VARDAMAN VIRTUAL FORESTRY COMPANY

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

A VETERAN TIMBERBUYER DESCRIBES HIS WORK

John Smith (not his real name) represents a well-known, big timber company in a 13-county district in southeastern United States where JMV&CO has operated for nearly 50 years. Once a JMV&CO employee, he's been at it for decades, and a manager for his company says that he lives and breathes timber procurement. His work is one of the most important forestry jobs in the Southeast, and since our main business is selling timber for private landowners, we felt lucky in getting him to tell us what he is looking for. Here's what we learned:

JMV: How do you learn that a tract of timber or land is for sale?

SMITH: From many sources: landowners, wood suppliers, invitations from consulting foresters, clients of our Landowner Assistance Program, and occasionally a state forester.

JMV: We sometimes mail you an invitation to bid on a tract that seems ideal for you, but you don't bid, and then again your bid on other tracts surprises us.

SMITH: Types and amounts of wood our mills use change all the time in response to demand for what we manufacture.  I communicate regularly with our manufacturing and sales people. No one outside this organization can stay current on changing needs of our mills. The information in your bid invitation tells me first whether I’m interested at all and, if so, how I will try to buy your client's timber. When I can use most of the tract for our needs, I usually bid on it myself. If I can use only part of it, I may make a firm commitment to a logger or a wood supplier who will purchase the tract and deliver my part to our mills.

JMV: When we get six or so bids, the high bid is often well above the next highest and perhaps two or three times that of the lowest. What causes such wide variation? How do you decide how much to bid?

SMITH: Two factors determine the amount of my bids: 1) the volume of timber that I believe is in the sale, and 2) the stumpage price that I can pay for each product such as poles, plylogs, sawtimber, chip-n-saw, pulpwood, or others. Until I cut down and measure each tree, I can only estimate the volume, and chances for error in estimates are very large. The problem is that, although the average volume per acre is large, the individual trees are distributed over the area in a very irregular fashion. If I measure only a sample of the area, but my sample is not representative of the whole, I can make a big mistake. My guess is that some of the unusual bids are the result of inadequate sampling.

Calculating the price I will bid is easier. Stumpage values reflect (1) the margin we can make by converting products to marketable goods like plywood, lumber, & pulp, (2) the resale margin on products we do not use, but other mills will buy from us, and (3) what we think our competitors will bid.

JMV: We always include a tally of trees by DBH classes, and we include total tree heights in pulpwood sales. Do these help you, and if so, how do you use them?

SMITH: Yes, this information is very helpful, and here’s why. Most timberbuyers would come up with the same volume you do or close to it if we measured each tree. But I can’t afford such an expensive investigation because I get only a chance to bid on the sale. I don’t keep an accurate count on how many sales I bid on and miss, but my success rate is surely no more than 20%.Your practice of furnishing a marked tree tally is especially welcome as this is a accurate count, not an estimate and therefore much easier and cheaper for me to check.

JMV: We also include a road map and a tract map with each sale. How helpful are these? Could we dispense with them?

SMITH: Don't dispense with your excellent maps.I usually recon several upcoming sales on a single field trip. Without a good map, I waste time trying to find the tract and often use up more time trying to obtain some kind of map from other sources.

JMV: How many days' notice do you need to make your appraisal and submit your bid?

SMITH: 20-30 days. Maybe more during the winter, on very large acreages, or on tracts that are largely hardwood.

JMV: What other information would help you?

SMITH: Access arrangements you have made on tracts without direct road frontage, special expectations of your clients (don’t damage the designated trees around the house), and painted delineation of Streamside Managemant Zones.

JMV: If you have access to the Internet, we could send you a five- or six-page e-mail about each sale listed on www.se-timbersales.com, but then your in-box will fill up quickly. Under our present plan, we list each sale as we receive it, but send you an e-mail each Friday noon summarizing all tract names, states, and counties listed during the week. Which plan do you prefer, or can you suggest another?

SMITH: Your present plan is fine.

(We added the boldface emphasis above because we are proud of the results that we achieve, but also to urge the same procedure to other sellers who list tracts on www.se-timbersales.com)