The World's Most Profitable Timber-growing Region
The crosshatched area below shows the natural range of loblolly pine, Pinus taeda, less
portions with these faults for our purposes:
- Widespread low site index (SI-25 below 65) because of topography,
- Short growing season and high danger of ice damage because of location,
- Less rainfall during growing season, and
- Few markets for pine timber.
For 100 years this region supplied large crops of pine timber with little management by man because
loblolly pine is an inherently productive species. It reproduces itself naturally very well, outgrows
most pine and hardwood species, and produces heavy crops of trees with high quality for many uses.
But what has now turned the region into a world beater was loblolly's response to the research efforts
of hundreds of scientists over the past 40 years. They learned techniques of genetic improvement,
seedling morphology, site preparation, chemical cultivation, and growth prediction that have led to growth
increases of 100% or more. Utilizing these techniques made loblolly pine tracts into superb investments
with annual compound returns of 10% to 16% from visible, physical growth of trees without increases in
unit prices.
But since the big pluses came from human research findings, they can be produced only by human
applications of them. In other words, landowners must cultivate their gardens; big profits don't spring
up by magic. The first step must always be to learn how productive the soil is. In spite of loblolly's
many natural advantages and the pluses added by research, it can't produce an adequate return from a
SI-25 below 65. The owner of such a tract will probably earn more by selling it and putting the money in
stocks or bonds.
If that is the case with your tract, don't delay. When the stock market was setting records every
week and Enron was headed for $85 per share, those investors were feeling rich as double-X cream and
scrambling for small forests easily accessible from cities. Now that Enron has sold for $0.26, the
timberland market among affluent weekenders will surely shrink. Your value won't drop to $0.26 per
acre, but you may have missed the chance to get out of it because of a bubble in another market.
If productivity is OK, but a good stand of young pines is overtopped by a stand of low-quality hardwood,
you must get rid of the hardwood. Delaying action will only make things worse.
Whether you already own timberland or are looking for an investment in it, you should follow Peter
Drucker's advice: DISINTEGRATE. If you want to own timberland because you like hunting, birdwatching, or
walking in lovely woods,you can be happy to own stream bottoms, pipeline rights of way, or pastures. But
if your goal is ROI, you must get your money out of them and into parcels that are 100% productive of super
pine trees.
Although the crosshatched area contains millions of world-class investments, it's not a solid mat of
them. You must look hard to find an 80-acre tract without at least one or two idle or low-quality acres.
Keep looking; your objective is making money, not growing trees. If you can't find one to buy, try long-term
leases; the fields and pastures of small farmers who cannot now make money farming them are very productive
for trees. Our computer records can help you find one.
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