keeping, accountability, and a third party review.

At the present time forest certification is relatively young. In the Inland Northwest, log purchasers are taking notice of the certification movement. Purchasers are far from requiring log sellers to have certified status; however, they are encouraging loggers to meet certain standards.

Although the issue remains very cloudy and the jury is still out, it does appear that the industry is heading in a “certified” direction.

Experiencing the Morel


The morel is one of the most delicious and valuable wild mushrooms found in our area. Yet the enthusiasm for this wrinkled fungi seems to reach beyond mere acquisition and consumption. People in the know (Author, Patrick McManus refers to them as the “morel minority”) seem to derive their pleasure from a synergy created by all aspects of the morel experience.

morel-girl

Examples of extreme measures taken by people to obtain morels are plentiful. In Europe, landowners would burn their own forests just to stimulate the production of this mushroom. Following the 1994 forest fires, which created ideal growing conditions for the fungi near Libby, Montana, conflicts over prime morel picking spots inspired threats and even gunplay. Other evidence of seemingly irrational exuberance include numerous festivals held in honor of the morel, the fact that Michigan designates May as morel month, and in Minnesota, it is the official state mushroom.

The timing of this mushroom’s appearance undoubtedly contributes to the experience. Morels prosper during a warming trend following a cool, moist period. Warm days from May to June are ideal times to look for morels. For me, my neighbors tulip patch gives an indication of when to hit the woods. It seems as though when his flowers are just budding it is time for me to head for my favorite morel spots.

At first glance morels appear rather homely; however, upon closer examination they have a certain charm and special character that is unique as well as elegant. This distinctive appearance makes it very difficult to confuse them with any other mushroom; another feature that appeals to pickers. A word of caution needs to be inserted here. Although morels are very distinctive, there are other mushrooms that can confuse inexperienced pickers. If there is any doubt about your ability to identify a morel, have an experienced picker you trust show you one.

Knowing positively what a morel looks like and when it grows does not guarantee success. Morels are very elusive and unpredictable. They have a color and texture that blend well into their surroundings, making them very difficult to see. They are found in many different habitats. Environmental conditions need to be just right for them to appear. Other than the fact that disturbance, such as from fire or logging, stimulates their production, there is little indication of where they might be found. And don’t expect much help from the “morel minority.” People who have worked hard enough to know areas that produce consistently, or have learned “tricks” to narrow their search, are very unlikely to give up this information. You are on your own and it takes a combination of skill, perseverance, and luck to overcome all of these challenges. Perhaps this is the essence of the morel experience.

There is one small task morels require; however, that is not quite as pleasant or exiting as the rest of the experience. They need to be cleaned well. The best way is to split them down the middle, lengthwise, and wash them thoroughly. Then it is a good idea to soak them for several hours in cool salt water and put them through one final rinse and blot on a towel.

Assuredly, the taste and economic value of the morel are also major contributors to the experience. I checked a few supermarkets in the Coeur d’Alene area while writing this article and the lowest price I found for dried morels was $4.99 for one half ounce!

I personally have never found more morels than I care to part with. Their flavor is exceptional and they are very easy to prepare. About the only rule that must be followed is that they need to be cooked well. I enjoy them best sautéed in real butter with a few leeks (large green onions that have a slightly sweet taste); however, they are delicious prepared in any mushroom recipe and there are a wealth of published recipes to choose from. If more morels have been gathered than can be prepared, they are also very easy to preserve. The fastest and easiest way is to sauté and freeze. They also dry nicely or may be canned.

As the weather warms, be sure to consider adding the morel experience to your appreciation of our Northwest forests.

Forest fertilization, is it for you?


Fertilization is a forestland management tool that is getting new attention. Increased tree growth, reduced incidence of disease, and lower levels of tree mortality are potential benefits from a forest fertilization program.

Several factors should be considered to determine whether fertilization is a viable management tool on a given parcel. These include landowner objectives, forest condition, and economic feasibility. Currently, the prevailing opinion among forestry professionals is that when used appropriately, forest fertilization is a worthwhile activity.

The two major goals of fertilization are to increase the production of wood, and to reduce the incidence of disease. Studies have shown that on the appropriate site, both of these objectives can be accomplished with fertilization.

The ability to increase wood production through nitrogen fertilization has been well documented. Recently, pioneering research has indicated that fertilizing with potassium, and possibly other trace elements (primarily sulfur and boron), may also lead to a reduction in tree mortality caused by root disease and other pests. The importance of potassium in forest health makes sense since the lack of this nutrient has long been associated with agricultural crop disease problems.

Two tree species that are highly susceptible to root disease, Douglas-fir and grand fir, have much greater nutrient demands then other more root disease resistant species. Consequently, it appears that Douglas-fir and grand fir sites containing soils of low fertility are particularly prone to having root disease problems.

New research has also discovered a possible link between the presence of root disease and the parent material of forest soils. For example, trees growing in soils formed from basalt parent materials are less likely to be affected by root disease than those growing in soils derived from granite. The primary reason for this appears to be the greater availability of potassium in basalt-based soils than in granite-based soils.

The numbers: Although results vary widely, fertilization has the potential to increase wood production by 1,500 board feet per acre over ten years and to generate an average 23% net return on the investment in that same time. A rough estimate of fertilization costs, including fertilizer and using a helicopter for application, is $120.00 per acre for nitrogen and potassium fertilizer, and $160.00 per acre for nitrogen and potassium with trace element supplements. These costs are greatly influenced by the size of the parcel to be fertilized. On very small land areas, hand application of fertilizer is a viable option.

Of course, natural sources of fertility are also present on forestland. Approximately 60% of the potassium and 75% of the nitrogen in a tree is located in the needles and smaller branches. With this in mind, it is important to leave as much of this material in the woods as possible after a logging operation. In some instances, aesthetic needs or high wildfire risks make this management strategy prohibitive.

What does this all mean? The following information highlights a few points to consider:

  • Forests respond best to fertilization if they have been thinned and exhibit good individual tree vigor.
  • In most instances, potassium should be included in the fertilization mix to increase forest health.
  • Fertilization is somewhat expensive, but usually provides an attractive financial return.
  • Harvest operations should strive to leave as much slash in the woods as is acceptable from a visual and fire risk standpoint.

While forest fertilization is a relatively new management strategy, research on the subject is encouraging. The increased growth potential and disease resistance can dramatically change the productivity and character of your forest. If you are interested in pursuing a fertilization program, please contact our office.

Estate Planning


It seems like most people fear estate planning as much as death itself. This is understandable, since estate planning combines two dreadful concepts – death and taxes. In addition, this situation is further complicated for forest landowners because they are dealing with an asset that is illiquid, requires special expertise to value, and may be difficult to divide among heirs. However, it is because of these reasons that estate planning is critically important for forest landowners.

The world of estate planning is much too complicated to address in a single article. Consequently, it is our intent to highlight the following important points for landowners to consider.

  • An attorney knowledgeable in estate planning issues is usually the key team member in the planning. Additional assistance from a forester and financial advisor is also important.
  • A Will is a critical element in most plans. In Idaho and Washington if one spouse dies without a will, the descendant’s assets are to be divided equally between the surviving spouse and the children.
  • Living Wills, by themselves, do not generally reduce estate taxes.
  • Currently, estate assets over $675,000 are subject to tax. This exempt amount will be gradually increased to $1 million by the year 2006. Estate tax rates are high with rates beginning at 37% and quickly escalating to 55%.
  • Federal law allows an individual to transfer tax-free $10,000 (per year) of their estate to another individual. A married couple can transfer $20,000 per year to a desired individual. There is no limit as to the total number of individuals that the aforementioned amounts may be transferred to.
  • A limited liability company (LLC) or limited liability partnership is an excellent estate-planning tool for most landowners. An LLC allows a landowner to gradually gift his/her forestland, while significantly discounting the forestland value for estate tax purposes. Typically, the estate value is reduced by 30-50%, which greatly magnifies the ability to reduce estate taxes and transfer assets to heirs. This planning technique is too complicated to detail in this article, but your estate-planning professional can further explain this approach.
  • The conveyance of a conservation easement can help landowners preserve the character of their property while reducing estate taxes. A conservation easement involves a landowner foregoing his/her right, as well as a future owner’s rights, to develop a parcel. The transaction consequently reduces the value of the property and the resulting estate tax bill. There are also income tax benefits to this approach.
  • The IRS has incorporated certain provisions within the tax code to help landowners keep property within the family. For individuals who qualify, special-use valuation and qualified business exemption rules can greatly reduce estate taxes.
  • Landowners are highly prone to undervalue their forestland. This can be a costly mistake when developing your estate plan. It is generally necessary to utilize the services of a consulting forester and land appraiser when determining your forestland value.

This information is just a brief overview of a few essential points to consider during the estate planning process. It is not legal advice.

We never know what the future will hold. Time is of the essence – develop or review your estate plan NOW!