In episode 6 of Forest Matters, NativState VP of Forestry Tim White shares important guidance about timber harvests for landowners enrolled in a forest carbon program. He points out that enrolling in a forest carbon program does not prohibit timber harvesting but instead requires harvests to align with long-term carbon stock goals and sustainable management standards. This episode also looks at:
- The importance of well-structured timber sale contracts
- Implications for properties enrolled in certification programs such as Forest Stewardship Council (FSC)
- Maintaining accurate records
- Communicating with foresters and legal counsel to ensure harvest decisions support both timber value and carbon commitments
Transcript
Forest Matters
Episode 6
Summary Keywords:
- Forest carbon program, Allowable harvest, Carbon stock maintenance, Timber sale contract, Harvest specifications, Carbon accounting, Best Management Practices (BMPs), Streamside Management Zones (SMZs), Damage clauses, Contract duration, Insurance requirements, Regulatory compliance, FSC certification, Timber market fluctuations, Sustainable Forest management, Carbon credit integrity
Speakers
Mark Fortune
Tim White
Tim White 00:00
Some buyers of timber have different specifications. Some cut to a 12-inch top, some cut to a 14-inch top. I remember several years ago a guy told me, he said, well, my neighbor got so much more than I did for his same timber. Then why? I said, well, what was the specification? If he cut his to a 14 inch top and yours to a 12 inch top, you got more money because you cut more tons. He left more tons in the wood. Something as simple as specifications should be in the contract.
Mark Fortune 00:50
Welcome back to another episode of the Forest Matters podcast. In the series of episodes that we’ve done so far, we’ve been talking about sustainable forestry and sustainable forest management. But today we’re going to get into a little bit of that. But we’re going to start off with question number one. But first, let me introduce our guest. Once again, we have Tim White, our NativState’s Vice President of forestry. Hi, Tim.
Tim White 01:13
Good to see you Mark.
Mark Fortune 01:14
And let me start off with question number one that we get from everybody. Just to reiterate, does enrolling in a forest carbon program mean I can no longer harvest any trees on my land?
Tim White 01:24
That’s a great question. And in the NativState program, no, you are allowed. And that’s a really for those people that might not be enrolled in a program, that’s one of the things you really need to dig into and make sure of whatever carbon program you’re in that you ask that specific question. And with NativState, we do have what’s called an allowable harvest over a period of time that you are allowed to harvest some timber.
Mark Fortune 01:49
Right. And so how does enrolling in a forest carbon program, such as NativState’s, change the way landowners should think about timber harvesting?
Tim White 01:58
Great. So you can harvest. I tell people this, you’re allowed to harvest. It might not be the amount that you traditionally would do, or those trees may have to stay on the landscape longer. We call that a rotation age, specifically around pine. The rotation may be lengthened some. So while you can harvest, you can’t probably harvest to the level, you shouldn’t be able to harvest to the level of common practice or what everybody does, or you shouldn’t be in a carbon program. The whole, the guiding thought is when you start with a forest, no matter what size that forest is, let’s just pick, a forest that’s got 100 tons of wood per acre. At the end of the carbon agreement, you need to have at least 100 tons or more so that forest is going to grow. You can cut that growth. You can cut a portion of that growth through the 20 or 40 years. And that’s perfectly okay. I think there’s a misconception that people think when you enroll in a carbon program, that you’re locking those trees up forever and you can never, ever, ever cut them. That’s not healthy for the forest. So we would not want to do that. And so yes, you can absolutely cut to a to allowable harvest.
Mark Fortune 03:14
All right. So when it gets into the practice of cutting and what you’re going to do in that sustainable harvest, let’s get into the ever fun topic of contracts. Then first and foremost let’s be clear – this is not legal advice. Neither Tim nor I are lawyers. So you should involve your attorney in when you when you develop contracts. But Tim’s been working on this a long time. So you have some idea about how this works.
Tim White 03:38
So these are some items that you need to make sure are in your contract, among other things. Contract a timber and we’re talking about timber harvest contract. And I’ll try not to get too far in the weeds because this could be a long conversation. So when you’re selling timber, there’s two basic ways to sell timber. You can sell it as a lump sum, a group. In other words, I’ll give you X amount of dollars for your timber. Doesn’t matter how many times, doesn’t matter what species, whatever. That’s called lump sum. Another way to sell timber is we call pay as cut. I want to specify those trees to be cut. And I’m going to pay you by the ton in some cases board feet. Not many people use board feet. I will pay you per ton for what is cut. So those lump sum and pay as cut or the two methods. But each of those methods should have a contract associated with it. And things in that contract. Something as simple as specifications. What size trees do you got now? Typically the trees would be identified in some manner. There’s a boundary painted around them or a flag around them, or their trees are individually painted, or you identify them in some way, you know, by a residual basal or a cut down to a certain basal area or, some way to identify those trees to be cut. But in some mills some buyers of timber have different specifications, some cut to a 12 inch top, some cut to a 14 inch top. I remember what several years ago a guy told me. He said, well, my neighbor got so much more than I did for his same timber that why? I said, well, what was the specification? If he cut his to a 14 inch top and yours to a 12 inch top, you got more money because you cut more tonnage. He left more tons in the wood. Something as simple as specifications should be in the contract. Who is responsible for payment terms? Is there a down payment involved? Are there road deposits that you need? You need to have, for, so you get done with the job and, you know, there’s ruts in the road. Who’s going to fix that? Okay. Things like protecting boundaries, corners, not falling trees outside or on fences. Obviously road work and stuff is important. But a big part of it is the state, best management practices for water quality or as we call them, BMPs. Who’s responsible for that? Who’s going to mark if there is an SMZ, a streamside management zone, who’s responsible for marking that and how is it delineated? Is it a painted line? Is it a flag line? And what what if any, activity harvesting activities can go on inside that essentially has to be spelled out of a contract. Gosh, there’s well, there’s a lengthy contract, you know, timber, markets change, their timber markets are local and they fluctuate some within each locality. South Arkansas is different than North Arkansas is different than north Louisiana. But you can only, you know, you can’t expect to just say this is open ended. Cut it till you get done? Well, what if prices go up? And what if they take two years to cut it? So you need to specify the length of the contract. Those are a few of the things I’m trying to think of, of some other really key parts. Oh, you know.
Mark Fortune 07:05
Are there safeguards in terms of insurance? Good water access?
Tim White 07:08
Absolutely. Contractor the insurance requirements are in there. The buyer has to grant really should grant the seller access to the property, and they should guarantee to the seller they have free and clear title to that timber. So who knew they had a lien on it, or who knew they had an old timber deed or something like that. So they have to make sure that, that they have good clear title to the timber. They’re able to sell it. It’s clearly delineated is to is what is cut and when it should be cut. And is there if damage occurs to the trees that they’re left, what happens? Pine trees. That’s such a big deal. Hardwood trees, It’s a big deal if you scan up the side of a hardwood tree and it’s not one let’s say that was supposed to come out, it wasn’t marked to be cut. Well, you just introduce rot into that tree. And so the next harvest, the bottom six feet of that tree won’t be any good, let’s say. So there may be some damage clauses, penalties in there. You know, if, if weather changes during the harvest activity, when can you say, okay, y’all stop because you’re making two big ruts, that has to be spelled out in the contract. And let’s say the contract expires and they don’t get finished. Are there provision in there to grant them an extension? And if so, what’s the price, does the price extend? And I’ve had to do that a few times. Because, you know, bottomland hardwood especially, you know, it might take two years to cut a tract because it just gets, you know, there’s only a limited amount of time to do harvesting. So there’s a lot of that that needs to be in a contract.
Mark Fortune 08:45
Well, in, in introducing the layer of land that may be enrolled in a forest carbon program at the same time, what does that bring to bear in terms of contracting and making sure your harvest contract is sound?
Tim White 08:58
Well, especially if that land is in a forest certification program. Like we’ve mentioned before, in previous episodes. FSC yes. If, you know, you know, something as simple as a contractor must follow all laws and regulations, well, that covers OSHA laws, which is safety, that covers regulations about spills. Let’s say they have a hydraulic line break and it spills a certain amount of hydraulic. Who’s cleaning that up and and what laws or regulations do you have to follow to make sure that happens? So that’s a key part. And it’s more not just cause it’s in a carbon program, but because it’s in a certification program. Something as simple as road building, you know, you got to get from the highway or the county road to the track. Well, who’s going to be on the road and how is it to be built? It should be built to follow the BMPs. Okay. It should be in built in such a way to be able to withstand truck traffic and all the things that go on with harvesting. So so there’s a lot I mean, most, most timber sale contracts are usually 3 to 4 pages long. They’re pretty lengthy.
Mark Fortune 10:01
Well, then how does your team get involved in those with landowners who enrolled in our program as as they come on.
Tim White 10: 09
For the NativState landowners, if they are in, which they will be in some type of certification, I’ve got actually, I brought a sample. Here we go of our sample harvesting contract, and I think this is four pages. We will provide to them a sample. I mean, here again, we’re not attorneys, and we’re not representing ourselves as legal authorities, but this should cover all the guidelines in that certification program. Okay. And so that land owner is free to use it, obviously run it by their attorney would be a good idea. But we’ll have that available to them. And this is a harvesting contract. We have chemical application contracts. We have, whether it’s, land or aerial application of herbicides, we’ll have a contract for that. Something as simply as a boundary line. People paint boundary lines. Well you need a contract for that. Why, what if they make a mistake and they mark something that’s not your boundary? Who’s responsible? Well, important. Another thing I think I did point out is obviously in the contract, it you obviously have to have the price and the price per ton or the let’s I said a lump sum. And is that money to be paid half upfront entirely upfront? The terms. How is it to be paid and how do you keep up with it. Like for example, pay as cut. As I mentioned, every truckload will have a scale tick. This is how many times went across the scale you should get a copy of that, and you should be able to balance that. Okay, I’ve got 42 tickets totaling so many times, so much of pulp wood so much of timber, so much of pallet wood or whatever it is. And you should that should absolutely reconcile with the money they pay you.
Mark Fortune 11:58
Well, and I think it’s important to keep in mind that those tickets are part of our documentation process. When we sell credits and back to our corporate buyers to be accountable to them.
Tim White 12:07
Yes. So we take the the the timber removed, that timber gets placed in what’s called permanent wood products. So, you know, obviously it was turned into paper or lumber or cross ties or something. So those, those actually permanent wood products stay on the landscape for I think we’re allowed to keep 100 year, don’t quote me on that, but I’m pretty sure we get to count those for 100 years. I mean, the the wood in a building stays for quite a long time. Well, that it gets, it gets moved from standing timber to permanent wood product. So we have to account for that. Right? In addition we have to account all our carbon inventory for those times to remove. So we actually have to go do some re-inventory and that type of stuff. Because you had 100 tons and you cut 20. Well now you got 80. And then that 80 is going to grow. So we have to keep up with that.
Mark Fortune 12:57
Right. And just to be clear, I mean, it’s our job as a forest carbon developer to guide landowners through that entire process.
Tim White 13:04
So yes, it is. And, a couple of my foresters have actually been procurement foresters. They’ve bought timber before, so they’re very, very well versed in contracts. And what should and shouldn’t be in there.
Mark Fortune 13:18
Well, just to kind of wrap up, if you could give landowners just 1 or 2 quick things to remember when they enter into this process and, you know, and especially when they consider timber harvesting while in a carbon program, what would you want to make sure that they know?
Tim White 13:30
The first thing is get in touch with us. Tell us about what your plans are. Because we’ve got an inventory. We know we got a pretty good idea. But from the inventory, what’s there? I had a landowner last Friday. Big track, 5,000 acres, White County. Hey I’m thinking about cutting some timber. I was like, well, okay, let me remind you, and your carbon agreement, this and this and this applies and we’d love to talk to you. He was wanting to sell some white oak, which is a fairly valuable. I said, okay, here’s my suggestion. First of all, I’m going to go look at me and my one of my other guys are going to go look at it. But right now it’s probably not a good time. You know, I told him a lot of reasons why. We also keep with to keep up with timber markets. Because like I said, they’re local. And what’s going on up here in North Arkansas may not be going on in South Arkansas. So we try to keep up with that. And if there’s an opportune time to sell, absolutely. That’s that’s great for the landowner. But we’re there to supply as much technical expertise as we can.
Mark Fortune 14:30
All right. And just one last reminder, remember, we’re not attorneys
Tim White 14:34
Run the disclaimer
Mark Fortune 14:36
But but it is important to consult with your foresters and consult with NativState when you get into this.
Tim White 14:41
And an attorney that’s familiar with this. They are not all. Just like foresters. We specialize in one thing. So do attorneys. But there’s there’s some good ones out there that understand contract law. And they could.
Mark Fortune 14:52
Well and where we operate, you know in the timber basket of America there’s plenty of plenty of resources available.
Tim White 14:58
We’ll throw as much business as we can to those poor attorneys.
Mark Fortune 15:02
That’s right. All right, Tim, thanks for your time.
Tim White 15:03
You bet. Mark. Thank you.