LEASING TAPS
Many people believe that the objective of a consulting forester is to grow timber for his/her client. In fact, the primary objective of a private consulting forester should be to manage a clients’ woodlot in a manner that meets the landowners’ objectives.
Ten years ago, it is highly unlikely that I would have ever encouraged a landowner to tap his/her sugar maple trees for sap production. Back then, the loss in timber value due to the tapping was significantly more than what could be earned tapping the tree. Needless to say, things have changed quite a bit.
Maple syrup production has been dramatically increasing and there is a high demand for tap lease opportunities. Whether or not leasing taps is a good idea is dependent on a number of variables; however, the option is certainly worth exploring.
Like most forestry decisions, the first question that needs to be answered is the long-term objective of the landowner. How long is the landowner going to own the land and what are the projected financial needs of the landowner? Does the landowner need an immediate influx of cash, or a continual regular cash flow? If a landowner is looking for immediate revenues, cutting the timber will almost always be more lucrative for the landowner. However, if the landowner has a longer time horizon, in many instances, leasing taps will be more profitable. Additional variables for consideration are the current diameter of the trees, the quality of the trees, the size or extent of the tapping zone, current growth rates and current stumpage prices. Veneer should not be tapped; however, the answer is not so definitive when it comes to lower grade sawlogs.
In southern Vermont, it is not uncommon for landowners to receive a lease payment based on $1.00 per tap. A good sugarbush will contain between 80 and 100 taps per acre; therefore, the potential is for a landowner to receive between $80 to $100 annually per acre. This dollar amount should draw a landowners’ attention.
To allow tapping or not to allow tapping is not an all or nothing proposition. While tapping will cause defect in the lower log, there is still value in the tapped tree. The upper logs will have value, and some have made the argument that a tapped log has a niche market for furniture. That is a pretty small market, and in most cases, when doing an analysis, I will significantly discount the value of the tapped log.
A tap lease is a significant commitment. Most leases run at least ten years and some even longer. A lease does not prevent the proper management of the woodlot; however, thinning will need to be coordinated with the maintenance done on the tap equipment. Additionally, most leasers need at least 2,000 taps to make the investment viable and the landowner needs to understand that in most cases the tapping operation will consist of tubing and vacuums and not the picturesque buckets traditionally associated with a sugaring operation.
In a newsletter article printed a number of years ago, I discussed the concept of “crop tree release” management. One of my arguments for the consideration of this management technique was that it essentially diversified the landowners’ timber portfolio. The same reasoning holds true in relation to tap leases.
Leasing taps is not for everyone; however, it is worth understanding the concept. Leasing may diversify your land management portfolio and may be an additional way to get the highest rate of return from your land investment. If you have any questions concerning the cost/benefits of a tap lease arrangement, please contact your nearest NEFCo forester.