Navigating the Benefits of Pay-As-Cut Timber

The two primary methods of selling timber are pay-as-cut sales or lump-sum sales. In a lump-sum sale, the landowner receives one upfront payment for all timber in a given area based on an estimate of the value of the timber made by the buyer. In a pay-as-cut arrangement, timber is paid for as it is harvested and delivered to forest products mills. There are pros and cons to both methods, and AFM foresters can help you decide which method is best for you.

Here’s a detailed breakdown:

With AFM acting as an agent/advocate of the landowner, the landowner and the logging company enter into a contract that specifies the terms of the sale. You can be sure that our foresters and other land management professionals have your interests in mind and will negotiate the best price per unit of timber (e.g., per board foot, cubic meter, or ton), the types of timber to be harvested, and the boundaries of the harvest area. With AFM acting as your agent, we ensure that every load from the sale is accounted for and oversee other conditions, such as appropriate harvesting, environmental conditions, or specific logging practices. When the logging company proceeds to harvest the timber, AFM foresters are there to ensure the harvest complies with the agreed terms.

An essential part of AFM’s role in a pay-as-cut sale is timber security. To ensure that every load is accounted for, buyers must record each load as it is loaded and identify the product and destination of the load of wood.  After the load is delivered, AFM reconciles scale tickets using a sheet where the buyer records each load ticket.  To ensure compliance with the system, AFM foresters conduct weekly audits of the harvesting site.  As part of the inspection, we audit the load books, showing what has been loaded and where it is destined to be delivered. Also, as our foresters are working in the field and surrounding communities, they diligently keep an eye out for our unique, immediately recognizable load tags on log trucks. In the event of inconsistencies, our foresters investigate until they are satisfied our system is being adhered to.  Once a load of wood is delivered to a mill, a ticket is generated based on scaling (measuring the volume of each log) or weighing the logs. Periodically (generally weekly) during the term of the sale, the buyer submits the scale tickets to AFM, along with payment. These periodic settlements are reviewed by AFM staff for accuracy (in relation to the contract) and reconciled with the load books from the harvest job.

Engaging with AFM to conduct a pay-as-cut timber sale has numerous advantages for landowners. Landowners reduce the risk of buyers making conservative estimates on the value of their timber and potentially enjoy higher revenue by receiving payment for every stick of wood harvested. AFM foresters oversee the process every step of the way and negotiate the best prices on your behalf. Additionally, AFM foresters intently observe industry standards for sustainable forestry by ensuring state Best Management Practices (BMPs) and other federal/state regulations are adhered to so that our natural resources are maintained for future generations.

To learn more about pay-as-cut timber sales and forest management opportunities for your property, reach out to us for a consultation today!