A:The purpose of most thinning operations are: remove suppressed, diseased trees and reduce stems/ac to encourage continued growth on the remaining stems.

In a 3rd row thinning operation you take out 33% of the stems when you remove the cutout row, in a 5th row thinning operation you remove 20% of the stems when you remove the cutout row. If your timber stand is well stocked, with little disease or stem quality issues, then either a 3rd or 5th row operation may be suitable.

If you have an initial low stocking rate or have an above average amount of diseased and inferior trees, you would probably want to go with a 5th operation. The reason for this is that taking out only every 5th row vs. every 3rd row allows you more choices when selecting which trees from the remaining rows to harvest.

Sometimes there are also site or contractor equipment type issues to consider. I personally like 5th row operations in most instances as I like to have more control over which trees are harvested from the remaining rows. The quality of your 1st and/or 2nd thinning will have a large impact on the overall return of your timber investment.

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Chuck Mathis,
AFM Regional Manager: MS, AL, & FL
Bonifay, Florida
(850) 547-2534
chuck.mathis@amforem.biz

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Q:

A: I feel the first step in any phase of timber management is to have an inventory of the property by a reputable graduate forester. This is accomplished by measuring all trees on a number of sample plots or points that would give an estimate of the entire property population within a given statistical accuracy.

From this inventory, current market values can be used to calculate the present timber value as well as making management recommendations and project possible future returns on the investment along with being able to set your basis for tax purposes. This inventory could range from a simple verification of any timber data you received during the purchasing of the property to a complete inventory of the property on stand level basis.

The number of sample plots or points needed for the complete inventory would be dependent on the type and age of timber being inventoried and the variability within the various stands or timber types.

Rodney Schroeder

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A: The weak dollar makes Texas land less expensive to foreign investors and some have already taken advantage of the situation by purchasing timberlands in East Texas. As of July, there did not appear to be a rush of offshore investors into the market. However, some U.S.-based buyers appear to be anticipating future inflation as they aggressively seek out properties that are not offered for sale. These forces undeniably continue to exist.

The question focuses on the effects of the credit crunch and housing market woes. Currently, the volume of sales in rural Texas appears to have slowed from the frenzy of activity in the past three years. The future depends on the Federal Reserve’s response to the credit crunch and associated home market slowdown. If the Fed continues to augment the money supply by cutting the fed funds rate, as some pundits have urged them to do, many investors will likely see a higher risk of inflation in the future. 

That view will prompt more activity in the land market. On the other hand, if the downward spiral in the housing markets precipitates a recession, land markets will likely falter. At this writing, it is far from clear which path the economy will follow. Judging from past experience, the Fed will probably try to avoid recession by expanding the money supply until the panic subsides. That prescription will breathe new life into Texas land markets as inflation driven investors seek a safe store of wealth. Additionally, Texas land will become even more attractive to foreign money. If the Fed pursues this strategy, Texas land markets will thrive. 

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Dr. Charles Gilliland is a research economist at the Texas A&M Real Estate Center.

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