BUDGETING FOR SUCCESS
BUDGETING FOR SUCCESS
As discussed above, short-rotation forestry differs from most conventional forestry in that shorter rotations mean faster income, but establishment and early management costs are higher. If landowners are unprepared or otherwise unable to make investments at critical times such as weed/grass control, a new plantation can quickly become almost unmanageable. Thus, educated budgeting is important. Cost-effectiveness of short-rotation forestry is dependent on maximizing revenues from stands and minimizing costs by avoiding unnecessary and costly activities.
Reducing costs: Budgeting should be based on short-rotation forestry based on thorough assessment of expected costs for the full duration of the project, including site preparation, planting, weed control, management, and harvesting. A general budget estimate for establishing and managing short-rotation stands in North Carolina is provided in Table 9, and follows the guidelines in the “Site preparation” section and the timeline of activities in Table 4. Landowners should expect post-planting expenditures during first, second, and possibly third years of growth depending on the occurrence of competing vegetation and insect pests. An interactive enterprise budgeting tool can help forest growers predict cash flow for specific landowner-created scenarios.
Maximizing revenues: The following measures enhance economic viability of short-rotation forestry stands:
Select the best species and clones for a particular site to minimize risks of low productivity or poor survival, while enhancing economic feasibility. The North Carolina Forest Service offers coastal and piedmont varieties of some short-rotation forestry species, including sycamore and loblolly pine. Some of the variety selections affect seedling costs.
Control of competing vegetation enhances growth of plantation trees and increases economic viability.
Depending on stand objectives, management decisions play important roles on the economic feasibility of a stand. Stand density is significant for the interplay between stand revenues and costs. Lower-density stands require lower seedling costs and higher costs of weed control than high-density stands, but the former can lead to greater profitability due to faster and larger growth and potential for higher-value application such as veneer. A high-value stem production for veneer will require budgeting for regular pruning to improve quality and sale value of stems (logs).
Targeting more than one market for the wood from short-rotation stands improves cost-effectiveness of stands.
Table 9. Budgeting for establishing and managing short-rotation forest stands.
Figure 30. Budgeting for success especially means successfully reducing weed and grass competition without doing excessive expensive treatments. These two images show a stand with good weed and grass management (left) and one where the window to manage was missed, which will require careful and expensive remedial treatments to avoid tree mortality of loss of growth (right).