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Thoughts on Entering into a Timber Contract

This week we are going to continue our discussion about timber harvest. During the 4-session Forestry Management Workshop Series hosted by Purdue Extension and the Putnam County Soil & Water Conservation District in April, Extension Educators, industry representatives, and woodlot owners provided some suggestions on what should be in a timber sale contract.

Three big items that should be included in a timber sale contract include the length of the contract, number of trees being harvested, and payment information. In terms of length of contract, oftentimes, contracts are for 2 years. This allows the company cutting the trees time to harvest everything when the weather is conducive (i.e. not raining or snowing and likely to cause extra erosion issues). As the seller, if you do not want the timber to be harvested during hunting seasons, then the contract length is usually increased to 2 ½ years.

In terms of number of trees, the contract should state how many trees of each species and the estimated board feet being harvested. A board foot is a unit of volume equivalent to a board that is one inch thick, one foot wide, and one foot long. It is the common measurement use in timber harvests. When you are setting up the contract, as the seller, you have the right to say you do not want to harvest any trees under a certain size.

Payment information would include all terms of payment such as when the seller will receive the income, will it be split between two installments, how much they will receive, etc. 

As you review timber contracts, you may notice that some include a list of BMPs or Best Management Practices. These are practices that are listed in the contract that the individual doing the harvest would need to follow. They can be related to building access roads, having log landings, skid trails, how stream crossings are utilized, how the property is left once the timber harvest is over, and others. Including a list of BMPs that will be followed is good to help protect the overall health of the forest, but may not be found in all contracts. Additionally, it is important to note that as a seller, if you include a large list of restrictions or requirements for the timber buyer to follow, it may lower the price you receive.

Once you enter into a timber contract, it is a good idea to have the contract recorded. By recording the contact, you are essentially protecting both parties in the event something would occur. Ultimately, this is a good business practice to follow whenever entering into any contract.

As was mentioned in the last article, having a timber sale is not something everyone wants to do. However, we hope that anyone interested in having a timber sale does find this article useful.  If you would like to know more timber sales, please visit Purdue Extension publication Marketing Timber or the Indiana DNR publication Indiana logging & Forestry Best Management Practices.

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