Is there money in trees?

 A little questioning usually reveals the location of the woodlot wasn’t great and the terrain was challenging. Despite this, the result becomes embedded in the local community, and like the feedback on restaurants, the bad experiences travel furthest.

But I have also heard of cases where the sale of a woodlot turned the annual loss to a profit, or saved the family farm. These stories tend to be kept close because of pride and reputation.

Why do such very different experiences occur? Like all land use options there is considerable variation in the skill of the practitioner. A lot of woodlots have been harvested in recent years and many more are near maturity. A look at past woodlot sale data helps us understand how much of this is true and what’s going on where these very different experiences are reported.

I am fortunate to have access to sale records from forest consultants and companies arranging woodlot harvesting and marketing of logs. The information is anonymous and only the basic information on woodlot age, volumes and revenues is available. Not all woodlots are the same; they can vary by species, breed, age, stocking, pruning, productivity and access.

The following data from 84 woodlot sales is for a region in the North Island. Average net return to the grower was $20,300/ha, but ranged from $2500 to $72,500/ha. The average total payment for the woodlot was $275,000, ranging from $15,000 to $1.6m (see figure).

Clearly, there are woodlot owners that have made very little from their investment while others must be very happy.  If we look at the range of returns recorded, about 20% of the woodlots made 10,000/ha or less, but about 32% made $30,000/ha or more.

Trees need tending (pruning and thinning) and get better with age. However, the major factors that affect woodlot profit are the costs of harvesting, roading and transport.  Wood is very wet - water is 50% of the weight - and heavy to move around. The best location is where the harvesting and transport are easy and costs are low. Sometimes, if you take a long term view it is worth planting less accessible land. For example, a steep gully at the back of the farm will not make much profit, but if the block is large enough, it may pay for the roading required for trucks. This may facilitate the harvesting of the second crop or give better access to the back of the farm. 

So, how did one grower make more than $75,000/ha? This woodlot had a good yield at 800t/ha, was pruned, had a short distance to market, with low cost roading and ground-based harvesting.  Next time you pass a mature woodlot near a major highway, consider the value of the crop. At maturity it’s probably worth more than $40,000 a hectare. What I see is a lot of money standing there, especially when I multiply it by the woodlot size.

• The opinions expressed in this article are from the author only and are not official Scion statements. Graham West is a Principal Technologist at Scion, the Crown Research Institute dedicated to forestry, wood product, biomaterial and bioenergy development.