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Published May 17, 2010, 02:57 PM

Tree growers: Plan to succeed

SEBEKA, Minn. — Tom and Kyle Schulz just brought in a crop they didn’t plant and are planting a crop they’ll likely never see come to fruition. That crop? Trees — red pine, jack pine and white pine.

By: Mikkel Pates, Agweek

SEBEKA, Minn. — Tom and Kyle Schulz just brought in a crop they didn’t plant and are planting a crop they’ll likely never see come to fruition.

That crop?

Trees — red pine, jack pine and white pine.

“They’re planted according to the soil type,” Tom says of the plantings that went in the first week of May. “I’d say the first marketable harvest of those trees will be 40 years in the future, and the last will probably be 100 years.”

That’s good, long-range thinking that seems to fit Tom’s history as a student, farmer and educator.

The Schulzes are great proponents of farmers and landowners taking the time to create a Woodland Stewardship Plan — a customized roadmap for the value and development of woodlands, and a springboard to potential and future government benefits. A delegate to the National Farmers Union convention in mid-March in Rapid City, S.D., Tom promoted a resolution that passed to encourage farmers with trees to take a management step that he thinks offers long-range benefits.

Today’s increased emphasis on conservation programs and incentives for biomass, among other things, means a plan could be more important than ever to establish the value of the tree lands that farmers control, he says.

Potential green

The value could be enormous.

In Minnesota, there are 1.9 million acres of woodland on farms, according to the 2007 Census of Agriculture. Of those, 29,390 farms had a total of 1.33 million acres of woodland that has not been pastured — the kind that can have the greatest value for wood products.

Nationally, about 45 percent of all forestland — 354 million acres — is under nonindustrial private ownership.

The Cooperative Forestry Assistance Act of 1987, the Forestry Stewardship Program provides technical assistance through state agencies to help develop comprehensive, multi-resource management plans.

Only about 10 percent of nonindustrial private forest land is covered by stewardship plans. In Minnesota, the number is 15 to 20 percent, according to Jim Lemmerman, a state forester Board of Water and Soil Resources. The plans are becoming more compre-

hensive and valuable.

The Schulzes’ first management plan for a 40-acre diversified tract was in 1977 was about 20 pages.

The new plan, in 2004, had about 400 pages.

“In the past, it’s been the case that if you had more than 20 acres, and required one of these plans, a forester would do it free of charge. In the present economic environment, you’re going tot have to put dollars into it yourself,” Tom Schulz says.

The current plan includes more information about wildlife than the original plan, which was just about the trees.

“Now they go into the biota — the ‘understory,’ what animals like what brush varieties, and what management needs are for various purposes,” he says.

There are both state and federal layers.

State incentives

The primary state program is the Sustainable Forest Incentive Act of 2001. One motive was to provide an incentive small forest owners could use to buy down real estate taxes for small forest owners so they’re more inclined to keep the property in trees, rather than subdivide and sell it for housing subdivisions or other purposes.

“You’re allowed to do ‘working forestry’ things, including the enjoyment of property for hiking and hunting and the state helps you own it,” Schulz says says. “The Legislature cared about people being ‘taxed off’ of the property.”

On the Schulz family’s diversified forest land, this program alone pays more than $8 an acre, which is sufficient to cover the taxes.

Under this program, the farmer/landowner gives an easement for an eight-year period initially. It automatically re-enrolls, with verification that the land still is in the landowners’ hands. If a landowner wants to opt out, he or she can do that, but only with a four-year waiting period.

Landowners enrolled in the program can’t subdivide it, turn it into farmland or into pasture.

“You can get out of it, for whatever reason, but you have to wait four years before you can subdivide it and then hope that the American Land Trust can buy up the development rights or some public entity like that,” Schulz says.

Significant to Schulz is that, for the SFIA incentive, the money is passed through the farmer, who then pays taxes to the county.

“It doesn’t ‘shift’ taxes,” he says. “As an ag owner, I pay taxes to the county and everybody’s happy,” he says, referring to the local taxing entities.

An alternative state program is known as the “2c” program — Class 2c Managed Forestland classification.

This 2c program gives a break on the taxes but amounts to a tax shift because other landowners end up paying more so the participating landowner gets a break on his or her taxes.

“The economic difference in our county is that SFIA produces a larger net benefit than in putting your land in 2c would. But with 2c, you can be out of that tomorrow,” he says. “Land could be enrolled in 2c in an urban area, just waiting to be developed. Say it was scrub brush. The tax burden could be ‘shifted’ to other taxpayers, and 18 months later, the plantings could be torn out and turned to house. I say that through that process ‘We the People. . .’ didn’t get much. We give these people a tax break, but there’s no continuing tax benefit.”

Federal programs

Another source of support is the federal government’s Environmental Quality Incentive Program. This is run by the U.S. Department of Agriculture’s Natural Resources Conservation Service.

This could mean, for example, subsidizing the cutting out of competing plants and other nonmarketable trees and brush in a forest, or thinning to improve it. There’s a whole list of 60 programs, he says.

“Here, the advantage of having a Woodland Stewardship Plan is that in order to prove you can benefit from the EQIP program, you’ve had to have had income from the property in the past five years,” Schulz says. “With forestry, that can be difficult because of the time between harvests. The Woodland Stewardship Plan operates as a ‘proxy’ to prove that you’ve had a benefit. You’re allowed to use that as evidence that you’re benefiting from the land.”

Part of the plan is a “stand map” of improvement on management practices you want to employ.

A second federal program is the Wildlife Habitat Incentives Program.

The federal Office of Management and Budget in the current fiscal year decided to embargo the money for WHIP.

That’s just for the wildlife habitat. This would apply to a situation like Schulz’s recent harvest, where he left an acre to regenerate itself into aspen. The whole acreage was included in a wildlife incentives program. Payment is based on average costs throughout the state.

A third federal program is the Conservation Stewardship Program.

“If you have a management plan — again — you can take a yearly payment for CSP. It’s rather modest, but it’s cash flow coming back to you,” Schulz says. “You have to maximize all of these programs to make farming work right. I think the public is well served by that. It’s not a bad way to reward farmers for doing the right thing.

“I think we should be promoting management plans because they give those landowners a tremendous amount of management information about how to put ‘best management practices’ on farms and woods areas. It’s an opportunity to meet with professional foresters.”

Farming a forest

Schulz says he’s never formally studied forestry, but his family has learned it across generations.

He was born on the farm where he lives today. It is a Minnesota Century Farm that his grandfather, Frank Schulz, homesteaded in 1888. Trees were part of the farm since the start, and a diversified parcel of 40 was probably purchased in 1930s.

He was born in 1948 and graduated from high school in 1966. He finished college his degree in agricultural economics at the University of Minnesota in St. Paul in 1970 — just before the first Earth Day. (“Our commencement speaker talked about the world after Earth Day,” he recalls.)

He was just about to go to University of Chicago, where he planned to go to graduate school, but his father died suddenly. Instead of graduate school, Schulz returned home to help his mother run the family’s modest-sized dairy farm.

The farm grew from 20 cows to 32 cows under his management and now includes some 360 acres. There was always that 40-acre forest. It was all pine — jack pine, Norway pine, white pine and a few aspen trees.

“My father, Frank Jr., always said to me, it doesn’t cost you a lot to keep this land (in trees). He said, ‘Think of it as an insurance policy. If you get burned out, you can always cut the trees and rebuild.’”

In 1975, Schulz met Kyle Herfindal, a county Extension Service home economist for Wadena County, Minn. She originally was from the Lake Park, Minn., area.

In 1977, the young couple completed their first forestry management plan. They arranged for the plan because they were about to build a new dairy barn.

“We got the forestry plan to sustainably harvest it to build a barn, and we did,” Schulz says.

They hired a fellow with a sawmill who sawed the lumber for the barn.

Going by the plan, the Schulzes would have taken out five-acre chunks across the 40 acres. But the timber market declined. The barn got built, but the additional harvest was delayed for nearly two decades.

“We suffered from a lot of problems from the wood being over-mature,” he says.

In 1991, Tom and Kyle sold the dairy herd and Tom became a farm business management instructor at Central Lakes College in Staples, Minn. In 2008, he retired from that post and is in a faculty emeritus status. In retirement, he went back to a bit of farming. He has a herd of 30 registered Angus beef cattle.

Poplar demand

In Sebeka, he has 68 acres are in hybrid poplar production. Another 40 acres are in conventional, diversified forest. Another 50 acres is in hay for the beef herd and 40 acres of pasture and 17 acres of Conservation Reserve Program lowlands. He also rents out 120 acres in Otter Tail County, Minn., for pasture — roughly 350 in all, when odds and ends are thrown in.

The Schulzes planted their first poplars in 1996. Tom was approached by Blandin Forestry of Grand Rapids, Minn., to plant the poplars. The company paid someone else to plant them on the 68 acres and paid the Schulzes an annual rental fee, plus a stipend for cultivating the trees — all of this with an eye toward a later harvest — perhaps in 2008 or so. It appeared to be a better deal than conventional cash rent at the time.

The poplar program didn’t turn out the way the Schulzes expected.

The company was bought out twice — first by an Australian company and then a Finnish firm. Eventually, the Finnish project abandoned the project, leaving the Schulzes with acres of poplars.

“They just said the trees are yours,” Tom Schulz recalls.

Tom talked with a forester from the local Soil and Water Conservation District to do a management plan for the poplar. He contacted various vendors to see if they’d be interested — Potlatch, Verso Paper and Sappi in Duluth, Minn.

In 2008, the Schulzes made a deal with Verso to buy the trees, partly because they would take a majority of the “slash” or waste, for a bioenergy co-crop. They harvested in July.

“Again, this wasn’t a big thing, but it got the slash out of my way and I wasn’t going to end up burning it myself. Also, burning it to run their boiler at their paper mill generated some energy, so I was happy,” Tom Schulz says.

One issue was that the trees were growing too close together — planted on eight-year spacing — and they hit a plateau of maturity in their ninth year.

Forks in a tree

Schulz thought Verso might harvest every other row, so the remaining trees could grow larger. But Verso suggested doing a clear cut and starting over. The company eventually wants to rent the land and has entered a contract for the next growth of trees. Verso was going to replant in 2009, but waited, partly because of the economic collapse.

“The plan is to replant with 10-by-10 spacing,” Schulz says. “It’ll go 14 years before it’s harvested, so I figure we’ll get a better product after that.”

The conventional diversified forest is an entirely different challenge.

In 2009 and 2010, the Schulzes harvested 23 acres out of the diversified 40-acre woodlot. The forester inventoried the acres before harvest, creating a “bill of sale,” to present to forestry companies who might bid on it — how many cords, and of what quality.

In this case, Dick Walsh Forestry had to leave a fraction of the dead trees per acre untouched, to help retain a habitat for birds, insects and other wildlife. The parcel was predominantly the Norway pine, but also contained some jack pine and a small amount of white pines. There also is a large number of aspen and various subspecies — maple and oak.

The Schulzes expect to do some thinning on acres that were harvested in the 1980s.

“We need to get this done,” Tom Schulz says. “That will make sure we are growing the forest in the optimum method.”

Because of the forester’s advice, the Schulzes hired Future Forest Inc. of Askov, Minn., which came in and used a Brekke Trencher to prepare forest replanting on. Two big conical fingered disks go about 10 inches into the soil, creating a continuous furrow. This offers a continuous trench through an area that had roots, rocks and some trash.

“Typically, you plant and hope for 50 percent — but you can get 30 to 80 percent survival rate, depending on the weather, dryness and, of course, planting technique,” Schulz says.

The price farmers can get for managed woodland varies.

The hybrid poplars brought in about $800 an acre. The conventional forest brought in almost $2,000 an acre.

“There’s a lot of value in that forest when it comes to harvest time,” he says.

According to the Schulzes’ plan, they replanted 9,640 red pine (also called Norway pine), 6,000 white pine and 1,500 jack pine on that site,” Tom Schulz says. “They’re planted segregated, so you can use specific herbicides for the various species. White pines are more susceptible to herbicide damage, so you segregate them from the jack pines.”

Schulz knows from experience in education that there are farmers who overlook their tree land as a source of income. A little management attention could mean the difference between $10,000 of income and $100,000 on the same tract.

“We need to have each acre have some kind of income stream come in to make the entire farm more successful,” he says.