Tree Crops for Marginal Farmland White Pine

Publication Number 446-603, posted April, 1998

Authors: Russell L. Hatcher, Extension Assistant, University of Tennessee; Larry A. Johnson, Associate Professor, University of Tennessee; George M. Hopper, Associate Professor, University of Tennessee; James W. Pease, Assistant Professor, Virginia Tech; James E. Johnson, Associate Professor, Virginia Tech

Table of Contents

Introduction	Evaluating Alternative Tree Crops
How to Use This Guide	Cost Share Programs
Descriptions and Uses	Other Benefits
Production Managment	Appendix
Financial Analysis Production Costs Markets and Returns Evaluating Your Investment	References
Case Study

Introduction

Many producers would like to increase farm income and decrease income variability. This has caused a growing number of farmers to investigate new and diversified sources of income. A resource which has not been tapped to its full potential is marginal farmland, specifically its use for growing tree crops. There are over 30 million acres of woodland and idle pasture and cropland on Southeast farms. And much of this land could be producing valuable tree crops.

The Tree Crops for Marginal Farmland Project seeks to provide farmers with basic information about growing and marketing tree crops. Tree crops have many advantages for farmers with marginal or unused land. The cost of inputs is relatively low, economic returns may be quite competitive with alternatives, and there are important environmental benefits.

There are five introductory guides in this series, and each has an accompanying videotape. They provide information on a specific tree crop which can be grown on small or medium-sized tracts of marginal or unused farmland. All these crops are common to areas of the southeastern United States, but their economic potential should be investigated by farmers. The tree crops chosen for this series are:

• White Pine for Timber
• Black Walnut for Timber and Nuts
• Loblolly Pine for Timber
• Royal Paulownia for Timber
• White and Virginia Pine for Christmas Trees

Your decision to grow a tree crop should be made only after careful consideration of the growing time, expense requirements, market conditions, expected returns, and your personal objectives. These guides will help you make your decision. In addition, you should seek information from representatives or organizations such as your state Forestry Service, your local Cooperative Extension office,and private consultants.

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How to Use This Guide

To use this publication to its best advantage, read it straight through. Take special note of the cultural practices described and their estimated costs. Think about potential markets for the harvest. Read how to evaluate your potential investment, and think about the other benefits of tree crops. Next, read the case study, "What Happened to Wayne," to get a better idea of how these investments can be evaluated. To conduct a financial analysis of your own situation, carefully estimate all the production costs, then take your estimates to the local Extension agent or farm management agent for assistance.

Throughout this publication, photographs can be accessed through the underlined links in specific sections. These are provided on separate pages due to the large size of some of the photos.

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White Pine: Descriptions and Uses

White pine has played many roles in U.S. history. It was first used to make ship masts for England's mighty navy, and later was the most favored species of the fledgling lumber industry in this country. White pine accounted for more than half the nation's supply of lumber for over 200 years. It was a major species of the Civilian Conservation Corps (CCC) reforestation efforts during the Great Depression of the 1930's.

White pine was extensively used in construction when old-growth pine forests were abundant. Today, the use of white pine as construction lumber is rare. It is now chiefly a specialty wood used mostly in the furniture industry. Siding and decorative trim, cabinets, panelling, and other interior wood products are its more common uses. The ease of finishing and repairing makes white pine wood useful for furniture stock. The ability of white pine to adapt to a wide range of sites and its rapid growth rate make young trees desirable as Christmas trees or as ornamental landscape trees. The increasing use of white pine for pallets and pulp encourages harvesting of smaller, lower quality trees.

White pine has several characteristics that make it a good tree crop on marginal land, especially in the South. It requires a relatively small amount of labor and management; it is ideal for coarse, sandy soils; it has few natural enemies; and it is one of the fastest growing trees in the United States. Essentially, you can plant the trees, and after the plantation is established, watch them grow.

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Production Management

Site Selection

The southernmost limit of the white pine range is the Cumberland Plateau and Mountains and the Southern Appalachians. Diameter and height of white pine increase faster in the southern portion of this range than in any other area. Forested areas in Georgia, Kentucky, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia include about 35 million acres of white pine.

White pine is found between elevations of 1,000 and 4,000 feet but grows best in 2,000- to 3,000-foot elevations. For optimum growth, plantations should be located on north- or east-facing slopes or on stream terraces.

White pine is adaptable to many soil types. On coarse, sandy soils, white pine will out-produce all other trees. However, as the quality of soil increases, the competitiveness of white pine decreases because other trees grow faster than white pine on the better sites. Poorly drained soils are not suitable for white pine.

Site Preparation

Site preparation depends on the location of the site and existing vegetation. If competition from existing trees or other vegetation is minimal, site preparation may not be necessary. Otherwise, reduce competition with a combination of herbicide application, prescribed burning, or mechanical means such as mowing. Mowing allows easier planting of seedlings and decreases competition from other vegetation during the first few years.

Tree Planting

White pine plantations may be established by sowing seed or planting seedlings. Usually, the method of site preparation and the site itself determine the decision to use seeds or seedlings.

For relatively clean sites that are somewhat inaccessible, sowing seeds works well. Seedbed conditions have the greatest impact on survival. A moist, mineral soil is best, but survival is good in both disturbed and undisturbed ground cover. Avoid hot, dry sites that are bare of any ground cover.

It takes more time and effort to plant seedlings, but it is much easier to control the number of trees per acre by planting seedlings than by sowing seeds. On most sites, you should plant two- or three-year-old seedlings. They can be planted by machine, but most are planted by hand. Plant at approximately a 10-foot by 10-foot (435 trees per acre) or a 12-foot by 12-foot (302 trees per acre) spacing to produce the best board-foot yields for short rotations.

Plant between December and March. On sites prepared by a prescribed burn, freezing might be a problem and planting should be delayed until the first of February. Seedlings are sometimes uprooted by freezing and thawing on prepared land.

Contractors are usually available to perform the work necessary for plantation establishment. Contact your county forester or Extension agent for a list of these vendors.

Cultural Practices: Thinning and Pruning

White pine requires a relatively small amount of labor and management compared to other tree crops. It is also usually true that the higher the quality of your trees, the higher will be the price you'll receive. High-quality trees are often a direct result of proper management.

Improvement in stand quality is obtained by thinning at the appropriate time. If your trees were planted among older trees, the seedlings will grow quite well in their shade for a while. But after about four growing seasons, competition should be removed by chemical treatment. White pine is more shade-tolerant than other yellow pines and will grow well many years after the trees begin to compete with each other. Stands are often 20 to 30 years old before they must be thinned.

The decision of when to have a partial cut depends on the density of trees planted. If you initially planted fewer than 450 trees per acre, a rotation of 30 to 40 years with no thinning should produce the type logs most demanded by the furniture market. On the other hand, if the number of trees planted per acre exceeds 450 to 500 trees, an earlier thinning is often warranted. The decision to harvest is made easier if the trees to be removed can be sold as small logs, but trees from a young plantation are usually too small.

Pruning is another practice to improve the quality of your white pine stand. White pine self-prunes as it competes for space, but dead branches often persist for several years as short stubs. Artificial pruning of side branches eliminates this undesirable characteristic. If you prune, you should prune only trees that will remain until final harvest. Prune after the first thinning and to a height of 17 feet on trees no larger than 7 inches to help to ensure that pruning wounds are adequately covered by clear wood at final harvest.

Pest Control

Protecting white pines against insects and diseases in the northeastern United States requires intensive management. However, in the southern range this is not the case. With proper management and site selection, white pine can usually be grown with only limited pest management.

Like all trees, white pine has insect and disease enemies. The most important are the white pine weevil and root decline. Other threats are annosous root rot and white pine blister rust. Air pollution can also be a problem by opening the door to pest infestation. If you grow white pine, become familiar with white pine pests. Most problems can be avoided rather easily. Contact your county forester or Extension agent for more information.

Calendar of Silvicultural Practices

Common silvicultural practices for white pine and the approximate time to perform them are listed here. Not all the practices are necessary for every situation to establish and maintain a healthy stand of trees for every situation.

Calendar of Possible Silvicultural Practices for White Pine

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Financial Analysis

Production Costs

The cost of planting and managing white pine varies from site to site. Some landowners may have the necessary labor and equipment to perform most of the silvicultural practices. Others may find it necessary to contract the work.

Site Preparation

The site where the trees are to be planted usually requires preparation. Often, sites need mowing or chemical treatment. If custom-hired, mowing costs about $17 per acre. Figure about 30 to 45 minutes of labor per acre if you have a tractor and mower and can do this work yourself.

Tree Planting

Establishment cost is a combination of the cost of the seedlings and the cost of putting them in the ground. White pine seedlings cost, on average, about $50 to $60 per thousand trees, and contract planting costs about $37 per acre. Since seedlings are usually planted by hand, most of the cost is labor. The time required for hand-planting depends on the number of trees planted per acre and the terrain. If you plant the trees, figure on between 10 and 20 hours per acre. You will need to purchase a dibble, spade, auger, or other suitable tool.

If drought or other adverse conditions occur, 25 percent of the seedlings may die. This means additional planting costs, assuming you want to replace the dead trees.

Thinning and Pruning

Grass and woody plants can compete with white pine and must be treated if white pine growth is reduced. If you have a backpack sprayer, the necessary chemicals, and protective gear, count on spending 5 to 10 hours per acre for this task. You can hire it out for approximately $40 per acre.

Pruning requires only a pruning saw but takes about 10 to 15 hours per acre. Typically, this chore can be hired out for about $1 per tree.

Other Costs

Except for pre-commercial thinnings, management practices such as prescribed burning and harvesting are often contracted due to liability exposure and large capital investments. Assume a harvest expense of 5 percent of the total payment received for the trees. This is for a consulting forester to administer the sale and harvest operation.

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Markets and Returns

Several factors affect the price received for trees. The most important are location, quality, quantity, size, and accessibility. As mentioned above, white pine is mainly used as a specialty wood in the furniture industry. Markets are limited for white pine lumber and pulpwood. However, growers willing to search for with higher prices may be successful. Potential buyers include furniture manufacturers, log home builders, and pulpwood companies for papermaking.

Most white pine is sold to sawmills. The price paid for standing trees is the stumpage price, while that for logs hauled to the mill is the delivered price. Typically, sawmills perform primary manufacturing by sawing logs into boards, dimension lumber, and cants. Most of these products are sold to furniture manufacturers. The remaining white pine timber is used by log home manufacturers and carpenters for constructing and finishing houses. You may want to investigate all three markets before selling your white pine trees.

Typical prices associated with white pine as it progresses from a tree to a piece of furniture or part of someone's house are listed in Table 1.

Table 1. White pine prices.

Since the major buyers of white pine are sawmills, trees are purchased by "thousand board-foot," or "MBF." Typically, the total volume of MBF in a stand of trees is estimated and a potential buyer will make a stumpage offer on this estimate. Expected revenue will depend on the volume estimate and bid price.

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Evaluating Your Investment

Tree crops are different from most agricultural crops due to the long growing time needed to return profits. Many factors, such as inflation and interest rates, will have very important effects on profitability. For example, inflation may result in future returns that appear large in today's dollars, but have low future purchasing power. Also, since interest rates are closely related to inflation, interest cost incurred or interest income foregone will vary with inflation rates. Inflation is an important concern when considering investments that do not generate returns for many years.

Deciding whether white pine production is a good investment will require careful consideration of production costs, expected returns, and how much your time is worth. After all, trees take much longer to grow than traditional crops, and your money will be invested for many years.

Returns must be discounted because a dollar to be received tomorrow is worth less than a dollar received today. Whether a bird in the hand today is worth more than two (or even three) in the bush tomorrow depends upon your time preference for money and your evaluation of risk. In investment analysis, you should choose the discount rate to reflect your preference for dollars today rather than dollars in the future. With an annual discount rate of 10 percent, you should be just as pleased to receive one dollar today as one dollar and 10 cents next year.

Here are three measures to analyze an investment:

Present Net Worth

Present Net Worth (PNW) is similar to the term "profit." The effects of inflation on expected returns over costs are removed, and returns are discounted to the present. An investment with PNW greater than zero is profitable.

Annual Equivalent Value

Annual Equivalent Value (AEV) is the Present Net Worth expressed as a constant annual return throughout the investment period. The AEV can be used to compare a tree-crop enterprise with field- crop returns on the same site.

Internal Rate of Return

Internal Rate of Return (IRR) is the rate at which discounted revenues just equal discounted costs. An investment has good potential if the IRR exceeds rates from alternative investments with similar risk, timing, and capital outlay.

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Case Study

Here is the story of Wayne, a farmer who planted white pine on his marginal farmland. You can use Wayne's experience as a reference for estimating the cost of managing your stand, but remember that no situation is ever typical. Wayne's costs are only estimates and will probably be different from your costs.

Mowing was the only operation needed to prepare Wayne's land for planting. Mowing cost Wayne $17 an acre. Wayne purchased seedlings for $57 per thousand trees and hired someone to plant the seedlings by hand for $37 per acre. Then, during the third year, grass and woody plants began to compete with his pines, so Wayne sprayed an herbicide treatment at a cost of $40 per acre.

After those initial years, Wayne could essentially sit back and watch his investment grow. Only fire protection expenses were necessary, which cost a little more than $1 per year.

Harvest time came at year 35. Wayne hired a consultant to estimate the volume of his white pine stand in thousand-board-feet. A sawmill offered him a stumpage price of $65 per MBF, which Wayne accepted. Wayne paid the consultant a fee of 5 percent of the stumpage price, or about $3 per MBF.

Once the trees were harvested and sent to market, Wayne had some time to think. He wondered if his effort had been worth it. Was the white pine stand a good investment?

Over the 25-year growing period, inflation had averaged 4 percent per years. Wayne decided that a 10 percent discount rate was a good estimate of his expected rate of return on the investment. Table 2 shows that his investment generated a profit after income taxes of $28 per acre. The profit was small because of the long growing period and Wayne's choice of discount rate. Evidently, Wayne thought that he could have earned this rate on an alternative investment of his money.

Like many farmers, Wayne wondered how the white pine crop compared with row crops planted on the site. The Annual Equivalent Value with Wayne's chosen discount rate of 10 percent was only $3 per acre after income taxes. If Wayne had selected a lower discount rate, the AEV would have been more competitive with row crops on this marginal farmland.

The Internal Rate of Return indicated an 11 percent after tax return from the investment. This is a breakeven discount rate at which discounted revenues equaled costs. If Wayne wasn't confident about selecting a discount rate, the IRR would show that he made a profit only if the discount rate was below 11 percent.

Table 2 shows the investment measures Wayne used over a range of discount rates:

Table 2. Wayne's financial measures (after income taxes).

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Evaluating Alternative Tree Crops on Your Farm

The choice between tree crops also depends on the farm's resource base. For example, a particular species may offer a relatively high return per acre but requires a sizeable amount of up-front investment capital to establish the stand. If investment capital is a major concern, then a tree crop such as white pine may be the best alternative. White pine does not generate a high dollar return per acre. But it may well give a higher return on your investment capital than more highly valued trees.

Finally, risk should be considered. Numerous production problems such as weather, disease, and insects can reduce the productivity of a stand. Also, costs vary widely. While trees are less risky than many agricultural crops, lost income can be considerable if a total disaster occurs. You may want to work through a few examples yourself, varying price and production levels, to get a feel for the risk inherent in the tree crop.

Use Table 3 for information regarding the many factors that go into the decision to grow a particular tree crop.

Table 3. Information sources for tree crop selection.

Once you have decided which tree crops to consider, you need to come up with the necessary data to conduct your financial analysis. Your local Cooperative Extension agent or farm management agent will be able to help.

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Federal and State Cost-share Programs

Cost-share funds simply reduce your cost of forestry activities. For example, a 50 percent cost-share on seedlings and tree planting may reduce the cost from $60 per acre to $0 per acre. Direct payments from program such as the Conservation Reserve Program provide income in early years before timber revenue begins.

As a word of caution, you cannot expect to receive federal funds from two different programs for the same activity. There are some state programs which also provide assistance for farmers and woodland owners. Your local county forester is the best source of advice on state programs.

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Other Benefits of Tree Crops

Trees also prevent soil erosion. Eliminating soil loss enhances land productivity and water quality. By stopping sediment from entering the streams, your water resources will be cleaner and therefore more suitable for fish and other aquatic species. Finally, tree crops screen the air and serve as a noise barrier. Again, proper design can maximize these benefits from your tree crop.

Moreover, most people enjoy the natural beauty only a tree and forest can provide. The Chinese say, "Keep a green tree in your heart and perhaps the singing bird will come."

Plant a tree crop today -- and enjoy the many benefits for years to come.

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Appendix

Growth and financial measures were estimated with YIELDplus 2.1, a microcomputer-based timber yield forecasting and planning tool developed by the Tennessee Valley Authority. For further information call (615)494-9800, or write to:

Todd Hepp
Forest Resources Development Program
Tennessee Valley Authority
Norris, TN 37828

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References

Della-Bianca, L. 1981. Thinning eastern white pine in the Southern Appalachians. Southern Journal of Applied forestry 5:68-73.

Fleming, H. 1986. White pine in the Southern Appalachians. In: Eastern White Pine: Today and Tomorrow Symposium Proceedings. D.T. Funk (compiler). USDA Forest Service Northeastern Forest Experiment Station. General Technical Report WO-51. p. 141.

Sims, D.H. 1986. Eastern white pine in the southern highlands. In: Eastern White Pine: Today and Tomorrow Symposium Proceedings.

D.T. Funk (compiler). USDA Forest Service Northeastern Forest Experiment Station. General Technical Report WO-51. pp. 115- 117.

Vimmerstedt. J.P. 19061. Southern Appalachian white pine plantations: site, volume, and yield. USDA Forest Service Southeastern Forest Experiment Station. Station Paper No. 149. 13pp.

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