University of Missouri Extension
G5051, Reviewed October 1993
Selling Walnut Timber
John P. Slusher
School of Forestry, Fisheries and Wildlife
Fred Crouse
Missouri Department of Conservation
Larry R. Frye
Fine Hardwood Veneer Association
American Walnut Manufacturers Association
Missouri is one of the leading states in black walnut production. Many of its soils are ideal for
walnut. Black walnut wood has been in great demand for furniture, gun stocks and other
purposes since colonial days. More recently, veneer and woodenware items also have increased
the market for this species in the United States and abroad. The development of mechanical
hullers, crackers and pickers also has expanded the market for nut meats and shell products.
Black walnut requires and deserves attention if maximum returns are to be earned. For many
woodland owners, the opportunity to sell timber comes only once or twice during a lifetime. For
those fortunate enough to own a well-managed woodland, timber can be harvested periodically.
In either case, the success or failure of a timber sale usually will depend on the attitude and
knowledge of the seller.
Buying and selling walnut trees is a business transaction. Buyers, being profit engineers for their
employers, must buy within the current market prices to keep their company in business. The
woodland owner derives income on profit from the crop and must receive a fair price while
protecting the productivity of the land and its trees. A satisfactory sale will be made when the
needs of both interests are met.
A properly conducted sale may serve as a useful management tool to producing a continuous
crop of high-quality, high-value walnut timber. In addition, nut yields also may be increased.
Reasons for selling
First, the owner has to decide if it is the proper time to sell trees. There are several common
reasons for selling.
A woodland owner may simply need money for unexpected expenses. It will often pay such an
owner to investigate the possibility of securing a loan on the timber instead of selling it. In some
cases it could cost money to harvest when the market is weak or when trees have not reached the
best size for harvest. The increased growth and value could be more than the interest on a loan.
A second reason for harvesting walnut is to clear land for other uses such as crops or livestock.
Again, caution is advised because many people have discovered too late that good timberland
has been turned into a marginal farming venture. The benefits of thinning to allow growing other
crops in addition to nut and wood production is another consideration that should be
investigated.
A third reason for harvesting is to improve growing conditions for higher returns. The number of
trees in a wood lot and their spacing at different ages are important influences on tree growth and
quality as well as on nut yields. Improvement harvests are regularly made in the well-managed
stand.
A fourth reason for harvesting is economic maturity of the tree. When growth drops to a point
where economic gain is very low, it may be desirable to harvest the tree to improve the
woodland.
What to sell
The objective in selling is to be paid the fair market value or better for the timber. The area
should also be left in a productive condition for future sales. In many cases, this objective could
be more important than the first.
Trees of the following types that contain merchantable logs should be sold first:
Large trees that are dead in the tops or with many large dead or dying branches.
Trees with severe stem defects that make them unprofitable to grow. Trees with good
nut production may be exceptions
Low-quality smaller trees or less vigorous, poorer-quality large trees in crowded stands.
Trees adding 2 inches of diameter growth in five years or less are considered "fast
growing." Two inches of diameter in six to 10 years is moderate growth, but trees
requiring over 10 years to add 2 inches of diameter are growing at a very slow rate.
Crowded stands slow the rate of individual tree growth.
Nut crops can return income while the trees are maturing. In general, the larger the crown, the
larger the nut crop. The volume of nuts produced by an individual tree varies from year to year.
Widely spaced trees usually will produce more nuts than trees in crowded stands. However,
certain trees may never produce heavy nut crops while others consistently produce good crops.
What determines timber value?
The value of walnut as it stands in the tree (stumpage value) is appraised by deducting from the
value of the delivered log, the cost of processing and delivery to the log yard, plus a fair profit
for the timber buyer and the logger. This includes the cost of appraisal, cutting the trees, sawing
them into logs, skidding, loading and transporting to the mill. These costs must include not only
labor and equipment costs, but also such miscellaneous items as social security, worker's
compensation, equipment depreciation, insurance and interest on invested capital.
Tree size and quality are important. The importance of size and quality is best illustrated by an
example. A log 10 feet long and 12 inches in diameter at the small end contains 40 board feet by
the Doyle log scale (Figure 2). Growing the same 10-foot log to a 20-inch diameter produces 160
board feet. If the log also becomes veneer quality in the process, that factor may also increase the
price paid per board foot by two to 10 times. Therefore, in this illustration, adding 8 inches of
diameter to a good-quality log increased its value up to 40 times. The owner of walnut timber
should keep this principle in mind while managing trees.
Figure 1
Tree defects.
Figure 2
Doyle Log Volume Table.
Log length
Diameter of log, small end, inside bark (inches)
6 8 10 12
14
16
18
20
22
24
26
28
30
32
34
36
38
40
6 feet
1 6
13 24 37
54
73
96
121 150 181 216 253 294 337
384
433
486
8 feet
2 8
18 32 50
72
98
128 162 200 242 288 338 392 450
512
578
648
10 feet
2 10 22 40 62
90
122 160 202 250 302 360 422 490 562
640
722
810
12 feet
3 12 27 48 75
108 147 192 243 300 363 432 507 588 675
768
867
972
14 feet
3 14 31 56 87
126 171 224 283 350 423 504 591 686 787
896
1011 1134
16 feet
4 16 36 64 100 144 196 256 324 400 484 576 676 784 900
18 feet
4 18 40 72 112 162 220 288 364 450 544 648 760 882 1012 1152 1300 1458
1024 1156 1296
Consideration also must be given to accessibility, ease of logging, distances to markets and the
market the buyer has for the logs.
While it is good practice to use trees as much as possible, or to thin overcrowded stands of small
trees, it is shortsighted to cut all trees as soon as the butt logs reach minimum standards. The
greatest rate of financial return from walnut trees is realized during the period when they grow
from the small sawlog size into the large sawlog size.
Quality is equally important to the walnut buyer. A poor-quality tree may have no value for
veneer or lumber, while a high-quality tree of the same dimensions may be worth hundreds of
dollars. Defects lower the grade and consequently the value of the trees.
The most common defects in walnut logs are knots caused by branches; seams caused by
disease, lightning, fire scars, frost damage or mechanical injury; holes caused by insects or bird
pecking; shake, caused by injury; split; and decay (Figure 1). Another common and unnecessary
defect is metal embedded in the wood. Fences are commonly nailed to fence-row walnuts,
making the best part of the tree worthless. Even temporarily nailing into a walnut tree causes
serious degrade, because a chemical reaction between metal and walnut sap produces a stain that
permeates the wood.
The highest values are in high-quality logs 16 inches or larger in diameter. To be marketable in
regular markets as a sawlog, a tree should contain a log that is 8-1/2 feet long and at least 12
inches inside the bark across the small end. There are exceptions to this general rule. In areas of
high demand, it is sometimes possible to sell large logs less than 8 feet long or logs smaller than
12 inches in diameter.
General rules for black walnut log grades
Two terms relating to grade should be defined: face and trim allowance.
In grading trees for quality, each face of the tree is examined. A "face" is any quarter of the tree's
circumference. Trim allowance is an extra 3 to 6 inches left on a log to allow the manufacture of
a standard lumber of veneer lengths. Lumber from logs with end checks, pulls or slanting chain
saw cuts must be trimmed to standard lengths. This accounts for the need for trim allowance in
the log.
Standard grading systems exist, but in periods of high market demands, grading standards are
often relaxed. These general rules are for your guidance only, as a number of different walnut
grading systems exist. Each walnut buyer may have his or her own set of standards based on
market outlet requirements. Landowners should not harvest their own trees for selling logs.
Mistakes or lack of knowledge about where to properly cut the log can be costly, especially in
veneer-quality trees.
Top-grade veneer generally must be 16 inches or larger in diameter inside the bark (DIB) at the
small end of the log. The logs must be butt logs 9 feet (plus trim) or longer in length. The logs
must be straight, uniformly round, have moderate to thin sapwood, be uniform in color with no
visible defects and have no noticeable dark streaks or bird peck, and be from live trees.
Good veneer comes only from butt logs that are sound, straight, and free of cracks, metal, shake
or excessive sapwood. They must be 14 inches DIB or larger and 9 feet long (plus trim) or
longer. Logs 9 or 10 feet long must be 100 percent clear. Logs 11 feet and longer must contain
three clear faces, but the fourth face can be only 85 percent clear.
Average veneer comes from butt logs and second cut logs. Logs must be 6 feet (plus trim) or
longer. Six-foot logs must be 100 percent clear and 14 inches DIB or larger. Seven-foot and
longer logs must be 14 inches DIB and have two clear faces, with the remaining two faces
having sound defects only. Twelve-inch DIB logs must be 8 feet and longer.
Good lumber logs are from butts and second cuts 12 inches DIB or larger and are 6 feet long
(plus trim) or longer. Logs should have two clear adjacent faces, and must be reasonably straight
and free of metal and shake. They must be 85 percent clear in 3-foot cuttings on two or more
faces of the log.
Average lumber logs are expected to yield a fair percent of one face and better lumber. Logs
must be 11 inches DIB or larger and be 6 feet (plus trim) or longer. They must be free of metal
but can have a slight crook. They must be 85 percent clear in 3-foot cuttings on at least one face
of the log.
Poor lumber logs are expected to yield some common and better lumber. Logs must be 11
inches DIB or larger and 6 feet (plus trim) or longer. Some crook is permitted, so long as 4-foot
cuttings are possible.
Other products
In the interest of more complete use of the tree, some sections 4 feet long (plus trim) or longer
and 11 inches DIB or larger may be purchased for gun wood or other short product material.
When to sell
The timing of sales may also affect price. Most plants have limited storage facilities for logs. To
avoid loss from deterioration, they keep only a limited supply on hand. The buyer will offer the
best prices when markets are active and log supply is low. Winter usually is the best season for
tree sales. Some buyers will offer higher stumpage prices if the time allowed for removal is
lengthened. However, the seller should seldom allow cutting periods exceeding 18 months.
Walnut demand is cyclic. Landowners should follow the market trends and make their sales
during periods of high demand.
Methods of selling
If the decision to sell was prompted by a desire to change land use, perhaps all the trees that are
large enough to be usable will be sold. The definition as to what is a usable tree will vary with
different buyers according to the utilization standards and markets available to their mill. In this
type of sale, minimum returns will be realized because many trees will be cut before they are
economically mature.
Another method of selecting trees to market is to sell all those larger than a certain size. This is
called a "diameter-limit sale." Again, from a proper management standpoint, this is not a
satisfactory method of selling walnut. If the diameter limit is set at 18 inches, many low-grade
and defective trees will be left that should be removed. Also, some high-quality trees that are a
good investment for the future will be cut prematurely.
Recommended methods
To properly manage a walnut stand, each merchantable-sized tree should be consecutively
numbered 1, 2, 3, etc. Special tree marking paint is available from forestry supply catalogs. It can
be easily seen, can't be removed without being noticeable and will last several years. Numbering
has many advantages:
A record may be kept of each tree's size, condition, relative quality, estimated lumber
content, relative capacity to produce nuts, need for release from competition, need for
pruning, growth rate, etc.
Decisions may be made regarding its need for immediate harvest, future harvest, etc.
Sales are made easier because each buyer is looking at and bidding on the same trees. If
one buyer wants 15 trees, another 18, and still another 25, and the trees for sale are not
marked by number (or in some other fashion), the seller can't evaluate the bids and select
the best one.
If the trees are consecutively numbered, buyers can easily determine if they have missed
a tree. Omitting one good tree could easily affect a bid by several hundred dollars. Also,
the seller may not have to accompany each buyer to find the trees.
To evaluate trees, you must have information on the diameters, usable lengths and log quality.
(Good walnut trees are valuable — but not all walnut trees have good quality.) You may
obtain a cruising stick and volume tables to determine tree content. State service foresters or
private consulting foresters also are available to assist the seller who lacks sufficient knowledge
for this task.
Types of sale
Three general types of sales are used regularly in timber sales: lump-sum, price-per-board foot
and share-basis.
The price-per-board foot (buyer agrees to pay a certain amount per board foot for all wood
purchased) and the share-basis (seller and logger divide the income) types of sale place a burden
on the seller. He or she must collect money after the trees have been harvested and the logs sold.
It is also an inconvenience for loggers to provide sales records.
The "lump-sum," or price for the entire number of trees for sale, is most often used to sell black
walnut. It is the least trouble to the seller, because he or she does not have to check any
measuring but simply takes the amount offered. However, unless the trees for sale have been
marked, the buyer can take any trees he or she wants and the woodland may not receive
maximum management benefits.
A lump-sum sale allows sellers to receive their money before the trees have been harvested. It
also encourages buyers to make maximum use of the tree. The disadvantage of a "lump-sum"
sale is that buyers have more risk involved and may bid conservatively where doubt about tree
quality exists.
Tree and log scales
A number of different measuring scales are used in Missouri to estimate the number of board feet
in a tree or log. "Tree scales" are used to estimate the number of board feet that will be sawed
from a standing tree of a given diameter and merchantable length.
"Log scales" are used to estimate the number of board feet to be produced from logs that result
after the tree has been felled and cut into logs.
Some of the more common scales used are the "International," "Scribner" and "Doyle." Nearly
all walnut in Missouri is currently purchased by Doyle scale.
The type of scale used is not important when making a lump-sum bid because the final total price
per tree or per group of trees is the important factor to the seller. If sellers decide to sell by the
board foot, they should familiarize themselves with the difference between scales and arrive at a
price-per-board foot that compensates for the difference in estimation between scales.
Walnut prices are normally quoted by the board foot, but high-quality trees yield thin sheets of
veneer that is measured by the square foot. For this reason, buyers will quote a higher price per
board foot for a tree from which they expect to obtain veneer.
The bid notice
Walnut should be sold by bid regardless of the system used. Where only a few trees are for sale
or quality is low, the seller may be able to attract only local buyers. Where tree numbers and
quality are high enough, bidders may be attracted from greater distances.
Several potential buyers should be invited to submit sealed bids for the timber. The more
responses sellers receive, the better idea they will have of the actual worth of the trees.
There are two types of buyers. The independent buyer buys timber, cuts the trees, then resells the
logs to one or more mills. This buyer is an independent business contractor. The second type of
buyer is a an employee on a company payroll. His or her job is to buy a continual supply of
timber to keep the mill operating.
Although it would appear that sellers could save money by cutting and selling their own walnut,
this is rarely the case. Few landowners have the skill or product knowledge to make proper
judgment in harvesting and marketing walnut trees. Questions about prices, log lengths and
diameters needed, as well as log-quality specifications, may be answered differently for each
sale. Once the trees are cut, the seller is at the mercy of the market, which often changes rapidly.
After deciding which buyers to contact, a bid notice should be sent out. The bid notice should
include:
Seller's name, address and telephone number.
Location of the trees (legal description and directions from nearest town).
Number of trees to be sold, average diameter and how they are marked.
Any special sale instructions (cleanup requirements, special periods of time that logging
is to be excluded to prevent crop damage, etc.). The more complicated the requirements,
the fewer bidders will respond and their anticipated costs will be reflected in the bidding.
Latest date bids will be accepted. (A minimum of one month should be allowed from the
mailing of the bid notice for buyers to examine the sale area.)
The bid notice should state a definite date, time and place when bids will be opened and
accepted. Only sealed bids should be accepted. It should be emphasized that no oral or late bids
or bids of "a certain amount over the highest sealed bid" are acceptable.
The seller has the right to refuse all bids, but under no circumstances should he or she accept
verbal bids or late bids. All bidders should be notified as soon as the decision has been made.
The timber sale contract
All sales of timber should be covered by a timber sale contract. This should not be taken as a
sign of distrust, but only as a good business practice. If all terms are set down on paper, it helps
prevent misunderstandings.
The contract may be prepared by the seller with the advice of an attorney and forester, or it may
be prepared by the buyer or the buyer's attorney. Standard contract forms are often used by
buyers, or they may be obtained from most professional foresters.
If a lump-sum sale is made, all trees should be paid for before the first tree is cut. If logs are
being sold, they should be entirely paid for before being hauled away.
The buyer should be given a reasonable amount of time to remove trees. One year to 18 months
is not unreasonable. Because of unfavorable weather, avoiding crop damage, mill problems, etc.,
the buyer may want to reserve the right to ask for an extension of time under terms agreed on by
both parties.
Provision should be made for a third party agreeable to both the buyer and seller to settle
contract disputes.
The buyer should show proof of worker's compensation and liability insurance coverage.
The legal location of the timber should be given so that there is no question about the sale area.
It should be understood that the buyer has the right-of-way across the seller's property to remove
logs and that due respect will be given to each other's rights and property.
Where logging residue will create a special problem, such as in cultivated fields or in building
areas, special cleanup provisions should be stated in the bid notice and sale contract. An
alternative is for the seller to hire for the cleanup work done after the timber sale. Unless
flooding occurs, debris in the woods ordinarily poses no special problem. Reducing logging
residue to ground level to speed natural deterioration normally is sufficient treatment.
Policies pertaining to excessive damage to roads, fences, remaining timber, etc., should be
provided for in the contract. Special logging provisions to avoid crop or soil damage also should
be stated in the contract if desired.
No standard contract for selling stumpage adequately covers all circumstances, but there are
certain basic things that should be included:
Names and addresses of buyers and sellers.
An accurate legal description of the location of the timber.
The number of trees involved and how they are marked.
The amount of the purchase price and when it is to be paid.
Expiration date of the contract.
Other responsibilities of the buyer such as preventing fire; preventing excessive damage
to young timber; and leaving roads, fields, and fences in good repair.
Other responsibilities of the seller such as guaranteeing the buyer he or she has the right
to sell the timber and granting right-of-way and entry into the land for the purpose of
harvesting trees.
Two copies of the contract should be dated and signed by both the buyer and the seller, with a
copy going to each. It is a good idea to have a third party sign as a witness. Some contracts are
signed in the presence of a notary public, especially when dealing with timber owned by an
estate, in joint ownership, or by a corporation or public agency.
Checking the sale
The seller should check the sale for violations of contract provisions. This should be done several
times while the operation is in progress. A one- or two-day notification before cutting will allow
the seller or the seller's representative to be on the site. The buyer or the buyer's designated
representative should be present if changes are made. The seller can be liable for breach of
contract or injuries if changes are made by the seller through the buyer's employees.
After the job is completed to the seller's satisfaction, the following items should be checked:
That no unmarked trees were cut.
That fences, roads and culverts were repaired to as good or better condition than before
the sale.
There is no excessive or abnormal damage to the sale area.
Full payment has been received.
When these conditions are met, the seller should give written release to the buyer.
Tax considerations
Under certain conditions, forest products are eligible for depletion allowances and tax benefits
due to long-term capital gains benefits.
Each case is different, but the amount received from a sale may often be reduced based on the
value of the timber when the property was acquired. The seller may sell all or part of the original
timber and decrease the taxable income up to the total dollar value of the timber when the
property was acquired.
Growth or price increases may be claimed as long-term capital gains if certain ownership and
sale requirements are met.
Where to get additional information
Free technical advice is available through Service Foresters of the Missouri Department of
Conservation. Additional information may also be obtained through your local MU Extension
center.
G5051, reviewed October 1993
Related MU Extension publications
G5050, How to Measure Trees and Logs
http://extension.missouri.edu/publications/DisplayPub.aspx?P=G5050
G5150, Increase Woodland Products Through Timber Stand Improvement
http://extension.missouri.edu/publications/DisplayPub.aspx?P=G5150
G5999, Forestry Assistance for Landowners
http://extension.missouri.edu/publications/DisplayPub.aspx?P=G5999
Order publications online at http://extension.missouri.edu/explore/shop/ or call toll-free 800-2920969.