The answer to the question in this title is pretty straightforward – not only are large acreage recreational property values lower than they have been in almost ten years, an abundance of quality tracts are also currently on the market. The first thought that this response most likely evokes from a prospective buyer is, given the current uncertainty with the economy, the smart play is to wait, let prices continue to drop, then pull the trigger on that dream property. This scenario sounds simple enough – why would anyone want to buy right now?

Although the odds of finding that perfect property at a very reasonable price are high right now, this window of opportunity will not last forever. Land prices will eventually bottom out and start the recovery process. Even more important than the recovery of land prices to a potential buyer is the inevitable reduction of quality tracts on the market.  Once land prices stabilize, the first tracts to go are sure to be the best ones. By waiting for land prices to continue falling, a buyer is risking an opportunity to purchase a quality tract at a great price that probably has not been on the market for a long time and most likely will not be on the market again anytime soon.

The purchase of a large acreage recreational tract is typically a substantial long-term investment which requires much deliberation. The main objective for a majority of buyers is getting a great deal on a tract that meets all of their requirements. Many buyers are currently hesitant to move forward in the purchasing process and this hesitancy is justified by the uncertainty of land prices recovering. For those considering the purchase of a recreational property take a look at the following statistics from the United States Department of Agriculture during the Great Depression:

“Agricultural land values saw the largest percentage declines of the century in the early 1930′s, the beginning of the Great Depression. Agricultural land values dropped 37 percent over a period of 3 years and remained between $30 and $33 per acre throughout the 1930′s. Following the Great Depression, land values were revitalized and began a climb that continued until the early 1980′s.”

Over the last three years the majority of large tracts of recreational property in upstate South Carolina have been losing value. Overall, these properties are currently pushing a 30 percent loss in value since land prices started declining. An increasing number of recreational properties currently on the market have experienced major price reductions that reflect this 30 percent loss in value. A legitimate argument is the current recession has lasted longer than anyone anticipated and we are close to a recovery but it will be a slow one. If this argument proves true a valid assessment of current land values is that although they have bottomed out, the time frame for recovering value will be significant. As the slow recovery reveals itself the transactions on quality recreational tracts will increase in frequency as buyers gain more certainty that land values are increasing. Therefore, the best time to get serious about purchasing a large acreage recreational tract is now. The substantial inventory of nice recreational properties with values 30 percent below pre-recession values will not last long and continuing to wait could very well result in missing out on the chance to purchase that ideal tract at a great price.

That old golf course is getting to be an eyesore. Those once manicured fairways are getting a little rougher than the former rough. And forget about pulling out your putter; you’ll need a chipping wedge just to get the ball across the green.

Sound familiar?

All across the nation, golf courses are shutting down due to lack of demand. During the late 90s and early 2000s, developers across the country raced to construct as many golf course communities as they could even as the number of golfers leveled out. With a larger supply of courses but a stagnating demand, many golf operations found themselves without a customer base. As a result, for the first time in over 60 years, more golf courses shut down than were opened during the five-year period between 2005 and 2010. In 2010 alone, 46 courses opened compared to 107 that closed.

These days, municipalities and developers are facing a new challenge: what to do with all of the defunct courses. “Continuing to invest in golf courses that are not financially self-sustaining at the cost of other urban recreation is completely unjustifiable,” says Meredith Thomas, director of San Francisco’s Neighborhood Parks Council. As urban populations are continuing to rise, residents are finding it more difficult to find open space within a reasonable distance of where they work and live. In Los Angeles, for example, less than 15 percent of residents live within walking distance of a park or garden.

At the same time many golf courses are falling into disrepair, city officials, developers, and residents nationwide are working to tackle the challenge of how to protect open space in an economical and environmentally conscious way. For every 1,000 residents, Chicago only has 4.2 acres of open space. In Los Angeles, those same 1,000 must compete for 6.2 acres. And San Francisco, a city that prides itself on its livability and quality of life, offers only 6.6 acres.

When undertaken with a thoughtful eye toward the needs of the larger community and with a genuine respect for the natural environment, golf course repurposing can serve as an opportunity to create amenities that will serve the community long into the future. Rather than shortsightedly replicating conventional residential subdivisions, we encourage stakeholders to see the former courses as opportunities for innovative, sustainable development.

Because of the nature and logistics of golf course design, they are well-suited to become multi-use recreation and field sport facilities. In urban areas, where residents have limited access to open space, repurposed golf courses could include networks of hiking and biking trails, sports fields, disc golf courses, gardens, and public parks. They could also serve as public gathering places with such facilities as amphitheaters and farmer’s markets, both of which could add much-needed revenue to the local economy. In the winter, these areas could double as cross-country skiing facilities as well as hills for kids (and adults!) to go sledding. In areas where public space is perhaps not as threatened, repurposed golf courses could also include equestrian centers, networks of ATV trails, and shooting and hunting facilities, while water hazards could become high-quality fishing habitats. Local governments need not fear onerous management costs as precedents abound for contracting all or part of the operational responsibilities. Suitably-sized and located developments can both subsidize new facilities and benefit from their subsequently increased property values.

In addition to the recreational opportunities repurposed golf courses provide, they could also provide services to bolster the local economy. The establishment of a public farm could serve not only as a source of local food but could also provide educational opportunities for students and other community members. A municipal-scale composting facility could prevent huge amounts of waste from being landfilled while also adding to the municipality’s coffers through the sale of nutrient-rich compost, top soil and mulch. With stormwater management requirements becoming ever more stringent, repurposed golf courses could provide areas for rain gardens offering localized treatment options for adjacent developments and stormwater credits, while also potentially qualifying for conservation easements and wetland credits.

With sincere thought and care, communities across the country can repurpose golf courses as valuable amenities without straining the local budget, and in fact, can usually generate a profit, depending on the chosen programming. With the plethora of opportunities that defunct golf courses provide, these communities have incredible opportunities to enhance their livability for residents now and well into the future.

The big news on farmland values this week was the $16,750 per acre price for Iowa farmland. Even more shocking was that it topped the previous high price of $15,368 an acre a whole week before in another part of the state. Granted, this is some top tier quality farmland with high Corn Suitability Ratings. Still, it’s shocking right? Not even a year ago, I met with a group of farmers when Midwest corn ground was hitting $7,000 to $8,000 an acre on a regular basis and the consensus was “It can’t go any higher, how will they sustain their costs.” Like the title says….Don’t Say it Can’t Go Any Higher….because it will.

In Kansas during the height of the residential boom (pre-2007) good development land that was previously pasture or maybe some farmland was going around $25K to $35K per acre. So Iowa cropland prices are absolutely amazing in comparison. However, on the flip side you will probably never hit those high corn yields on Kansas ground.

In the Commercial Connections recent newsletter from the National Association of Realtors Commercial Real Estate division, Edmond Massie makes a great observation about land that hits this high price point issue perfectly.

Land is the basis for food and the demand for food is always there so land values may continue to go even higher for high quality productive farmland that produces a diverse use crop. There has been interesting talk in the mainstream media recently on the subject of high farmland prices as well. Bloomberg posted the headline last week that Soaring Farmland Prices in US Midwest Bring Fed Scrutiny of Rural Banks. And the old faithful retired Fed Chief who has been preaching about a farmland bubble for quite some time, Thomas M. Hoening, has likely had Jason Henderson take up the microphone for him on the subject. The Federal Reserve Bank of Kansas City published an eye-popping headline this week in TEN magazine called “Growing Value: Is the farmland boom sustainable?”

Land is often referred to as “Dirt” and according to the Wikipedia definition dirt means “unclean matter” and maybe regulators and media news outlets look at it that way because of all the extreme scrutiny on the issue lately. For a real estate sector that typically only turns over historically at a rate of 3% a year and estimates show that in the last year it was closer to 1.5% due to the tight market of farmland; it is amazing to see the vast amount of attention given to the topic of farmland investing in mainstream media.

So will land prices go higher? The crystal ball does not reveal an answer today. A guess would be that farmland prices will level out and may do so quickly if there is a major uproar in the commodities markets. You will probably never see farmland go for that much in our lifetime in Kansas unless it is pre-development transitional land. Well…there you go… I said it… it won’t go any higher…in Kansas anyway!

With uncertainty in Europe, tight credit markets and falling projections for demand for commercial office space and residential construction, The Wall Street Journal published a profile of the REIT sector that summarized the “dethroning” of REITs as a preferred equity category by investors (“Investors check out of real-estate stocks”, October 5, 2011). Of note, REITs that manage hotels and industrial space fell 32% and 24% during the third quarter of 2011. How did this sector-wide “slap down” affect timberland-owning REITs?

Timber REITs Fall with the Sector

While publicly-traded timberland-owning REITs, and REITs generally, outperformed the S&P 500 over 10-year, 3-year and 1-year benchmarks (see table), the timber REIT sector took a shellacking during the quarter. The timber REIT sector, as measured by the FTR (Forisk Timber REIT) Index, returned -20.84% for the quarter, and sits at -8.27% year-to-date.

Individually, the four publicly-traded timber REITs produced varying returns for the quarter, with Weyerhaeuser leading the way down, and Potlatch holding its own on a relative basis:

• Potlatch (PCH): -10.63%
• Plum Creek (PCL): -14.38%
• Rayonier (RYN): -15.55% (split adjusted)
• Weyerhaeuser (WY): -28.87%

Weyerhaeuser drove timber REIT returns as it comprises 44% of the market capitalization weighted FTR Index. Mathematically, the drop in share prices proved advantageous to investors shopping for dividend yields as Weyerhaeuser’s yield approached, and temporarily exceeded, 4%. Yields for Potlatch continue to exceed 6%, while Plum Creek and Rayonier hover between 4 to 5%. The question becomes the sustainability of dividend levels given the outlook on core revenue generators for these firms. Our research targets the ability of current cash generators by firm to satisfy cash obligations (i.e. debt service and dividends) in the near and mid-term.

Looking forward, the sector suffers from downward revisions associated with housing demand and construction in the United States, and the associated declining need for softwood lumber manufactured from the pine, Douglas-fir and hemlock trees grown by the timber REITs. Alternately, the Performance Fibers and log export businesses have provided timely and opportunistic lifts to revenues.

Most of the people in America are in agreement on one thing right now: our national economy is a mess. Those who keep tabs on the land markets across the country would share that sentiment for recreational and timberland tracts. From what I experience first-hand inAlabamaand the anecdotal evidence from land professionals in other regions shows that in many locations across the country timberland sales are way down.

The bright spot in the land market right now is good agricultural land. Arable acreage in the Midwest and the Mississippi Delta is selling at all-time highs; bolstered by strong commodity prices and investors like George Soros betting that the demand for food will increase dramatically as the world population grows in the coming decades.

I believe what is happening in the timber and recreational segments of the land market right now is akin to a major logjam in a river. We have many factors that have combined to form a major blockage in the flow of land sales that were happening from 2004 to 2007. We all know that what happens in the global economy now trickles down to our local markets. Thomas Friedman is correct, “The World is Flat”, and so there are many more forces at work that affect our local land sales than even a decade ago. I am not smart enough to identify and address even a fraction of those factors, but there are three main logs in this jam that I think we can put our finger on that we have some influence over. Running a successful business right now means you have to focus on what you can influence, and work hard at tilting the table your way.

1. Behavioral Economics of Sellers

Understand your product (land) and work to understand people. Markets fluctuate, circumstances change, but human nature is relatively constant. Personalities vary, but there are traits that most people share in common when it comes to their money and assets.

Most landowners will feel like their property is worth more money than the exact same type of property across the road or next door. It is worth more money for one very important reason: it belongs to them. This is called the endowment theory, which boiled down is, “mine is worth more than yours because it is mine.”

In addition, human nature makes us hate losing money. The average person has more anguish over losing $1000 in a deal than they have joy over making $1000. This is called the risk aversion theory, and that coupled with endowment is why so many sellers say, “I am not going to give my land away.” It is as natural a reflex as your knee bouncing when tapped by a doctor’s mallet.

In an investment, if you had a 100% chance of making $5,000 or an 80% chance of making $6,000 which would you choose? If you had to sell and you had a 100% chance of losing $5,000 or an 80% chance of loosing $6,000 which would choose? Most people choose option A in the first question and option B in the second. That is exactly the opposite of what a smart investor would do. The upside is almost certain in the first question and the downside in the second has a strong chance of increasing your losses. So choosing option B in the first example almost assures you of making 20% more money, and you are almost certain you will lose your $5,000 plus 20% if you chose option B in the second example. We make those decisions because we naturally have an aversion for risk. (I found a similar example in a TD Ameritrade investment class I took this year.)

It is our job to provide the most recent and accurate information about what a landowner’s property is worth in our professional opinion, and then help them make the decision as to whether they are willing to sell their land in this market.

2. Financing Difficulties

Securing financing for rural land is more of a challenge than it was five years ago. Land professionals need to be more educated about the possibilities of financing acreage. Having preferred lenders to recommend potential buyers to is a good start, but having a working knowledge of USDA Rural Loan Programs, owner financing options, and 1031 exchanges are also very helpful.

3. Lack of Consumer Confidence (Scared Buyers)

The plain truth right now is that people are uncertain about the future of our country and are afraid to turn loose of large amounts of money. A recentGalluppoll showed that 81% of Americans are dissatisfied with the way our government is being run, and they believe that $0.51 of every tax dollar is being wasted. That fear is causing paralysis when it comes to making major purchases.

However this distrust of government and fear of the unknown is opening markets for mini-farms of 10 to 20 acres where families can grow their own food and get out of  cities. The 2010 census showed that over 83% of Americans now live in the 331 largest metro areas, leaving roughly 17% of our populous in rural areas.  Land professionals have a unique knowledge that 83% of the population are not experiencing on a day to day basis. That means the odds are highly in our favor when someone is ready to purchase rural land. By showing a prospective buyer that investing in land is historically safer and a better investment than buying stocks or gold, you put them at ease with the purchase and increase your probability of making a sale.

The flow of the land market is shifting. Just as a logjam in a river causes the flow to change course, so the cumulative effects of the global economy are shifting rural land buying trends right now. Farmland in the Mississippi River Delta and Midwest is at all time highs, Florida citrus farming acreage is down 36% since 1996, China’s imports of pecans have created a demand for pecan orchards; these are all trends that are happening because of forces outside their regions. When a stream changes course it erodes part of the old bank and makes a new shoreline. The same is true in the land market. This logjam is creating new opportunities. It does us no good to pine for how things used to be, all of that has been washed downstream. This logjam is moving our industry in new directions and also building up demand for when the economy recovers. Opportunities to make money are out there. This logjam may be just the thing that helps take your business to the next level if you are prepared and are willing to accept the change.

During the last ten plus years that I have been receiving the magazine from the National Association of Realtors I do not ever remember an entire article devoted to land and specifically farmland. For the most part rural land such as cropland, hunting land, ranchland or pasture is left out as a category in real estate industry news. So it was a pleasant surprise to open this month’s issue and see the article called Farm Land Rush – Are prices too high? Are there still opportunities to invest? Experts weigh in.

The credit for this article should go to the Realtors Land Institute for promoting land ownership and their organization of real estate land professionals. More networking groups, state chapters and land listing websites are popping up all the time. While most of that may be good there are some rumblings that farmland is headed for a bubble just like every other real estate category did a few years ago. While a general slowdown of values can certainly happen in the foreseeable future most experts agree that a total crash is not expected in land values.

The sheer volume of news articles that have focused on farmland investing in the last year is overwhelming to say the least. After following farmland values for nearly twenty years and only running across farmland investing in the mainstream media maybe only once in a blue moon it is amazing to see Google alerts sending a handful of mentions every day now. The Wall Street Journal, Forbes and nearly every local newspaper in a rural farming epicenter has run articles about farmland prices and values and the topic of investing in farmland. Even Wall Street jumped in and articles about farmland investment funds were reviewed in investor publications.

That is great you are probably thinking. It may be – only time will tell. However, one thing is for certain at least in our area the amount of farmland that is available for sale is probably half of what it was a few years ago. Farmers are holding on to what they have and gobbling up anything they can that is adjoining their property to expand their operations. Many times farmland never sees the open market as neighbors will go to neighbors first or land will be passed from one generation to the next. For the most part the transfer process happens without any potential buyers ever knowing the land changed hands. That makes it rather difficult for the average investor to purchase farmland.

However, one sector that is becoming popular with individual investors is ultra-small tracts that may be in a future development area. These parcels are usually less than 40 acres but are still being actively farmed in crops. The land is usually still zoned agriculture and providing an income but the land is also located in a growing area. Having been involved in these types of sales more over the last few years it has been a beneficial transaction economically to both buyers and sellers. The sellers (usually retiring farmers) need to sell and they can receive a great price for their farmland. The buyers in turn end up with an income producing property that is being taxed as agricultural land not development land and then the buyer also has the potential for more future profits when they eventually sell.

So while farmland investing may be mainstream media now; really, nothing has changed, it is still just farmers making food from the land.

In the midst of the stagnating economy and fears of a double dip recession, U.S. farmland and cropland values as a whole continue to be bullish. Farmland owners who made the decision to sell their current holdings should consider 2 tax deferred strategies while taking advantage of the trend.

This month the U.S. Department of Agriculture released a report stating:

“The United States farm real estate value, a measurement of the value of all land and buildings on farms, averaged $2,350 per acre for 2011, up 6.8 percent from 2010. Regional changes in the average value of farm real estate ranged from a 15.9 percent increase in the Corn Belt region to a 2 percent decline in the Southeast region. The highest farm real estate values remained in the Northeast at $4,690 per acre. The Mountain region had the lowest farm real estate value, $923 per acre.

The United States cropland value increased by $260 per acre (9.4 percent) to $3,030 per acre. In the Northern Plains and Corn Belt regions, the average cropland value increased 17.2 and 16 percent respectively, from the previous year. However, in the Northeast and Southeast regions, cropland decreased by 1.3 percent and 1.1 percent, respectively.”

Top Five States

Bottom Five States

Factors Impacting Farmland Values

Fueling strong demand for farmland from farmers and investors is the result of a number of factors including:

• Low interest rates
• World demand for food commodities of corn, soybeans and wheat
• Ethanol mandate
• Weather
• Improved farm technology
• Disease resistant seeds
• Reduced supply of available farmland for sale.

In addition to farmland demand, News.Gnom.es, a national newswire service, reports that “firms like Omaha-based Gavilon, owned by Ospraie, a hedge fund associated with George Soros and Canada-listed Ceres Global Ag have been buying up grain elevators from Wyoming to Toronto.” Evidently, given the demand for grain, warehousing and transporting have been uncovered as a profitable investment warranting non-traditional investors.

Common Denominator: Tax Deferral Strategy

So, how to capitalize on the surge in farmland prices? When the decision is made to sell the farmland holdings, tax deferral strategies need to be evaluated.

• 1031 Exchange: One of those is whether to reinvest in like kind real property or not. Farmland and grain elevator businesses can be sold and capital gains taxes effectively deferred when replaced with like-kind property.
• Deferred Sales Trust: If replacement property is not the intent, a Deferred Sale Trust can provide an alternative, deferring capital gains taxes, investing the proceeds and paying the recognized gain on a schedule that suits the taxpayer.

Will the Great Land Bubble ever come?  Does it apply to all land? Or just the skyrocketing values on farmland?  The headlines ask so many questions yet where are the answers?

I was looking though some old articles from newspapers, reports, newsletters and various sources that report on land values particularly farmland values and what immediately struck out like lightning from the pages was the continued talk about a bubble or crash in land values for YEARS not just in the last year.  This is not a recent phenomenon because some of these articles were from 2005 and 2007 and even as early as 2003.

So is there a land bubble?  Good question!  Everyone talks about it including the FDIC but nobody will definitely say if we are in a bubble.  The news cycle has published a flurry of land bubble headlines every week for the last six months.  A quick review of past articles for the last five years shows a similar cycle as well.  Most of the land bubble talk started showing up as the residential markets headed into the spiral downward.  Recreational land and residential building lots as a rule followed the residential markets for negative value losses.  Rural residential building parcels also seemed to have tanked parallel with the housing and commercial markets.  However, farmland appears to have done exactly the opposite of what most projected.

In 2007 over half of rural bankers thought a land price bubble was eminent.  In 2008 an article reported that at the conclusion of a Midwest farmland auction two bidders asked each other what did we just do? Implying that they both thought the price went too high. However, in the same area two years later with land prices up another 20% the winning bidder is probably patting himself on the back now for buying at that 2008 price.  While there are always exceptions on the local markets the national averages have continued to show increases in farmland from 5 – 20% in value.

An analysis of Kansas land values since 1991 showed only one year when values actually decreased.  Most years increased 3-7% in value with recent years showing as much as a 11-15% increase in value from year to year.  If you take the history back even further it shows that between 1960 and 1978 that farmland prices in Kansas doubled twice.  Decreases in value show up in the 1980s which is expected but no apparent large scale crashes have appeared in farmland values for nearly fifty years.  Kansas and other Central Plains states tend to be good benchmarks for national trends because of historically stable markets.  Literally sitting right in the middle of the country these areas don’t fluctuate like a roller coaster in economy or values like some of the coastal states.  It takes a while to catch up with trends in the heartland and if it drops sharply then the effects are not nearly as drastic.

Jason Henderson, a Kansas City Federal district economist recently spoke at the North American Agricultural Journalists association meeting and spoke of land’s value-to-rent ratio. He indicates that rents are not keeping pace with land values and that is something that happened in the 1980s farmland value crash.  Henderson also pointed out that if cheap credit ends then land values will return to normal levels.

Thomas Hoening has been reporting on the financial aspects of increasing land values for years.  He has been the lone wolf when it comes to interest rates and he has opposed stimulus spending such as quantitative easing.  He supports raising the interest rate as the economy improves so as to curtail inflation and bubbles.  The Fed seemed enthusiastic to announce his mandatory retirement as Federal District presidents have to retire at age 65 so it will be interesting to see who will sound the alarms when Hoening is not around anymore.

Credit may not seem to be a problem right now but the potential is down the road.  However as long as farm operators continue to have historically low debt loads it seems unlikely that interest rate increases would cause grand scale volatility in farmland values.  Farm income rose almost 30% in 2010 after good harvests along with high commodity markets. One scenario that is quoted over and over again is that if land values fall drastically that much of that loss will show up on paper.  Farmers potentially might lose a significant amount of net worth due to the land values as an asset. However, farm incomes are predicted to steadily continue upward and that coupled with low interest rates and low debts make most economists say it is reason enough not to compare to the 1980s downturns in land values. Additionally, land values are in line with the returns in the agriculture industry say most investment managers.

So why no bubble?

• Farmland has less risk than say the stock market – even stock brokers admit that.
• Farmland is not as leveraged as other types of properties so value loss can be absorbed easier.
• Farmland does not follow the stock market or other real estate markets – and that’s good!

So why all the Hubbub?

• Warning signs are valid points for any market especially the effect of increased interest rates.
• Input costs for agricultural can be harshly affected by rising gas prices.
• Speculation in the commodities markets ultimately hits home on land value.

So…what do you think?  Bubble or Hubbub?

The seminar put on by the FDIC in streaming video webinar format this morning titled Don’t Bet the Farm – Assesing the Boom in Farmland Prices was very interesting with a panel of speakers in various fields such as banking, agricultural professors and economists.  The one group that was blatantly not represented was the actual farmer or agricultural producer which was odd. It seemed that a representative from farming should have been there to give input on such an important topic.

The conclusions from most of the speakers were not really anything new or surprising as so much press coverage and media commentary has been put on this subject already.

The major points were:

• Farmland Values have risen quickly but farm income has also increased
• Interests rates are low and debt ratios are low (i.e. farmers are not leveraged as much as in the previous farm/banking busts)
• Demand is strong and will continue especially foreign demand for United States farmland crops (especially corn to China)
• Farmland value increases are not panic buying
• Farmland buyers are nearly 75% existing farm operations that are expanding and are buying with huge amounts of cash and small loans
• Investors represent a small sector of the buyers and most all of them are individual buyers (people buying back home where they grew up, non-operating farm owners that lease out to local farmers)
• Institutional buyers are less than 10% of the buyers of most farmland
• Farmland does NOT correlate with commercial and residential real estate markets.
• Extremely small amount of farmland actually on the market or being sold, farm owners do not typically sell…ever!  Those that do sell are usually non-operating owners that are 65+ that inherited the land.  There is 60% less land on the market today than ever in last 10 years.
• There are more buyers than sellers in the farmland market due to reluctance of farmland owners to sell for any reason other than consolidation or retirement.
• Almost all farmland buyers are local buyers (probably within the same county)

Some of the panel member were asked to predict what the market would be like in two years.  Most waffled but a couple answered straightforward.  The investment fund (REIT) Manager, Shonda Warner predicted that farmland prices would be stabilized.  An agricultural professor from Purdue suggested that prices will go even higher.  So what will happen?  Time will only tell.

The panelist slide shows should be on FDIC.gov later today and next week the video file will be posted for viewing.  It was an interesting overview especially from the banking prospective.

In 2011, states such as Georgia, Louisiana and Mississippi show sawtimber prices exceeding $30/ton, and Florida and Louisiana surpassing $11/ton for pine pulpwood.  Prices change annually across and between states in the 10-year forecast as local mills adjust to end-market demands.  The benefit to forecast users of this bottom-up approach was evident in 2010.  “In 2010, Forisk’s sawtimber forecast was within 4% of actual prices, and within 1% for key end-use markets such as paper and paperboard,” said Dr. Tim Sydor, Forisk’s Forest Economist.  “The key is understanding and updating the local, statespecific relationship – the elasticity – between wood demand and prices.”

The ForiskFORECAST: Pine Sawtimber and Pine Pulpwood predicts annual pine sawtimber and pulpwood stumpage prices across the US South and by state through 2020, and forecasts the production of lumber and paper and paperboard, as well as the demand for wood from emerging bioenergy markets.  For more information, visit www.foriskstore.com and click “Stumpage Price Forecasts.”