Understanding Growth and Yield in Timberland
As an investor, there are many things to think about before agreeing to put money in a specific stock or investment. When considering timberland for sale in Florida as an investment, investors need to have a full concept of what they are purchasing. This means understanding characteristics of the land and the trees.
Trees are one of Earth’s finite resources, however, they make a unique investment because they grow. Each type of tree has a specific growth rate, which essentially determines how much that species grows in one year’s time.The Longleaf Pine, one of Florida’s more prominent pines, can grow to be 40 feet tall in just 20 years. Growth rate is dependent upon things like soil, location and how the property was previously managed.
In terms of investing, growth rate correlates to how much a timberland investment would appreciate each year. The percentage of growth equals the percentage of appreciation of the land. Older trees are often seen as more valuable because they can be harvested immediately. However, younger trees still need to grow and thereby, are seen as a benefit for a long-term investment. With a timberland stand, having a variety of species and tree ages can be a way to get the most return on the land. Of course, harvesting should not exceed the growth rate, but with proper testing and planning, each stand can be utilized to its full potential.
In forestry, yield has two meanings. The first is how many trees can be harvested per period, and the second is how many trees can be harvested at any time. For instance, one forest may be able to yield 300 cubic feet of timber in a single year or 3,000 cubic feet could be harvested after a period of ten years. The trick with managing timberland is to find a way to make the yield match the growth rate. A forest that can achieve this is considered to have sustained yield management. A sustained yield management would likely be the most steady profit inducing scenario for an investor.
A basic understanding of these things can help an investor when looking at Florida timberland for sale. Each investor has their own desires and needs for profit, so understanding growth and yield can help determine the amount of timberland you want to invest in.