Innovative Tree Farming

Chapter 2: The Ideal Tree Farm Species

From A Guide to Innovative Tree Farming in the Pacific Northwest by Mike Dubrasich. 2005. Whirlwind Press. For a hard copy of the book ($10 - includes shipping) please contact W.I.S.E. [here].

My professional advice to you is don’t plant Douglas-fir on your tree farm. You might find this advice curious because Douglas-fir is the commercial tree species most commonly grown in the Pacific Northwest. Every year billions of board feet are harvested, and hundreds of millions of new Douglas-fir seedlings are planted. What’s the problem? What’s wrong with Douglas-fir?

The problem is that growing Douglas-fir has a huge opportunity cost. Many other species produce more net income per acre per year. Tree farming is a business. Douglas-fir is a poor money maker.

In general the best species to grow would be the one that makes the tree farmer the most money with the least effort in the shortest amount of time. This is profitability: gross sales minus all costs, discounted to the present. To meet the profitability goal, the ideal tree farm species should have the following characteristics:

1. Fast growth, reaches harvest age quickly.

2. Easy to grow, with minimal up-front capital investment, and low maintenance, culturing, and harvesting costs.

3. Produces valuable products, preferably for expanding markets.

4. Provides the tree farmer the opportunity to add value to the products

Let’s examine these ideal characteristics one at a time.

Fast growth

The ideal tree species to grow comes to market in a relatively short period. People making long-term investments should know that time changes the value of money. The longer you have wait for a payment, the less it is worth. A sum of money due 50 years in the future has a present worth less than 1/11 of its face value, at a discount rate of five percent. At a discount rate of seven percent, the 50-years-in-the-future sum is today worth less than 1/29 of its face value (see Table 1).

Table 1. Factors for Discounting Future Values. To calculate the present value of a single sum due many years in the future, find the table entry corresponding to the years and your selected discount rate. Then multiply the future face value by the table entry. Example: $15,000 due 50 years in the future, with a discount rate of 5%, has a present value of $15,000 * 1/11.5 = $1,304. The table entries are rounded, so calculations will not be exact. For exact table factors use 1/(1 + p)^n, where p is the discount rate and n is the number of years.

Innovative tree farmers grow faster-to-harvest-age crops than Douglas-fir timber. The best historical example of innovation in Pacific Northwest tree farming is Christmas trees. Christmas trees are typically 7 to 10 years old at harvest. An acre carries about 1,000 marketable Christmas trees, worth about $15 each, wholesale. That means the Christmas tree farmer has gross sales of $15,000 per acre, about the same amount a Douglas-fir timber grower grosses at harvest with 50-year-old timber. The difference is the former harvests five times before the latter harvests once. In terms of profitability (figuring in costs) Christmas trees make about ten times more, per acre per year, than Douglas-fir timber. As we shall see, many innovative tree farm crops make more profit than timber or Christmas trees. Fast growth to harvest has a lot to do with it.

Some tree farm species produce an annual commercial harvest of cones, boughs, shoots, sap, flowers, fruits, or nuts. Annual sales add up quickly. An annuity of $72 compounded at five percent will equal $15,000 in 50 years. In other words, an annual crop that grosses $72 per acre per year is equivalent to a freshly planted acre of Douglas-fir timber (expected to be worth $15,000 in gross sales value at harvest in 50 years). Any tree farm crop that yields an annual harvest of more than $72 per acre beats Douglas-fir timber.

Easy to grow

The second characteristic of the ideal tree farm species is that it should be easy to grow, with minimal up-front capital investment, and low maintenance, culturing, and harvesting costs.

Tree farmers grow native plants because they are easy to grow. Native plants are species that occur in our naturally and have been here for thousands of years. They are adapted to the local climate, soils, and pests. They grow like weeds (even better than weeds) and don’t require irrigation or fertilization (although those practices can improve native plant growth rates). Sometimes native plants don’t even require planting; they establish themselves on tree farms naturally.

Easy to grow also means cheap to maintain, culture, and harvest. Shearing Douglas-fir Christmas trees is a big expense. Shearing is labor intensive and must be done every year until harvest. Noble fir Christmas trees need their long leaders trimmed but not shearing, hence they require much less field culturing. Some innovative growers sell “wilding” noble firs that received no field culturing at all. The huge savings in culturing costs more than makes up for a slight reduction in sale price (as compared to cultured nobles; wilding noble fir Christmas trees sell for 25 to 50 percent more than sheared Douglas-firs).

Many tree crops are more profitable to grow than Christmas trees, because they are easier to grow. Some of these require pruning, but pruning is faster and cheaper than shearing (by pruning I mean cutting branches off at the trunk). Many of the best tree species achieve high value only if pruned, while others, such as Douglas-fir, gain little value from the effort. Innovative tree farmers take advantage of the easy practice of pruning to grow high value products that surpass even wilding noble fir Christmas trees for profitability.

Produces valuable products

By my count, eleven commodity classes constitute tree farm product markets:

1. Structural lumber
2. Poles and posts
3. Chips
4. Paper pulp
5. Firewood

6. Ornamentals
7. Decorative wood
8. Craft fiber
9. Living plants
10. Food
11. Pharmaceuticals and plant extracts

Large corporate and government landowners mass-produce the first four commodity classes and control their markets. Innovative tree farmers avoid these markets because it’s difficult to make a profit in them. The fifth, firewood, also produces little or no profitability for most tree farms. One telling feature of a mass-produced product is that it has a low value-to-weight ratio. If a tree farm product sells by the ton for pennies, then successful tree farmers don’t bother to produce it.

The last six commodity classes are of special interest to tree farmers. These are expanding markets, the markets of the future, where profitability awaits the innovative. They are worth closer examination.

Ornamental tree farm products include Christmas trees, boughs, cones, flowers, and fronds. As we have seen in our Christmas tree farm example, ornamentals can out-profit timber 10 to 1. Other ornamental tree farm products, such as boughs, cones, and fern fronds, can be even more profitable than Christmas trees (in part because annual income compounds faster than periodic income). Ornamentals have some special requirements. Culturing can be expensive. They generally have a short shelf-life and must be purchased by end-consumers soon after harvest. Most have seasonal markets (the Christmas tree harvest and sales season is only three or four weeks per year). Even so, ornamentals are much more profitable than Douglas-fir.

Decorative wood is visually attractive wood. Examples include figured wood, burls, naturally stained wood, colorful wood, and easily-worked wood. Uses include arts, crafts, paneling, musical instruments, cabinetry, and furniture making. Decorative wood is valued for its appearance, like ornamentals. Hence, it need not be especially strong nor sold in large lumber-sized pieces (artisans make objects as small as beads or coasters from decorative wood). It is often sold in small blocks for lathe turning. Veneer manufacturers slice decorative wood logs and cants. Decorative wood offers numerous opportunities for tree farmers to increase profits by adding value to their growing trees and harvested products.

Decorative wood markets are year around, not short-seasonal. The harvested materials usually have a long shelf-life. If treated correctly, decorative wood can last hundreds of years. In fact, even rotten wood can be valuable if the fungal stain, called spalting, is attractive. Figured grain and burls rarely occur in wild trees, but tree farmers can induce figure and burls into saplings of certain species, and grow them into commercial-sized, high-value trees in 25 years or less. Decorative wood is one of the most profitable commodities you can (legally) grow on your tree farm.

Craft fiber is wood that can be woven. Tree farm products for the craft fiber market include shoots, roots, inner and outer barks, splits, splints, strips, and twines. Uses include arts and crafts, furniture making, basketry, and ornamental applications. On some trees species, especially at young ages, the inner bark is more valuable than the wood. A 20-year-old bitter cherry, 12 inches in diameter at breast height and clear of limbs for 25 feet, may have $50 to $100 worth of outer bark (but only $2 worth of pulp wood inside it). Any tree that is worth $100 at age 20 is of interest to innovative tree farmers.

Live plants produced by tree farms include seedlings, rooted cuttings, root-balled and potted plants, and living mosses and ferns. I also put viable seed in this category (seeds are, after all, alive and plants, or at least potentially so). We usually call farms that produce living plants nurseries, and the nursery business is outside the scope of this book. Marketing live plants requires working knowledge of nursery regulations, and proper certification to avoid spreading pests and diseases. Growing your own seedlings is one method of protecting your tree farm from outside infections. Innovative tree farmers also sell cones or processed seed to the nursery industry.

Food crops grown on tree farms include berries, fruits, nuts, and mushrooms. In general, domesticated food crop varieties greatly out-produce their wild cousins, but some edible native plants are high-value luxury foods. Truffles, morels, chanterelles, huckleberries, camas, wild celery, and many others can provide small (but annual) profits to tree farmers. Commercial wild food gathering on public lands is a problematic practice, but is little competition to private landowners who produce consistent, high-quality edible native foods for local restaurants and grocery stores.

Pharmaceuticals and plant extracts are medicinal and aromatic extracts, concentrated essential oils, and distilled fragrances. These products are purchased by industries including: pharmaceuticals, homeopathy, soaps and shampoos, cosmetics, and many others. This market is huge and currently under-utilized by Pacific Northwest tree farmers. Opportunities abound for innovators, at both large and small scales, but the most profitable application for individual and family tree farmers may be the use of small, CO2 distilleries to extract and refine rare fragrances.

The combined markets for tree farm ornamentals, decorative wood, craft fiber, live plants, food, and pharmaceuticals are just a fraction of the lumber market, but they are multi-million (or -billion) dollar markets nonetheless. So-called specialty and niche markets are not attractive to large corporations, leaving those expanding and highly-profitable markets wide open for the rest of us.

Opportunity to Add Value

The last characteristic of the ideal tree farm species is that it provides tree farmers with opportunities to add value to products. Value can be added while trees are growing or after harvest. An example of the former is pruning. On some species, such as Douglas-fir, pruning adds little value. Douglas-fir is used for structural lumber, and the presence of a few knots is acceptable to consumers. On other species, such as western red cedar, pruning can triple or quadruple the value of the wood. On some species, such as Oregon ash, pruning can turn a waste tree into one worth five times more than Douglas-fir by the board foot.

Adding value after harvest can be a profitable practice, too. Most tree farmers cannot cut lumber from logs more efficiently than sawmills. Sawyers in typical sawmills miss-cut decorative wood logs, however. Tree farmers who saw their own decorative wood logs into violin blanks, slicer cants, turning blocks, and other specialty products, can increase the value of the wood 10-fold or more. A figured bigleaf maple log, worth about 25¢ per board foot delivered to a pulpmill, might be worth $50 per board foot cut, dried, and planed into guitar backs.

Fast growth to harvest, easy to grow, producing valuable products for multiple markets, and providing the opportunity to add value: these are the characteristics of the ideal species for innovative and profitable tree farming. Are there any real species that meet the test? Yes indeed, as we shall see in the next four chapters.