Considering Leasing Contracts for CRP Trees
Coleman W. Dangerfield Jr., Economist,
Larry W. Thompson, Associate Chief, Forest Management Georgia Forestry Commission
At expiration of the CRP contract the forest landowner may be interested in long term management of his/her timber resources by leasing their timber land. An individual or company that specializes in timber leases can ensure adequate growth, protection, and productivity through knowledgeable management skills. However, a word of caution is due. BE SURE THAT YOU KNOW WHAT YOU ARE GETTING INTO BEFORE SIGNING ANY TIMBER LEASE.
There are usually two types of leases available to the owner: (1) single, up front lump sum payment, and (2) annual increment payment. The owner should determine, in consultation with his lawyer and forester, which type lease is most beneficial to his individual needs. Stipulations and responsibilities within the lease should be examined carefuly to be sure that they are clear and understandable. The following information can help you examine common assumptions to consider for these:
Some timber lease assumptions
Reasons for landowners to lease timber stands:
Reasons for landowner not to lease timber:
Landowner options without timber lease:
Implications for the CRP landowner
Keeping these lands planted in trees will reduce soil erosion losses while increasing the future supply of timber in Georgia. Other benefits of keeping CRP land in trees include improved water quality, enhanced fish and wildlife habitat, reduced stream and road-side sediment, and reduced production of surplus agricultural commodities. In addition, pesticide application on forest land is greatly reduced relative to row-crop land.
Landowners can earn their greatest monetary returns by growing their own trees from planting to financial maturity. But, more landowner inputs are required to grow their own trees. Generally, fewer dollars are earned by landowners leasing their trees. Also, realize that less landowner inputs are required when leasing. However, with leasing, cash-flow is greatly improved for the landowner. Leasing remains an important option and can be a win/win experience for landowners and lessees. When examining any lease option, landowners should consider the following: