Conservation Reserve Program
                                                    Forest Land Opportunities                                 4
                                                           September 1995

 Considering Leasing Contracts for CRP Trees
Coleman W. Dangerfield Jr., Economist                                David H. Newman, Forest Economist
David J. Moorhead, Forester                                          D.B. Warnell School of Forest Resources
Extension Forest Resources                                 The University of Georgia

                                              Larry W. Thompson, Associate Chief, Forest Management
                                              Georgia Forestry Commission



                     Introduction                               !         Control ingress and egress.

           At expiration of the CRP contract the forest         Lessee may:
landowner may be interested in long term
management of his/her timber resources by leasing               !         Pay lump sum or annual lease payment to
their timber land.  An individual or company that                         landowner.
specializes in timber leases can ensure adequate                !         Assume fire protection responsibility.
growth, protection, and productivity through                    !         Develop prescribed fire program.
knowledgeable management skills.  However, a                    !         Assume general tree management.
word of caution is due.  BE SURE THAT YO U                      !         Use best management practices (BMP's),
KNOW  WHAT YOU ARE GETTING INT O                                          including roads and streams.
BEFORE SIGNING ANY TIMBER LEASE.                                !         Assume risk of loss from: flood, wildfire,
                                                                          insects, disease, storms, etc.
           There are usually two types of leases                !         Pay ad valorem tax on trees at harvest.
available to the owner: (1) single, up front lump sum           !         Pay all marketing and harvesting related
payment, and (2) annual increment payment.  The                           costs.
owner should determine, in consultation with his                !         Maintain legal boundaries at lease end.
lawyer and forester, which type lease is most                   !         Clearcut stand at end of lease.
beneficial to his individual needs.  Stipulations and           !         Regenerate trees after clearcut.
responsibilities within the lease should be examined            !         Control ingress and egress.
carefuly to be sure that they are clear and
understandable.  The following information can help             Reasons for landowners to lease timber stands :
you examine common assumptions to consider for
these:                                                          !         Earn annual income from tree crops.
                                                                !         Lease rate based on your trees: stand
          Some timber lease assumptions                                   conditions, tree species, market area, site
                                                                          index, etc.
                                                                !         Benefit from high level of management
Landowner may :                                                           knowledge of lessee.
                                                                !         Transfer risks of tree production loss and
!          Retain land ownership.                                         marketing to lessee.
!          Pay annual land ad valorem taxes.
!          Retain hunting lease rights.                         Reasons for landowner not to lease timber :
!          Retain pine straw lease rights.



                                                                  Landowners can earn their greatest monetary
!       Leasing company reputation is questionable.        returns by growing their own trees from planting to
!       Wants to ensure greatest freedom and               financial maturity.  But, more landowner inputs are
        flexibility.                                       required to grow their own trees.  Generally, fewer
!       Has adequate timber management ability.            dollars are earned by landowners leasing their trees.
!       Seeks to earn all returns from trees               Also, realize that less landowner inputs are required
        (management, risk, labor, capital, etc.).          when leasing.  However, with leasing, cash-flow is
!       A binding, legal contract is difficult to break    greatly improved for the landowner.  Leasing
        if unforseen circumstances develop.                remains an important option and can be a win/win
                                                           experience for landowners and lessees.  When
Landowner options without timber lease :                   examining any lease option, landowners should
                                                           consider the following:
!       Provide own timber management/marketing
        expertise.                                         !      Leasing trees is a new option -- Go Slowly.
!       Hire high quality timber                           !      Check-out leasing company.
        management/marketing expertise through             !      Consider leasing only part of timberland.
        professional forestry consultant.                  !      Consult a lawyer before signing any lease
!       Assumes all risks of profit or loss from                  agreement.
        growing trees.                                     !      Lease only the specific resource (growing
!       Freedom of unencumbered land ownership.                   trees), not full use of the land.

     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.