Tackling the Numbers Game In Forestland Management

Retired forest economics professor Charley McKetta unveils Tree Cents software

By Barbara Coyner

Pop quiz time. Let’s say you’re evaluating 400 acres of private forestland and the markets remain soft, yet the land needs some thinning and treatment. What are you going to do? Cut heavily and plant a new species? Walk away? And what will it cost to take either alternative? Got any idea of the tax advantages or long-term investment strategies for your choice? Logging contractors who become forestland owners, or consultants to forestland owners, face a steep learning curve when it comes to crunching the numbers. Customary bookkeeping that tracks equipment and payroll isn’t going to tell you about the land, its net present value, soil expectation value, realized rate of return or equivalent annual income.

And asking your bookkeeper to tackle those big ugly financial formulas is almost a business risk itself. But a retired University of Idaho forest economics professor recently unveiled what he considers a cheap and easy solution — his own timber stand investment analysis software. “I tried to use some of the software programs out there and they were too labor intensive and certainly not a pleasant experience,” says Charley McKetta, who’s also managed 400 acres of his own forestlands for the last 20 years. “Heck, I have a Ph.D. in economics and I was having a tough time, so I’m hoping this program will be a much more rewarding experience. We tried to make it pretty (great photos sprinkled throughout the software), easy (three different types of help), cheap ($50) and reliable, so that woodland owners could operate it without much problem.”

McKetta, figures forestlands can have environmental integrity, beauty and profits, but it takes some effort. Yet he’s seen little interest in forestland investment analysis. “I taught timber investments for 25 years to forestry students, workshops for public foresters and extension classes for private forest owners. Even though I tried to reinforce the idea that forestry investment returns are really sensitive to project design, and that classic ‘good’ silviculture can bankrupt forests, it fell on deaf ears. There are horror stories of public foresters over-investing to gain hugely negative returns, of treating young standing timber as if it had no value unless it was harvestable. The standard joke about family forests is that if they win the lottery, they’ll just keep tree farming ‘til it’s gone. The attitude’s really strong in the West, where small private owners emulate the deficit forestry practices of the national forests.”

McKetta’s software assesses forestland financial management from several angles and he describes it as “a cheap, easy program that radically decreases the knowledge, time and money it takes to incredibly increase your insights about the forestry you do.” He’s developed specialized versions for the Inland West, the West Coast, the South and the North, because each area has unique situations. As for the user-friendliness of the product, Bob Hassolt of Seven Ridges Forestry in Kendrick, Idaho, sums it up. “As one that is profoundly computer illiterate, this program is nice because all I have to do is punch buttons and fill in the blanks in order to get some sophisticated investment results.

The program is Excel-based and can be run on most any home computer or laptop. There is a tutorial and manual that will take you through the program, and thankfully for me, no programming is required, and there are lots of help buttons, definitions or warnings about sensitive entries.” Having run a chain saw, a forest and a classroom, McKetta now focuses on running the numbers. He regards his software program as both a record keeper and an organizational tool that he hopes will make forestry more efficient and productive. “It has to be profitable or you won’t survive,” he adds. “There’s lots of silviculture right here in the Northwest that’s pretty, healthy and profitable at the same time, but you’ve got to know how it fits together to get the right balance.” More information on the software “Tree Cents” is available at (208) 301-4634, or [email protected]
 

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