average cost for 1 acre of timberland

How Much Does 1 Acre Of Timberland Cost?

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If you’re looking to diversify your investment portfolio, here’s something you may not have considered before: timberland.

Land itself, in particular farmland, is increasingly becoming a wise investment choice, and timberland is no exception. The limited amount of wood to go around makes timberland ever-valuable. In fact, buying timberland is one of the better land investments available, especially with rising lumber prices over the last few years.

Historically, timberland returns have fared well when compared to stocks, but hold far less volatility. Owning timberland is a way to hedge against inflation as well.

Timberland trees continue to grow in volume and value, no matter what the conditions are of the current economy. If timber prices aren’t bringing in a good profit margin, the timber can be left to grow until prices become higher again. This isn’t always the case with tangible investments such as stocks or gold. While waiting for stock or precious metal prices to rise, the number of shares of stock or gold owned are not increasing.

It provides overall portfolio diversification, which lowers portfolio volatility and risk. In addition, land value will increase by approximately 1% per year.

How Much Is An Acre Of Timberland Worth?

  • Ballpark estimates show that 1 acre of timberland has a value of approximately $1,500. What’s more, this value increases dramatically if land owners let the trees mature for decades.
  • As with all real estate, the main determination of timberland prices is location, such as surrounding mills and roads that are accessible to the mills. The quantity and type of the timber on the land also plays a major role in value.
  • For instance, the lumber derived from large pine logs have more demand in an area that has many sawmills than smaller logs that are ground to small bits for paper production or wood chips.
  • Those who own timberlands in the southern parts of America concentrate on producing larger pine logs. The pine timber stands in this area consist of timber derived from trees that are almost the same age.

What Is Plantation Wood?

Plantation wood has become a reliable source of quick timber.

The term “plantation wood” is referring to large crops of harvestable timber in a shorter time frame. The goal is to grow a large amount of timber in as short a time as possible. Another name for the product grown with this farming technique is “fast wood.”

Large open fields on plantations were used historically to grow certain crops such as cotton, sugar cane, tobacco and coffee. Now, some of these large parcels are being used to have a rapidly growing crop of trees. Scientists and forestry specialists have been involved in creating and carrying out this method of timber production.

The timber produced in these fields can be used for logging, and the scraps can be material for paper, fiber and pulp.

One notable feature of plantation wood farms is that they could reduce the reliance on natural land that strips the forests and trees at an alarming rate.

What Is Timber Worth?

Timber is valued per acre, and here is the average value in 2020.

  1. Plantation Grown – $1,566 per acre
  2. Natural Land – $2,055 per acre

The volume and types of products available on a particular site of timberland will determine the value per acre. Prices for timber products can vary considerably even from county to county in a specific region based on demand.

The southern parts of the country are known for high-quality timberland that produces large pine trees used for logging. These larger pine logs are used to manufacture high-quality grades of lumber.

In fact, much of the lumber across the country comes from small landowners. In the South, almost two-thirds of timber comes from small landowners.

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