Not ready to retire anytime soon, but I've had ancestors continually
owning east Texas ranch land back to 1816. Taxes for pasture
land are artificially low compared to forest, but there are rumours
of that changing. In any case, if I told you what the taxes are
per acre per year, you wouldn't believe me, and that's the major
carrying costs.
Pine trees cost 5 cents each, total costs for labor and land
preparation raise that to about 10 cents per tree (i.e. 1-year
Loblolly pine seedlings, 30 to 50cm tall.) assuming you have
land that needs a LOT of preparation.
Fully planted forests take about 600 trees per acre, assuming you
plant 6 feet apart on rows 12 feet apart. This gives a planting
cost of about $60 per acre. Land can be had as low as $500
per acre, but $1000 would be more usual. Property taxes are much lower than city property taxes, something like $1 per acre per year.
I forgot the actual figure, it was so small that my jaw dropped, and
I just left it out of the calculations.
Income taxes are payable only upon lumber (pulp) harvest, and
if you plant say 6 or 8 hardwood trees per acre (say black walnut)
you will end up with extremely valuable wood in three quarters of
a century or so.
Pulp harvests start as early as 8 or 10 years, then you progress
to pole and eventually dimensional lumber as you thin the stands.
I should mention that you had better either live there or have
relatives or other relationships with locals, or your property will
be pruned by tree poachers.
Note that the big timber companies have replanted most of that
country. Trees grow so much faster than they once did that even
if we have to supply 2000 sq foot houses for the Chinese over the
next 40 years, I expect us to still have plenty of the stuff around.
And silviculture is so far behind agriculture in terms of improving
yields that there is plenty of room left for improvement. For
instance, we now produce about 10x as much wheat per acre
as at the turn of the century, but the forests are only about twice
or three times as efficient as then. Eventually we will over-produce
timber, and all those glorious national parks are going to be no
longer logged due to transportation costs. The tree huggers will
win in the end, but it will be through economics and genetics,
not their stupid laws. (Which, for instance, pretty much prevent
burning in Texas, which eventually wiped out the Long Leaf Pine
tree there. The native Americans deliberately burned the forests
in Texas every 3 or 4 years in order to keep the undergrowth
out and keep berry and deer production up. Since burning was
eliminated, the Long Leaf, (which has needles up to 18 inches
long), has been largely eliminated, as it is the most fire-resistant
of the Texas trees, and relied on this for its seedling to get thrive.)
On the other hand, Long Leaf makes lousy pulp, but damn good
dimensional lumber and pilings. Oh.. I'm wandering.
Forests are great projects, but only for very very long term
investors. However, you can compute the short term returns,
based on tree growth rates, etc., and they are automatically
inflation corrected. They do best when (real) interest rates
are low, as I expect will eventually happen.
-- Carl |
