As you all are fully aware, our national econ-omy is in turmoil. No business sectors have been left unaffected, including the forest products industry. Housing starts are a key component to a robust timber economy, as is the ability for people to obtain loans for home purchase and remodeling projects. With domestic housing starts down a whop-ping 33% as of December 2008, and US Ex-ports of North American Hardwood Lumber down an average of nearly 17% for all spe-cies (as compared with 2007 exports), it stands to reason that our timber prices have fallen, in some cases rather dramatically.

Coffee shops and backyard barbeques buzz with the idea that timber prices “have tanked”. While this is true for the most part, there remain some opportunities available to the savvy landowners who choose to contin-ue to invest in their forest’s long-term future. More on that in a moment.

As for current timber prices, there can be no doubt that the species that has taken the hardest hit is black cherry. The once reigning “king of cash-flow” is now on-par with hard maple in most regions. The Allegheny Plat-eau, which is home to the best of the best cherry, has seen the price drop from more than $2,000/mbf to $500-$700/mbf as of February 2009. Wow! This has had a crip-pling effect on the sawmill industry. Other species have seen their prices tumble as well, but none so hard as cherry.

For the timber companies that buy your tim-ber and the sawmills that produce the lum-ber, this downturn in the market has been harsh. Timber was purchased at the former higher prices on short-term contracts, leaving the sawmills with no hope of recovering their investment even at break-even status. The result is that some mills have closed com-pletely, others are working at 20% of capaci-

ty, while still others are turning the lights on just long enough to keep their current cus-tomer base. All in all, not a pretty picture for the future.

From despair comes unforeseen opportunity. While the key species of cherry, hard maple, soft maple and red oak are difficult to move in the current market, white ash has found some favor. This has been good news since the Fall of 2008 through now as the threat of the Emerald Ash Borer (EAB) continues to loom large in our operating area. Landown-ers have been taking to the woods to recover some of their ash value in advance of poten-tial quarantine zone establishment if EAB is found. Some companies are paying as much as $600/truckload delivered. After backing out the cut/skid/haul costs, and leaving some profit for the timber producer, land-owners are being paid between $150-$300/mbf on the stump. Not bad for ash. While you may not be considering entering your woods now, it can be a wise decision to move this species in this market in advance of EAB.

Despite these current conditions, landowners continue to sell timber and we continue to bid it with favorable results. While the mar-kets are somewhat depressed, we are seeing a high volume of bidders on each sale, which only bodes well for the seller. Our stumpage price graph is found below this article to give you some insight into the changing mar-ketplace.

The other markets that have emerged in this difficult time are for sawdust, chips and poles. Pellet manufacturers have had greater difficulty getting the product they need, as have the OSB (oriented strand board) plants. With the previous high cost of heating fuel, propane, and natural gas, firewood has been in high demand also. Given this situation,

and given that many loggers are looking for any way to make money and stay in business, and given that the surviving sawmills are trying to keep their best logging crews, op-portunities to do timber stand improvement thinning (TSI) and harvests of low-grade material prevail. TSI provides a much need-ed thinning, reducing the stand density by removing the poorest growing stock. This leaves the best stand structure, composed of trees with the best form and quality to grow for the future.

Traditionally, TSI is a cost to a landowner. In this instance, however, little or no money is exchanged. The cost of cutting and/or removing the material is equal to or greater than the value of the material being cut. But loggers are happy for the work right now and the money they receive from the end-user basically pays their wages or less. We cannot afford to lose the loggers we have left in this industry, and there is great benefit to your woodlot to do some TSI or a low-grade har-vest. While you may not make any money from the initial TSI, you will not pay to have it done either. So, consider doing some TSI or a “wood-job” in your forest to provide for your family’s future knowing that you are providing employment in this difficult time to folks in the logging industry.

In general though, this is a good time to watch your investment grow. If you need to sell timber, seek the advice and counsel of one of our foresters. This is a time to be creative in order to capture the best markets available. Knowing which species are in fa-vor in the market is our strength. Take ad-vantage of savings, income and investment opportunities. Reinvest in your woodlot now for greater returns in the future. Call us for a free consultation.

In legal circles, real property is often referred to as a “bundle of sticks”, where each stick represents a value, use, or right for that property. Timber is perhaps the most nota-ble “stick” in the bundle for forestland; it has defined the value of forests for as long as the world has demanded wood products. How-ever, to maintain forestland ownership under the economic pressures of today, we have to pursue as many ways as possible to reduce cost, enhance the value of our forest, and/or maximize value from it. This is especially true when timber markets are less than ideal. There are a lot of “sticks” in your forest, besides the ones lying on the ground.

SAVINGS OPPORTUNITIES

Current use and tax abatement programs are designed by State Government to reduce your property tax burden in exchange for maintaining or enhancing the benefits that your forest offers us all. In New York this program is called Real Property Tax Law 480a; in Pennsylvania it is referred to as the

Clean and Green Act; in West Virginia it is called the Managed Timberland Program. Reducing the cost of property ownership allows you the opportunity to invest in some of the other “sticks” on your property.

The Environmental Quality Incentives Program (EQIP) is a federal cost share program administered by the Natural Re-sources Conservation Service (NRCS). EQIP offers financial and technical assis-tance to private landowners for management planning, timber stand improvement, habitat management, etc. Through this program, society is able to help you invest in some of your “sticks” adding value to your property.

The Wildlife Habitat Incentives Program (WHIP) is another federal cost share pro-gram administered by the NRCS. WHIP offers financial and technical assistance to private landowners for fish and wildlife habi-tat restoration and development, invasive species control, etc. This is another “stick” that society can help you increase the value

of your property with.

INVESTMENT OPPORTUNITIES

Forest inventory and management plan-ning is a positive step towards the steward-ship of an important asset, and defines the difference between merely cutting trees and thoughtfully managing forest resources – it is the backbone of sustainability. An invest-ment of this kind in your timber “stick” aids in estate planning, wealth transfer and guid-ance to heirs, income tax planning, adds val-ue to your property, and provides access to government programs, forest certification, carbon credit sales, and other opportunities. (See also the sub line on wealth transfer in this issue of the Woodland News or go to the FORECON website for more infor-mation)

(continued on page 2)

By Brian S. Bullard, Certified Forester ®, Falconer Office

By Craig Vollmer , Certified Forester ®, Falconer Office

Recently, FORECON EcoMarket Solutions (EMS),

LLC. launched its’ Pooled Private Landowner Forest

Carbon Project, which provides access to the CCX car-

bon market for qualified private landowners. A compre-

hensive property level forest inventory and sustainable

certification (i.e. Tree Farm Program) is required in

order to qualify for the program. Revenue streams for

forest landowners are expected to yield per acre values

similar to that of a hunting lease ($3 to $10+ per acre).

This new income stream adds significant value, especial-

ly considering the current state of the timber market

and increased land taxation. If you’re interested in learn-

ing more about the FORECON EMS Pooled Private

Landowner Forest Carbon Project, including qualifica-

tion requirements, benefits, and risks, download the

FORECON EMS enrollment/information package at

www.foreconecomarketsolutionsllc.com.

Are you planning for an orderly transfer of your timberland ownership to your children?

If so, we have Certified General Real Estate Apprais-ers on staff that specialize in timberland valuation techniques to assist in personal financial planning. In addition to fee ownerships, our past assignments have included fractional interests, conservation easements, natural gas, coal, recreation rights and most recently carbon. We have worked with a number of attorneys throughout our region to assist in estate planning and property transfer techniques to potentially reduce estate taxes and to provide for an orderly transfer of properties to your next generation. Finally, we have experience in working with subsequent generations, estates, trusts, trustees, and beneficiaries in the admin-istration of these properties. Give us a call!

By Chuck Alexander, CPA,CGREA

By Jon Pomp, EcoMarket Analyst

Lori Brockelbank is FORECON’s Urban Forester and a Certified Arborist. In recognition of her dedica-tion to her profession, she has been honored with two organizational appointments at both the state and national level. She was recently elected to the board of the New York State Urban and Community Forestry Council; the organization that assists the NYS Dept. of Environmental Conservation in executing its urban forestry policies. She was also appointed the NYS liaison of the Society of Municipal Arborists, an or-ganization within the International Society of Arbor-ists dedicated to building competence in the profes-sionals that manage community forests.

Matt Smith is the Director of Forecon’s EcoMarket Solutions, LLC division, which provides a range of carbon, water and conservation-related asset manage-ment services to landowners. This department special-izes in forest carbon offset project consulting and aggregation both domestically and internationally. Matt was recently honored by the New York State Society of American Foresters (NYSAF) and was giv-en the NYSAF Environmental Education award for his efforts at the Local, State, and National level for his untiring efforts in speaking on forest carbon offset project development to diverse audiences nationwide.

Please join us in congratulating Lori and Matt on their accomplishments!

By Brian S. Bullard, Broker/Realtor®

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Forest certification through the American Tree Farm System ® is an opportunity to be recognized through third party verification for practicing sustainable forestry on your property - and it’s free to enroll! The standards set by this program have been internationally endorsed, recognizing Tree Farms as sources of certified sustainably managed wood products. Enrollment offers many benefits, most notable of which is access to the worldwide demand for certified wood and that it meets the requirements for carbon trading. This is another way to emphasize the value of a couple of your “sticks” and add value to your property as a whole. For more information about Tree Farm, go to the services page on the FORECON website.

Timber stand improvement (TSI) thinning focuses on the removal of unhealthy or undesirable trees; it is an important first step towards enhancing the long-term value of your timber. With the increasing demand for firewood, it may be possible to sell these trees or get the work done in exchange for the trees. This is a great low cost way to increase timber and property value, while improving long-term growth rates, timber quality, and forest health - a worthwhile low risk investment in your timber “stick”.

INCOME OPPORTUNITIES

Carbon credit trading was probably never on the original “bundle of sticks” list, but is an exciting new opportunity for some landown-ers. As manufacturing companies and other organizations seek to offset the emissions generated by their business, they are willing to pay landowners to store carbon in their trees if they will guarantee sustainable forest management. For most properties it can generate enough income to cover a fair portion of your property taxes. Who knew a molecule would ever be considered a “stick” with value. (See also the sub line on selling carbon in this issue of the Woodland News or go to the FORECON EcoMarket Solutions website for more information).

Selling oil, gas, minerals, or wind is not a new concept, but has become more widespread as America turns to more domestic alter-

native sources of energy. If you own the right property, these “sticks” have become more valuable than ever before. These trans-actions can be complex, however, and taking the right approach to protect you and your other “sticks” is critical. The income generated and the value added to your property could be substantial.

A recreational lease can generate income for your property. Good quality hunting ground is in high demand. Entering into a recrea-tional lease is not only an income opportunity, but also provides some additional security, may help keep your boundaries maintained, help control the deer herd, and adds value to your property. In most cases, leasing this “stick” will more than cover your property taxes. (See also the sub line on recreational leases in this issue of the Woodland News).

The Wetlands Reserve Program (WRP) is also a federal program with the NRCS. The objective of WRP is to protect and enhance wetland function on private land through the purchase of easements and/or restoration cost share. The “sticks” addressed by this pro-gram can produce income for you and/or add value to your property for providing an important service to society.

A conservation easement is the sale or transfer of one or more of the “sticks” in your bundle. In the right location, some properties with special ecological features are in high demand by conservation organizations. Conversion or fragmentation resulting from develop-ment is one of the biggest threats to ecosystem values; these organi-zations look for opportunities to reduce that threat by acquiring the development rights to property. Selling or donating this “stick” may generate some revenue and/or help reduce property or income tax.

The forestry and natural resource professionals at FORECON, Inc. are ideally positioned to help you take advantage of any these opportunities. Feel free to go to our website or contact an office in your area for more information.

On February 26, 2009, Timberland Realty officially became a Partici-pating broker with Cabela’s Trophy Properties, LLC. Cabela’s, one of the most trusted names by sportsmen since 1961, offers some of the finest sporting properties for sale in the country through quali-fied independent real estate brokers. Timberland Realty has been recognized by Cabela’s as providing high quality recreational and timberland properties sales services to our Sellers and Buyers alike, since 1989. We are pleased to be able to offer you the opportunity to use the Cabela’s name in marketing your property through Tim-berland Realty. This will provide our current and future Sellers and Buyers with the best possible service and exposure, bringing a na-

tional market to their doorstep. Call us at 716-664-5602 ext.303, or visit our website at www.timberlandrealty.net and click on the “Cabela’s Trophy Properties” tab.

By Brian S. Bullard, Broker/Realtor®

New York

Falconer (716) 664-5602

Cortland (607) 753-3113

Hancock (607) 637-4466

Pennsylvania

Smethport (814) 887-8731

Titusville (814) 827-4254

West Virginia

Elkins (304) 636-9336

Oak Hill (304) 469-6950

In 2008, the Arbor Day Foundation initiated a new ac-creditation for college campuses nationally known as “Tree Campus USA”. The University of Nebraska was one of the first campuses to receive the “Tree Campus USA” designation, and there have only been a few other colleges that have acquired that designation as of Janu-ary 2009. FORECON, Inc. is currently working with several colleges, helping them to obtain this prestigious accreditation. Does your alma mater have this designa-tion? If not, let them know about the Tree Campus USA program, as it would certainly benefit them and the community they reside in. If you happen to work for a college or university that may be interested in this program or know of one that might have an interest, please contact our Urban and Community Forest De-partment at (716) 664-5602, ext. 305.

By Lori Brockelbank,

Certified Arborist ®

Hunting Leases Available

Do you desire your own private hunting property, or wish to generate some extra income from your land? We can help. We now offer services that can assist you in finding land to lease or, assist in leasing your land. When leasing a property you can expect exclusive hunt-ing, fishing, and recreational rights to a property. If you have land to lease you can receive peace of mind know-ing who is on your land, generate income and reduce crop damage. Contact us or refer to our website soon for land lease listings, and find out how we can provide you with those services.

By Jay Lindemuth, Hunting Lease Coordinator

Forest Technician