Al-I’u’t mun-'1 3 1293 3009 This is to certify that the dissertation entitled An Economic Assessment of Pine Regeneration in Mississippi and Alabama presented by Robert Andrew Daniels has been accepted towards fulfillment of the requirements for Doctoral degree in Forestry Ola/(We Dr. Daniel E. Keathleyi Major professor Datef~2rf/ MS U is an Affirmative Action/Equal Opportunity Institution 0-12771 ______—___ _. ._.. ..._..__ __._ _ ___. M ,__. ___ 3; Liemnv Michigan State l University PLACE IN RETURN BOX to remove this checkout from your record. TO AVOID FINES return on or before date due. DATE DUE DATE DUE DATE DUE MSU Is An Affirmative Action/Equal Opportunity Institution c:\c|rc\daudxapm:¥o.[ AN ECONOMIC ASSESSMENT OF PINE REGENERATION IN MISSISSIPPI AND ALABAMA BY Robert Andrew Daniels A DISSERTATION Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Forestry 1991 ABSTRACT AN ECONOMIC ASSESSMENT OF PINE REGENERATION IN MISSISSIPPI AND ALABAMA by Robert Andrew Daniels Lack of pine regeneration after harvest on private, nonindustrial forestlands in Mississippi and Alabama is a major cause of decline in net annual growth. Most pine reforestation in these states is accomplished with public cost-share assistance. Net present value analysis was used to evaluate the economic profitability of Loblolly pine plantations using cost-share assistance in Mississippi and Alabama. Pine plantation investments were analyzed for marginal cropland and cutover timberland situations with site Quality, stumpage price region and unimproved or genetically improved seedlings as variables. These investments were evaluated at the 4, 6 and 8 percent real discount rates. Marginal cropland pine plantations were profitable on all sites evaluated in Alabama and Mississippi, except those on the poor quality site using unimproved seedlings in north and central Mississippi. The profitability of cutover timberland pine plantations was dependent on the combination of site Quality, stumpage price region, discount rate and type of seedlings used. -— ~19, Cutover timberland plantations were unprofitable on the poor site using unimproved seedling stock in both states at the 4 percent discount rates, even in the best stumpage markets. These plantations were profitable at the 8 percent discount rate on the excellent and good sites using either seedling type in both states except for north Mississippi and central Mississippi using unimproved seedlings. Cutover timberland plantations were profitable on the excellent, good and average sites in all price regions using either improved or unimproved seedlings at 6 percent discount rate. Tables are provided that show the net present value for marginal cropland and cutover timberland plantation investments on all sites, and stumpage price regions within Mississippi and Alabama using improved or unimproved seedlings at 4, 6, or 8 percent real rates. These results show private, nonindustrial forest landowners the profitability of their cost-share plantations for specific sites and market conditions in Mississippi and Alabama. An assessment of genetically improved pine seed, seedlings, nursery capacity and site preparation/tree planting services available in Mississippi and Alabama is presented. The availability of these plantation inputs appears ample. DEDICATION This paper is dedicated to the memory of my parents Joseph A. and Susan M. Daniels who would have been especially pleased with this accomplishment. Their love and encouragement remains with me always. I also dedicate this paper to my wife, Diane, in appreciation for her love, patience and encouragement throughout my studies. Without her this would not have been possible. iv ACKNOWLEDGEMENTS I would like to thank Dr. Daniel Chappelle for his helpful guidance and advice in the conclusion of my studies. I also appreciate the help of Dr. Robert Marty, Dr. Daniel Keathley, Dr. James Hanover, and Dr. Lee James. TABLE OF CONTENTS CHAPTER ONE: INTRODUCTION ................................... Alabama Forestry .................................................... Mississippi Forestry ................................................. The Question of Pine Reforestation ...................... Research Objectives ............................................... Research Methods .................................................. CHAPTER TWO: PLANTATION PRODUCTION INPUTS .......................................................... Pine Seed Availability ........................................... Nursery Capacity .................................................... Usage of Southern Pine Seed and Seedlings ............................................. Planting Services .................................................... CHAPTER THREE: PINE PLANTATION BUDGETS ..... Assumptions and Fixed Variables ...................... CHAPTER FOUR: RESULTS AND DISCUSSION ......... Sensitivity Analysis ................................................. Policy Implications ................................................... Conclusions ............................................................. APPENDICES Appendix A: Southern Softwood Timber Supply and Demand ................................................. Appendix 8: Seed Estimate Calculations .......... Appendix C: Acres of Forestland by Site, Class and County in Alabama and Mississippi ............................................ Appendix D: Computer Simulation Output Examples ....................................................... Appendix E: Profitability Curves for Fine Plantation Investments in Alabama and Mississippi ............................................ BIBLIOGRAPHY ...................................................................... vi PAGE 0034 11 26 28 29 ‘ 35 42 52 66 78 90 100 112 117 121 140 143 149 169 181 able 1. able 2. able 3. able 4. able 5. able 6. ble 7. bis 8. bis 9. blefl10. blett. LIST OF TABLES Annual Timber Harvest Value, Alabama Alabama Output, Income, and Employment Multipliers (Type II) for Selected Economic Sectors Annual TImber Harvest Value, Mississippi Comparison of Total Forest Industry Multipliers with Mississippi Economy Multipliers Forest Industry Sector Type II Multipliers Compared with Weighted Average Type II Multipliers for All Sectors Conservation Reserve Program Tree Planting Acres Accepted (August, 1989) Private, Nonindustrial Forest Plantings and Conservation Reserve Plantings, Mississippi Private, Nonindustrial Forest Plantings and Conservation Reserve Plantings, Alabama Ownership of Southern Pine Seed Orchards in the Southern States Mississippi Southern Pine Seed Orchard Ownership Alabama Southern Pine Seed Orchard Ownership vii PAGE 10 18 24 24 3O 31 34 Table 12. Table 13 Table 14 Table 1! Table 1 Table 1 Table 1 Table ' Table Table Table TabII Tabb Tabl ale 1?. ale 13. ale 14. ble 15. ble 16. ble 17. his 18. ble 19. ble 20. ble 21. ble 22. Mississippi Forestry Commission Nursery Funding Alabama Forestry Commission Nursery Funding Seedlings Planted in Mississippi and Alabama, 1980-1989 Estimated Loblolly and Slash Pine Seed Requirements for Mississippi and Alabama, 1980-1987 Mississippi Forestry Vendors, 1981 Site Quality Definitions for Plantation Budgets Stumpage Price Averages for Mississippi and Alabama, 1988 Average Costs for Selected Forest Practices and Tree Seedlings Alabama Marginal Cropland Budget Summary, 4 Percent Discount Rate Mississippi Marginal Cropland Budget Summary, 4 Percent Discount Rate Alabama Cutover Timberland Budget Summary, 4 Percent Discount Rate Mississippi Cutover Timberland Budget Summary, 4 Percent Discount Rate Marginal CrOpIand Sensitivity Analysis Summary Cutover Timberland Sensitivity Analysis Summary viii PAGE 39 41 45 49 58 72 76 82 92 94 97 99 102 104 Table Table TabII Tabl Tabl Tab Tat Tal Ta Te T: 'able 26. able 27. able 28. able 29. able 30. able 31. able 32. this 33. this 34. lMe35 .bIe 36. ble 37. ble 38. Alabama Marginal CrOpIand Sensitivity Analysis Budget Summary Mississippi Marginal Cropland Sensitivity Analysis Budget Summary Alabama Cutover Timberland Sensitivity Analysis Budget Summary Mississippi Cutover Timberland Sensitivity Analysis Budget Summary Maximum Number of Cutover Timberland Acres Profitable for Cost-shared, Reforestation by State, Discount Rate and Seedling Type. Total and Private Timber Harvest Simulation Projections for the South and the United States . Annual TImber Supply and Demand Comparison by RPA 'I‘Ime Periods, Mississippi National Forests Annual 'I'Imber Supply and Demand Comparison by RPA Time Periods, Alabama National . Forests Softwood Supply, Removals, Net Annual Growth and Inventory for Alabama (Millions Cubic Feet) Softwood Supply, Removals, Net Annual Growth and Inventory for Mississippi (Millions CubIc Feet) Softwood Supply, Removals, Net Annual Growth and Inventory (Millions Cubic Feet) and Timberland Area for the South Acres of Forestland (thousands) by Site Class and County in Alabama Acres of Forestland (thousands) by Site Class and County in MissiSSIppI ix PAGE 106 107 108 110 112 - 125 126 128 131 132 135 143 146 FigI FigI Fig Fig Fig Fig Fit igure 1 lgure 2 gure 3 gure 4 gure 5 gure 6 JUI‘S 7 lure 8 lure 9 lure 1 0 ure11 LIST OF FIGURES Regional Tree Seedling Production Capacity Reforested Acres in Mississippi and Alabama, 1979-1989 Seedling Usage 1980-1989, Mississippi Seedling Usage 19804989, Alabama Forest Tree Planting/Seeding in the South 1949-1987 Reforestation Flowchart for Industry and PNIF Land Available Tree Planting and Site Preparation Vendors by County in Mississippi Available Tree Planting and Site Preparation Vendors by County in Alabama Alabama Price Reporting Regions Mississippi Price Reporting Regions Profitability Curve for Marginal Cropland Pine Reforestation Using Cost-Share Program, North Alabama X PAGE 38 43 46 47 51 55 59 61 73 74 169 Fig Fig Fit PAGE Figure12 Profitability Curve for Marginal Cropland Pine Reforestation Using Cost-Share Program, Central Alabama ' 170 Figure 1 3 Profitability Curve for Marginal Cropland Pine Reforestation Using Cost-Share Program, South Alabama 171 Figure 14 Profitability Curve for Marginal Cropland Pine Reforestation Using Cost-Share Program, North Mississippi 172 Figure 15 Profitability Curve for Marginal Cropland Pine Reforestation Using Cost-Share Program, Central Mississippi 173 Figure 16 Profitability Curve for Marginal Cr0pland Pine Reforestation Using Cost-Share Program, South Mississippi 174 Figure 1 7 Profitability Curve for Cutover Timberland Pine Reforestation Using Cost-Share _ Program, North Alabama 175 } =igure18 Profitability Curve for Cutover 'I'Imberland Pine Reforestation Using Cost-Share Program, Central Alabama 176 Figure19 Profitability Curve for Cutover Timberland Pine Reforestation Using Cost-Share Program, South Alabama 177 Figure 20 Profitability Curve for Cutover Timberland Pine Reforestation Using Cost-Share Program, North Mississippi 178 ’igure 21 Profitability Curve for Cutover Timberland Pine Reforestation Using Cost-Share Program, Central Mississippi 179 xi Figure 22 Profitability Curve for Cutover Timberland ' Pine Reforestation Using Cost-Share Program, South Mississippi xii PAGE 180 timbI inclu Flori This year US pr0I lite nat pul the III Sit SC CHAPTER ONE: INTRODUCTION The forests of the Southern United States are a major source of timber products for the United States and the world. The southern states include Alabama, Mississippi, Georgia, Tennessee, Louisiana, Arkansas, Florida, North Carolina, South Carolina, Virginia, Oklahoma and Texas. This region has been an important producer of timber products for many years. In 1987, 32.8% of the US softwood lumber production, 45.3% of US. hardwood lumber production and 65.1% of the nation's pulpwood oroduction originated in the southern US. (Ulrich 1989). By comparison, fifteen years earlier, in 1972, the southern states produced 25.8% of the tation's softwood lumber, 48.5% of its hardwood lumber and 62.2% of its )ulpwood (Ulrich 1989). The southern softwood resource occupies a significant portion of he southern forest. In 1985, southern pines were a major forest cover ype component on 88.7 million acres, including pine plantations, natural :tands, and mixed pine-hardwood stands. These stands represented :oftwood timber volume of 106.7 billion cubic feet or about 40 percent of is standing volume in 1987 (Weddell 1989). 10f l 198 of I spt US! en The southern softwood resource is comprised almost exclusively of southern pines. There are 10 pine species (genus Elms) that are ative to the south, but four principal species; Loblolly (Mega), Slash " , Longleaf (P. palustris) and Shortleaf (P, eghinata) accounted r 84.8 percent of the softwood sawtimber volume in 1987 (Weddell 89). The southern hard pine species cannot be separated on the basis ‘wood structure (Panshin and De Zeeuw 1970). Therefore, these >ecies are commonly known as ”southern pines” in the industry and are sad interchangeably in manufacturing processes, since their physical Id chemical properties are very similar. Throughout this paper the term Iuthern pine will refer to this group of species. The southern pine resource is the basis for a large, diverse and gionally important industry. Southern pine is used to produce a variety products including dimension lumber, plywood, poles, piling, chips, per, veneer, furniture, composite products and many others. 9 southern forest industry occupies a very important position in the ional economy. In 1982, forest industries in the South employed one very nine workers, paid $1 out of every $10 in wages and salaries produced $1 out of every $11 of value-added to the economy by nufacturing. Nearly one of every five southern manufacturing ablishments was a forest industry in 1982, totaling nearly 17,000, thwide. Forest industries employed 557,000 workers and paid $8.5 biIIIOI soutl (USI impc (USl 198i occ al. oal llm isl su an illion annually in wages and salaries. The products shipped by outhern'forest industries in 1982 were valued at more than $49 billion USDA Forest Service 1988). Several reports have described the portance of the forest products industry to the southern region in detail USDA Forest Service 1980, Flick et al. 1980, USDA Forest Service 988, Flick and Teeter 1988). Alabamafltestnr Forests and forest industry are very important to Alabama. Forests ccupy 21.6 million acres or 65% of Alabama's total land area (Rudis, et 1. 1984). Southern pine forest types occupy 7.3 million acres and the ak-pine type occupies another 4.5 million acres. The remaining mberland supports hardwood forest types including oak-hickory which the state's predominant type on 7.3 million acres. The latest forest JI'VSY of Alabama (1982) showed that 54 percent of the growing stock d 62 percent of the sawtimber volume were softwood (USDA 1985b). rest ownership in Alabama is primarily private, nonindustrial (PNIF). hile forest industry owns 21 percent of the state's forestland and 5 rcent is publicly owned, 74 percent is controlled by PNIF owners. A 82 Alabama Forestry Commission study estimated that there were proximately 223,500 PNIF owners in Alabama. The Alabama Forestry Commission (AFC) is the forestry service anization in Alabama. Primary responsibilities of the AFC are fire tection, timber management and the production and distribution of tree - Alab lore: priv: pres equ the am in me 19 tree seedlings. The AFC is headquartered in Montgomery. Each of Alabama's 67 counties has an AFC county ranger supervisor or a county forestry supervisor. A AFC county supervisors provide forest management services to private landowners free or at moderate cost. Timber management prescriptions, prescribed burning, fire lane construction and reforestation equipment rental are among the services offered. Forest industry in Alabama is large and well distributed throughout the state. Forest industry is Alabama's largest manufacturing industry and among the largest employers (Flick 1983). In 1985, forest products firms employed approximately 64,300 workers or one of every six manufacturing workers in the state (Alabama Forest Resource Center 1987). Forest products are the most important agricultural crop produced in Alabama with a production value of $757 million in 1989 (Alabama Forestry Commission 1990). Table 1 shows the value of Alabama's timber harvest since 1982. Forestry is fundamentally important to the Alabama economy. An input-output model of the state's economy using 1977 data for Alabama showed that the forest industry occupies a significant economic position (Flick 1980). The forest industry multipliers were consistently larger than hose of other manufacturing sectors. The study showed that Alabama's conomy would experience larger increases in business activity, ousehold income and employment from expansions in forest industries - «rain- at 1981 198i 198' 198' 198 198 198 198 TABLE 1. Annual Timber Harvest Value, Alabama 1/ 1989 758 1988 702 1987 802 1986 - 566 1985 718 1984 638, 1983 635 1982 498 1/ Sources: Forestry Cash Receipt Reports, Alabama Cooperative Extension Service and Alabama Forestry Commission. 2/ Value delivered to the first point of processing such as pulpwood yard or sawmill, rounded to nearest million in current dollars. If than from comparable expansions of more traditional Alabama manufacturing industries such as primary metals and textiles. A more recent input—output study of the Alabama economy eaffrrmed the economic importance of forest industry sectors. Holmes 1988) developed an input-output model of the Alabama economy based n output multipliers and associated coefficients adapted to Alabama rom updated (1984) national model coefficients by the Bureau of conomic Analysis (B.E.A.) of the US. Department of Commerce. His odel also includes adjustments to the B.E.A. coefficients and estimates f sector outputs, taxes and government expenditures. The resulting ultipliers developed from this model place forest products firms above 9 weighted state average multiplier in output, income and employment. able 2 shows output, income and employment multipliers for the two rest industry sectors from Holmes' model compared with other selected TAE TABLE 2. Alabama Output, Income and Employment Multipliers (Type II) For Selected Economic Sectors 39.919: Qumut Income Emnlmrment Textile Mill Products 3.30 2.56 2.56 Wood/Furniture Products 2.95 2.37 2.31 Paper/Allied Products 2.57 2.56 4.11 Food and Tobacco Products 2.75 3.38 4.25 Chemicals/Refined Petroleum _ 2.08 2.85 . 4.27 Weighted Average 2.45 1.97 2.05 Source: Holmes 1988 sectors and the weighted average for that multiplier. Forest industry output, income and employment multipliers are larger than the weighted average multipliers for all sectors. In particular, both wood/furniture products and paper/allied products sectors have high income multipliers, wood/furniture products has a high output multiplier and paper/allied products has a high employment multiplier. All multipliers reported by Holmes are Type II, that is they include direct, indirect, and induced changes in output, income or employment due to an increase in economic activity in the various sectors. ' Forestry is the single largest land use in Mississippi and occupies 16.9 million acres. Softwood forest types occupy 4.8 million acres or 28 percent of all commercial forest land, while the oak-pine type occupies 3.5 million acres. When these types are grouped together pine timber is arnak lorne: Comn excep aghcr soflhi 1911 sotw in19 blio SOflI mac peh indL pen the til I 881 he I19 a major component of the forest type on 8.3 million acres which accounts for nearly 49 percent of the state's forest land (Donner and Hines 1987). Commercial forest land is well distributed throughout the state with the exception of the Delta region in northwest Mississippi which is primarily agricultural land. Mississippi's forest resources are almost equally divided between softwood and hardwood. The total volume of growing stock in 1987 was 19.4 billion cubic feet. Of this total 56 percent (9.1 billion cubic feet) is softwood and 53 percent (10.3 billion cubic feet) is hardwood. Similarly, in 1987, the total sawtimber volume on Mississippi's timberland was 73.2 billion board feet, of which 54 percent (39.5 billion board feet) was softwood and 46 percent (33.6 billion board feet) was hardwood. The ownership of Mississippi's commercial forest land is predominantly PNIF. Approximately 130,000 PNIF owners control 69 percent of Mississippi's forests, representing 11.7 million acres. Forest industry owns slightly less than 20 percent and public agencies own 11 percent of the state's forests. The Mississippi Forestry Commission (MFC) is the state agency charged by the Mississippi Legislature with fire protection, management of public forest lands, tree seedling production and providing forestry assistance to PNIF owners, upon their request. The commission is headquartered in Jackson and has a network of county foresters in nearly every county of the state. In some cases, such as the Mississippi Dell the ma pro lim' Mi: 39 ol sh Delta, a county forester may service several counties, but in most cases there is One graduate forester per county. The MFC county forester manages a small crew of technicians and others who provide fire protection, prescribed burning, fire lane construction, tree planting, timber management and other services to county forest landowners. As in Alabama, forest industry is very important to the economy in Mississippi. Timber has been among the three most valuable agricultural crops in Mississippi for over 10 years. The production value of forest products in 1989 was $717 million (Daniels 1990). Table 3 shows the value of Mississippi's timber harvest since 1982. In 1982, Mississippi had 1094 forest industry establishments employing 37,200 workers that produced shipments valued at $2.9 billion. These establishments accounted for 35 percent of all TABLE 3. Annual TImber Harvest Value, Mississippi 1/ leer WW 1989 717 1988 611 1987 600 1986 478 1985 488 1984 527 1983 484 "1982 406 1/ Source: Harvest of Forest Products, Mississippi Cooperative Extension Service, Forest Resources Market Note Series. 2/ Value delivered to the first point of processing such as pulpwood yard or sawmill, rounded to nearest million. -. '3‘." manulz produc Servlcl indust lumilu econc 1975 descr the in also : Oulp slron indu: TABL Total TIM 2/TI Mar Sou manufacturing facilities, paid $532.6 million in wages and salaries and produced $1.13 billion in value-added by manufacturing (USDA Forest Service 1988). In 1986, there were 52,299 workers employed at 1352 forest industry establishments including the lumber/wood products, furniture/fixtures and paper/allied products sectors (Rush 1988). Porterfield described an input-output study of the Mississippi economy focusing on the forest products sector, based on 1974 and 1975 data (Porterfield, R.L., T.R. Terfehr and J.E. Moak 1978). The study described the forest resources, ownership patterns, forest industry and the importance of PNIF management to future productivity. The analysis also showed that forestry was an important part of the state economy. . Output, income and employment multipliers all illustrated forestry's strong influence. Table 4 shows the comparison of the ”average" forest industry multiplier with the "average" Mississippi economy multiplier. TABLE 4. Comparison of Total Forest Industry Multipliers with Mississippi Economy Mult‘piers Multipliers 1/ Total Forest Industry2/ 3.56 3.94 4.67 Mississippi Economy ’ 3.74 3.24 3.86 1/ Mult’pliers shown are an average of Type I and Type II Multipliers 2/ Total Forest Industry Multipliers are the Average of Multipliers From 11Forest Products Manufacturing Sectors Source: Porterfield et. al. 1978 de‘ sa thi pt 10 The Mississippi Research and Development Center has developed an input-output model for the state economy that contains 92 sectors and utilized both published data and survey data (Lee 1986). In this analysis three forest industry sectors are defined, lumber/wood products, furniture/fixtures and paper/allied products; Lee comments (p. 31) that "Food, furniture, lumber and apparel sectors have high output multipliers. Since food, furniture and lumber are strongly linked to Mississippi's agricultural and forestry sector these sectors' multipliers are larger than other sectors.” In a later discussion Lee concludes "the sectors such as food processing, lumber and mining which are strongly connected to the state's agricultural resources or natural resources have comparative advantages in economic development strategies". Table 5 shows Type II multipliers for forest industry manufacturing sectors compared with the state's weighted average Type II multipliers from Lee (1986). TABLE 5. Forest Industry Sector Type II Multipliers Compared with Weighted Average Type II Multipliers for all Sectors. Type II Multipliers Output Income Employment All Manufacturing 1.910 2.157 2.423 Lumber/Wood Products 2.017 2.089 2.230 Furniture/Fixtures 2.267 1 .730 1 .786 Paper/Allied Products 1.973 1.964 2.604 Weighted Average 2.045 1.970 2.149 Source: Lee 1986 pint relc est: Ion Re 11 The southern forest industry was built largely on southern yellow pine. It should not be surprising therefore, that interest in pine reforestation has been keen for many years. Several reports have established increased pine reforestation as a necessary goal in southern forestry, particularly pine reforestation on PNIF lends (SouthernForest Resource Analysis Committee 1969, USDA Forest Service 1978). Concern about the levels of pine regeneration on PNIF lands of Mississippi and Alabama began to rise in the late 1970's and early 1980’s (Murphy 1973, Van Hooser 1973, Murphy 1978, Alabama Committee on Forest Productivity 1978, Mississippi Forestry Association 1979, Rudis, et al. 1984). A major concern was the increasing rate of pine timber harvests and the apparent failure of some forest landowners to regenerate pine stands after harvest (Weaver and Bullard 1982, Bullard et al. 1981). In the early 1980's Mississippi and Alabama both launched formal forest planning efforts. In Alabama, a special legislative forestry study committee was formed and in Mississippi the governor convened a conference on the ”Pathways For Forestry”. A common conclusion drawn by each of these forest planning efforts was the need for increased pine reforestation on harvested PNIF lands. ln Mississippi, a specific reforestation target to reforest 200,000 PNIF acres annually by the year 1990 was established. In Alabama, county forest planning commill reforest l lands iI relores measu manag the av COIICG existe and o PNIF econ: al., I own sam. (USI derr Dricl SUp liml 12 committees were organized and local teams began working on the reforestation problem. While emphasis had been placed on pine regeneration on PNIF lands in the planning process, researchers began to study the reforestation situation on PNIF lands to quantify the problem and identify measures that could be useful to stimulate additional reforestation and management. In addition, with an increase in pine plantings anticipated, the availability of genetically improved seedlings also became a concern. Brissette (1982) was concerned that too little nursery capacity existed to achieve the PNIF reforestation goals and that because of land and other constraints state nurseries were producing at or near capacity. In the early 1980's, researchers began to focus attention on the t PNIF lands of the South. It was becoming clear that PNIF lands had economic investment potential for growing softwood timber, (Adams et al., 1982, USDA Office of Budget and Program Analysis 1983) but PNIF owners largely were not reforesting their harvested pine lands. At the same time, southern softwood timber supply and demand projections (USDA Forest Service 1982 b, Adams et al., 1982) showed increasing demands for southern pine timber and forecast rising real stumpage prices. Subsequently, a more detailed assessment of southern timber supply and demand (USDA Forest Service 1988) predicts softwood timber removals above net annual growth until after the year 2000. This dec incr in II timl bet inlI ha oi oi 13 decline in southern softwood sawtimber availability is projected to increasé real sawtimber stumpage prices at an annual rate of 3.2 percent in the South Central region. A detailed review of the southern softwood timber supply and demand literature is given in Appendix A. A study 01759 southern PNIF owners who had harvested timber between 1971 and 1981 by Royer and Kaiser (1983) revealed many interesting facets of southern PNIF owner's behavior regarding harvesting and reforestation. Partial harvesting (defined as the removal of ”only some mature trees....with many larger or mature trees regardless of type remaining on the parcel") was the most widely used harvest method and was used on 46 percent of the acres harvested. Clearcutting or seed tree harvests were used on 32 percent. The most common reasons for harvesting timber were that the owner perceived the timber as mature and was offered a good price. Another important reason expressed for cutting timber (particularly for partial cutting) was the motivation to improve the growth of remaining trees. The dominance of partial harvesting as a preferred cutting method Is consistent with PNIF owners' multiple ownership objectives and may imply that this groups' guiding rate of return is different from owners who prefer other harvest methods. Closer examination of reforestation behavior showed that reforestation activities were most common on clearcut sites, but that site preparation was actually conducted on only 38 percent of these acres. The res reforest relores should The pr back It was III relora the SI for int silvicr I101 IE i"lilo: soutl were state Perc- the I can rate 14 The result was that 62 percent of clearcuts were not purposefully reforested. A similar situation occurred on partially cut parcels with no reforestation action taken on nearly 75 percent of these acres. The major motives for reforesting were the belief that the land should be kept in timber, anticipated profits, and the advice of a forester. The primary reason for not reforesting was a belief that pine would come back naturally. Cost-sharing was a modest incentive to reforest, but it was most common among owners reforesting clearcuts. The conclusions of this study pointed to the fact that pine reforestation on PNIF lands needed more emphasis if the full potential of the South's pine resource was to be realized. The authors cited a need for increased education among PNIF owners in the South regarding silvicultural choices. In addition, a majority of landowners apparently did not recognize the need for pine regeneration. In another article, Kaiser and Royer (1983) identified the most important barriers to southern pine reforestation. To identify why southern landowners were not investing in pine reforestation, interviews were conducted with owners of harvested forestland from 13 southern states. Their survey of harvested southern ownerships showed that 64 percent of the acres were left to reforest themselves. On 4 of 5 acres in the South that were not actively reforested the lack of pine reforestation can be attributed to the owner's belief that the site would naturally reforest itself. Other important reasons for not reforesting were "high costs acre from cons impl relu con est: con obs als po as int int 85 15 costs" (51 percent of acres), "returns too far in the future“ (43 percent of acres), ”bther uses for harvest income” (40 percent of acres) and "returns from forestry being too low" (34 percent of acres). These reasons were considered important by the authors, reflect-economic perceptions and imply differences in time preference (reflected in their guiding rate of return) among southern landowners. They are economic and financial constraints on forest management even after the need to reforest is established in the minds of these landowners. This study showed that a combination of high costs and low or delayed returns is a significant obstacle to pine reforestation. A group of factors of less importance to reforestation decisions also included: poor productivity of the land, fire, insect and disease risks, poor condition of the site following harvest, too much difficulty getting i assistance, lack of cost-sharing and indecision about future land use. It is interesting to note that 27 percent of the acres harvested was owned by individuals who consider the ”red tape" associated with getting assistance on forest management as being too cumbersome. The authors concluded that (p. 10) "reshaping the perceptions of the owners of 80 percent of the harvested lands in the South is central to the question of pine reforestation." From a policy viewpoint, it appears that institutional changes in cost-sharing program administration and increased educational initiatives for forest landowners in combination with the usual tax incentives and cost-share funding are needed to stimI Thor polic shaI OPP For 198 gro ant reg so St re. WI 16 stimulate reforestation among a major segment of southern PNIF owners. Though ihis segment of southern owners has been identified, public policy changes have essentially been confined to tax changes and cost- share funding. Dutrow and Kaiser (1984) outlined the potential economic opportunities for southern PNIF forestry investments considering the US Forest Service RPA Assessment projections (USDA Forest Service 1981a) that timber demand will rise faster than supply. The broad groups of forestry investments described included: stocking control (such as prescribed burning, precommercial and commercial thinnings and release), stand conversions, regeneration of non-stocked acres, regeneration of hardwoods and regenerating mature or overmature softwoods. Expected financial returns in real terms were provided. 1 Stocking control in existing stands ranked highest with an 18 percent real rate of return on investment while regenerating hardwood stands was ranked lowest (though still profitable) at 8 percent real rate of return. Analysis of data for the South indicated that over 88 million acres of nonindustrial ownerships promise returns of 4 percent or more above the level of inflation with 50 percent of these acres offering returns of 10 percent or more. In Alabama, about 13.6 million acres would return at least 4 percent and 9.3 million acres would yield at least 10 percent above inflation. For Mississippi, these figures are cited as 9.1 million acres at 4 percent and 5.5 million acres at 10 percent or less. growl initial know gove all It inve: com mar P101 198 not law an mi 80 CIT SU 18 17 The conclusion drawn by the authors is that investments in growing timber can be profitable, particularly in the South, though large initial capital commitments, long time periods and lack of firsthand knowledge seem to be limiting factors on PNIF lands. The authors urged governments to continue efforts to provide information and assistance to all timberland owners and do what is necessary to improve the investment climate for the private sector. Recognizing these opportunities and considering the problems of conventional agriculture (overcapacity, soil erosion, low prices, poor market outlook) Congress established the Conservation Reserve Program (CRP) as part of the Food Security Act of 1985 (Public Law 99- 198). This law authorized the Secretary of Agriculture to retire land from crop production to conserve and improve the soil and water resources of farms and ranches. The law was authorized for crop years 198610 1990 and cumulative reserve lands are intended to equal not less than 40 million and not more 45 million acres in the US (Cubbage and Gunter 1987). A major goal under the CRP is the reduction of soil erosion. To accomplish this objective, the plan proposed to convert highly erodible cropland, previously devoted to agricultural crops to a less-intensive use such as permanent grass or trees. The measure provides for annual rental payments to enrolled landowners for a ten year period. The amount of annual payments is determined through a competitive bidding procedure conducted at the state level. In addition, cost-sharing funds were one 1981 beer 1 .02 Ark: and in II Aug pla 18 were made available to assist enrolled landowners establishing trees or other permanent cover. Through the first four sign up periods (March, 1986 - February 1987) about 1,136,000 acres (5.8% of the total CRP enrollment) had been accepted for tree planting, nationwide. Of this total, approximately 1,020,000 acres (89%) were located in the southern states from Arkansas and Louisiana east to South Carolina and Florida (Moulton and Dicks, 1987). Table 6 shows the CRP acres devoted to tree planting in the Southern states through the first nine signup periods, ending in August, 1989. Alabama and Mississippi are among the top three tree planting states under the CRP. TABLE 6. Conservation Reserve Program Tree Planting Acres Accepted (August, 1989) State Iotal. Alabama 278,475 Arkansas 1 25,696 Florida 112,065 Georgia 608,047 Louisiana 71 ,447 Mississippi 428,115 North Carolina 81,411 South Carolina 208,730 Tennessee 27,107 Texas 18,322 MW ' 28.9.5.5 Total 1 ,987,470 Source: Agricultural Stabilization and Conservation Service T souther PrograI will bel cease Carollr (Marsl refore: new lc after I have ' has c Kaisr PNIF Wher deci: after The shift mar lore 19 The CRP tree planting effort should be a significant boost to southern softwood timber supplies if the experience of the Soil Bank Program (1956-1960) is predictive of the way today's forest landowners will behave. These forests tend to remain after the annual payments cease (Alig et al. 1980). A study of soil bank tree planting in South Carolina reported a real social internal rate of return of 6.3 percent. (Mersinko and Nodine, 1981) However, though CRP is a major reforestation effort and will add approximately 706,590 acres of new forest in Mississippi and Alabama, the problem of PNIF reforestation after harvest remains. Though hundreds of thousands of southern acres have been planted to trees under the CRP reforestation on cutover lands has continued to lag behind. A number of researchers have followed the work of Royer and Kaiser (1983) by examining those factors that were shown to influence PNIF owner reforestation behavior. Royer and Kaiser (1985) found that where a professional forester is consulted, regeneration and harvesting decisions tend to improve, but that this guidance has had only limited effects because too few landowners were receiving such assistance. The authors concluded that the public forester's role in the South should shift from one of giving technical assistance to one of promoting forest management and regeneration among more landowners. Cubbage, et al. (1985) evaluated the impact of state assistance foresters in the Georgia Piedmont and showed that tracts that assistance lores harv Asst unit sigr pro Ber ralI Mi: prr be 20 foresters marked selectively had significantly more residual volume after harvest than tracts where no professional foresters were involved. Assisted landowners also received nearly twice the stumpage price per unit for their timber than did unassisted landowners. A study in Mississippi (Straka, et al. 1986) concluded that significant economic benefits can be attributed to forest management promotion activities by state service foresters among PNIF owners. Benefit/cost ratios were reported from 3:1 up to 20:1 using real discount rates between 4 and 10 percent. Among other accomplishments a Mississippi Forestry Commission service forester annually stimulated site preparation on 1,238 acres and reforestation on 1,152 acres. A survey of forestry assistance in Georgia also found foresters to be effective in assisting PNIF owners (Cubbage and Hodges 1986). Industry foresters tended to work fewer, but larger ownerships, (average tract size between 636 and 1,533 acres) while state foresters worked smaller ownerships (average tract size 131 acres) and consultants dealt with ownerships between these extremes (average tract size 376 acres). The study notes that one-quarter of PNIF lands in Georgia received some forestry assistance in 1983. However, though a large acreage was under management, less than 15 percent of the annual volume harvested came from forester-associated cases. In addition, planned reforestation represented only one third of the total harvested PNIF acreage each year A private. reforest: states 1 percent of five r their hc percerl assumr author: were n would retore: some reiore Soutl policy DUinI inves cost- an it ll10d 80 p 21 A study by Fesco, et al. (1987) reinforces the importance of private, nonindustrial forest land owners in the South and the need for reforestation. Based on a survey of PNIF owners from 12 Southern states who harvested pine timber between 1971 and 1981, nearly 90 percent of theforestland harvested was held. as a family operation. Four of five of these harvested acres were owned by those who hope to pass their holdings on to their heirs. In addition, the survey showed that 80 percent of the clearcut or partially cut acres, ("thinned" acres were assumed not to need reforestation) were not actively reforested. The authors reported that approximately 75 percent of the harvested acres were not actively reforested because the owners largely felt that the site would reforest itself. The authors commented that (p. 79) ”Southern pine reforestation depends on reshaping the perceptions of those who own some three-quarters of the clear and partial cut lands that are not actively reforested.” They concluded that (p. 80) "assuring an adequate supply of Southern pines in the future will require not simply a change in public policy but a change in attitude [of these owners] as well.” The principal public policy changes reported that landowners said would stimulate investment in pine reforestation were lower property taxes and increased cost-sharing. Nearly 80 percent of harvested timberland was owned by an individual who said lower property taxes would have a high or moderate effect on their decision to reforest. Reforestation decisions on 60 percent of the harvested acres would be highly or moderately affected by It sha 9118 an Iun ch: 80 do de 22 by the increased availability of cost-share funds. Tax issues and cost- sharing were the only public programs rated highly or moderately effective by the surveyed landowners of more than half the harvested acres. However, public program options such as increased educational funding were not considered even though the need for an attitude change was identified as a major problem. Rosen and Doolittle (1987) characterized PNIF owners in the Mid South (including Mississippi and Alabama) and commented on the well documented failure of these owners to regenerate pine stands. They describe Mid South PNIF tracts as poorly stocked with low timber volumes per acre. The authors offer these characteristics combined with relatively small areas in pine reforestation and disproportionately large areas of upland hardwoods as further evidence of PNIF reforestation failure. After increasing concern about PNIF pine reforestation and much research, precise estimates of reforestation after harvest vary. Fesco, et al. (1987) concluded that 46 percent of southern PNIF owners that had harvested pine stands actually implemented reforestation practices such as planting, seeding, or leaving seed trees. The South's Fourth Forest Report (USDA 1988) estimates that about half of all clearcuts on PNIF plnelands are followed by adequate reforestation practices. A recent study of timberland harvested in Mississippi between 1977 and 1987 (McWilliams 1988) concluded that 83 percent of the harvested pine and mixed PNIF l privalI (McW range that it harve W88 I We be a Prog acre the pin relr unt PN rel I10 23 mixed pine hardwood stands that had poor regeneration were held by PNIF owners. In another study of residual pine stocking after harvest on private land in six southern states including Mississippi and Alabama (McWilliams 1989) the estimated success rate for pine regeneration ranged between 31 and 57 percent on PNIF land. The study indicated that the pine regeneration situation was improving and that 48 percent of harvested pine stands on PNIF lands had high pine stocking (a stand was classified as high stocking if it was greater than 60% pine). The condition of southern forestlands and trends in softwood inventory have caused pine reforestation on private, nonindustrial land to be a major concern (McWilliams 1990). Though Conservation Reserve Program (CRP) tree planting has been significant, reforesting harvested acres will continue to be an essential priority in the South. In Mississippi and Alabama CRP tree plantings have been among the highest of any state in the nation. However, a comparison of tree planting acres in the CRP with non-CRP acres suggests that PNIF reforestation rates for other lands such as cutover stands may be unsatisfactory. Tables 7 and 8 show CRP tree planting as a portion of PNIF tree planting in Mississippi and Alabama between 1985 and 1989. Since CRP acres are former cropland, non-CRP acres should reflect reforestation of lands recently harvested. In Mississippi and Alabama, non-CRP acres have fallen below planting levels seen prior to CRP. TABI 198 198 198 195 191 19! TABLE 7. Private Nonindustrial Forest Plantings and Conservation Reserve Plantings - Mississippi (acres) 1&1 1985 1986 1987 1988 1989 1990 ENE: 101,743 1tt947 151,600 250,882 148,916 EEHE' 0 0 81,781 152,013 67,632 102,389 Nonsnfli 101,743 114,947 69,819 98,869 81,284 2.9132- 53.9 60.6 45.4 19H“ 231,260 218,292 260,615 356,175 266,021 1 Conservation Reserve Planting estimates from ASCS. Accepted tree planting contracts in a particular year were assumed to be planted in the following year. Source: USFS Planting Reports and Mississippi Forestry Commission. TABLE 8. Private Nonindustrial Forest Plantings and Conservation Reserve Plantings - 191 1985 1986 1987 1988 1989 1990 ‘ Alabama (acres) .ENEi CEME‘ 65,200 0 122,600 0 179,200 83,066 142,720 97,741 94,273 63,939 --—- 33,729 NQHLEflZ 65,200 122,600 96,134 44,979 30,334 46.3 66.1 67.8 Infifl 223,608 307,600 376,200 301,135 255,872 1 Conservation Reserve Planting estimates from ASCS. Accepted tree planting contracts in a particular year were assumed to be planted in the following year. Source: USFS Planting Reports and Alabama Forestry Commission. have Heir havr han regi pint ma an the luv 31: all lat 25 Assessments of southern softwood timber supply and demand have shewn rising harvest levels and declining softwood inventories. Reforestation rates after harvest on Mississippi and Alabama PNIF lands have apparently declined recently. The lack of pine reforestation after harvest on southern PNIF lands has been cited as a major factor in regional declines of southern pine net annual growth and inventory and pine type acreage changes. Increased pine reforestation and management on PNIF lands will provide economic benefits to Alabama and Mississippi. However, many private, nonindustrial owners perceive that returns on forestry investments (even cost-share investments) are low and that getting cost-share or other forestry assistance is too difficult. State-specific economic analysis is needed to demonstrate the economic attractiveness of cost-share pine reforestation investments and to guide 1 landowners in selection of the most profitable sites for their investments. PNIF owners also need detailed information about the availability of pine seed, seedlings and reforestation services. This information will help landowners efficiently access goods and services needed to reforest harvested forestlands and assist state forestry agencies in planning for the future. B | GI . I' The objectives of this study are: 1) To analyze pine seed availability, nursery capacity, pine seedling production and site preparation/tree planting services in Alabama 211 3i 4) lndusl availa prepa IMssi asses Alab: icon sells YIEI 26 and Mississippi as potential limiting factors on PNIF pine reforestation. V 2) To analyze the economic profitability of cost-shared pine plantation investments in Mississippi and Alabama using improved or unimproved seedlings on foUr site quality classes in six stumpage price regions. 3) To analyze the sensitivity of the analysis to changes in the discount rate. 4) To identify the most profitable sites for pine plantation investments In Mississippi and Alabama. BeseaLQLMetnods Information available from public forestry agencies, private industry and the literature was used to construct descriptions of pine seed availability, tree nursery capacity, pine seedling production and site preparation/tree planting services availability in Alabama and Mississippi. The availability of these "plantation inputs" is examined to assess their potential as limiting factors in PNIF pine reforestation in Alabama and Mississippi. Net Present Value (NPV) analysis was used to determine the economic profitability of pine plantations in Alabama and Mississippi. A series of pine plantation budgets was prepared for each state using YIELD plus, a timber yield and financial analysis microcomputer program har pric see dis dis de 27 (Hepp 1982). The budgets were calculated for marginal cropland and harvested forestland situations on four site quality classes, six stumpage price regions (three per state) and for improved or unimproved seedlings. These budgets were constructed using a 4 percent real discount then the plantations were evaluated at 6 and 8 percent real discount rates to compare the sensitivity of the results to discount rate. A detailed description of these budgets follows in a later chapter. and II harve decllr retort decis avail relor avail pole impi bec: plar Sou Mis 98 CHAPTER TWO: PLANTATION PRODUCTION INPUTS Reforestation, particularly on PNIF lands is important to Alabama and Mississippi forestry. Lack of adequate pine regeneration on harvested PNIF land has been identified as a major cause of the regional decline in softwood growth. Many variables are important in the reforestation decision, on the human side and the economic side. These decisions have a significant effect on the southern forest. Equally important, however, are the delivery systems that must be available to perform the regeneration tasks once an owner decides to reforest. Site preparation contractors and tree planters must be easily available at reasonable cost. In addition, for the tree improvement potential to be realized efficient nurseries must produce high quality improved seedlings that are available to PNIF owners. It is essential that the mechanism for tree planting be completely functional and efficient because pine reforestation is accomplished almost exclusively by tree planting. For example in 1984,97 percent of all reforested acres in the South were accomplished by tree planting. In 1987, in Alabama and Mississippi, the tree planting percentage of reforested acres was 99 and 98 percent, respectively. 28 oi the Mlssis comp conlr: to inc ellici conlI in III The Miss plar sug qu ph 8C 29 The purpose of this chapter is to examine the major components of the delivery system for artificial pine reforestation in Alabama and Mississippi. Are the tree planting system components adequate? These components include seed, seedlings, nursery capacity, site preparation contractors and tree planting contractors. If PNIF owners are stimulated to increase reforestation on harvested lands, individual states must have efficient nurseries to deliver high quality, improved seedlings, and contractors must be available to do the work. If any of these is lacking or in limited supply the production of plantations will be constrained. Therefore, it is useful to examine the status of each component within Mississippi and Alabama to identify potential "bottlenecks" in the plantation production process. Pin Av ii iii Before genetically improved seedlings can be grown, reliable supplies of genetically improved seed must be available. The following questions then arise: what improved seed is available (especially for production of trees available to PNIF owners); at what cost; and who has access to it? Forest industry firms were the first to invest heavily in tree improvement programs through the industry cooperatives formed at universities such as North Carolina State and Texas A & M. Hence, industry has the greatest amount of improved seed available from company seed orchards. Table 9 shows the ownership of southern pine TABLE 9 State # Alabama Arkansa Florida Georgia Louisiai Mississi North 0 Oklah0I South C Tennes Texas Virginia Total Percer 1 Soul 2 Sour 3A|ab 4 Miss seed prop com exai han mat the 30 TABLE 9. Ownership of Southern Pine1 seed orchards in southern states? W Forest State State Federal Industry Private Total Alabama 3573 0 565 o 922 Arkansas 78 283 1 71 0 532 Florida 739 0 1,382 0 2,121 Georgia 645 0 762 0 1 ,407 Louisiana 335 21 0 491 0 1 .036 Mississippi 2844 330 185 0 799 North Carolina 85 78 453 0 616 Oklahoma 41 0 1 76 0 21 7 South Carolina 188 136 420 0 744 Tennessee 168 8 88 5 269 Texas 210 0 438 0 648 Virginia 359 0 199 0 558 Total 3,489 1 ,045 5,330 5 9,869 Percentage 35 1 0 55 0 1 00 1 Southern pine includes Loblolly, slash, Shortleaf and longleaf pines only. 2 Source: USDA Forest Service 1982a. 3 Alabama Forestry Commission as of September 1987. 4 Mississippi Forestry Commission as of September 1987. seed orchards in the southern states. This seed, however, is company properly and is used exclusively to produce trees to be planted on company lands. Weyerhaeuser seedlings planted in Mississippi, for example, are grown at nurseries outside Mississippi from improved seed harvested in company seed orchards. Some improved seedlings are made available to private landowners each year by forest industry, but the seed is not generally available. Therefore, the most advanced source of genetic: is also inte the U.S. it were eithr Mo active trer Forestry 1 some oil the distill .‘ TABLE 10. \ Species \ Loblolly pi Slash ping Shortleaf L°“9|eal 1 Total Percenia \ 1 Missist 30urce: \ 31 of genetically improved seed is privately owned and not for public use. It is also interesting to note that in 1981, 70 percent of all seed orchards in the U.S. were southern pine and of southern pine orchards, 88 percent were either Loblolly or slash pine. Most state forestry agencies in the South have been engaged in active tree improvement programs for many years. The Mississippi Forestry Commission tree improvement program has lagged behind some of the leading states, such as Florida and Georgia. Table 10 shows the distribution of seed orchard ownership in Mississippi. Currently, MFC TABLE 10. Mississippi southern pine seed orchard ownership. mebILQateoanLAizresl— Forest Species State“ Federal Industry Private Total Loblolly pine 209 107 113 0 429 Slash pine 75 102 72 0 249 Shortleaf pine 0 1 1 0 O 11 Longleaf pine 0 1 10 0 0 1 1 0 Total 284 330 185 0 799 Percentage 35 41 24 O 1 00 1 Mississippi Forestry Commission as of September 1987. Source: USDA Forest Service 1982. has 29 produc 1986i is elim Missis nation orcha quanl Oden Virgir indus clear parti othe of in yielr Alsi Cor orcl QUE the 32 has 284 acres of grafted southern pine seed orchards. MFC began producing improved Loblolly pine seedlings from its own orchard seed in 1986 but it will be several years before the reliance on ”woods run" seed is eliminated. The U.S. Forest Service has a large seed orchard in south Mississippi but that seed is used primarily to produce seedlings for the national forests. Also, there Is a small acreage of forestry industry orchards in Mississippi. Improved pine seed is available on the open market in limited quantities (Bell 1985). International Forest Seed Company (IFS) of Odenville, Alabama fills orders for improved seed of Loblolly, Slash, and Virginia pines. The source of IFS Company improved seed is forest industry surplus. IFS Company contracts with forest industry firms to clean orchard seed and acts as broker to sell excess seed when a particular firm has more than they need. Most improved seed is sold to other forest industry firms but some is sold to state nurseries. Availability of improved pine seed depends on seed orchard cone crops and seed yield in any particular year, seed source required and amount needed. Also, improved seed is much more costly than ”woods run" seed. IFS Company offers first generation improved Loblolly pine seed (clonal orchard origin) for about $40 per pound, depending on availability and quantity ordered. These costs are twice that of "woods run" seed which the company sells for about $18 to $20 per pound. Stale lorestr seed dealers, but t the state nursery s and only a limited 2 amount of seed if 1 there is incentive I loresters are hesil do not know exac case, improved sr seed by purchasi' through county 10 year but MFC reg per pound. MFC orchards producI The Alabr was begun earlir AFC has 357 ac eoal of the prog "ursefies- Tabl class in Alabam orChard acreag nurseries have impmved Dine : 33 State forestry agencies purchase some improved pine seed from seed dealers, but budget constraints can limit the quantities. Typically, the state nursery superintendent has need for a definite amount of seed and only a limited amount of money to spend. Since he can get twice the amount of seed if he purchases ”woods run" as opposed to improved, there is incentive to buy "woods run" seed. In addition, some agency foresters are hesitant to buy "improved” seed from a dealer because they do not know exactly what improvement they can expect. In Mississippi's case, improved seed costs are prohibitive. So, MFC procures their pine seed by purchasing cones from individual collectors across the state through county forestry offices. Seed yield and costs vary from year to year but MFC reports that seed acquired by this method costs about $14 per pound. MFC intends to use this procurement process until their seed orchards produce enough improved seed to supply their nursery needs. The Alabama Forestry Commission's tree improvement program was begun earlier and has progressed further than Mississippi's. The AFC has 357 acres of seed orchards under management with a major goal of the program to produce genetically improved seed for AFC nurseries. Table 11 shows the seed orchard capacity by ownership class in Alabama. It is interesting to note the much larger industry seed orchard acreage in Alabama than in Mississippi. Since 1981, AFC nurseries have been producing a minimum of approximately 20 percent improved pine seedlings from their own orchard seed. The balance of TABLE 11. Alabama 5‘ / species # Loblolly pine Slash pine shonleal pine Longleal pine Total Percentage W Source: USDA Fores improved seedling open market. AF orchards to com seed by 1990 (A Unlike Ml elected to purch own improved 8 are announced . low bid firm that contract. Contra imProved seed certified as to c 34 TABLE 11. Alabama southern pine seed orchard ownership. Wemmmcresl Forest Species State1 Federal Industry Private Total Loblolly pine 210 O 481 0 691 Slash pine _ 95 0 56 0 151 Shortleaf pine 7 0 1 0 0 1 7 Longleaf pine 45 0 18 0 63 Total 357 0 565 0 922 Percentage 39 0 61 0 1 00 1 Alabama Forestry Commission as of September 1987. Source: USDA Forest Service 1982a. improved seedlings are produced from improved seed purchased on the open market. AFC's goal is to produce enough improved seed in its own orchards to completely supply Commission nurseries with improved seed by 1990 (Alabama Forestry Commission, 1983). Unlike Mississippi, the Alabama Forestry Commission has elected to purchase improved seed on the open market to supplement its own improved seed production. Contracts for improved seed purchases are announced and interested firms submit bids on those contracts. The low bid firm that meets the seed contract specifications is awarded the contract. Contract specifications require that all seed be first generation improved seed of specified germination capacity, but they need not be certified as to degree of improvement. Some improved seed purchases are made from tree from forest industry winning bid. The c small amount 01 hr pine cones In summary ownerships in Mis and ownership of production progra pine seed within ' illlliloved seed sr Mississippi has n ”19 quality of im; are not certified. The numt state is not a cor because seedlir borders. Interst industry nurseri useful, lherefon regional nurser 1'18 bulk 01 the : 35 are made from tree seed companies while others may be purchased from forest industry firms directly depending upon who submits the winning bid. The only seed collection AFC does from the wild is for a small amount of hardwood tree seed and occasionally a few longleaf pine cones In summary, the supply of genetically improved pine seed to PNIF ownerships in Mississippi and Alabama is constrained by cost barriers and ownership of improved seed orchards. Both states have active seed production programs that should provide sufficient quantities of improved pine seed within 10 years. While Alabama has chosen to supplement its improved seed supply by open market purchases from industry, Mississippi has not because of budget constraints and concerns about the quality of improvement that can be obtained when purchased seed are not certified. WWI! The number of acres committed to tree seedling production in a state is not a complete measure of that state's tree seedling supply because seedlings for planting can be easily shipped from outside state borders. Interstate shipment of seedlings is routinely done by forest industry nurseries but much less among state-owned nurseries. It is useful, therefore, to examine state nursery capacity within the context of regional nursery capacity since in-state seedling production does form the bulk of the supply of trees available to PNIF owners. Forest tree r industry, and other Nursery in south M needs on National may be sold to oth seedling productio State nurse forestry agencies reforestation withi lands. in fiscal ye produced 45 perc 1981, of the seec percent were ave centred basis pn' forest industry he nurseries but in 1 established their ‘0 produce seed Forest int nursery Capacio ac“93. conoentr Texas. and Alal 36 Forest tree nurseries fall into four categories: federal, state, forest industry, and other private. The only federal nursery in the South is Ashe Nursery in south Mississippi. lt's production is used for reforestation needs on National Forest lands although on occasion surplus seedlings may be sold to others in need of seedlings. The federal contribution to seedling production is small and to PNIF supply is virtually nil. State nurseries are owned and operated by the various state forestry agencies and produce a major portion of seedlings used for reforestation within their state, both on forest industry lands and PNIF lands. In fiscal year 1980 (1979-80 planting season), state nurseries produced 45 percent of all seedlings grown in the South. In fiscal year 1981, of the seedlings produced by state nurseries (602 million pine) 55 percent were available to PNIF owners and 45 percent were grown on a contract basis primarily for forest industry (Brissette, 1982). In the past, forest industry had many of their seedlings contract-grown by state nurseries but in the last 15 years many forest industry firms have established their own nurseries and have relied much less on the states to produce seedlings for them. Forest industry nurseries now form the major part of the South‘s nursery capacity accounting for about 45 percent of existing nursery acres, concentrated most heavily in Georgia, South Carolina, Florida, Texas, and Alabama. The forest industry nursery system now has 2,571 acres in the South compared to 2,566 acres in state nurseries (Figure 1). Other privatr capacity (8.7%) an ornamental and la of nursery capacity they form about 91 South. The State r Mississippi Forest Waynesboro and accounting for 99 does produce so Produced at the r landowners throt 0i state tree nurs forestlands, The MFC million seedlings Seedling Produc and fertility. Se maXimum annu: regime the arm 37 Other private nurseries form another small portion of production capacity (8.7%) and primarily produce hardwood tree seedlings for the ornamental and landscaping industry. Appropriately then, the discussion of nursery capacity centers on state and forest industry nurseries since they form about 90 percent of all pine seedling production capacity in the South. The State of Mississippi has relatively few nurseries. The Mississippi Forestry Commission operates tree nurseries at Mount Olive, Waynesboro and Winona. Pine seedling production predominates, accounting for 99 percent of seedling production but the Winona nursery does produce some hardwood seedlings each year. The pine seedlings produced at the MFC nurseries are sold at or near cost to forest landowners through the county forester's office. The expressed purpose of state tree nurseries is to provide seedlings for reforesting pn'vate forestlands. The MFC nurseries occupy a total of 268 acres and produced 68.4 million seedlings in 1985. The nurseries are operated on two years of seedling production then one year fallow to maintain soil organic matter and fertility. Seeding production of MFC nurseries has approached the maximum annually, for the past three years but under this management regime the annual production limit of MFC nurseries is 70 million seedfings. E: which epic be com 9N mm A": .osoool min EmN an: banana. Sumac“. «use. comm «my 9.2m «Hafinvhflnh ””hnvd‘ 38 383.8 cozoznoi 953mm 3:. 3:295 . F 9:9“. 59 .cmEEomSZ 3 cozfloomm< 523:3 6%? 83.3 .mSou 30: c 6 _ _ m as omN «0:02.22» 003302 00220000 38322 .8678? 88: 3.88 .m 258E 53> mm. mm. was mm. mm. Vm. mm. mm. Pm. om. 0 ON Ge. co co oop ON? o3. omw car com 1.. CNN 1 OVN com 5853 59:56 853% I ////////2//////////////////// ////////// 46 [ILL l I _N~OL—ul oznam Ucw u__Zn_ 7//////// 3335' L L 0:in UCN k_ZQ7//////4 CV“ >E~WJUC_| CNN DOW «0:05:2C 09:05. MWEEGMW 47 35882 32.89 88: 9:83 .5 93E 60> mm. mm. hm. mm. mm. «m. on. N? Fm. ////////////////// ////////////////////////// _mu°.—rl 0:933 0cm E_zn_7///////z banana—I o on om om ONF of. of. 0 PN OVN CNN com 5553 826.6 35.56% needs, appear to I itis poséible to es produce the need Mwmmwwp Loblolly pir pine followed by lower coastal pla directory (USDA and 32 percent 1 to make up the r seedlings plants and the remaini then use averag seed needed to The trenr and Seedlings : 15- These figu per mm for I that 7.5 percent Seedlings, on (number of pla smini ranges Show that The 48 needs, appear to have leveled off. If we carry this analysis a step further, it is poss'ible to estimate the number of pounds of pine seed required to produce the needed seedlings. Then, these estimates can be compared to current seed production capacity. Loblolly pine is by far the most widely planted species of southern pine followed by Slash pine, which is planted mostly in the southern lower coastal plain. Of southern pine seed orchards listed in the latest directory (USDA Forest Service, 1982a) 56 percent were Loblolly pine and 32 percent were Slash pine. Shortleaf and Longleaf pine combined to make up the remaining 10 percent. If we assume that 75 percent of all seedlings planted are Loblolly pine, another 20 percent are Slash pine and the remaining 5 percent are Shortleaf and Longleaf pines, we can then use average numbers of seed per pound to estimate the pounds of seed needed to produce seedlings for planting. The trends will obviously follow the trends shown for planted acres and seedlings so only the pounds of seed needed are shown in Table 15. These figures were calculated using an average number of seeds per pound for each species (USDA Forest Service 1974) and assuming that 75 percent of the seeds planted grow to become plantable seedlings. One recent study, however, reported that seed efficiency (number of plantable seedlings divided by the number of pure live seeds sown) ranges from 40 to 90 percent (South, 1986). The data in Table 15 show that the seed required to produce needed seedlings for Mississippi .hmmrvomm w .NENDN.< DEN 33.00.00.5— EOS m~c0E0h300I Umom GEE £03m UCN 3.0301. DmfiwFimm .mn 030.5. 49 .m 5382 5 32530.30 c.9538 cow 3 «.mom. 5 3.853 mag 883$ 38 tmvmfi «.33 sum: 82 06mg? 0.3 fin Nommdw QmFN mdaqm m.N wN.N vNDxn QNmP camp 8. 8.6.3 «.83 «.83 an? 6.8 to. .33 983 33 82 Em Ed F.N¢N.N 06an @443 0.956 o.m0N.N NmfiwK ENm P 39 QMKNdF fimvmd mKNmK onP m.moN.m adv EN 921.5 v.03 mom. n.me.o v.8 EN mdmvfi m. we P.0Nv.m QNNm; mfimvd 5N9. Nmmw mNmmK mdfin; warm...“ mdN— v.mmo.~. QNG; odmvd «A: 5m— mdmmd Nomv; N.Nom.¢ fioow Nd 5K mdho; odvmd Qm: ommw mco____E 955:: 3; 3; 3; 52.5.6 3: 3; 3; 82.5.6 28> E 88: E 88 A c 88 85.88 A c 88 E 88 A c 88 85.88 nofiéaw :85 2.030.. .90.? nofiéafl 535 2.030.. .. .83 mEman 39363—2 Nmm Tom? .mEmowZ new _&_mm_mm=2 .2 2:25:33. boom 85 Emma cam 2.030.. cofiEzmm .mp 3331 and Alabama havr seed needs rose l pounds in 1987. dramatically. Set 162 percent to 1 E each state that rr produced for a p; As PNIF reforest annually to prod seed come from numbers oi impl purchase forest needed quantiti WSW agency alternative is to seedling that is Seedling years, Particule e"malegion. states since al increElse in ire South has 9x] Planting. The 50 and Alabama have increased steadily through 1987. In Mississippi, seed needs rose 58 percent from 7,316.2 pounds in 1980 to 11569.3 pounds in 1987. In Alabama, seed needs have increased even more dramatically. Seed usage in 1980 was 6,352.9 pounds but it increased 162 percent to 16,700.4 pounds in 1987. This is not to say that inside each state that many pounds of seed were used, but that the seedlings produced for a particular state consumed a given amount of pine seed. As PNlF reforestation increases even more seed will be required annually to produce the needed seedlings. But where will the needed seed come from? If Alabama and Mississippi wish to offer greater numbers of improved seedlings to landowners they will be forced to purchase forest industry surplus seed until state orchards produce needed quantities of seed. A problem with purchasing seed is that state forestry agency budgets have been shrinking in recent years. The alternative is to use "woods run” seed and produce an ”average” seedling that is becoming less desirable to landowners. Seedling needs in Mississippi and Alabama have risen in recent years, particularly among PNIF owners. This trend is also tme for the entireregion. Figure 5 shows the tree planting record for the southern states since about 1950. For the last 15 years there has been a steady increase in tree planting except for a short dip in 1980 and 1981. The South has experienced increases in both PNIF and forest industry planting. These two have combined to push reforestation acres to their \Camanrll ‘ OO0.00W.N U®U®®W\U0~ CNF...‘ mmtde 51 om. $0, :32 5:8 05 E msnmmwasawa 8:. use”. .m 2:9“. mm. _ 86> om. mm. on. mm. ow. mm. om. me. _ _ _ _ _ o //////////////////////////////////.. xxx/xxxx L 2568 xxx// x4 x m w l 0868; / l ooodom; .muohlII-l om.z,////////, l ooo.ooo.~ >:m:uc_l ooo.oom.~ umuomm\um.cm_o mega highest level in hit constraints and to retorestation leve It is difficul available in Missi involved and the the most current respective state Planting or site p The most comm Preparation, “'91 burning but 0thl applications ant Planting service Seasonally in 3 Years and then heavy equipme atlencies have This may Char Semis about The intPrmatir 52 highest level in history. State nursery production is limited by budget constraints and forest industry production is needed to maintain reforestation levels. M It is difficult to completely describe the supply of planting services available in Mississippi and Alabama because of the variety of services involved and the nature of the forestry contracting business. Based on the most current directories of forestry contractors available from the respective state forestry agencies, Mississippi has about 170 tree planting or site preparation vendors and Alabama has an estimated 166. The most common planting services offered are mechanical site preparation, tree planting (both by hand and machine), and prescribed burning but other services offered include: tree injection, herbicide applications and direct seeding by helicopter. Many contractors that offer planting services are also in other businesses and do forestry work seasonally in a limited locality. They also may be "in the business" a few years and then cease to operate when other opportunities calling for heavy equipment arise. For these and other reasons state forestry agencies have difficulty maintaining an up~to~date list of forestry vendors. This may change in the future as vendors become more organized and serious about the business rather than treating it as a seasonal sideline. The information presented, therefore, is the best information available from state forestry gathering this data Aocomplisl and Alabama follr will be done on to industry lands co such as crawler 1 CPmPélrly foreste planting. (lncree contracting out 1 indePendent ver costs have crea planting.) Soon more Often, con grown in forest individual Com; Pde by Co sUPSWised 811C estimate that n lands in Missis Reforestation monitored by ' 0i °°mPany 3i 53 from state forestry agencies involved given the difficult nature of gathering this data. Accomplishing site preparation and planting work in Mississippi and Alabama follows one of two paths depending upon whether the work will be done on forest industry land or PNIF lands. Often, on forest industry lands company crews use company-owned heavy equipment, such as crawler tractors, to clear logging slash and other debris. Then company foresters use prescribed burning to leave a clean site ready for planting. (Increasingly in recent years, however, forest industry has been contracting out their site preparation, even burning, where possible, to independent vendors. Also, increasing mechanical site preparation costs have created a great interest in herbicides for site preparation and planting.) Soon after site preparation is complete, company crews or more often, contracted vendors, replant the tract with improved seedlings grown in forest industry nurseries. Tree planting vendors contract with individual companies to plant trees on company lands. Trees are provided by company nurseries and these planting Operations are supervised and checked by company foresters. Industry foresters estimate that more than 80 percent of tree planting on forest industry lands in Mississippi and Alabama is done by independent contractors. Reforestation operations on forest industry lands then are closely monitored by company foresters to ensure efficiency and success. Use of company site prep crews and/or a relatively small group of experienced tree p time delays and fa forestland. On PNIF la complicated. Few inclination to atter most PNIF plantir forestry commiss monitor the opera the county forest preparation treat After a sit furnishes the 0V1 choice as to hov prohibited by lat From this point, contracts with r Planting seasor VendPr to do hi Chosen Vendor agency foreste cerflties the pl; landowner or 1 54 experienced tree planting contractors, provides a system that minimizes time delays and facilitates prompt reforestation of harvested industry forestland. On PNIF land, however, the reforestation procedure is more complicated. Few forest landowners have sufficient equipment or inclination to attempt their own site preparation or planting. In fact, since most PNIF planting is done with public cost-sharing assistance, a state forestry commission forester is usually involved to help arrange and monitor the operations. The normal procedure on PNIF land is to contact the county forester or ranger to get a recommendation on what site preparation treatments are needed. After a site preparation recommendation is given, the forester furnishes the owner with a list of vendors available and it's the owner's choice as to how (or if) to proceed and with whom. The public forester is prohibited by law from recommending specific vendors over others. From this point, the landowner chooses a site preparation vendor, contracts with him to perform the work and orders seedlings. Before planting season arrives the landowner must arrange with a tree planting vendor to do his tree planting. When tree planting season arrives the chosen vendor performs the tree planting services and a state forestry agency forester checks the work. If all is done properly, the forester certifies the planting job and the cost-sharing funds are reimbursed to the landowner or are paid to the vendor. Figure 6 gives a flowchart -— wb—J co_um~cm.n. hence) conc0> /‘ uOUc0> mCmCLam Qthm oboe: 9.3520. duct 35 a... — otm . m m we: 55 96.. H:ze nc< 3.26:. 5“. tmnozoi 5:23.201 .0 2:9“. Mlll/Illl “ VII’IIII. ) ”(Ill/III 9 III/III/lllll. ” III/IIII/IIII. a o/MIII/IIIIIIII a .llll/Illll/l/ 05 a P- ” «wavy Hm. . , m a t u a m “ m \ I u - - W - ( m 520 $82.80 Saints: 3.08.80 8:2. oocmzqsoo 3:38 3:390 i coEEooom .233“. coszmE mouco> oscsm .ouco> .238“. >ocom< £32m. no; 25 a 22m. cot. 2m 25 >ocoo< 23m mEcSm men. s... . >cmano 223.500 concm> -momnw> cooco> c. c2332.... mczcfld no. m not”. 08 e n. 26 2._ m , c a - . a .I/IllllllllllIII. “ .Illllllllllltlllll “in r l ‘1! ” r i it" ” pp» representation con land and'PNIF lan smoothly and eifif supervised by cor services is direct planted by contra planting while the assured when th planting specific: PNIF land refore contractors and particularly true operation and t1 1986-87, 97 pe accomplished 1 Alabama the p. Reforestation r scheduling dift landowner ap; In a study of y and Royer 19 individuals wt assistance wt 56 representation comparing the reforestation sequence on forest industry land and-PNIF land. Reforestation on forest industry land can proceed smoothly and efficiently because the various operations are performed or supervised by company personnel without delay and payment for services is direct from buyer to seller. When forest industry land is being planted by contract tree planters, company foresters usually check planting while the operation is still in progress and compliance is assured when the job is complete. The contractor complies with the planting specifications and is paid promptly for services rendered. On PNIF land reforestation delays occur because additional players such as contractors and agency foresters must become involved. This is particularly true when public cost-sharing funds are used to finance the operation and this is usually the case in Mississippi and Alabama. In 1986-87, 97 percent of all Mississippi PN IF tree planting was accomplished using either state or federal cost-share funding while in Alabama the percent of cost-share funded PNIF planting was 59 percent. Reforestation delays develop for reasons such as coordination and scheduling difficulties, limited manpower, compliance checking delays, landowner apathy, cost-share funding availability and vendor availability. In a study of why PNIF owners do not invest in pine reforestation (Kaiser and Royer 1983) 27 percent of harvested acres were owned by individuals who consider the "red tape" associated with getting assistance with forest management as being too cumbersome. These delays become vr very dependent c Therefore, strean potential to lower costs and stimul: this system coulr whee preparation vent master list of ref landowners Upc uPdated, and lie Preparation ser lane constructit Table 16 show Another Consulting For MiSSisslPPl Fo consulting to" MiSSissiPptn ande mix of to timber sale llSled 0n the 57 delays become very significant when we realize that PNIF owners are very dependent on cost-sharing monies to get plantations established. Therefore, streamlining the PNIF reforestation sequence has the potential to lower landowner apathy, reduce information and transactions costs and stimulate more PNIF acres to be reforested. Policy changes in this system could be very useful ways to increase PNIF reforestation. In Mississippi, there are two sources of tree planting and site preparation vendors. The Mississippi Forestry Commission maintains a master list of reforestation vendors and lists of vendors are furnished to landowners upon request. This list dates from 1981, is periodically updated, and lists 148 vendors, 141 of which offer tree planting or site preparation services. Other services offered include tree injection, fire lane construction, prescribed burning, helicopter services and others. Table 16 shows a breakdown of services offered by these vendors. Another source of reforestation vendors is the Directory of Consulting Foresters Operating in Mississippi published by the Mississippi Forestry Commission in March 1984. This publication lists consulting foresters who are available for various forestry services in Mississippi. In total the publication lists 69 firms and individuals offering a wide mix of services from marketing and environmental impact studies to timber sales and regeneration services. Several vendors who are listed on the MFC vendor list also appear in this directory but when these are eliminated, 29 additional tree planting or site preparation vendors TABLE 16. Miss Services Offered Hand Planting it 4 Machine Planting 4 Mechanical Site Pre| Tree Injection 4 Firelanes and Presc OM53 Source: Mississippi 1 "Planting“ or “fret 2 Mechanical Site I bedding and bust 3 Others include L and woods road 4 This service also remain. When and plotted acv number of van Flgure7 show available to M1 lorest landowr rellilestation v prePartition Vt 33 are willan include the M 58 TABLE 16. Mississippi forestry vendors, 1981 Services Offered No. Vendors Percent of All Vendors Hand Planting 1. 4 66 44.6 Machine Planting 4 16 10.0 Mechanical Site Preparation2 64 43.0 Tree Injection 4 37 25.0 Firelanes and Prescribed Buming4 4 2.7 Others 3 13 8.8 Source: Mississippi Forestry Commission. 1 "Planting" or "tree planting" was counted as hand planting. 2 Mechanical Site Preparation includes shearing, raking, chopping, K-G blade work, bedding and bush hogging. All firms do not offer all services. 3 Others include LAP programs, aerial spraying and seeding, boundary line maintenance and woods road construction. 4 This service also offered by Mississippi Forestry Commission. remain. When these names are added to those listed on the MFC list and plotted according to Mississippi counties they service, we see the number of vendors available to each county to do reforestation work. Figure 7 shows the number of tree planting and site preparation vendors available to Mississippi forest landowners by county and reveals that forest landowners have between 36 and 71 vendors willing to do reforestation work in their county. In all, about 170 tree planting and site preparation vendors are operating in Mississippi. Among these vendors, 33 are willing to service all counties in Mississippi. These figures do not include the Mississippi Forestry Commission that does offer tree planting services to private landowners, though the Mississippi Forestry 59 42 42- 45 42 43 37 36 44 43 36 43 47 37 37 43 47 ll..._| 38 1 _ - l 37 ‘48 47 44 38 . 33 47 33 41 48 38 41 43 48 48 38 . y - z__, » 37 4° 41 hJig l 41 ‘38 . , 39 42 55 53 so 45 54 [ 43l so a 71 1 Source: Mississippi Forestry Commission 1981, 1984 Figure 7. Available Tree Planting and Site Preparation Vendors by County in Mississippi 1 Commission repc Mississiopi is pe ln Alabarr directory of tree 1984). The late by county, who planting tor priv is to help lando needs. The dir who expressec and lists about The Ala Percent of all r listed in the 15 currently aVail vendors are li landowner in Choose one ( everll-coumy as 35 tree p| Figuri Vendom ava Alabama Fo 60 Commission reports that 90 percent of all work done on PNlF land in Mississippi is performed by private vendors. In Alabama, the Alabama Forestry Commission publishes a formal directory of tree planting vendors ( Alabama Forestry Commission 1984). The latest edition of the directory lists individuals and companies, by county, who are willing to do mechanical site preparation and tree planting for private landowners in Alabama. The purpose of the directory is to help landowners efficiently find a vendor to fill their tree planting needs. The directory is a compilation of information provided by vendors who expressed a willingness to do site preparation or tree planting work and lists about 100 individuals and firms. The Alabama Forestry Commission estimates that only about 60 percent of all Alabama's tree planting and site preparation vendors were listed in the 1984 directory so that an estimated 160 to 170 vendors are currently available to private forest landowners in Alabama. Currently, vendors are listed by the county they are willing to service, so a landowner in any particular county can turn to the list for his county and choose one of the vendors available. According to the 1984 directory every-county has at least 19 vendors available and some have as many as 35 tree planting or site preparation vendors. Figure 8 shows the number of tree planting and site preparation vendors available to Alabama forest landowners by county. The Alabama Forestry Commission feels satisfied that there are enough tree Figure t 61 24 27 25 21 - Source: Alabama Forestry Commission 1984 Figure 8. Available Tree Planting and Site Preparation Vendors by County in Alabama planting and site landowners and ' including telephr Alabama and Ml MFC does abou Mississippi eacl lorestry commie burning on FM" exposure for or Based o and industrial i there is a strati industry lands Alabama contr land tree plant l°llree Plantir relorestation l Similarly to co "‘9 Sliulh in l trees Until M, These tree p type tree pla examlilo, ho 62 planting and site preparation vendors available to Alabama forest landowners and the vendor directory makes it easy to locate them by including telephone numbers. An important difference between Alabama and Mississippi is that AFC does no tree planting at all while MFC does about 10 percent of the planting done on PNIF land in Mississippi each year. However, in both Mississippi and Alabama the forestry commission does more than 90 percent of all site preparation burning on PNIF lands. This is principally due to the potential liability exposure for consultants and equipment availability. Based on discussions with reforestation vendors, agency foresters and industrial foresters it appears that in both Mississippi and Alabama there is a stratification in the reforestation services market between forest industry lands and PNIF lands. Forest industry in Mississippi and Alabama contract out between 80 and 100 percent of all their company land tree planting. Forest industry tracts are large and attract competition for tree planting contracts by highly organized, production-type reforestation companies. These reforestation companies operate similarly to contract grain harvesters in the Great Plains. They begin in the South in December or January and work their way north planting trees until May or June when they finish in the Great Lakes region. These tree planters plant with hodads and easily out-bid local dibble- type tree planting venders on a cost-per-planted acre basis. For example, hodad planting crews typically average 6,000 trees planted per L__— man per day whi or less per day. ' trees for $29 to S dibble bar crews are based in Arl These reloresta lorest industry a A good 5 Tree Planting S for forest indus‘ Wanam Alabama for Si Corporation, C Percent of thei Planted on PN industry client beceluse then do not like in . Forest "ads are lan Contracts are Cost reforest. on forest ind 63 man per day while a good dibble bar tree planter may plant 4,000 trees or less per day. This difference in production allows hodad crews to plant trees for $29 to $31 per acre compared to $40 or more per acre done by dibble bar crews. Most of the ”hodad" vendors are from out of state and are based in Arkansas, Tennessee, Idaho, Montana or the Southwest. These reforestation companies offer low prices and good survival to forest industry and tend to get contracts year after year. A good example of such a reforestation company is Evergreen Tree Planting Service of Sand Point, Idaho. This firm has been planting for forest industry in Mississippi and Alabama for about eight years . In a typical year they will plant about 15,000 acres in Mississippi and 9,000 in Alabama for such clients as International Paper Company, James River Corporation, Champion lntemational, and others. Evergreen does 95 percent of their planting on forest industry land with about 5 percent planted on PNIF land coordinated by the state forestry agency or an industry client. They prefer not to work with PNIF owners directly ‘ because there are problems trying to plant smaller tracts and they also do not like the difficulties of delayed payment. .— Forest industry tree planting contracts are attractive because the tracts are large and payment is direct. Since virtually all industry contracts are awarded after a bid process these high production, low- cost reforestation firms capture most of the contract hand planting done on forest industry land in Mississippi and Alabama because of their low per acre rates, if- Weyerhaeuser, i only. Their expi managers feel if last to do a high seasons Weyer not make a qua mentioned is th terrain found in do a high quali vs 700 per acr not measure u Forest i few reliable ve forest industry dibble bar pla efficient vend contracts. .. Since Slate refores. planting on f ‘Gli to |°Cal, . Vary greatly 64 per acre rates, mentioned earlier. At least one firm, however, Weyerhaeuser, which manages land in both states, uses dibble planters only. Their experience with hodad planters has been poor and company managers feel that tree planters who plant 6,000 trees per day are too fast to do a high quality planting job. While the trees survive a few seasons Weyerhaeuser feels too many are leaning or ”j-rooted" and will not make a quality crop tree over the stand rotation. Another reason mentioned is that the hodad planting tool was not designed for the flat terrain found in the South. Basically, the Weyerhaeuser approach is to do a high quality planting job on fewer trees per acre (600 trees per acre vs 700 per acre planted by many companies) and hodad planting does not measure up to their expectations. Forest industry firms tend to contract their tree planting to the same few reliable vendors each year. Hence, because of the attractiveness of forest industry contracts the best tree planting vendors (either hodad or dibble bar planters) work for forest industry and the higher cost, less efficient vendors are crowded out of the competition for industry contracts. ,_ Since the larger industrial clients tend to be served by the out-of- state reforestation companies or the better in-state vendors most hand planting on PNIF land (much of which is paid for by cost-share funds) is left to local, less efficient contractors. The local tree planting vendors vary greatly in quality and reliability. In fact, one industry manager felt that many local t per acre' amount trying to be more understand insu by forest industl state competitio planting vend0l but this require not been estal small group of forest industry‘ less organized This market st tracts to be at would appear effort to estat iracts to stiml reducing tree 65 that many local tree planters set their prices in order to get the maximum per acre’ amount allowed by cost-sharing program policies rather than trying to be more cost competitive. Also, these vendors often do not understand insurance and workmen's compensation required of vendors by forest industry so that they cannot compete with well organized out-of- state competition. State forestry agencies have desired to certify tree planting vendors so landowners would have some measure of reliability but this requires a statewide effort and the certification programs have not been established. In the final analysis there tends to be a relatively small group of efficient, well organized reforestation vendors that service forest industry's reforestation needs and another larger, less efficient and less organized group of vendors that are available to service PNlF lands. This market stratification causes hand planting costs for forest industry tracts to be about $10 per acre less than typical costs on PNIF lands. lt ' would appear to be feasible to direct an appropriate amount of public effort to establish a vendor certification program and consolidate small tracts to stimulate competition for PNIF tree planting contracts thereby reducing tree planting costs on PNIF lands which are planted using public funds. CHAP‘ Budget an present and mm investment oppo revenues are me management. l investments req known variables are presented t described. This cha analyze the ac investments in Plantation inve cum” (harve regional stum' discount rate. The bl Va‘kbl Author CHAPTER THREE: PINE PLANTATION BUDGETS Budget analysis is a technique used to compare the value of present and future costs with the value of future incomes from an investment opportunity. In the case of pine plantation investments. revenues are many years in the future as are some costs of management. The construction of budgets for such long term investments requires assumptions and estimates of future values of known variables in the analysis. The assumptions used in this analysis are presented throughout the chapter as the budget construction is descnbed. This chapter describes the construction of budgets used to analyze the economic attractiveness of cost-share pine plantation investments in Mississippi and Alabama. These budgets model pine plantation investments in two different situations: marginal cropland and cutover (harvested) timberland. Additional variables include site quality, regional stumpage prices, improved or unimproved seedling stock and discount rate. The budgets presented were developed using the Tennessee Valley Authority YIELD plus microcomputer program (Hepp 1987a). 66 YIELD plus is a ) yield and'financia combines growth in a single micror which was the ill introduced in the and yield simula financial analyst Reforestation Tl available that p fields or halves provides all the widely used in The program is southeastern l QIOWlh simulat the marginal c Plantation" for construct the °°mPlete and Co"Silver the Loblolly pine 67 YIELD plus is a yield forecasting and planning tool that performs growth, yield and'financial analysis. YIELD plus was chosen because it combines growth and yield prediction and financial analysis capabilities in a single microcomputer program. It is the current version of YIELD 1.1 which was the first microcomputer-based growth and yield program introduced in the U.S. (Hepp 1987b). The comprehensive set of growth and yield simulators incorporates current research findings and the financial analysis package reflects current tax laws such as the Reforestation Tax Incentives, Public Law 96-451. Other programs are available that perform southern pine growth and yield projections for old fields or harvested sites, or financial analysis separately but YIELD plus provides all these features in one program at a reasonable cost. It is widely used in the South with over 500 registered copies in distribution. The program is most useful for even aged forest types in the southeastern U.S. and contains 13 individual growth simulators. The growth simulators used for this analysis were "Old Field Loblolly Pine" for the marginal cropland budgets and "Cutover Site Loblolly Pine Plantation" for the cutover stand budgets. The research data used to construct the YIELD plus growth simulators used for this analysis are complete and current. The YIELD plus manual cites 10 studies used to construct the "Old Field" simulator and 8 studies for the ”Cutover Site Loblolly Pine Plantation" simulator. The purpl attractiveness 0 Mississippi and attractiveness L most commonly and is the pres present value < n NPV Q i If the NPV is I present value iurtds than al calculate Np Two c a"mists: Int (EN), The anoiher Way 68 The purpose of these budgets is to estimate the economic attractiveness of pine plantation investments on various sites in Mississippi and Alabama. The primary indicator of economic attractiveness used in this study is net present value (NPV). NPV is the most commonly used measure of economic effectiveness (Fortson 1986) and is the present value of all incomes from an investment minus the present value of all costs. NPV is calculated using the following formula: n l n l NPV =2; Ij/(1 + i) — z Cj/ (1 + i) i = 0 l = 0 C=Cost Where: I = Income n = length of investment i = discount rate j = year cost or income incurred If the NPV is positive (that is, the present value of incomes is greater than present value of costs) then the investment project is a better use of funds than an alternative represented by the discount rate used to calculate NPV. Two other measures of effectiveness are also given in this analysis: lntemal Rate of Return (IRR) and Equivalent Annual Income (EAI) . The IRR is the interest rate at which NPV is equal to zero. To put it another way, IRR is the rate at which discounted revenues equal 69 discounted costs. The internal rate of return assumes that all intermediate investment incomes are reinvested in the project and is calculated using the following formula: NPV: r r-t r r-t Z Ct(1+i) = Z lt(1+i) t= 0 i=0 C=Cost Where: I = Income i = Internal Rate of Return r = rotation length in years t = year cost or income incurred A project is considered profitable if the IRR is greater than the discount rate. Equivalent Annual Income (EAI) is NPV expressed as an annuity over the length of the investment computed at the discount rate. This measure can be useful for comparing investments of unequal length such as comparing agricultural and forestry investments. EAI can be computed using the following formula. EAl= NPV (P(1+P)n) (1 +P)"‘1 Where: NPV = net present value P = discount rate n = investment length in years 70 The attractiveness of investing in pine plantations varies according to the productivity of the land and the previous use. In this case, land that had previously been in crops is relatively inexpensive to establish in pine, whereas timberland recently harvested generally requires greater expenses. Two different types of plantation investments were analyzed. The first plantation investment is that of reforesting harvested forestland. These budgets were titled "Cutover Timberland" and are the type of investments analysts report should be increased on southern PNIF land to ensure adequate pine supplies for the future (USDA Forest Service 1988, Knight 1987, Sheffield and Cost 1987). The second plantation investment is planting retired agricultural land. These budgets are titled "Marginal Cropland”. These two plantation investment scenarios were simulated on four different types of land designated as ”Poor", "Average", "Good", and "Excellent" site quality. The U.S. Forest Service has categorized forestland in Mississippi and Alabama in one of six categories based on productivity. For this analysis, the six Forest Service productivity categories (site classes) were consolidated to the four site quality classes above and converted to site index base year 25 because the YIELD plus program requires a base 25 site index. The Forest Service site classes are defined by productivity expressed in cubic feet of wood produced per acre per year. These categories have equivalence in site 71 index base year 50. For this study, the lowest two categories and the highest two categories were combined to yield a total of four site quality classes with associated representative site index (age 50) values. These site categories were consolidated because it seemed clear that the lowest site class would be marginal for timber production and the highest would be profitable. In addition, four site quality classes would help streamline the study. These site quality classes were labeled Poor, Average, Good and Excellent. The representative site index values were then converted to site index 25 values using height-growth curves for second growth Loblolly pine (USDA Forest Service 1982c). These site index 25 values were then used as input to the YIELD plus model. Table 17 shows the definitions of site quality for this analysis and how they correspond to the Forest Service site classes and site index, base year 25. Tables showing the number of acres by county in each site quality class are given in Appendix C. Another variable studied in this analysis is price region. Within each state are three distinct timber market areas designated "North", "Central", and ”South”. In Alabama these regions correspond with the Timber Mart South price reporting districts (Timber Mart South) and in Mississippi they correspond with the MCES Timber Price Report (Martin and Daniels, 1988) districts. Figures 9 and 10 show the price reporting regions used in this analysis for Alabama and Mississippi, respectively. Timber Mart South is a regional price reporting service based in North 72 TABLE 17. Site Quality Definitions for Plantation Budgets Site Productivity Forest Service Loblolly Pine Representative 6112521855" W M22550 W21 20-49 51-59 \ Poor 70 45 50-84 60-79 85-119 80-94 Average 88 57 120-164 95-109 Good 95 60 165-224 1 10+ \ Excellent 1 10 70 225+ 110+ 1/ Site class is growth in cu. ft./acre/year at culmination of mean annual growth for fully stocked natural stands. 2/ Taken from height-grth relationships in USDA 1982 C. Carolina and is the only published source of private timber prices for Alabama. Timber Mart South is widely used in the Southern United States as a source of timber prices information. The MCES Timber Price Report figures are used because the figures are specific for Mississippi and widely used in the state. .1 Prices used in this analysis are 12 month averages for pine sawtimber, chip-n-saw and pulpwood between September 1987 and September 1988. They are taken from Tlmber Mart South for Alabama and the MCES Timber Price Report for Mississippi. By using these price 74 North .r‘ Central South Figure 10. Mississippi Price Reporting Regions 75 averages in the analysis an implicit assumption is made that these products will remain the major pine product categories and that their relative prices will be consistent over the rotation. Through the 1960's and 1970's pine pulpwood and sawtimber were the two major categories of southern pine products. During the late 1970's chip-n-saw technology began to influence the market since it could produce dimension lumber from smaller trees. Since that time, chip-n-saw pine has entered the Alabama and Mississippi timber markets as a product category between pulpwood and sawtimber. At this time, and for the foreseeable future, these prices are expected to maintain their relative positions. The South's Fourth Forest report (USDA 1988) projects substantial increases in softwood lumber and pine pulpwood production in the South Central Region. These increases are expected to cause real price increases for both pine pulpwood and sawtimber stumpage. Such increased lumber demand should also maintain active markets for chip-n-saw size trees. The question of consistency of the relative price differences between price regions in each state is also worthy of mention. Traditionally, pine timber prices have been highest and most competitive in south Alabama and Mississippi with prices lower as you travel north in each state. Stumpage prices have also traditionally been higher in Alabama than Mississippi . Competition for stumpage has been the reason for this east-west difference. The three distinct price regions reflect this market segmentation. This delineation of distinct market 76 areas is expected to persist but as competition continues to spread from south to 'north prices in the northern price regions should begin to approach price parity with the other regions in the future. Such a development, should it take place, however, would improve the economic climate for regeneration investments in the region. Though the South's Fourth Forest study projects increasing use of hardwood pulpwood in the pulp and paper industry, no major changes are currently anticipated that would change the relative prices of the softwood products used in this analysis. ‘ Table 18 shows the product prices used for this study. Markets for pine products are assumed to be active, which is the case throughout Mississippi and Alabama. TABLE 18. Stumpage Price Averages for Mississippi and Alabama, 1988. Mississippi Alabama Price Region Sawtimber C-N-S Pulpwood Sawtimber C-N-S Pulpwood ------------------------ dollars---- North 132 107 9 148 107 14 Central 166 107 9 186 119 16 South 178 131 12 201 158 19 Sawtimber and CNS prices in $/MBF, Doyle, Pulpwood prices in $Icord Sources: MCES Tlmber Price Report and Timber Mart South. YIELD plus simulators generate product volumes in pulpwood, chip-n-saw, and sawtimber. In this analysis trees from 4 to 7 inches DBH 77 are considered pulpwood, 8 to 11 inches DBH chip-n-saw and 12 inches DBH and larger are sawtimber. Trees below 4 inches DBH are unmerchantable. A final variable in the analysis is type of seedling stock. Two alternatives were considered, unimproved or improved seedlings. This alternative is relevant because in the past ten years improved seedlings have become more available to private landowners and many ask if they should spend the additional funds to plant them. A key question arises when constructing an analysis such as this: What growth advantage should be assigned for improved seedlings? Loblolly pine progeny tests indicate first generation volume gains ranging from 10 to 20 percent compared with unimproved stock (Lantz and Kraus 1987, Talbert et al. 1985). Currently, there are no growth and yield models available for genetically improved stock-(Sullivan 1984) but research has demonstrated that improved and unimproved trees have significantly different heights and yields at equal ages similar to those due to site-index changes (Hollowell and Porterfield 1986). Accordingly, it is common practice among biometricians in the absence of growth and yield models, to estimate gains due to genetically improved planting stock by increasing the site index. A ten percent increase in growth is widely accepted among forest biometricians to model gains from genetically superior stock (Matney 1988, Hepp 1988). The authors of the South's Fourth Forest study used a 10 percent increase over base yields 78 when estimating growth and yield increases for pine plantations established with genetically superior planting stock (USDA Forest Service 1988 p. 129). A series of technical sessions were held among regional contributors to the South's Fourth Forest study and the 10 percent yield increase for improved seedlings was adopted as a concensus among technical experts. Therefore, for this study the gains from using improved planting stock were modeled by increasing the site index 10 percent. For example, when improved seedling plantations were being analyzed, the site index (base age 25) for the "Excellent" site class was adjusted from 70 to 77 to simulate the gain from improved seedlings. Future analysis might include a range of yield improvements associated with improved planting stock. This simulation technique implies a linear relationship between site index and volume increase which is not strictly true. Site index is a measure of tree height at a given age and we know that the relationship between tree height and volume is nonlinear. However, within a small range of change such as the 10 percent assumption used in this analysis the degree of nonlinearity is not anticipated to be relevant to the simulation outcome (Belli 1990, Land 1990).. E . | E' l I! . | I In this analysis rotation length was set at 35 years at which time all trees were harvested. Throughout the rotation a standard thinning schedule was applied to all stands. The plantations were thinned from 79 below taking the smallest diameter trees first to leave the highest value crop trees. Plantations were thinned at age 15, 22, 29 and then final harvest was performed at age 35. The thinning prescription was to reduce basal area at ages 15, 22 and 29 to the numerical equivalent of the 50 year site index. Using the 50 year site index as a target basal area for thinning southern pine stands is a common practice among southern foresters (Ezell 1988) and falls within the range of basal area identified by Smith (1962) but it is recognized that other thinning prescriptions could be successfully employed. The thinning prescription used here has been used in other studies as a standard management schedule (Ballard, et al. 1981). During the analysis this management schedule was applied uniformly to all stands with the exception of the "cutover timberland" budgets on the ”Poor site". On those sites growth was insufficient to support a thinning at age 15 so a modified management schedule of thinnings in years 25, 30, and final cutting at 35 was substituted. Prescribed burning was also used as a standard management practice during the rotation. Stands were burned every 5 years for competition control and wildlife habitat beginning in year 15 until rotation end. Plantation establishment was accomplished in one of two ways. Stands on marginal cropland only required prescribed burning for site preparation and were machine planted with 726 seedlings per acre as recommended by the state forestry agencies. Machine planting was 80 used because this method is appropriate for old field reforestation and the cost is less than hand planting. Stands on cutover timberland normally require more extensive site preparation to remove logging slash and residual stems. Though it is recognized that site preparation requirements can vary considerably from one site to another a standard site preparation scenario was used for this study. Cutover timberland stands were established by single-pass, roll chopping to remove competing and residual vegetation, prescribed burning to clear the site and finally hand planted by crews using dibble bars at 726 seedlings per acre. On these sites hand planting is required because logging slash will not permit machine planting. The owners of these plantations are assumed to be private, nonindustrial landowners in the 15 percent marginal tax bracket. Current tax laws are considered in this analysis. There is no capital gains exclusion for timber sale income but the reforestation tax incentives (PL 96451) are used. It is assumed that no costs such as consultant's fees are incurred when timber is sold, however, a $2 per acre annual cost is assumed to pay for management and taxes. Most tree planting on PNIF lands in Mississippi and Alabama is accomplished with the assistance of a public cost-share program, either state or federal. It is assumed, therefore, in this analysis that these plantations are established using cost-share funding. Current programs such as the Forestry Incentives 81 Program and similar state cost-share programs in Mississippi and Alabama-will pay up to 65 percent of site preparation and planting costs up to a maximum amount per acre for each practice. In this analysis it is assumed that the landowners secure state or federal (F IP) cost-share funding to assist them in reforestation and that they take advantage of the reforestation tax incentives. Public funding agencies will pay up to 65% of reforestation costs on various reforestation practices up to a maximum amount per acre. For example, the Mississippi Forestry Commission will pay 65% of seedling and tree planting costs up to $37 per acre. The costs paid by landowners to established plantations in this study were calculated according to the maximums allowed for each practice by the respective state forestry agency. Baseline costs for the required management practices are regional averages taken from Straka et al. (1989). Table 19 shows base costs used in the analysis. These costs were then adjusted by cost-share assistance to get landowner expenses used for the analysis. This study utilized a real analysis approach, that is, results represent returns without regard to inflation. Analysis on a real basis is often used so that alternate investment opportunities can be compared (Risbrudt and Ellefson 1983) and does not make any assumptions concerning the future rate of inflation. Results are presented independent of inflation in current (1988) dollars so users can make their own assumptions about inflation rates and adjust the results accordingly. 82 TABLE 19. Average Costs for Selected Forest Practices and Tree Seedlings1 Item _ Wm Improved Seedlings2 Alabama 19.96 Mississippi 22.50 Unimproved Seedlings2 Alabama 16.69 Mississippi 16.69 Machine Planting; old fields3 34.45 Hand planting following intensive site preparation4 38.69 Roll chopping, single pass4 65.47 Site preparation burning, chopped areas4 9.70 Silvicultural burning, ground drip torch3 5.43 1 Source: Straka et al. 1989 2 State Forestry Commission Prices 3 Used for Marginal Cropland Site Prep 4 Used for Cutover Timberland Site Prep Land costs are not considered, since land is normally viewed as a separate investment from the forest investment. In discounted cash flow analysis of forestry investments the choice of discount rate is very important and has been the source of debate among economists for years. The debate has focused most intensely on the appropriate rate to use when evaluating public forestry programs. Basically, two schools of thought have developed concerning the proper discount rate for evaluating forestry investments. The first contends that since forestry investments compete for limited funds with other government projects the current nominal market interest rate (opportunity cost of capital) should be used. A second school of thought has argued 83 that the use of current market rates overemphasizes the short run and is inappropriate for long-term investments, such as forestry. They contend that discounting at current market rates undervalues or ignores the interests of future generations and have proposed the use of lower discount rates which reflect the "social time preference" (Lorrain-Smith 1982, Helliwell 1974). Harou (1985) provides a thorough, concise review of the discount rate literature in forestry. Several authors have offered theoretical approaches aimed at reconciling these two opposing views of the discount rate problem (Manning 1977, Foster 1979, Foster 1 985). Klemperer (1976) reported historical real rates of return on long term financial investments such as Aaa corporate bonds during the 1960's (3 percent), bank loans (2 percent) and stocks before taxes between 1871 and 1973 (5 percent). He documented that real returns to I capital have historically been fairly stable and not as high as commonly thought. Row, et al. (1981) similarly present estimates of long-term private opportunity costs for capital (real market rates of return) in the range of 2 to 6 percent as part of their rationale in recommending a 4 percent discount rate for use in Forest Service long-term land and resource planning. Foster (1982) cited similar real rates of return. Randall (1981) suggests a six percent social discount rate to evaluate public investments. 84 A significant body of literature has developed over the past 30 years on the discount rate for evaluating public forestry investments. Recently, several authors have utilized corporate finance techniques to focus on a method to determine the appropriate discount rate for long- term corporate forestry projects (Fortson 1986, Zinkhan 1988a, Zinkhan 1988b). These researchers have utilized techniques that adjust the firm's marginal weighted average cost of capital, commonly used as the firm's discount rate, for risk and the ability of the project to support long term debt. The general conclusion of this research has been that corporate discount rates for evaluating forestry projects should be lower than have previously been used. Zinkhan (1988a) arrived at an approximate real discount rate of 4.3 percent for corporate southern timberland-related projects in 1987. Though the use of modern corporate finance techniques to determine an appropriate discount rate may be appropriate for individual PNIF owners with diversified portfolios (Zinkhan 1988a) methods that apply generally to PNIF owners are not available. Typically, if PNIF owners employ discounted cash flow analysis at all, they utilize the "current market rate” as expressed by money market funds or certificates of deposit as their alternate rate. Few attempts have been made to estimate the discount rate for PNIF owners, but one would expect to observe a wide range of discount rates among the population for several reasons. 85 Private, nonindustrial forestland owners comprise a very diverse group, including farmers, professionals, retirees, factory workers, and many others (Birch et al. 1982). Research has shown that these owners have multiple ownership goals for their prOperty which often include timber production but also include many other objectives such as recreation, grazing, residence, and others (Porterfield et al 1978, Martin, CB. 1978). Such a diversity of ownership objectives suggest that time preferences, investment strategies and expected returns on forest investments should also be diverse. Boyer and Moulton (1987) in a study that used regression analysis to examine the effects of cost-share programs and tax incentives on the likelihood of reforestation noted (p. 46) that the regression analysis "clearly indicated that the probabilities of reforestation are not the same among landowners who are familiar with public financial incentives and those who are not, other factors being equal.” This diversity seems intuitively clear but no research is available that assigns interest rate preferences to specific groups of forest landowners. Some authors have attempted to categorize and describe landowner objectives and attitudes regarding reforestation investments. Fedkiw (1983) described a classification of PNIF owners by investment strategy after Yoho. He classified five groups of PNIF investors: custodial investors, sideline forest investors, speculators, hobby investors, and "true investors". Fedkiw described characteristics of each 86 category's investment strategy and objectives for owning the land. Given the description of these groups of PNIF investors it is unlikely that the same rate of return will be acceptable to all. Davis (1980) examined PNIF reforestation behavior in central Mississippi and used discriminant analysis to describe attitudes of "retoresters" and ”non-reforesters”. Most ”non-reforesters" required one of two types of motivation to agree to reforestation. Some merely required that a forester personally present their Options and opportunities while others required that someone else pay all costs and oversee the planting. Such diverse opinions on reforestation as compared with landowners who did reforest implies that the rate of return expected by these owner groups is also diverse. Kronrad and DeSteiguer (1983) described attitudes among PNIF landowners regarding discount rates and investment lengths. They tried I to determine if the present alternative rate of return for short-term, liquid investments adequately reflects the rate of return desired for long-term illiquid investments. Results of a survey of 123 PNIF landowners who attended Extension forestry educational meetings in North Carolina, indicated that those landowners wanted a higher rate of return on their investment as the investment length increases. The present average nominal alternative rate of return of the landowners surveyed was 11.5 percent with a range from 5 to 18 percent. For a five year investment the 87 average rate of return desired was 13.2 percent and for a 25 year investment it was 15.1 percent. These results suggest that forest landowners may require a nominal discount rate 3.6 percent higher than the current alternative nominal rate for a risk-free, liquid investment to invest in reforestation. These estimates were gathered in 1982 when inflation was 6.2 (Economic Report of the President, January 1989) percent. The nominal rate of interest is related to the real rate by the following formula (Fortson, 1986y (1 +k) = (1 +i) (1+g) Where: k = the nominal rate i = the real rate 9 = the inflation rate If we use this equation to solve for the real rates expressed by the North Carolina landowners surveyed by Kronrad and DeSteiguer it yields the following: Investment Survey Average Associated W Ngminal Qisggunt Rate Real Disggunt Rate Present 11.5 4.9 5 years 13.2 6.5 25 years 15.1 8.3 These rates offer interesting insight into PNIF discount rate preference but it is only a glimpse. The reported averages represented ranges in landowner rate preferences and that of a biased sample of 88 landowners, namely those that attended Extension forest management meetings: In addition, these estimates were for risk-free investments of the specified periods and would need to be adjusted (up or down) for risk. Nevertheless, these rates suggest that real discount rates of some southern PNIF owners are in the range of 4 to 8 percent. The Forest Service uses a 4 percent discount rate in long term land and resource planning (Row 91 al. 1981) and real discount rates from 4 to 10 percent were used by Forest Service in the South's Fourth Forest study (USDA Forest Service 1988). Randall (1981) notes that in the long run, it appears, the real rate of interest, r, in the United States as reflected by the prime lending rate is about 2.5 to 3 percent. In a long term forest investment model used by Adams et al. (1982) as part of a U.S. timber supply model a discount rate of 4 percent was used. On the strength of current evidence and practice by other researchers real discount rates of 4, 6 and 8 percent were used in this analysis to evaluate pine regeneration investments. It is appropriate to describe the output of the YIELD plus package. The YIELD plus program has the capability to perform SOphisticated investment analysis. The user builds a cash flow stream by specifying the level and timing of harvests in the forest that is being "grown" by the growth and yield simulator. All current federal income tax regulations (Tax Reform Act of 1986) including credits, deductions, depletion allowances, depreciation and tax liabilities are included in the package. 89 However, calculation of alternative minimum tax is not included. The YIELD pills package generates a summary of forest growth over the rotation with a summary of each harvest during the rotation including age the cutting occurred, average tree height, thinning method, and summaries of the residual stand and harvested component. The next report is a "Detailed Wood Flow Report" which is a profile of each harvest by diameter class. It shows how many trees were in each DBH class at the time of harvest, how many of each were cut and how many remained. It also gives the value of harvested products. Based on the growth and yield simulation and financial parameters imputed to the model, the YIELD plus program will generate a Financial Profitability report. This report summarizes the costs and revenues that occurred during the rotation and lists before and after tax Net Present Value and other measures of economic efficiency. Finally,a cash flow report is produced. This report shows revenues and expenses for each year of the investment throughout the rotation. Examples of YIELD plus output for the "marginal cropland" and "cutover timberland" regeneration investments are given in Appendix D. CHAPTER FOUR: RESULTS AND DISCUSSION A series of 204 enterprise budgets was constructed to analyze the economic attractiveness of cost-share pine regeneration investments in Alabama and Mississippi. These budgets examine pine reforestation investments in two situations: marginal cropland plantings and reforestation following harvest using moderately intensive site preparation. In these scenarios, site quality, stumpage price region and seedling type were variables. A real discount rate of 4 percent was used for the base analysis, then 6 and 8 percent rates were used to evaluate changes in the results due to a change in the discount rate. Cost-sharing assistance such as in FIP or similar state cost-sharing programs was assumed with all analyses. The case of the Conservation Reserve Program which combines annual payments to the landowner and cost- share funds for plantation establishment was not considered. The analyses were performed using the YIELD plus computer package from the Tennessee Valley Authority. These budgets examine the timber investment only. Potential incomes from other sources such as hunting leases or non-market values are not considered. Incomes such as stumpage, and expenses such as site preparation, planting, 90 91 taxes, controlled burning etc. are in 1988 dollars. The guiding rate was 4 percent; The analysis was conducted on a real basis and is independent of inflation effects. Net present value (NPV) was used as the primary indicator of economic efficiency however, internal rate of return (IRR) and equivalent annual income (EAI) are also presented The marginal cropland case was a consistently profitable investment in both Alabama and Mississippi. Net present value for Alabama marginal cropland plantings ranged from a high of $952.95 in the south, using improved seedlings to a low of $138.80 in the north using unimproved or "woods run" seedlings. NPV using improved stock ranged from $952.95 on the Excellent site in the south market region to $194.28 on the Poor site in the northern market region. The use of improved seedlings increased NPV an average of 25 percent on the Excellent sites, over 40 percent on the Good and Average sites and 37 percent on the Poor sites. The use of improved seedling stock increased NPV an average of $166.17, $166, $150.70 and $67.14 on the Excellent, Good, Average and Poor sites, respectively. As expected, NPV was highest in the southern market region for all sites because prices are higher in the south. Table 20 shows a summary of results for Alabama marginal cropland plantation investments. The results of the Mississippi marginal cropland budgets were similar to Alabama. The NPV was positive for all sites, in all regions indicating a profitable investment. NPV ranged from $747.43 for the 92 35.33 um>anED u D 35.33 0965:: u _ .8me 223 Sn 6.22050 2:20:08 .0 $5358 .3 «56> 2:82.”. .52 n >mz 3 2:85 33:53. E53223 u _ 33 x52. mam . 8.2.0. 5 $8 3.2. v.38 832 8.42 8.59 ~38 8.8” E 5 8.8.5. «3 z. 332 m5: 3.3 wad «mm. 34K $4.9 wdm 8.5 9.9. {kw wimp Eda 4 .mz 8.8. 8.8 8.8 8.5 2.: 2.34. £9. 8.6 8.3 3.3 8.8 8.8 < Eu 3; of 2.9 a: «.2 an. 2: at 4.2 2: 4.3 3: :mm. 2 _ a _ a _ a _ 2 _ a _ so: 2:88 god 38.0 58.2 saw 333 8.54 3.8m oota . .2818 .8512 2mm 88 3% Sum 3:085 .2863 v .bmesam .mocam ucmaeo 559m: mEman .8 033. 93 _ southern market region, using improved seedlings to $88.66 in the northern market region using unimproved stock. NPV using improved stock ranged from $747.43 on the Excellent site in the south to $134.40 on the Poor site in the north. Improved seedlings increased NPV of the reforestation investment an average of $138.53 or 27 percent on Excellent sites, $133.17 or 43 percent on Good sites, $119.47 or 45 percent on Average sites and $54.94 or 47 percent on Poor sites. Table 21 shows a summary of results for Mississippi marginal cropland plantation investments. There is no doubt that planting marginal croplands or pasture with pine seedlings using cost-share assistance in Alabama and Mississippi is a profitable investment. In addition, using improved seedlings will increase the investment's net present value (from $45 to $192 depending on state and site quality) more than the small additional costs (about $3 - $15) of the improved seedlings. The analysis of reforestation on cutover forestland is of central focus given the lack of PNIF reforestation after harvest noted previously. The situation examined in these budgets is that of harvested forestland that requires moderately intensive site preparation. The site preparation method analyzed is the use of a single pass of a roll-chopper drawn behind a bulldozer, followed by site preparation burning and hand planting. Typically, the chopper will crush residual trees and brush concentrating the material near the ground. After a few months the slash 94 I'l'llll I'll :l’l‘” ,llllll 35.83 855823 a 3 use =< .353 923 Sm 85850 259.com .0 menu m2m> .885 62 u >mz 3 3:85 .352 E29433 a _ $8 .89.. 2m 1 . mm 5; 8.8m 2a: 8.02 83 91.9 8.3” 3.9:. modem 8.2m 33 a 8.1m <<>¢z 2:. mm. : 88 F 3 m: ems 3...: :3 3.2 8.8 2. 5 3.8 <_ Eomoi 82 u >mz 2 .oEooE .352 258233 u _ ommm xons 2m .8 can .8 .mu .8» 5 89: 2o; 39¢ .33 8:28. mead on. o. 9826: 532.2 mm 8509.: was 2:3ch 9550 656.885 m: 53 a .322 a come >596 958% new x69: 6 2.8 8.2: {.2 S. 8: com. «4.8 3.90 8.3:. 9.89 3.8% 3.9m 369 33.2 88 :8 8.: Nos 2.- 8.4 3.2 8.8 3.9 3.9. :..: 3.: <_ 589.“. 82 n >52 3. .252: 52.5. 58.8223 82: 92> 888 .82 53.8. 228 o... 2 9828: 826.5. 8 02.52: 8; 8 65.82:. m. .8» 8 .822. m 285 3.8.5 9538 new .89.. 2.8 .o c _ mom 8358.: u 3 85588 8.55.... n . 89.5 .mme. 90.3398 8.8.2.8 0.82.88 .0 8589: ..< u _ 83 8.2.. mam .8 o8 .8 .8 82 s 38:8 8.80 2.8.828 8.2!... 8.8- 8.8 S. 8- 8.8 8.8- 8. 8 8. :8 8.88 8.82 888 8.9: 8.48 32.2 2.- 8... 8..- 8.8 8.2. .5 8.2 8.2 8.2 8.2 Ks 8.2 4.3 8 9m fin hm 8.8 E. t 8.8 ms 8 8.8 2 :mm. 2.: +3 + + D _ D _ _ 2 _ 2 _ 2 . 8898 add .983 audz 83m Baud 9.5.4 ammmm 22.1.8. .888. 2&1. 58. 33.18998 828 8.8.. 8.88. 8.08 8. 2 8.28 8.9.... 88 K 2.8.. K... 8 8.88 8.8... 32.2 8.2 8.8 8.2 8.2 8.2 8.2 3.8 2.8 2.8 2.8 8.2 3.8 «Em 8 8 as m... .3 3 8 8.2 v... 2.2 a... m... LE. 3 _ 2 _ a . a _ a _ a _ at 8:88 Sam adqod aqua saw .82an .534 g 3.5 .8818. .8212 J8 88 gm 28m 5388.0 .cmocmn. v $8885 .8250 88.52:... .8550 55.8.8.2 .3 85m... 100 percent discount rate and on the horizontal axis is cumulative acres in that price region. Each curve is separated into four steps that represent a site quality class within the price region. The height of the step is determined by the NPV of the pine plantation investment for that site quality class. The width of the step is determined by the number of acres within the region in that site quality class as given by the Forest Service. Each figure has two curves one representing the pine plantation investment using improved seedlings and the other for unimproved seedlings. As long as the curve is above the horizontal axis the NPV is positive and the investment is profitable, below the horizontal axis the investment does not exceed the alternative rate. Twelve curves are presented, one for each of 6 price report regions in two states under two different plantation establishment regimes: marginal cropland and cutover timberland. Forest investments are sensitive to interest rates because they are long term investments. Since expenses such as site preparation and planting are incurred early in the investment and are not recovered until timber is sold years later, the interest rate used to calculate costs and returns is very important. The plantation budgets developed in this analysis for pine plantations on marginal cropland and cutover timberland were recalculated using alternative real discount rates of 6 and 8 percent to test the sensitivity of the results to interest rates. 101 Knowledge of how investment profitability changes as the interest rate changesis important, given the range of real interest rates that PNIF owners are likely to prefer. A range of interest rates is reasonable since PNIF owners have many ownership objectives. This sensitivity analysis will assist landowners that require different interest rates to evaluate their most profitable forest management investment opportunities by identifying the combinations of site quality, stumpage prices and management costs that make investments profitable at different discount rates. In the base analysis which used a 4 percent discount rate, all combinations of plantation type, site quality, price region, and seedling type were simulated. In this sensitivity analysis, all combinations were not run at 6 and 8 percent discount rates. Budgets were run with the 6 and 8 percent rates for the Excellent and Poor sites for each plantation type in Mississippi and Alabama with the intention of finding the combinations where the plantation investment became unprofitable (NPV negative). Since it is the Poor sites that are on the margin, those plantations on the Poor sites were the first to become unprofitable. However, as necessary, additional budgets were run for various combinations among the average sites to identify those situations where the investment became unprofitable. Sensitivity analysis was also run on the Excellent sites and as expected they remained profitable. Table 24 shows a summary of the sensitivity analysis for marginal cropland 102 68m .5585 8.5.1. >mz o>...aoq was aa.na..a> .0 5.35968 6.3.5.. 65 5.3 22532.. 3.553 a... 85 3.8.9.. =8 :08 c. a .o .a.v < l adv adv adv adv adv adv adv dv a.v adv adv adv .8“. add adv a.o.v adv adv a.o.v a.m.v a.m.v a.w.v adv a.o.v m.m.v ama.o>< adv adv adv adv adv adv adv adv adv adv adv adv nooc adv adv adv adv adv adv adv adv adv adv adv adv Ea..aoxm 530w .9250 5.02 Snow .8an 5.02 52% 35:60 5.02 £30m 3.50 5.02 25 3.03. ao..n. we... ca>anE3 85.9... oa>o.aE_cD 33.9... 9533 aEana.< .aa.aa.aa.s. 29m 98.3.0 .2655. .2 baEEzm a.a>.ac< >..>...acaw c..a.ao.o,.ac.9a§ vm game 103 plantation investments in Mississippi and Alabama. Marginal cropland pine plantation investments were profitable at all interest rates in Mississippi and Alabama with the exception of the Poor site using unimproved seedlings in the north and central Mississippi price regions. These two situations were unprofitable at 8 percent but were profitable at 4 and 6 percent discount rates. The cutover timberland plantation investment showed more sensitivity to the discount rate. This is not surprising since yields on cutover sites are lower than on agricultural fields and establishment costs are higher than for marginal cropland plantations. Table 25 shows a summary of the sensitivity analysis for cutover timberland plantation investments in Mississippi and Alabama. In Alabama, reforesting cutover timberland on Excellent, Good and Average sites using improved or unimproved seedlings was profitable at 4, 6, or 8 percent discount rates except those investments using unimproved seedlings on the Average site in the northern region. The plantation using unimproved seedlings in north Alabama on Average sites was profitable only at the 4 and 6 percent rates. Cutover site plantation investments on Poor sites were profitable at the 4 and 6 percent rates using improved seedlings in central and south Alabama but only at 4 percent in north Alabama. Unimproved seedlings on Poor cutover sites required a modified management schedule so could not be compared. 104 3.20.29. .9... 5.3 26582.. 25.62.86 22 «a... 3.8.9.. =8 some :. a .o .o.v < .afim 2.38.0 .92 2a >n.z 32.3.. a9. 333.9, .0 2.0.9.388 .2 dv dv v v v v 60“. adv adv dv adv adv adv dv dv dv adv adv dv $926 adv adv adv adv adv adv adv dv dv adv adv dv .600 adv adv adv adv adv adv adv adv adv adv adv adv 62.8.6 5:00 .9260 5.02 Snow .9260 5.02 5:00 .9260 5.02 :58 .9an 2.202 3.0 .6.an 8.5 max... 8662...... . ua>o.aE. ua>o.aE.c3 oa>o.aE_ 3.66am aEana.< 66.3.3.2 99w 9.9.2.2.... .9650 2 2.2.2.5 a.a>_a:< 3.2.65.0; 65:82.... .9650 mm mama 105 In Mississippi, fewer sites were profitable at the 8 percent discount rate than. in Alabama. Cutover timberland plantations were profitable in all price regions using improved and unimproved seedlings on Excellent sites at the 4, 6, and 8 percent discount rates. Investments on Good and Average sites using improved seedlings in the central and south price regions were also profitable at all discount rates tested. Plantations on Good sites in south Mississippi using unimproved seedlings were also profitable at all rates tested. In north Mississippi cutover plantations on Good and Average sites using improved seedlings were profitable at only the 4 and 6 percent rates. Plantations using unimproved seedlings on Good sites in north and central Mississippi and those on Average sites in all price regions were profitable at the 4 and 6 percent discount rates, but not at 8 percent. On Poor sites cutover plantations using improved seedlings were profitable at the 4 percent discount rate only in all price regions. Poor site plantations using unimproved seedlings required a modified management schedule and could not be compared. Tables 26 through 29 show the results of the sensitivity analysis for marginal cropland and cutover timberland plantation investments in Alabama and Mississippi. Based on the profitability levels shown by these analyses and Forest Service estimates of timberland acreage in each site quality classification we can estimate the maximum number of acres in each state where reforestation investments of this type are profitable under the 106 35.88 69682.83 u 3 85.88 858:: u . 38> 2.89m 82 n >dz 2.60:. 83:5. 2.28233 u _ mwmm .89.: gm. modm mmfio mafia 8.8 22 aa. .a .28 8.8 2.2 8.8a 8.2 8.8 >82 8a 58 2a 8v 8. 8a 8.2 2.8. 8.2 8.8 8.2 8.: 2w 8.2 8.: 8a 8.2 2a 8a 8.2 8.2 8.2 8.2 8.2 8.2 E. g 8.8. 8.2; 2.8 8.8. 8.8 8.8 2...: 8.8a 6.8a 8.8 2.3a 8.8 2.2 8.. 8.2 Ba 3a va.a 2... 5.8 8.8 8.8 8. 8 a2 8.8 .8. 8.2 8.: 8.a 8.2 8a 8a 8.2 8.2 2.2 8.2 2.2 8.2 a; 2 _ a _ 3 _ a _ 3 _ 2 _ 83 8:88 Snow .9.:o0 5.02 .9250 5.02 2.0.03”. corn. .2. u .a. 28 8n. 28 n 8. 28 2.2.8.0 «832% 28:.an 883m a.a>.a:< 3328.80 2860.0 8:685. 8:88? .am 28.. Fad? 35.88.. 8588...... u 3 $5.33 358...... u . 38> Emma... 82 u >az 058:. 8322 28.8235 n . 88m 80:. 2.9 mm. 5 vn. 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P 56 :6 mad 3d _ HARVEST A 1 YEAR 2002 AGE 15 <-- DBH-RANGE DBH NUMBER HASAL HEIGHT 8 NET NET TOTAL TONS NET TOTAL 1 NAME CLASS STEIIS AREA FEET VALUE DOYLE CORDS CORDS SAHLOGS TONS TONS CUT NON-CON 3.0 2.2 .1 36.9 .00 .00 .00 .00 .00 .00 .00 100.0 PULPNOOD 4.0 17.8 1.6 43.0 .00 .00 .00 .00 .00 .00 .00 100.0 PULPNOOD 5.0 61.6 8.4 47.2 22.28 .00 1.86 1.86 .00 3.26 3.26 100.0 PULPNOOD 6.0 131.2 25.8 50.2 77.34 .00 6.45 6.45 .00 12.92 12.92 100.0 PULPUOOD 7.0 181.6 48.5 52.5 156.22 .00 13.02 13.02 .00 27.50 27.50 64.2 CHIP-N-SAE 8.0 153.5 53.6 54.3 179.78 .00 14.98 14.98 .00 32.53 32.53 .0 CHIP-N-SAN 9.0 69.5 30.7 55.7 105.67 .00 8.81 8.81 .00 19.46 19.46 .0 - CHIPrN-SAN 10.0 14.1 7.7 56.8 31.87 .17 .75 2.24 2.52 2.49 5.01 .0 CHIP-N~SAN 11.0 1.0 .7 57.8 3.37 .02 .04 .20 .29 .15 .45 .0 CUT 329.4 67.0 .0 199.86 .00 16.66 16.66 .00 33.82 33.82 LEAVE 303.1 110. .0 376.67 .20 29.24 30.89 2.82 84.48 67.30 1 55‘1 --> 1117151 4 2 1111 2009 101 22 4-- 051-11101 055 101511 51511 111051 3 151 111 10111 1015 111 10111 1 1111 01155 51115 1111 1111 71101 00111 00105 00105 5171005 1015 1015 001 0511-1-511 5.5 59.5 23.3 57.4 95.34 .00 5.19 5.19 .00 17.95 17.95 100.0 0111-1-511 9.7 144.5 73.7 59.5 357.59 2.12 9.15 25.70 27.53 31.55 59.55 24.5 0111-1-511 10.5 55.7 42.5 71.9 279.52 1.54 3.23 15.77 23.13 12.55 35.50 .0 511111511 12.0 13.7 10.5 73.5 112.77 .50 .50 4.00 7.01 2.20 9.22 .0 511111511 13.2 1.0 .9 74.9 11.53 .05 .03 .35 .55 .14 .52 .0 001 95.1 41.4 .0 193.74 .52 10.45 14.75 5.55 25.79 32.54 11171 190.5 110.0 .0 595.21 4.10 10.57 40.25 51.50 39.03 90.54 --> 1117151 4 3 1111 2015 29 <-- 011-11151 051 101511 11511 111051 4 151 111 10111 1015 111 10111 x 1111 01155 51115 1111 1111 71101 00111 00105 00105 5111055 101s 1015 001 0111-1-511 11.2 102.5 70.1 51.5 550.75 3.77 5.55 29.33 45.15 21.95 57.13 43.0 511111511 12.5 53.9 54.9 54.0 724.55 3.92 2.15 23.29 43.51 10.54 54.15 .0 511111111 13.9 13.2 13.9 55.1 215.57 1.19 .32 5.95 12.22 1.52 14.04 .0 511111111 15.2 1.0 1.2 57.5 21.32 .12 .02 .52 1.13 .12 1.25 .0 00! 44.1 30.2 .0 241.37 1.52 2.39 12.53 19.45 9.45 25.90 11171 135.5 110.0 .0 1250.53 7.35 5.55 45.45 52.59 25.09 107.55 --> 1117151 I 4 1111 2022 101 35 <-- 011-11101 051 101511 51511 111111 5 151 111 10111 1015 111 10111 x 1111 01155 51115 1111 1111 71101 00111 00105 00105 5171005 1015 1015 001 111111511 12.5 55.2 45.5 59.5 552.37 3.51 2.35 21.20 35.59 10.55 49.37 100.0 517111511 14.0 51.5 55.5 92.4 1105.51 5.11 1.54 30.09 52.11 9.10 71.21 100 0 511111511 15.4 13.0 15.5 94.7 322.39 1.79 .29 7.75 15.93 1.73 15.55 100.0 511111511 15.9 1.0 1.5 95.7 31.52 .15 .02 .59 1.55 .12 1.55 100.0 CUT 130.5 130.7 .0 2112.00 11.55 4.21 59.74 119.29 21.52 140.92 11171 .0 .0 .0 .00 .00 .00 .00 .00 .00 .00 --> 10001011110 101115 {-- 001 599.4 259.3 .0 2745.95 13.73 33.70 103.79 145.59 90.59 235.27 11171 TVA YIELDPLUS Iv 1.15I Date: 4-28-1991 Tile: 10:41: 8 REGISTERED USER) TO! HONAGAHN 1 552! F I N A N C I A L P R O F I T A 8 I L I T Y STAND NANE: AL NLAND ACREAGE: _ 1 FINANCIAL PARANETER DATA PLANNING HORIZON IS FROM 1988 TO 2023 NARGINAL FEDERAL TAX BRACKET: 15.0 1 CAPITAL GAINS PROPORTION: 100.0 1 DISCOUNT RATE: BEFORE TAX: 4.0 X AFTER TAX: 3.4 X STUHPAGE PRICES 0511-11155 0511-51151 ------------- 517105 ------------------------ 5017-1010011 ---------- 1111 107 1155 5/111 5/101 1111 1115/1055 mm mm 1111 1115/1055 50157000 4 7 .00 .00 .0 .00 15.00 .00 .0 .00 0115-1517 5 11 119.00 .00 .0 .00 15.00 .00 .0 .00 511111551 12 20 155.00 .00 .0 .00 15.00 .00 .0 .00 FINANCIAL PROFITARILITY ANALYSIS (ADJUSTED FOR INFLATION) 511015 111 11111 111 111 551511170511 5 531.54 5 549.34 . 11111111 111501511011 15.5 1 17.0 1 F 001105111 1111 01 111051 10.9 1 7.5 1 ‘ 111011 1901711111 71101 5 44.57 3 41.57 0150001150 5111111/0051 11110 10.4 ' 4.3 50111111011110171101 5 1099.14 5 1213.50 FINANCIAL TRANSACTIONS (UNADJUSTED FOR INFLATION) TYPE FIRST YEAR LAST YEAR REPETITION SAHOUNT INFLATION 1 DESCRIPTION REFORESTATION EXPENSE >PL-98-451 1988 1989 l -20.94 0 P BURN/HPLANT/SSECS ORDINARY DEDUCTIELE EXPENSE .1988 2022 1 -2.00 O HGT ATAXES HARVEST A I: PULPVOOD REVENUE 2002 2002 5 286.48 3 ALL HOOD AS CORDS AT PULP-TOP-CULL PRICE ORDINARY DEDUCTIBLE EXPENSE 2003 2018 5 -5.00 0 BURN EVERY 5 YEARS HARVEST I 2: CHIP-N-SAN REVENUE 2009 2009 5 238.22 8 ALL HOOD AS CORDS AT PULP-TOP-CULL PRICE HARVEST A 3: CHIP-N-SAV REVENUE 2018 2016 5 231.46 ! SANLDG AS NRF. NET-PULP-TOP‘CULL AS CORDS 5 2221.48 3 SANLOC AS 88F. NET-PULP-TOP-CULL AS CORDS HARVEST_A 4: SANTINRER REVENUE 2022 2022 ‘ -INFLATION RATE IS COMPUTED AS COMPOSITE OF SPECIFIED SANTINHER AND PULPVOOD INFLATION RATES ACCORDING TO PRODUCT NIX --TOTAL NET CASH FLOV = 3 2823.77 (INCLUDES ALL CASH TRANSACTIONS BEFORE TAXES NITHIN PLANNING HORIZON) TVA YIELDPLUS (7 1.18) Date: 4-28-1991 Tile: 10:50:11 REGISTERED USER) TO! NOIAGARN 1 5513 C A S N F L 0 V S 8 Y Y E A R R E P O R T STAND IANE: AL HLAND 1011151: 1 515055-111 15151-1111 1111 1571101 1155155 111 ‘ 10001011110-111 1171105 1155151 111 10001011110-111 -0111111110 0011155 551 1011- 1955 .00 22.94 -22.94 -22.94 2 51 22.94 -2o.33 -20.33 1959 .00 22.94 -22 94 -45.55 3.03 22.94 -19.91 -40 24 1990 .00 2.00 -2.00 -47.55 1.15 2.00 -.55 -41.09 1991 .00 2.00 -2.00 -49.55 1.15 2.00 -.55 -41.93 1992 .00 2.00 -2.00 -51 55 1.15 2.00 -.55 -42.75 1993 .00 2.00 -2.00 -53.55 1.15 2.00 -.55 -43.53 1994 .00 2.00 -2.00 -55.55 1.15 2.00 -.55 -44 45 1995 .00 2.00 -2.00 -57.55 1.15 2.00 -.55 -45.32 1995 .00 2.00 -2.00 -59.55 .94 2.00 -1.05 -15.35 1997 .00 2.00 -2.00 -51.55 .51 2.00 -1.49 -47.57 1995 .00 2.00 -2.00 -53.51 .30 2.00 -1.70 -49.57 1999 .00 2.00 -2.00 -55.55 .30 2.00 -1.70 -51.27 2000 .00 2.00 -2.00 -57.55 .30 2.00 -1.70 -52.97 2001 .00 2.00 -2.00 -59.55 .30 2.00 -1.70 -54.57 2002 255.45 2.00 254.45 194.50 255.75 41.97 224.51 170.14 . 2003 .00 7.00 -7.00 157.50 1.05 7.00 -5.95 154.19 3 2004 .00 2.00 -2.00 155.50 .30 2.00 -1.70 152.49 ; 2005 .00 2.00 -2.00 153.50 .30 2.00 -1.70 150.79 2005 .00 2.00 -2.00 151.50 .30 2.00 -1 70 159.09 2001 .00 2.00 -2.00 179.50 .30 2.00 -1.70 157.39 2005 .00 7.00 -7.00 172.50 1.05 7.00 -5.95 151.44 2009 235.22 2.00 234.22 405.53 235.52 37.43 199.09 350.53 2010 .00 2.00 -2.00 404.53 .30 2.00 -1.70 345.53 2011 .00 2.00 -2 00 402.53 .30 2.00 -1.70 347.13 2012 .00 2.00 -2.00 400.53 .30 2.00 -1.70 345.43 2013 .00 7.00 -7.00 393.53 1.05 7.00 -5.95 339.45 2014 .00 - 2.00 -2.00 351.53 .30 2.00 -1.70 337.75 2015 .00 2.00 -2.00 355.53 .30 2.00 -1.70 335.05 2015 231.45 2.00 229.45 519.25 231.75 35.72 195.04 531.12 2017 .00 2.00 -2.00 517.25 .30 2.00 -1 70 529.42 2015 .00 7.00 -7.00 510.25 1.05 7.00 -5.95 523.47 2019 .00 2.00 -2.00 505.25 .30 2.00 -1.70 521.77 2020- .00 2.00 -2.00 505.25 .30 2.00 -1.70 520.07 2021 ’ .00 2.00 -2.00 504.25 .30 2.00 -1.70 515.37 2022 — 2221.45 2.00 2219.45 2523.77 2221.75 335.22 1555.55 2404.93 2023 " .00 .00 .00 2523 77 .00 .00 .00 2404 93 TVA YIELDPLUS (v 1.10) Date: 4-28-1991 Tile: 10:50:11 REGISTERED USER) TON NONAGARN 1 5544 NOODFLOV SUNHARY REPORT STAID NAEE: NS NLAND ACREAGE: l --STAND INVENTORY FOR 1988-- SITE INDEX18ASE AGE 25): 70 FEET STAND AGE: 1 YEARS ' SURVIVING I STEHS/ACRE: 728 AT AGE 1 89!!838313393!8139888333988REFRESEEEEEEIEESEEE1388134398333!!!84!!!! 1 A NISSISSIPPI HARGINAL CROPLAND 1 SITE INDEX 70 DISC RATE 4! ‘ UNINPROVED SEEDLINGS SOUTH NS PRICES 1 COST SHARE 65! 1 3 QN-~HM RESEEEEEXEEEREESEEEE898189388838t9!!!SEREREEREEEESEEEEEERREEE89383 OLDFIELD LORLOLLY PINE PLANTATION HARVESTING SCHEDULE RESIDUAL COHPONENT HARVESTED CONPONENT I HARVEST YEAR AGE HEIGHT PAI THINNING II RASAL NUHRER H-HDFT NET TOTAL I BASAL NUNEER N-BDFT NET TOTAL I IIUHRER CORDS HETHOD II AREA STENS DOYLE CORDS CORDS IAEEA STENS DOYLE CORDS CORDS I I II I I II I, I I 1 2002 15 50 .0 LON II 110 338 .00 28.03 28.03 I 54 311 .00 11.49 11.49 I I II I I 2 2009 22 65 3.1 LON II 110 215 2.79 15.08 38.89 I 39 102 .00 12.84 12.84 I I II I I 3 2018 29 76 2.4 LON II 110 150 5.98 6.96 42.92 i 29 52 1.02 3.30 10.98 i I II I 4 2022 35 83 2.0 l/A II C L E A R - C U T I 130 143 9.69 5.03 54.90 I ---101115/1011 252 505 10.71 32.51 90.19 TVA YIELDPLUS (v 1.15) Date: 4-28-1991 Tile: 10:21:53 REGISTERED USER) TON NONAGAHN 155 D E T A I L E D V O O D F L O E R E P O R T STAND IAEE: ES HLAND ACREAGE: 1 --STAND INVENTORY EUR 1988-- SITE INDEEIBASE AGE 25): 70 FEET STAND AGE: 1 YEARS SURVIVING I STEHS/ACRE: 726 AT AGE 1 8888881338””"8388"fl"3388881388883“"it"!!!It!“ 8838888881"! 5 t 3 HISSISSIPPI HARGINAL CROPLAID ‘ t SITE INDEX 70 DISC RATE 4: t t UNIHPROVED SBEDLINGS SOUTH HS PRICES t 3 COST SHARE 65% x 9 x 119901211515931311111t59319:13t:931315191199111191111131113113313111 9 OLDEIELD LOHLOLLY PINE PLANTATION HARVESTING SCHEDULE --> HARVEST I 1 YEAR 2002 AGE 15 (~- 059-51109 055 100599 01511 051057 5 507 191 70111 TONS 151 10710 x 1159 c0155 51155 1001 7157 71501 00109 00905 00905 9105005 IONS 1055 001 Ion-con 3.0 5.3 .3 34.5 .00 .00 .00 .00 .00 .00 .00 100.0 70115000 4.0 30.1 2.5 40.1 .00 .00 .00 .00 .00 .00 .00 100.0 70190000 5.0 57.2 11.9 43.9 45.55 .00 2.40 2.40 .00 4.27 4.27 100.0 70590000 5.0 150. 31.5 45.5 137.53 .00 7.24 7.24 .00 14.51 14.51 100 0 70020000 7.0 155.4 50.3 45.5 235.57 .00 12.42 12.42 .00 25.33 25.33 15.0 0577-1-510 5.0 125.2 44.5 50.2 215.95 .00 11.52 11.52 .00 25.05 25.05 .0 0519-1-51: 9.0 43.4 19.2 51.5 95.30 .00 5.07 5.07 .00 11.20 11.20 .0 9019-1-510‘ 10.0 5.0 3.3 52.5 15.51 .07 .30 .57 .95 .97 1.95 .0 CU! 311.2 53.5 .0 215.39 .00 11.49 11 49 .00 22.52 22 52 01109 337.5 110. .0 532.54 .07 27.45 25.03 .95 59.52 50.51 --> HARVEST 9 2 YEAR 2009 AGE 22 <-- 1 55(5 055-51505 055 505555 51515 551057 1 557 557 70715 7055 557 70715 x 5155 05155 57555 1555 1557 71505 00755 00505 00505 5175055 7055 7055 007 0515-5-517 5.1 115.1 57.3 52.5 354.27 .00 15.55 15.55 .00 40.50 40.50 55.5 0517-5-517 9.5 121.7 51.2 54.5 359.55 1.55 7.17 20.50 21.02 21.73 45.75 .0 0511-5-517 10.5 41.5 25.5 55.5 195.15 1.01 1.90 9.03 13.10 7.35 20.44 .0 517715555 11.9 5.5 4.5 55.1 49.22 .23 .20 1.55 2.70 .57 3.55 .0 007 101.9 39.5 .0 243.55 .00 12.54 12.54 .00 25.09 25.09 55175 215.4 110.0 .0 715.35 2.79 15.09 35.59 35.51 45.55 32.47 --> 5157557 5 3 7515 2015 105 29 <-- 055-51105 055 505555 51515 551057 5 551 557 70715 7055 557 70715 x 1155 05155 57555 1551 7557 71505 00755 00505 00505 5175005 7055 7055 007 0519-5-517 9.5 42.2 22.0 73.0 152.35 .59 2.79 5.31 5.93 9.70 15.53 100.0 0515-1-517 11.1 114.5 77.2 75.7 595.59 3.72 5.52 29.95 45 55 22.77 55.34 5.9 517715555 12.1 40.0 33.5 75.0 459.20 2.14 1.53 13.31 24.13 5.71 30.51 .0 557715555 13.5 5.5 5.5 79.5 92.51 .15 .13 2.30 4.55 .72 5.40 .0 007 52.3 25.5 .0 224.21 1.02 3.30 10.95 12.57 11.71 21.55 55171 150.1 110.0 .0 1159.05 5.95 5.55 42.92 70.31 25.15 95.52 .-5 5157557 5 4 7515 2022 105 35 <-- 055-51505 055 505555 51515 551557 3 551 557 70715 7055 557 70715 x 5155 05155 57555 1551 7557 71505 00755 00505 00505 5175005 7055 7055 007 517715555 12.1 95.5 52.5 53.2 1200.59 5.50 3.99 34.73 52.75 17.50 50.55 100.0 517715515 13.5 35.5 10.3 55.5 701.27 3.12 .92 17.15 35.15 5.31 40.50 100.0 517715555 15.3 5.5 7.0 57.9 135.53 .55 .12 2.99 5.47 .55 7.15 100.0 CUT 112.5 129.5 .0 2043.70 9.59 5.03 54.90 101.41 23.50 125.20 55175 .0 .0 .0 .00 .00 .00 .00 .00 .00 .00 --> 10005051750 707155 <-— 007 505.3 251.5 .0 2730.17 10.71 32.57 90.19 117.37 55.41 203.79 55177 TVA YIELDPLOS {v 1.15) Date: 4-28-1991 7115: 10:21:53 REGISTERED USER) TO! HONAGAHN 157 F I N A N C I A L P R O F I T A B I L I T Y STAND NAHE: NS HLAND ACREAGE: 1 FINANCIAL PARAHETER DATA PLANNING HORIZON IS FRUN 1988 TO 2023 HARGINAL FEDERAL TAX BRACKET: 15.0 1 CAPITAL GAINS PROPORTION: 100.0 1 DISCOUNT RATE: BEFORE TAX: 4.0 1 AFTER TAX: 3.4 I STUHPAGE PRICES DBH-RANGE DBH-RANGE ------------- SANLUG ------------------------ PULP-TOP-CULL ---------- IANE LON HIGH S/HBF SITUN INF! RING/ACRE S/CORD S/TUN INF! RING/ACRE PULPNOUD 4 7 .OO .00 .0 .00 12.00 .00 .0 .00 CHIP-N-SAN 8 11 131.00 .00 .0 .00 12.00 .00 .0 .00 SANTINBER 12 20 178.00 .00 .0 .00 12.00 .00 .0 .OO FINANCIAL PROFITABILITY ANALYSIS (ADJUSTED FUR INFLATION) BEFORE TAX AFTER TAX NET PRESENT NORTH S 589.57 3 809.80 INTERNAL RATE OF RETURN 14.2 A 14.5 E . CUNPOSITE RATE OF RETURN 10.0 E 7.3 1 f ANNUAL EQUIVALENT VALUE 5 31.59 S 30.08 . DISCOUNTED BENEFIT/COST RATIO 7.8 3.9 SOIL EXPECTATION VALUE 8 779.51 8 871.28 FINANCIAL TRANSACTIONS (UNADJUSTED FOR INFLATION) TYPE FIRST YEAR LAST YEAR REPETITION SAHUUNT INFLATION 1 DESCRIPTION REFURESTATIUN EXPENSE )PL-96-451 1988 1989 i -lg.;g g :G¥U£¥£EEEANT/85XCS ORDINARY DEDUCTIBLE EXPENSE 1988 2022 - . HARVEST I 1: PULPNOUD REVENUE 2002 2002 5 137.93 1 ALL NOOD AS CORDS AT PULP-TOP—CULL PRICE ORDINARY DEDUCTIHLE EXPENSE 2003 2018 5 '5.00 O BURN EVERY 5 YEARS HARVEST 8 2: CHIP-N-SAN REVENUE 2009 2009 5 154.03 1 ALL NOOD AS CORDS AT PULP°TUPcCULL PRICE HARVEST A 3: CHIP-N-SAN REVENUE 2016 2018 5 173.50 1 SANLUG AS HBF, NET-PULP-TOP-CULL AS CORDS HARVEST A 4: SANTIHBER REVENUE 2022 2022 5 1785.56 8 SANLUG AS NBF. NET-PULP-TOP-CULL AS CORDS ‘ -INFLATION RATE IS COMPUTED AS COHPOSITE 0F SPECIFIED SANTINBER AND PULPNOUD INFLATION RATES ACCORDING TO PRODUCT NIX --TOTAL NET CASH FLON = 8 2121.43 (INCLUDES ALL CASH TRANSACTIONS BEFORE TAXES NITHIN PLANNING HORIZON) TVA YIELDPLUS (7 1.15) Date: 4-28-1991 Tile: 10:28:39 REGISTERED USER) TON HUNAGAHN 1 £513 CASHFLONS BYYEAR REPORT STAND NANE: NS NLAND 1055105: 1 ---555055-111 - 11751-117 ---------------------- 7515 5575505 5115555 557 10005051750-557 5575505 5115555 557 10005051750-557 ~0515551750 0055155 555 1055- 1955 .00 21.79 -21.79 -21.79 2.45 21.79 -19.31 119.31 1959 .00 21.79 -21.79 -43.55 2.55 21.79 -15.91 -35.22 1590 .00 2.00 -2.00 -45.55 1.11 2.00 -.59 -39.11 1991 .00 2.00 -2.00 -47.55 1.11 2.00 -.59 -40.00 1992 .00 2.00 -2.00 -49 55 1.11 2.00 -.59 -40.90 1993 .00 2.00 -2.00 -51.55 1.11 2.00 -.59 -41.79 1994 .00 2.00 -2.00 -53.55 1.11 2.00 -.59 -42.59 1995 .00 2.00 -2.00 -55.55 1.11 2.00 -.59 -43 55 1955 .00 2.00 -2 00 -57.55 .90 2.00 -1.10 -44 55 1997 .00 2.00 -2.00 -59.55 .50 2.00 -1.50 -15.15 1995 .00 2.00 -2.00 -51.55 .30 2.00 -1.70 -47 55 1999 .00 2.00 -2.00 -53.55 .30 2.00 -1.70 -19.55 2000 .00 2.00 -2.00 -55.55 .30 2.00 -1.70 -51.25 2001 .00 2.00 -2 00 -57.55 .30 2.00 -1.70 -52.95 2052 137.93 2.00 135.93 55.35 135.23 22.59 115.54 52.55 7 2003 .00 7.00 -7.00 51.35 1.05 7.00 -5.95 55.51 3 2004 .00 2.00 -2.00 59.35 .30 2.00 -1 70 54.91 2005 .00 2.00 -2.00 57.35 .30 2.00 -1 70 53.21 2005 .00 2.00 -2.00 55.35 .30 2.00 -1.70 51.51 2007 .00 2.00 -2.00 53.35 .30 2.00 -1.70 49.51 2005 .00 7.00 -7.00 45.35 1.05 7.00 -5.95 43.55 2009 154.03 2.00 152.03 195.37 154.33 25.10 129.22 173.09 2010 .00 2.00 -2.00 195.37 .30 2.00 -1.70 171.39 2011 .00 2.00 -2 00 154.37 .30 2.00 -1.70. 159.59 2012 .00 2.00 -2.00 152.37 .30 2.00 -1.70 157.99 2013 .00 7.00 -7.00 155.37 1.05 7.00 -5 95 152.04 2014 .00 2.00 -2.00 153.37 .30 2.00 -1.70 150.31 2015 .00 2.00 -2.00 151.37 .30 2.00 -1.70 155.51 2015 173.50 2.00 171.50 352.57 173.50 25.02 145.77 301.41 2017 .00 2.00 -2 00 350.57 .30 2.00 -1-70 302-71 2015 .00 7.00 -7 00 313.57 1.05 7.00 -5.95 295.75 2019 .00 2.00 -2.00 341.57 .30 2.00 -1-70 295-05 2020 .00 2.00 -2.00 339.57 .30 2.00 -1 70 293-35 2021 - .00 2.00 -2.00 337.57 .30 2.00 -1.70 291.55 2022 5‘ 1755.55 2.00 1753.55 2121.43 1755.55 259.53 1516.02 1807-68 2023 .00 .00 .00 2121.43 .00 .00 ~00 1307-53 TVA YIELDPLUS (v 1.15) Date: 4-28-1991 Tile: 10:28:39 REGISTERED USER) TON NUIAGAHN 159 N O O D F L O N S U N N A R Y R E P O R T STAND NANE: AL COTOV ACREAGE: 1 --STAND INVENTORY FOR 1988-- SITE INDEXIBASE AGE 25): 70 FEET STAND AGE: 1 YEARS SURVIVING 1 STENS/ACRE: 728 AT AGE 1 NURSES8GENRES!!!"A”!!!“Etflttlflflflflflfl"A!"8888""3”"!!! 5 1 1 ALARANA CUTDVER TINBRRLAND 5 1 SITE INDEX 70 DISC RATE 4! 1 1 UNINPROVED SEEDLINGS SOUTH AI. PRICES 1 1 COST SHARE 85: 1 5 5 15551555155555553551555555555555555555515551551351311551555115115155 CUTUVER-SITE LUBLULLY PINE PLANTATION HARVESTING SCHEDULE 55510015 005705557 511755750 005105557 151575577515 105 551057 511 751551501151515 505555 55057 557 70715 151515 505555 55057 557 70115 1 1505555 00505 557500 111551 57555 00755 00505 00505 11551 57555 00755 00505 00505 1 I 11 I 1 I II 1 1 1 1 2002 15 15 .o 507 11110 425 .00 22.312231 1 11 125 .00 1.33 1.33 1 I 11 1 1 1 2 2009 22 53 2.9 507 11110 231 1.53 21.15 31.51 1 39 137 .00 105310.53 3 I 11 1 I 3 2015 29 79 2.3 507 11110 155 5.31 11.77 35.35 1 29 53 .91' 5.25 9.57 3 I 11 1 1 4 2022 35 91 2.0 5/1 11 05515-007 1130 115 11.10 12.59 50.15 1 ---707155/1055 212 153 12.02 30.70 72.17 TVA YIELDPLUS (v 1.1b) Date: 4-28-1991 Time: 9:58: 0 REGISTERED USER) TON NONAGAHN 1 (5() D E T A I L E D N O O D E L O N R E P O R T STAND NANE: AL CUTOV ACREAGE: 1 --STAND INVENTORY FOR 1988-- SITE INDEXIEASE AGE 25): 70 FEET STAND AGE: 1 YEARS SURVIVING E STENS/ACRE: 726 AT AGE 1 tSEES!SEE3ESEEEESSEEREESE!EEESSESEEEEIESEEEEEEES!SEEIESSESEASSESS!!! ALABAHA CUTOVER TINBERLAND SITE INDEX TO DISC RATE (1 UNIHPROVED SEEDLINGS SOUTH AL PRICES COST SHARE 65! “~”-~ ””“i‘H‘nfl 3133ESAEEXSSEISttttltttlttttEttttttttttttSEESESEEEEESSEESTESSESTEES CUTOVER-SITE LOBLOLLT PINE PLANTATION HARVESTING SCHEDULE --> HARVEST A 1 YEAR 2002 AGE 15 <-- 055-51505 055 505555 51511 551051 5 551 557 10111 1055 557 70111 x 5155 01155 57555 1151 1551 71105 00115 00505 00505 5171005 7055 1055 007 505-005 2 0 1.5 .0 21.5 .00 .00 .00 .00 .00 .00 .00 100.0 505-005 3 o 13.7 .7 30.1 .00 .00 .00 .00 .00 .00 .00 100.0 505-005 1 0 17.5 1.1 35.1 .00 .00 .00 .00 .oo .00 .00 100.0 10117000 5.0 101.1 13.5 10.0 .00 .00 2.05 2.05 .00 1.19 1.19 51.3 10117000 5.0 115.2 25.5 12.9 .00 .00 5.33 5.33 .00 12.11 12.11 .0 10117000 7 0 137.2 35.7 15.1 .00 .00 7.55 7.55 .00 17.70 17.70 .0 10117000 5 0 75.5 27.1 15.5 .00 .00 5.92 5.92 .00 11.22 11.22 .0 10117000 9.0 21.1 10.5 15.1 .00 .00 2.35 2.35 .00 5.75 5.75 .o CHIP-5-517 10.0 3.1 1.9 19.2 .00 .03 .21 .12 .53 .52 1.01 .0 007 " 127 5 13.7 .0 .00 .00 1.33 1.33 .00 2.59 2.59 LEAVE 424:5 110. .0 .OO .03 22.13 22.31 .53 51.93 52.46 1 (5‘1 ~-> 5157551 3 2 1515 2009 105 22 <-- """"""""""""" 055-51505 055 505555 51511' 551051 5 551 551 10111 1055 551 10111 x 5155 01155 57555 1551 5551 71105 00115 00505 00505 5171005 1055 1055 001 10117000 5.3 25.7 5.2 55.5 .00 .00 1.50 1.50 .00 3.54 3.54 100.0 10117000 7.5 123.7 37.9 50.0 .00 .00 10.29 10.29 .00 25.21 25.21 57.5 10117000 5.7 121.0 50.1 53.3 7.00 .00 11.32 11.32 .00 35.25 35.25 .0 0511-5~517 9.5 70.4 37.9 55.9 .00 1.07 5.57 11.09 11.31 11.53 25.57 .0 0511-5-517 11.1 21.5 11.5 55.0 .00 .52 1.75 1.37 7.50 3.55 11.55 .0 0511-5-517 12.1 3.1 2.5 55.7 .00 .11 .22 .77 1.53 .15 2.09 0 001 137.3 35.5 .0 .00 .00 10.53 10.53 .00 25.70 25.70 15175 231.1 110.0 .0 .00 1.53 21.15 31.51 23.77 55.15 51.95 —-> 5157551 1 3 1515 2015 105 29 <-- 055-51505 055 505555 51511 551057 5 551 557 70711 7055 551 10711 1 5155 01155 51555 1551 1551 71105 00115 00505 00505 5171005 7055 1055 007 10117000 5.9 12.9 5.5 71.5 .00 .00 1.55 1.55 .00 4.50 1.50 . 100.0 0511-5-517 10.3 105.3 52.7 79.0 .00 2.17 11.55 21.52 30.52 27.11 57.33 37.1 0511-5-517 11.7 51.5 15.3 52.5 .00 2.95 5.55 15.92 31.75 11.95 15.73 .0 517115555 13.1 20.2 19.0 55.3 .00 1.17 1.51 5.59 15.70 3.25 15.95 .0 517115555 11.5 2.9 3.3 57.5 .00 .31 .19 1.17 3.03 .35 3.11 .0 001 53.1 25.5 .0 .00 .91 5.25 9.57 11.13 14.55 25.25 15175 155.5 110.0 .0 .00 5.31 14.77 35.35 72.55 32.70 105.57 5 --> 5157551 1 1 1515 2022 105 35 <-- 055-51505 055 505555 51511 551051 5 555 551 70111 1055 557 10111 x 5155 01155 57555 1551 5557 71105 00115 00505 00505 5171005 7055 1055 007 0511-5-517 11.5 52.1 15.7 91.2 .00 3.11 5.95 17.52 35.21 12.97 45.15 100.0 517715555 13.2 50.5 57.2 95.3 .00 5.05 5.10 22.35 53.37 11.02 51.39 100.0 517115555 11.7 19 3 22.5 95.7 .00 2.12 1.35 5.91 23.51 2.54 25.15 100.0 517115555 15.3 2 5 1.0 101.5 .00 .19 .15 1.57 1.11 .37 4.79 100.0 001 145.0 129.5 .0 .00 11 10 12.59 50.15 117.50 27.21 114.51 15175 .0 .0 .0 .00 .00 .00 .00 .00 .00 .00 --> 10005011150 707115 <-- 001 153.2 211.7 .0 .00 12.02 30.70 72.17 125.03 70.51 199.57 LEAVE :‘ . ---- -- TVA YIELDPLUS (v 1.1b) Date: 4-28-1991 Tile: 9:58: 0 REGISTERED USER) TOE HONAGAHN 162 c-------------—----—-o----------_-------.--____ STAND NANE: AL CUTOV ACREAGE: I """"""""""""""" 111111111111115111111 PLANNING HORIZON IS FRON 1988 TO 2023 NARGINAL FEDERAL TAX BRACKET: 15.0 1 CAPITAL GAINS PROPORTION: 100.0 1 DISCOUNT RATE: BEFORE TAX: 4.0 X AFTER TAX: 3.4 X STUNPAGE PRICES DBH-RANGE DBH-RANGE ------------- SANLOG ------------------------ PULP-TOP-CULL ---------- NANE LON HIGH S/NBE S/TON INTI NINS/ACRE S/CORD S/TON INF! NINS/ACRE PULPNOOD 4 7 .00 .OO .0 .00 19.00 .00 .0 .OO CHIP-N-SAV 8 11 158.00 .00 .0 .00 19.00 .00 .O .OO SANTINBER 12 20 201.00 .00 .0 .00 19.00 .00 .0 .00 FINANCIAL PROFITABILITY ANALYSIS (ADJUSTED FOR INFLATION) BEFORE TAX AFTER TAX NET PRESENT NORTH 8 695.00 3 740.31 1 INTERNAL RATE OF RETURN 10.9 I 11.1 E 1 13 CONPOSITE RATE OF RETURN 9.1 T 6.9 1 ANNUAL EQUIVALENT VALUE S 37.24 3 36.49 DISCOUNTED BENEFIT/COST RATIO 5.7 3.4 SOIL EXPECTATION VALUE 3 916.91 8 1057.73 FINANCIAL TRANSACTIONS (UNADJUSTED FOR INFLATION) TYPE FIRST YEAR LAST YEAR REPETITION SANOUNT INFLATION 1 DESCRIPTION REFORESTATION EXPENSE >PL-96-451 1988 1989 1 -50.55 g EggPéggggéHPLANT/UNINP ORDINARY DEDUCTIBLE EXPENSE 1988 2022 1 -2.00 HARVEST A I: PULPVOOD REVENUE 2002 2002 5 25.22 1 ALL VVVVRVSSCVVERSAI PULP-TOP-CULL PRICE ORDINARY DEDUCTIBLE EXPENSE 2003 2018 5 -5.00 O BURN HARVEST A 2: PULPNOOD REVENUE 2009 2009 5 199.99 1 ALL HOOD AS CORDS AT PULP-TOP-CULL PRICE. HARVEST I 3: CHIP-N-SAN REVENUE 2016 2016 5 263.49 1 SANLUG AS NEE. NET-PULP-TOP-CULL AS CORDS HARVEST I 4: SANTINBER REVENUE 2022 2022 5 2471.09 1 SANLOG AS NBF, NET-PULP-TOP-CULL AS CORDS 1 -INFLATION RATE IS CONPUTED AS CONPOSITE OF SPECIFIED SANTINBER AND PULPNOOD INFLATION RATES ACCORDING TO PRODUCT NIX --TOTAL NET CASH FLON : 3 2768.69 {INCLUDES ALL CASH TRANSACTIONS BEFORE TAXES NITHIN PLANNING HORIZONI ----------- TVA YIELDPLUS 17 1.1b) Date: 4-28-1991 Tile: 10: 4:28 REGISTERED USER) TON NONAGAHN 1 (513 -----—-------—-------——-'--- ................... C A S H F L O N S B Y Y E A R R E P O R T STAND NANE: AL CUTOV 1055105: 1 ---------------------- 555055—111---------------------— ---------—-------------11155-71x---------------------- 1515 5575505 5115555 551 10005011150-551 5575505 5115555 551 10005011750-551 -0515511150 0011155 155 1055- 1955 .00 52.55 -52.55 -52.55 5 57 52.55 -15.55 -15.55 1959 .00 52.55 -52.55 -105.10 5 90 52.55 -15.55 -92.33 1990 .00 2.00 -2.00 -107.10 2.35 2.00 .35 -91.97 1991 .00 2.00 -2.00 -109 10 2.35 2.00 .35 -91.52 1992 .00 2.00 -2.00 -111.10 2.35 2 00 .35 -91.25 1993 .00 2.00 -2.00 -113.10 2 35 2 00 .35 -90.90 1994 .00 2.00 -2.00 -115.10 2.35 2.00 .35 -50.54 1995 .00 2.00 -2 00 -117.10 2.35 2.00 .35 -90.15 1995 .00 2.00 -2.00 -119.10 1.54 2.00 -.15 -90.31 1997 .00 2.00 -2.00 -121.10 .51 2.00 -1.19 -91.53 1993 .00 2.00 -2.00 -123.10 .30 2.00 -1.70 -93.23 1999 .00 2.00 -2.00 -125.10 .30 2.00 -1 70 -91.93 2000 .00 2.00 -2.00 -127.10 .30 2.00 -1.70 -95.53 2001 .00 2.00 -2.00 ~129.10 .30 2.00 .1.70 -95.33 2002 25.22 2.00 23.22 -105.55 25.52 5.75 19.71 -75 59 2003 .00 7.00 -7.00 ~112.55 1.05 7.00 -5.95 -54.54 2001 .00 2.00 -2.00 -114.55 .30 2.00 -1.70 -55.24 2005 .00 2.00 -2.00 -115.55 .30 2.00 -1.70 -57.91 1 2005 .00 2.00 -2.00 -115.55 .30 2.00 -1.70 -59.51 ; 2007 .00 2.00 -2.00 -120.55 .30 2.00 -1.70 -91.31 2005 .00 7.00 -7.00 -127.55 1.05 7.00 -5.95 -97 29 2009 199.99 2.00 197.99 70.11 200.29 32.00 155.29 71.00 2010 .00 2.00 -2.00 55.11 .30 2.00 -1.70 59.30 2011 .00 2.00 -2.00 55.11 .30 2.00 -1.70 57.50 2012 .00 2.00 -2.00 51.11 .30 2.00 -1.70 55.90 2013 .00 7.00 -7.00 57.11 1.05 7.00 -5.95 59.95 2014 .00 2.00 -2.00 55.11 .30 2.00 -1.70 55.25 2015 .00 2.00 -2.00 53.11 .30 2.00 -1.70 55.55 2015 253.19 2.00 251.19 311.50 253.79 11.52 222.27 275.52 2017 .00 2.00 -2.00 312.50 .30 2.00 -1.70 277.12 2015 .00 7.00 -7.00 305.50 1.05 7.00 -5.35 271.17 2019 .00 2.00 -2 00 303.50 .30 2.00 -1 70 259.47 2020 .00 2.00 -2 00 301.50 .30 2.00 -1.70 267 II 2021 - .00 2.00 -2.00 299.50 .30 2.00 -1.70 255.07 2022 2171.09 2.50 2159.09 2755.59 2171.39 372.55 2095.73 2354.50 2023 .00 .00 .00 2755.59 .00 .00 .00 2354.50 TVA YIELDPLUS (7 1.10) Date: 4-28-1991 Tile: 10: 4:28 REGISTERED USER) TON NONAGAHN 164 STAND NAME: MS CUTOV ACREAGE: 1 --STAND INVENTORY FOR 1988-— SITE INDEX(EASE AGE 25): 77 FEET STAND AGE: 1 YEARS SURVIVING I STEMS/ACRE: 726 AT AGE 1 ESEESSSSSXESSEEEESEESSENSE!113SSSEISSEEESSESSSERSSSEStttttttttttlttt MISSISSIPPI CUTOVER TIMBERLAND SITE INDEX 70 DISC RATE 4! IMPROVED SEEDLINGS SOUTH MS PRICES COST SHARE 65% ~00.””. ~“-”-- tttttASSESSSEESESSSSEESESEXSt!!!ItttttEttitttttltttSttlEtEEIIESSEES CUTOVER-SITE LOBLOLLT PINE PLANTATION HARVESTING SCHEDULE 55510011 005105557 515755750 005105557 1 5157557 1515 105 551057 111 75155155 11 51511 505555 5-5057 557 70711 1 51511 505555 5-5057 557 10711 1 1 505555 00505 557500 11 1551 57555 00115 00505 00505 1 1551 57555 00115 00505 00505 1 I 11 1 I 11 I 1 1 1 2002 15 19 .0 107 11 110 350 .11 21.15 21.95 I 27 192 .00 1.33 1.33 1 1 11 1 1 2 2009 22 59 3 2 107 11 110 205 3.25 21.95 31.95 1 11 115 .00 12.55 12.55 1 I 11 1 1 1 3 2015 29 57 2.7 105 11 110 135 5.39 12.12 12.25 1 30 53 1.33 5.31 11.37 1 I 11 1 1 1 2M2 M 1m 23 5n n 01515-007 11m n5 15m u2355m 1 ---- o—oco—n nnnnnnnnnn ---707115/1055 229 155 15.30 31.11 51.25 TVA YIELDPLUS (7 1.1b) Date: 4-28-1991 Time: 10:59:33 REGISTERED USER) TOM MONAGAHN 165 -—---—.-----------------cc-un-——----------------- STAND NAME: MS CUTOV ACREAGE: 1 -—STAND INVENTORY FOR 1988-- SITE INDEEIBASE AGE 25): 77 FEET STAND AGE: 1 YEARS SURVIVING 8 STEMS/ACRE: 726 AT AGE 1 $989981!333939833313938138339889818It‘llttttltttttltittt19913389888! MISSISSIPPI CUTOVER TIMBERLAND SITE INDEX 70 DISC RATE 4! IMPROVED SEEDLINGS SOUTH MS PRICES COST SHARE 65% ““hfl-.. --- $919ESSEIEESIEOSOSEEEESIAIII18398138!It!19091339839tittttltl'ttttttt CUTOVER~SITE LOHLOLLI PINE PLANTATION HARVESTING SCHEDULE --> HARVEST A 1 YEAR 2002 AGE 15 <-- DBH-RANGE DBH NUMBER BASAL HEIGHT 8 M5? NET TOTAL TONS NET TOTAL 3 NAME CLASS STEMS AREA FEET VALUE DOYLE CORDS CORDS SANLOGS TONS TONS CUT NON-COM 2.0 .8 .0 22.6 .00 .00 .00 .00 .00 .00 .00 100.0 NON-COM 3.0 9.2 .5 32.4 .00 .00 .00 .00 .00 .00 .00 100.0 PULPVOOD 4.0 35.5 3.1 38.6 .00 .00 .00 .00 .OO .00 .00 100.0 PULPNOOD 5.0 81.8 11.2 43.2 28.71 .00 1.79 1.79 .00 3.94 3.94 100.0 PULPHOOD 6.0 129.7 25.5 46.4 81.96 .00 5.12 5.12 .00 11.75 11.75 49.6 PULPNOOD 7.0 141.7 37.9 48.9 134.65 .00 8.42 8.42 .00 19.92 19.92 .0 CHIP-N-SAH 8.0 101.0 35.2 50.8 131.55 .00 8.2 8.22 .00 19.97 19.97 .0 CHIP-N-SAN 9.0 42.7 18.9 52.4 72.12 .00 4.51 4.51 .00 11.20 11.20 .0 CHIP-N-SAN 10.0 9.5 5.2 53.6 24.50 .11 .73 1.25 1.60 1.58 3.18 .0 CUT 191 6 27.3 0 69 33 .00 4.33 4.33 00 9.76 9.76 LEAVE 360:3 110. :0 404 17 .11 24.46 24.98 1.60 58.59 60.20 166 .-------—-—-———--------------———---------------_------_---g--------—-------—--o-oc--------__-_--__-------_-_----. --> HARVEST 3 2 YEAR 2009 AGE 22 <-- DBH-RANGE DBH NUMBER BASAL HEIGHT 3 NSF NET TOTAL TONS NET TOTAL 1 NAME CLASS STEMS AREA FEET VALUE DOYLE CORDS CORDS SAVLOGS TONS TONS CUT PULPVOOD 7.5 55.5 16 9 65.4 79.40 .00 4.96 4.96 .00 12.30 12.30 100.0 CHIP-N-SAH 8.7 125.8 51.8 69.1 257.05 .00 16.07 16.07 .00 41.10 41.10 47.4 CHIP-N-SAH 9.9 91.7 49.0 72.1 335.24 1.56 9.32 15.62 20.27 20.82 41.09 .0 CHIP-N-SAN 11.1 39.3 26.4 74.5 204.45 1.25 3.50 8.52 15.32 7.67 22.99 .0 SAHTIMBER 12.3 8.8 7 3 76.5 93.33 .44 .68 2.36 5.05 1.46 6.51 .0 COT 115.1 41.4 .0 201.21 .00 12.58 12.58 .00 31.78 31.78 LEAVE 206.0 110.0 .0 768.27 3.25 21.96 34.96 40.65 51.57 92.22 --> HARVEST 3 3 YEAR 2016 AGE 29 <-- DBH-RANGE DBH NUMBER BASAL HEIGHT 3 MBE NET TOTAL TONS NET TOTAL 1 NAME CLASS STEMS AREA FEET VALUE DOYLE CORDS CORDS SAHLOGS TONS TONS CUT CHIP-N-SAN 10.3 59.1 33.9 86.8 291.82 1.50 7.09 12.77 18.28 16.33 34.61 89.0 SANTIMBER 11.7 84.4 62.6 90.7 931.48 4.32 7.98 24.00 49.64 17.37 67.02 .0 SANTIMBER 13.1 36.7 34.2 93.9 595.33 2.94 3.07 13.19 31.24 6.62 37.86 .0 SAHTIMBER 14.5 8.3 9.5 96.6 189.04 .97 .59 3.65 9.54 1.23 10.77 0 COT 52.6 30.2 .0 259.64 1.33 6.31 11.37 16.26 14.53 30.79 LEAVE 135.9 110.0 .0 1748.03 8.39 12.42 42.25 92.44 27.03 119.47 --> HARVEST 3 4 YEAR 2022 AGE 35 <-- ‘ DBH-RANGE DBH NUMBER BASAL HEIGHT S MBE NET TOTAL TONS NET TOTAL 1 NAME CLASS STEMS AREA FEET VALUE DOYLE CORDS CORDS SAVLOGS TONS TONS CUT SAHTIMBER 11.5 5.9 4.3 100.4 70.98 .33 .62 1.81 3.74 1.36 5.10 100.0 SAHTIMBER 13.1 79.0 73.9 105.2 1465.75 7.25 7.31 31.65 76.21 16.01 92.22 100.0 SANTIMBER 14.7 35.0 41.0 109.1 945.53 4.85 2.73 17.63 47.16 5.78 52.93 108.3 SANTIMBER 16.2 8.0 11.5 112.3 295.90 1.54 .57 4.92 13.99 1.20 15.19 10 . CUT 127.9 k 130.7 .0 2778.16 13.97 11.23 56.01 141.10 24.35 165.45 LEAVE .0 .0 .0 .00 .00 .00 .00 .00 .00 .00 --> ACGUMULATED TOTALS <-¢ CUT 487.3 229.7 .0 3308.34 15.30 34.44 84.28 157.36 80.42 237.79 --------------------------------------------------------- TVA YIELDPLUS (7 1.16) Date: 4-28-1991 Tile: 10:59:33 REGISTERED USER) TOM MONAGAHN 167 E I N A N C I A L P R 0 F I T A B I L I T Y STAND NAME: MS CUTOV ACREAGE: 1 FINANCIAL PARAMETER DATA PLANNING HORIZON IS FROM 1966 TO 2023 MARGINAL FEDERAL TAX BRACKET: 15.0 1 CAPITAL GAINS PROPORTION: 100.0 2 DISCOUNT RATE: BEFORE TAX: 4.0 1 AFTER TAX: 3.4 I -C---------------o----—---------—--—— STUMPAGE PRICES DBH-91701 099-91709 ------------- 917100 ------------------------ 9019-709-0011 ---------- 71111 107 7109 9/197 9/707 177: 7179/1099 :/0010 mm: 177: 7179/1097 90197000 4 7 .00 .00 .0 .00 12.00 .00 .0 .00 0919-7-517 9 11 191.00 .00 .0 .00 12.00 .00 .0 .00 917717979 12 20 179.00 .00 .0 .00 12.00 .00 .0 .00 717170711 9907171911177 17117919 710705710 707 177117107) 919079 717 17779 717 717 9775777 70777 9 712.91 9 791.90 1 Innu1nm07uwu 106: 109: i 007909177 9179 07 917077 9.9 x 9.9 7 177011 7001711777 91107 9 99.19 9 97.59 0790007770 9179917/0097 91710 5.5 3.1 5011 71910717707 71109 9 942.49 9 1099.59 FINANCIAL TRANSACTIONS (UNADJOSTED FOR INFLATION) TYPE FIRST YEAR LAST YEAR REPETITION SAMOUNT INFLATION A DESCRIPTION REFORESTATION EXPENSE >PL-96-451 1966 1969 1 -56.36 0 CHOP/BURN/HPLANT/IMPROV ORDINARY DEDUCTIBLE EXPENSE 1968 2022 1 -2.00 0 MGT ATAEES HARVEST ! 1: PULPNOUD REVENUE 2002 2002 5 52.00 1 ALL NOOD AS CORDS AT PULP-TOP-CULL PRICE ORDINARY DEDUCTIBLE EXPENSE 2003 2016 5 -5.00 O BURN EVERY 5 YEARS HARVEST 4 2: PULPVOOD REVENUE 2009 2009 5 59.55 ' ALL HOOD AS CORDS AT PULP-TOP-CULL PRICE HARVEST 4 2: CHIP-N-SAV REVENUE 2009 2009 5 91.35 4 ALL HOOD AS CORDS AT PULP-TOP-CULL PRICE HARVESTfN 3: CHIP-N-SAV REVENUE 2016 2016 5 250.43 ' SANLUG AS MBE, NET-PULP-TOP-CULL AS CORDS HARVEST 4 4: SANTIMBER REVENUE 2022 2022 5 2621.50 ' SANLUG AS MBF. NET-PULP-TOP-CULL AS CORDS 4 -INFLATION RATE IS COMPUTED AS COMPOSITE OF SPECIFIED SAVTIMBER AND PULPVOOD INFLATION RATES ACCORDING TO PRODUCT MIX 2672.11 (INCLUDES ALL CASH TRANSACTIONS BEFORE TAXES VITHIN PLANNING HORIZON) --TOTAL NET CASH FLON = S TVA YIELDPLUS Iv 1.1b) Date: 4-28-1991 Tile: 11: 4: 5 REGISTERED USER) TOM MONAGAHM 168 C A S H F L O N S B Y Y E A R R E P O R T STAND NAME: MS CUTOV ACREACE: 1 ---------------------- BEFORE~TAE -----------------------19777-71x---------------------- YEAR REVENUE EXPENSE NET ACCUMULATED-NEI REVENUE EXPENSE NET ACCUMULATED-NET -0NINFLATED DOLLARS PER ACRE- 1966 .00 56.36 -56.36 -56.36 6 51 56.36 -51.65 -51.65 1969 .00 56.36 -56.36 -116.72 7 66 56.36 -50.70 -102.55 1990 .00 2.00 ~2.00 -116.72 2.59 2.00 .59 -101.96 1991 .00 2.00 -2.00 -120.72 2.59 2.00 .59 -101.36 1992 .00 2.00 -2.00 ~122.72 2.59 2 00 .59 -100.77 1993 .00 2.00 ~2.00 -124.72 2 59 2 00 .59 -100.17 1994 .00 2.00 -2.00 -126.72 2.59 2.00 .59 -99.56 1995 .00 2.00 -2.00 -126.72 2.59 2.00 .59 -96.99 1996 .00 2.00 -2.00 -130.72 2.02 2.00 .02 -96.96 1997 .00 2.00 -2.00 -132.72 .67 2.00 -1.13 -100.09 1996 .00 2.00 -2.00 -134.72 .30 2.00 -1.70 -101.79 1999 .00 2.00 -2.00 -136.72 .30 2.00 -1.70 -103.49 2000 .00 2.00 ~2.00 -136.72 .30 2.00 -1.70 -105.19 2001 .00 2.00 -2.00 -140.72 .30 2.00 -1.70 -106.69 2002 52.00 2.00 50.00 -90.72 52.30 9 60 42.50 -64 39 2003 .00 7.00 -7.00 -97.72 1.05 7.00 -5.95 -70.34 2004 .00 2.00 -2.00 -99.72 .30 2.00 -1.70 -72 04 2005 .00 2.00 -2.00 -101.72 .30 2.00 -1.70 ~73 74 2006 .00 2.00 -2.00 -103.72 .30 2 00 -1.70 -75 44 2007 .00 2.00 -2.00 -105.72 .30 2.00 -1.70 -77 14 2006 .00 7.00 -7.00 -112.72 1.05 7.00 ~5.95 ~63.09 2009 150.91 2.00 146.91 36.18 151.21 24.64 126.57 43.46 2010 .00 2.00 -2.00 34.16 .30 2.00 -1.70 41.76 2011 .00 2.00 -2.00 32.16 .30 2.00 -1.70 40.06 2012 .00 2.00 -2.00 30.16 .30 2.00 -1.70 36.36 2013 .00 7.00 -7.00 23.16 1.05 7.00 -5.95 32.43 2014 .00 2.00 -2.00 21.16 .30 2.00 -1.70 30.73 2015 .00 2.00 -2.00 19.16 .30 2.00 -1.70 29.03 2016 250.43 2.00 246.43 267.61 250.73 39.56 211.17 240.19 2017 .00 2.00 -2.00 265.61 .30 2.00 -1.70 236.49 2016 .00 7.00 -7.00 256.61 1.05 7.00 -5.95 232.54 2019 .00 2.00 -2.00 256.61 .30 2.00 -1.70 230.64 2020 .00 2.00 -2 00 254.61 .30 2.00 -1.70 229.14 2021 .00 2.00 ~2.00 252.61 .30 2.00 o1.70 227.44 2022 2621.50 2.00 2619.50 2672.11 2621 60 395 22 2226.57 2454.01 2023 00 00 .00 2672 11 00 00 00 2454.01 ---—--------- nnnnnnnn u--—-—---_--------—--- .0-------------------------—-—---—-—---c-.------------ -——-----------------------—-—----- TVA YIELDPLUS (v 1.103 Date: 4-26-1991 Tile: 11: 4: 5 REGISTERED USER) TOM MONAGAHN APPENDIX E Profitability Curves for Fine Plantation Investments in Alabama and Mississippi 169 APPENDIX E Profitability Curves for Pine Plantation Investments in Alabama and Mississippi I ~4— ssoo—- 4 NPV —~ A (6) ‘— o 7 7 7 7 7 7 7: .. 1000 2000 3000 :4000 5000 6000 7000 ACRES (THOUSANDS) 5 SI SI SI SI 70 60 57 45 SITE INDEX ‘ 7o 60 '57 45 NW UNIMPROVED $534.16 $331.50 $239.59 $133.90 va IMPROVED $673.35 $469.42 $413.72 $194.28 ACRES (THOUSANDS) SI 70 SI 60 SI 57 SI 45 TOTAL 333.6 992.5 2497.7 3267.8 7071.5 PERCENT 4.7 13.9 35.2 46.2 100.0 r—o—o—«UNIMPROVED J.___,.____,.___,‘Implaoveo Figure 11: Profitability curve for marginal cropland pine reforestation using cost-share program, North Alabama. 170 -L—x "—7 $500" A NPV '“ <5) -- _ o I I 1 I i 1 1 i + __ 1000 2000 3000 4000 5000 6000 7000 8000 9000 ACRES (THOUSANDS) SI SI 5' s1 70 60 57 45 SITE INDEX 70 60 57 45 NPV UNIMPROVED $885.04 $441.52 $357.35 $183.34 NPV ,MPROVED $831.84 $585.19 $517.27 $252.35 ACRES (THOUSANDS) SI 70 SI 60 SI 57 SI 45 TOTAL 458.6 1695.2 3715.7 2844.3 8713.8 PERCENT 5.3 19.5 42.6 32.6 100.0 Figure 12: Profitability curve for marginal cropland pine ‘r F— Ffl UNIMPROVED x—i—F—X IMPROVED reforestation using cost-share program, Central Alabama. 171 $1ooo—L,‘ “L. .. a $500-- 1 fl NPV ‘” ‘9 (3) “ _x o 7 7 7 7 7 7 __ 1000 2000 3000 4000 5000 6000 ACRES (THOUSANDS) SI SI SI SI 70 60 S7 45 SITE INDEX 70 60 57 45 NPV UNIMPROVED $760.41 $486.57 $430.03 $219.23 NPV IMPROVED $952.95 $673.02 $597.12 $296.17 ACRES (THOUSANDS) SI 70 SI 60 SI 57 SI 45 TOTAL 182.1 1107.6 2265.2 2318.1 5873.0 pERCENT 3.3 18.8 38.5 39.4 100.0 °—-0—0—*UNIMPROVED ‘ *— k 4 IMPROVED Figure 13: Profitability curve for marginal cropland pine reforestation using cost-share program, South Alabama. 172 ...—X “$500‘:__. -- 9: NPV -- 3 T ($) -- , ——x -- 1——-0 o 7 7 7 7 1000 2000 3000 4000 ACRES (THOUSANDS) SI 37 SI SI 70 80 57 45 SITE INDEX 70 60 57 45 NPV UNNPROVED $483.88 $313.03 $274.18 $122.02 $610.03 $411.31 $361.36 $161.62 NPV IMPROVED ACRES (THOUSANDS) SI70 SI60 Sl57 SI45 TOTAL 389.1 1083.8 1668.6” 739.5 3881 9.5 28.1 43.2 19.2 100.0" PERCENT a : = fiUNIMRROVED Wag—x IMPROVED Figure 14: Profitability curve for marginal cropland pine ' reforestation using cost-share program. North MISSISSIPPI- 173 :———x -—_'—'0 $500- NPV ‘ 44‘ (3) " ’9 — ———x 0 1 7 7 7 7 7 1000 2000 3000 4000 5000 6000 . ACRES (THOUSANDS) 5' s1 s1 3. 70 , 60 57 45 SITE INDEX 70 80 57 45 NW UNIMPROVED $578.02 $378.33 $334.17 $158.90 va IMPROVED $714.89 $489.87 $431.54 $202.86 ACRES (THOUSANDS) SI 70 SI 60 SI 57 SI 45 TOTAL 851.6 1899.0 2311.5 841.6 5703.7 PERCEM 14.9 29.8 40.6 14.7 100.0 H—O—‘UNIMPROVED w—x IMPROVED Figure 15: Profitability curve for marginal cropland pine reforestation using cost-share program. Central Mississippi. 174 __ —X 5500"- j‘ 4 NPV ~- (3) ‘- “ "—-—x 0 7 7 7 7 7 7 _4 1000 2000 3000 4000 5000 6000 7000 ACRES (THOUSANDS) SI SI 3| SI 70 80 57 45 SITE INDEX 70 60 57 45 NPV UNIMPRQVED $571.32 $445.81 $395.36 $190.85 NPV IMPROVED $825.91 $574.84 $508.25 $243.84 ACRES (THOUSANDS) SI 70 SI 60 SI 57 SI 45 TOTAL 1093.9 1945.6 2383.5 1154.7 6577.7 PERCENT 18.8 29.6 38.2 17.6 100.0 0—°—-’—‘UNIMPROVED Figure 16: Profitability curve for marginal cropland pine reforestation using cost-share program. South Mississippi. 175 _..—" 5500-- NPV __ ~———x (S) -- 7‘ o 7 7 7 7 7 7 7,5 1000 2000 3000 4900 5000 6000 7000 ACRES (THOUSANDS) . SI SI SI 31 7o 60 57 45 SITE INDEX 70 60 57 45 NW UNTI‘JPRQVED $470.38 $289.87 $213.04 3.2.75" NPV ,MPROVED $622.82 $374.45 $324.14 $86.42 1/ Harvest schedule changed from 4 to 3 cuttings ACRES (THOUSANDS) SI 70 SI 60 SI 57 _ SI 45 TOTAL 333.6 982.5 2487.7 3267.8 7071.6 PERCENT 4.8 13.9 35.1 46.2 100.0 o—¢——¢—-° UNIMPROVED ,__,._*_, IMPROVED Figure 17: Profitability curve for cutover timberland pine reforestation using cost-share program, North Alabama. 176 _;_.x 3500'"- % NPV "- H (55) "’ __ ~94 o 7 7 7 7 7 7 7 :t=~‘.—I 1000 2000 3000 4000 5000 6000 7000 8000 9000 ACRES (THOUSANDS) SI SI SI SI 70 60 57 45 SITEINDEX 70 60 57 4S 1 NPV UNIMPROVED 5505-33 $359.54 $288.35 18.74 ’ NPV IMPROVED $794.24 $488.60 $425.94 $131.07 1/ Harvest schedule Changed from 4 to 3 cuttings ACRES (THOUSANDS) SI 70 SI 80 SI 57 SI 45 [TOTAL 458:8 1895.2 3715.7 2344.3 |8713.8 5.3 19.5 42.8 32.8 I 100.0 PERCENT o——o—o—~ UNIMPROVED H__.._,. IMPROVED Figure 18: Profitability curve for cutover timberland pine reforestation using cost-share program, Central Alabama. 177 51006-- --x --o ~-._I " $500-- ‘ AX NPV ‘- ($) "" _. fi’ O T I 7 7 7 a7— .. 1000 2000 3000 4000 5000 6000 ACRES (THOUSANDS) SI SI SI 60 57 45 SI 70 SITE INDEX 70 60 57 45 NPVJNIMPROVED 3595-00 $419.77 $343.58 $53.131 ’ NPV IMPROVED $906.07 $567.02 $497.60 $175.63 1/ Harvest schedule Changed from 4 to 3 cuttings ACRES (THOUSANDS) Sl70 8160 $157 3145 TOTAL 182.1 1107.6 2265.2 2318.1 5873.0 3.3 18.8 38.5 39.4 100.0 PERCENT °—""°"'—°—_‘ UNIMPROVED *_*_H IMPROVED Figure 19: Profitability curve for cutover timberland pine reforestation using cost-share program, South Alabama. 178 $500-:__," _.._. NPv -- 4 “ ($7 " H fl 0 7 7 7" i. 1000 2000 3000 4000 ACRES (THOUSANDS) SI SI SI SI 70, 50 57 45 SITE INDEX 70 60 57 45 NPV UNIMPROVED 3369-60 $191.39 $143.39 $35.80" NPVIMPROVED $493.52 $279.89 $234.53 $31.84 1/ Harvest schedule Changed from 3 to 4 cuttings ACRES (THOUSANDS) SI 70 SI 60 SI 57 SI 45 TOTAL 389.1 1083.8 1668.6 739.5 3861 PERCENT 9.8 28.0 43.2 19.2 100.0 o——+—o—oUNIMPROVED H__,.__,.IMPROVED Figure 20: Profitability curve for cutover timberland pine reforestation using cost-share program, North Mississippi. 179 ._:-—-—X $500-- NPV -- A (95) “ H -— *0 o 7 7 7 7 7—7‘ I, 7 1000 2000 3000 4000 5000 8000 ACRES (THOUSANDS) 3' SI SI SI 7° 60 57 45 SITE INDEX 70 80 57 45 7 NPV UMMPROVED $489.10 $253.87 5193.20 ”31.47’ NPV IMPROVED $618.71 $360.22 $305.88 $54.85 1/ Harvest schedule Changed from 4 to 3 cuttings ACRES (THOUSANDS) SI 70 SI 60 SI 57 SI 45 TOTAL 851.6 1699.0 2311.5 841.8 5703.7 PERCENT 14.9 29.8 40.5 14.8 100.0 F c = 'UNIMPROVED Fa g 1 IMPROVED Figure 21: Profitability curve for cutover timberland pine reforestation using cost-share program, Central Mississippi. 160 _ X $5001 *9: NPV "' _: ($1 _ 4 '- ~———-x D E 7 E : i 1 fl: 1000 2000 300.0 4000 5000 6000 7000 ACRES (THOUSANDS) 5' SI SI SI 70 60 57 45 SITE INDEX 70 60 57 45 1 / NPV UNIMPROVED $543.92 $307.20 $241.80 $.2,81 NPV IMPROVED $712.81 $428.93 $366.96 $93.09 Figure 22: 1/ Harvest schedule changed from 4 to 3 cuttings PERCENT ACRES (THOUSANDS) SI 70 SI 60 SI 57 SI 45 TOTAL 1093.9 1945.6 2383.5 1154.7 6577.7 16.6 29.5 36.3 17.6 100.0 W. 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