The Florida Forest Steward
A Quarterly Newsletter for Florida Landowners and Resource Professionals
Volume 3, No. 1, Spring, 1995
In This Issue:
Chuck McKelvy, Biologist Coordinator
More Information About SIP
Endangered Species & Private Property
Continuing Education Opportunities
Effects of Global Warming on Trees
Florida's Forests Grow
Timber Mart-South Summary
This issue of the newsletter did not get lost in the Christmas mail or crush of last-
minute tax returns. We've received many calls requesting information on topics
such as the Timber Mart-South timber prices, and since the first quarter price
summary just arrived (see page 8) it is time for this issue to get in the mail.
Hopefully, you will find this more relevant because of the delay. We intend to
release the next few issues in shorter time to keep up with our quarterly schedule.
Thanks for the calls!
A five-year status report for the Forest Stewardship Program was released at the
end of 1994. Nationwide, slightly over 83,000 landowners have enrolled just over
10 million acres in the Programs. The northeastern and southern states account for
40% and 25% of these totals, respectively; and Florida has a little less than 10% of
the southern acres. The majority of cost-share payments have been for management
plan, reforestation, forest improvement and wildlife habitat practices. You, the
participants in this program, are providing the leadership for the expansion of
sustainable forestry on private lands, a concept that is being embraced worldwide
by everyone from the forest industry to environmental coalitions. Keep up the good
Chuck McKelvy Replaces Scott Sanders as Biologist
Scott Sanders, the former Stewardship Biologist Coordinator in Tallahassee, moved
late last year into a new position as the Florida Game and Fresh Water Fish
Commission's Assistant Bureau Chief of Wildlife Management. Scott worked with
many landowners in the development of their Stewardship Management Plans, and
on their behalf we wish him well in his new position.
Chuck McKelvy succeeded Scott as the statewide Stewardship Biologist
Coordinator. Chuck comes into this position with extensive experience in wildlife
management and private landowner assistance after working as a Resource
Biologist with the Commission in Lake City since 1980.
More Information about SIP
As reported in the last issue of the newsletter, forest fertilization is now eligible for
cost sharing as a site preparation treatment under Practice SIP2. Landowners can
use fertilization as one of their three site preparation treatments for which they
receive cost shares. Fertilization at the time of site preparation or planting can have
positive impacts on growth on many poorly drained or very poorly drained soils,
especially those classified as savannas or flatwoods soils. Your consultant or
county forester will help you determine if your soils fit into one of the responsive
Although fertilization in older (age 15 to 20 years) stands is not a cost-shared
practice, it can provide a very good return on your investment on many of Florida's
soils. Again, your county forester or consultant can help determine an appropriate
prescription for your particular soils.
Cost-share rates for reforestation practices (SIP2) have been reduced by 10% to
bring them approximately in line with the same practices under the FIP and ACP
programs. There are, however, important differences among these programs. FIP
and ACP are primarily reforestation programs, while SIP was designed to provide
landowners with a mechanism to also meet a variety of forest management
objectives. Since this involves input from additional resource professionals, the
approval process for a SIP application requires more time.
We expect that available cost shares for reforestation from all sources will become
more limited in the future. From a landowner's perspective it is helpful to realize
that the long (and short) term trends in increasing timber values can often justify
the cost of reforestation even when cost shares are not available. The Reforestation
Tax Credit can help landowners to write off their expenses. Landowners should
also consider reserving a portion of their timber sale revenue for reforestation
before allocating it elsewhere.
Finally, we goofed in the last issue of the Florida Forest Steward newsletter in the
statement on page 3 that landowners no longer need to sign a Forest Stewardship
Creed. That is still an important step in the inauguration of a Stewardship plan and
Endangered Species and Private Property Rights
This issue is at the forefront of many
discussions today, from corporate
boardrooms to policy formulation in
I, government offices to newspaper headlines.
We are likely to see some significant
developments in the next few years if recent
activities are indicators of the direction this
issue is taking.
For instance, an Appeals Court ruling last year in the "Sweet Home" case suggested
that the Endangered Species Act prohibition of "harm" to endangered species on
private land only applied to direct action against a listed animal or plant, and not to
habitat modification. The Supreme Court has agreed to include a review of that
ruling on its 1995 docket. If the ruling is upheld it will mean that habitat protection
on private lands can no longer be required, under existing endangered species
Both houses of Congress are considering legislation involving compensation if land
values are diminished by federal environmental laws as well as reform of the
Endangered Species Act. Along with other natural resource issues that are in
committee hearings or headed for the floor, this pending legislation could turn the
104th Congress into a truly historic session.
Well, it looks like we missed the April 15 deadline with this bit of news, but it may
still be useful for next year or an amended return. The Internal Revenue Service
ruled last year (Revenue Ruling 94-27) that at least a portion of SIP cost-share
payments (for all nine SIP practices) could be excluded from gross income at your
discretion, as has been previously allowed with FIP and ACP cost shares for
reforestation. Even if the payments are excluded, they must be reported to the IRS
as excludable under Section 126 of the Internal Revenue Code. The mathematics of
calculating the excludable amount are complicated; however, if you harvested
timber within the past three years, all of the cost-share payments received can
generally be excluded.
Perhaps the most interesting aspect of the new ruling was the provision that
excludability be retroactive to the start of the program. So, if you received cost
shares in previous years, and counted them as ordinary income, you can file
amended returns to recover that exclusion.
While we are on the subject of taxes, a soon-to-be-released stewardship publication
(Income Taxes & Private Forest Landowners) describes important recordkeeping
concerns for landowners. Keeping good documentation of income and expenses
can be a relatively painless task, once organized, but it will be invaluable if that day
of reckoning (the IRS Audit) ever arrives. A simple accounting system (on a pad of
paper, in an accountants book or in a computer) should include separate accounts
for capital expenditures, capital income, ordinary income and normal expenses.
Capital expenditure accounts are subdivided into subaccounts for land, timber and
equipment; depending on the asset in the subaccount, the basis (or costs) may be
deducted for tax purposes as depreciation, amortization, or not until the asset is
actually sold. Capital income primarily consists of the capital gains or losses
incurred from the sale of timber, while ordinary income includes revenue from
other forest products such as fuelwood, logs that you cut yourself, pine straw,
hunting leases or Christmas trees less than 6 years old. Normal expenses,
deductible in the year you incur them, include property taxes, most prescribed
burning, consultant and management fees, interest payments, and so on.
Along with developing a good system for recordkeeping, it is important that
landowners understand their IRS classification relative to their use of the land.
Differences between personal use, investment or business can have major impacts
on tax deductions and treatment of timber sale revenue. If these are matters of
concern to you be sure to request a copy of the new publication when it reaches
County Forester or Extension offices this summer.
One last item related to taxes. The U.S. Forest Service recently released the
publication Estate Planning for Forest Landowners; What will Become of Your
Timberland? This new handbook (General Technical Report SO-197) provides
guidance in applying estate planning techniques to their forests, and it discusses the
Federal estate and gift tax laws that affect timber owners. Single free copies of the
186-page book are available from the Forest Service Information Center, Suite 850,
1720 Peachtree Road NW, Atlanta, GA 30309-2417.
The potential value for increasing returns in the future from hardwood management
were mentioned in the previous newsletter. Although the length of the trend is short
term, at best, a comparison of the stumpage values in the last issue and those on the
last page of this issue indicate definite increases in hardwood values. We will
address a number of concepts important to hardwood management in future issues.
One of the easiest ways to manage for
hardwoods may be to accept the mixed
pine-hardwood stands that naturally occur, even when trying to manage for pure
pines. Many hardwood species are prolific seed producers and sprout readily from
stumps when cut. In the process of ecological succession, they would gradually
replace pine trees if given enough time without major interventions such as high-
intensity fires. Thus, their occurrence in forest stands may be viewed as one
component of ecologically-based management. Rather than trying to control, or
eliminate, them from all comers of pine plantations, they could be retained in
portions or comers of the stands where the cost of trying to remove them may be
more than offset by their increasing value. Retention of such hammocks or
hardwood pockets would also add to the diversity of wildlife habitats and food
sources on your property.
If you are seriously concerned about opportunities for managing your hardwoods
you may be interested in Southern Hardwood Management, a new publication from
the Cooperative Extension Services and U.S. Forest Service (Management Bulletin
R8-MB 67). Single free copies are available from the Forest Service Information
Center listed in the Tax Updates section of this newsletter. A limited number of
copies are also available at our Extension office at U.F. (904-846-0849).
Continuing Education Opportunities
The University of Florida and Florida Society of American Foresters will sponsor
the annual Spring Symposium May 17-18 with the theme Ecosystems of Florida,
Conserving and Managing for the Future. The Symposium will be held at the
University Centre Hotel, Gainesville, and you can call the Office of Conferences
(904-392-5930) for registration information.
The Florida Forestry Association (904-222-5646) has taken the lead in coordinating
a variety of technology transfer and continuing education opportunities for
landowners and natural resource professionals. Participating organizations include
the Florida Division of Forestry, private industry, forestry consultants, Lake City
Community College and the University of Florida.
Scheduled workshops and shortcourses for the rest of 1995 include:
4 Timber and Timberland
May 23, Lake City
4 Forest Management on
Sept 21, Austin Cary
4 Herbicides in Forestry
Sept 26, FAMU, Quincy
4 Herbicides in Forestry
Sept 28, Putnam County
4 Timber Cruising
Oct 5, Austin Cary Forest,
Future topics will include Environmental Regulations, Advanced Negotiating
Skills, Estate Planning for Forest Landowners and Endangered Species. As times
and locations are finalized for each workshop they will be announced in future
Effects of "Global Warming" on Trees
Diverse opinions abound on the potential effects on
humans and plants of global warming and increased
levels of atmospheric carbon (from smoke, for
Globe example). A study initiated several years ago in loblolly
pine plantations in the Georgia Piedmont is shedding
some interesting light on this topic. To simulate global
warming conditions, large chambers were built around
branches on 22-year-old trees and used to maintain
higher carbon dioxide and temperature levels than
Although the study will run for many more years, third year results are already
showing some significant effects of the elevated carbon and temperature. It appears
that loblolly pine is well adapted to elevated carbon conditions and is likely to
increase growth rates if atmospheric carbon increases. If loblolly pine is a good
indicator for other species, many of our southern forests may actually experience
increased growth rates in a slightly changed global climate.
"Florida's Forests Grow"
That is the title of a colorful new brochure just published by the Florida Division of
Forestry and Florida Forestry Association. It's filled with fascinating information
on forests in the state. For example:
Forests cover nearly 48% of Florida's total land area, and
Non-industrial private landowners own slightly less than half of that
The forest products industry injects $1.25 billion into local communities in
It is the 6th largest manufacturing employer
Over 5370 miles of trails provide outdoor recreation fun
The paper industry is targeting a 50% paper recovery goal through recycling
by the year 2000
A healthy one-acre forest could produce annually 2700 copies of an average
daily newspaper, 940 one-pound books, and enough oxygen for 18 people
Wood is used to manufacture over 5000 different consumer products
Over 5 billion trees have been planted in the state since 1928.
CRP Plantations -- Whatcha Goin' To Do?
The Conservation Reserve Program (CRP) began in 1986 with the purpose of
placing perennial crops on highly erodible agricultural lands to reduce soil erosion
and improve water quality. Nationwide, over 2.4 million acres of forest plantations
have been established since then using CRP cost sharing, with landowners
receiving rental payments over 10 years. The first of these contracts are now
expiring and many more will expire in the next few years. Although contracts that
expire during Calendar Year 1995 can receive a one-year extension upon request,
future extensions are uncertain. Landowners with CRP plantations can choose
among a number of alternatives for future management of their land.
Four of the more likely alternatives to consider include: growing the trees to
financial maturity (around 25 to 30 years); selling or leasing the timber rights while
maintaining land ownership; clear-cutting trees at CRP expiration and leaving the
land idle; or returning to annual crop production. A recent University of Georgia
evaluation of these options indicated that landowners will earn higher returns from
retaining pine plantations than they would by converting these lands back to row
crops such as soybeans or corn.
Substantial increases in tree size and value occur between ages 10 and 20 as trees
grow into merchantable size and higher value products. Landowners can receive
substantially more total revenue by waiting until age 15 or older to thin a portion of
these stands and harvesting the rest later. Before thinning, immediate returns can be
realized from harvesting pine straw, although we do not recommend this treatment
more than 1 or 2 times on these soils, nor on erodible slopes. Fertilization
treatments around the same time could also stimulate extra growth on the
remaining trees (depending on the previous cropping history of the soils), with
potentially sizeable gains in revenue when the rest of the stand is finally harvested.
Non-monetary benefits from maintaining the plantations will include reduced soil
erosion losses, improved water quality, enhanced fish and wildlife habitat, reduced
stream sediment and reduced production of surplus agricultural commodities.
Considering the financial as well as non-monetary benefits, it is reasonable to
conclude that maintaining the plantations until they reach commercial timber size
will generally make more sense (and cents) than converting them when the CRP
contracts expire and they are just reaching that financially important part of their
growth curves. Landowners who enrolled in the Soil Bank Program during the
1950's also followed this logic; approximately 80 percent of the Soil Bank
plantations were retained until maturity.
Timber Mart-South Summary
Average timber prices in Florida are summarized quarterly by Timber Marts, Inc in
North Carolina based on their surveys of many different timber purchasers and
sellers. The information in the following table was extracted from their first quarter
(1995) report that was released in early April. Because of the large number of
information sources for these averages, the average prices may be very useful for
observing trends over time, but may not necessarily reflect current conditions at
any particular location. Regarding trends, prices in almost all timber sizes are up
substantially since the first half of 1994. Some of the increase is due to lower
lumber supplies from other sections of the country, especially the northwest, and
some resulted from very high demands for pulp and paper on world markets.
Prices also vary depending on size of the sale tract and timber on it, distance to
mills, and other market conditions. For example, the time necessary to move
logging equipment to and from a particular site must be considered as part of the
harvesting cost, and the proportion of the total cost that accrues to moving
equipment is higher for small tracts than large ones. Similarly, hauling costs are
directly proportional to distance to the mill, so that trucking to a mill 50 miles away
will cost twice that for a one-way distance of 25 miles. If you are considering a
timber sale, you would be wise to let a consulting forester help you obtain best
current prices for your timber.
We added a column for average price per ton of wood in order to value all products
on a common unit and to help you compare the relative values of different products
and tree sizes.
The dark band in the pnhandle
'ignifri" an area where p iOc's
are somewhere bclweein hiomse ol
Region 1 and Region 2 while the
dark region in SouLh Florida
Icapivllsun aen arcl wher price
Icptills arew scare Lo nonexislcnt.
Stumpage Prices, 1995, 1st Quarter
(from Timber Mart-South)
Avera e Price
$ 39 $ 34-44
$ 43 $ 42-44
$ 63 $ 59-67
$ 64 $ 58-70
Average $ 64
Northeast(l) $256 $238-273
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S J, UNIVERSITY OF
Cooperative Extension Service
Institute of Food and Agricultural Sciences
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