VARDAMAN VIRTUAL FORESTRY COMPANY

The Most Direct Link to Knowledge Workers in the Southeast Forest Economy

David Williams lives a long way from the piney woods of the South, but his decisions about what to do with them are as good as anybody's. What they have produced is worth thinking about.

Not happy with his returns up to that point, he conducted a clearcut sale of his timber in Pike County, Mississippi in mid-1993, and logging was completed about a year later. Our records show that he then studied several options about how to handle the tract: 1) leaving it as is, 2) re-generating with government cost-shares, and 3) entering an agreement with Vardaman Pine Plantation Partners (VPPP), PPMC's predecessor organization.

Although we do not know exactly, we think that, on the these options, his thought processes were as follows:

"1) Because of its appearance, the land isn't very attractive to buyers now, and since I think that land prices will steadily rise, I don't want to sell it anyhow. On the other hand, it does have a value and will probably produce very little unless I put some trees back on it.

"2) The government cost-share will help, but I'll still have to invest much of the cost. Furthermore, I'm 750 miles from the tract, can't supervise this government operation, and have no one to hold responsible if something goes wrong. I'll also get no income for at least 12 years.

"3) VPPP will regenerate the tract at its expense, so I'll save a big cash outlay at the start. It will bear any loss from plantation failure. I'd like a much bigger annual payment than the $7 per acre it offers, but at least I'll have some income, and I can always buy back VPPP's interest if a really good deal comes along. I'll go with VPPP and see what happens."

So what happened? VPPP planted the trees in January 1995 and sent him the annual payments and written and videotape reports in late 1995 and 1996. During this time the little trees were growing, the time before the first thinning was getting shorter, timber prices were rising somewhat, and Jim Vardaman was trying to raise money from institutions. When he succeeded, PPMC offered to buy the contract from VPPP and to pay Mr. Williams $21 per acre annually beginning in December 1997. He accepted the new offer.

Now nearly three years later, he hasn't invested a penny in his land, his annual cash income is 200% higher, the attractiveness of the tract to possible purchasers is improving every year, and he can buy out PPMC at any moment. Is your record as good as his?