VARDAMAN VIRTUAL FORESTRY COMPANY

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THINNING A PINE PLANTATION: WHY THE STEP IS CRITICAL AND HOW TO EXECUTE IT

We have often explained why the most important step in making money with pine plantations is correct application of all cultural techniques at the time of the establishment. If you don’t apply them properly to start with, you can’t reach your initial profit forecasts by later corrective actions. If the compound interest added to your timber capital is too small this year or added to the wrong kind of trees, you have lost it forever.

The next critical step is the thinning at about age 12–15. Even if your establishment was flawless, improper planning and careless woods work in thinning will eliminate your chances for future big profits. Although thinning produces only a small cash flow, it fixes the size of the future harvest. Therefore, we treat the planning and execution as very serious business. We hold our staff personally responsible for doing things right in the woods and penalize them financially for poor performance. Here are essential parts of the operation as illustrated by a 40.4-acre thinning for Pine Plantation Management Company, LLC (PPMC) early this year.

Investment Inventory

Twelve or more years ago not one owner of a plantation in a hundred (we were among the negligent) recorded every detail of the establishment, noted important changes later on, and can retrieve the record now. Nevertheless, you can’t even think about intelligent planning until you know such facts as approximate area, age, number of trees by one-inch DBH classes, total height of main trees, percentage of pulpwood-quality (crooked, cankered, forked below 33 feet, etc.), and hardwood component. For its initial evaluation of a tract, PPMC requires the measurement of these data on ten well-spaced 1/40-acre plots with heights of three dominants and two codominants on half of the plots. PPMC doesn’t consider this inventory an unnecessary expense; it’s in the serious business of making money growing trees, not fun and games.

Forked trees can have such an important effect on your profits that they are worth more discussion. Because of their DBHs, many trees in your final crop will be prime raw material for chipping-saw mills and sell for good prices when they meet the specs. Because of the manufacturing process, these mills want trees processed into 40-foot lengths, not in the 16-foot lengths many of us are familiar with. They cannot use forked trees at all.

Look at a forked pine tree. You will see that, just below the fork, the two leaders that caused it have grown together for at least several feet before they essentially became two separate trees. The longer it has been since the fork originated, the greater the length of this unusable portion of the bole. It is two feet at a minimum, usually four feet, and often six feet. Even when the tree is processed into pulpwood, this portion must be cut and left in the woods.

All plantations contain forked trees, and because of common natural events, e.g, heavy tip-moth infestations and damaging ice storms, 25-30% of the trees may be in this condition. If you want to make money growing trees, you must get rid of them and the rest of the junk as early as possible. As you will see in a nearby article, the price of pulpwood should be a minor factor in this operation.

Investment Analysis

If PPMC purchases the tract and proceeds directly to the thinning, it requires the measurement of 1/40-acre plots with centers on a square grid 330 feet apart, one plot for each 2.5 acres. The initial ten plots can be substituted for ten of these. It also requires a Global Positioning System (GPS) map of the planted area, excluding all areas not in the plantation.

PPMC then enters the stand data for an average acre in PTAEDA2V and runs a series of simulations to predict timber outputs under various rotation lengths, thinning intensities, and cultural treatments. By applying to them the timber-price results reported by JMV&CO and posted on www.vardaman.com, it calculates the real rate of return (RRR) for each scenario and chooses the one with the highest.

After studying PTAEDA2V outputs, it instructs its foresters which trees to mark for cutting. In a recent case these were as follows: "Go down each row and mark for cutting all pulpwood-quality trees and all other trees larger than 4.5" DBH but smaller than 7.2" DBH. Do not attempt to alter the spacing of the remaining stand." These clear, easy-to-follow instructions, based on solid science, eliminate the selection of trees by a marker who, although experienced, can never see a complete picture of the stand.

Before the trees were marked and solely from its original measured sample, PPMC used PTAEDA2V output to provide the per-acre data for the invitation to bid. By one-inch DBH classes, these included number of trees, average height, volume in cubic feet outside bark, and volume in cords. It also reported the exact area from the GPS survey. We believe that no other seller of pulpwood thinnings offers such detailed data.

Inspection of Cutting

PPMC requires periodic inspections of cutting operations to spot-check for cutting of unmarked trees and unnecessary damage to the remaining stand. When stumpage is paid in a lump-sum in advance, operations are complete when the buyer releases the tract or the time allowed for cutting expires. But if stumpage is to be paid by measurement as cut, as it sometimes is, PTAEDA2V plays another important role. When the pay-as-cut bid was accepted on the 40.4-acre sale, PPMC calculated that its receipts would be $12,573. When the final stumpage check arrived, the total was only $7,522. Jim Vardaman immediately inspected the tract on the ground and ordered the JMV&CO crew, under the supervision of Len McCombs, one of the five Members of PPMC, to measure and mark all trees that were involved or should have been involved in the thinning.

He made the following report:

"We marked and the logger cut and left on the ground 206 trees containing 9.3 cords.

We marked, but the logger failed to cut 77 trees containing 4.9 cords.

We failed to mark 341 trees smaller than 7.2" DBH containing 11.0 cords.

We failed to mark 875 pulpwood-quality trees containing 107.2 cords."

To compensate PPMC for the damage it suffered as a result of its poor performance, JMV&CO offered to withdraw its bill for services up to that point, to pay an additional $2,500 to bring PPMC’s receipts up to the predicted level, and to do all possible to remove the trees that should have been removed. Vardaman accepted the offer. This sad tale reveals how many things can go wrong in thinning.

Summary

Detailed analysis, careful planning, and first-rate execution in forest investments are expensive, but they are required to produce high RRRs. You should notice that PPMC now knows not only what it sold, but also the details of the stand remaining on its land. Reasonably-accurate annual evaluations without additional expense will thus be possible for quite a while. We believe that no one can do these jobs in a satisfactory manner without following similar procedures. After nearly 50 years of observing uninformed "thinning" cause large reductions in harvests, we are not willing to expose our clients to such dangers.