Green Horizons Volume 13, Number 3 Summer 2009 Massive Windstorm Levels Thousands of Ozark Acres Hank Stelzer, MU Forestry Extension Weather experts call them derechos (pronounced ‘deh- RAY-cho’). Lay people call them land hurricanes. One forest landowner whose forest was obliterated in the massive, May 8th windstorm called it “the biggest heartache of my whole life.” The derecho (which means ‘direct’ or straight ahead’ in Spanish) started in southeastern Kansas before dawn and then raced across the Missouri Ozarks before finally ending in southern Illinois. The most severe damage was a 90-mile-long corridor beginning southeast of Montauk State Park in southeastern Dent County and running east through northern Bollinger County. Width of the corridor ranged from 6 to 15 miles. Two well-defined tornado tracks were also found to the south of the main event in Shannon County. Because the storm track went through the sparsely populated Ozarks, news reports of the damage were light and centered on the Fredericktown area. It was not until a week later, as state and Federal forestry officials began piecing together reports from field offices that the true magnitude of the destruction began to sink in. Analysts with the U.S. Geological Survey in Rolla, Mo., compared satellite images taken before and after the storm and have initially estimated more than 113,000 acres of forested sustained “significant to severe damage.” That means on those acres at least 50 percent of the forest canopy has been lost; either through trunk breakage or complete toppling of the tree. Using an average 3,600 board feet/acre (FIA data from 20 most affected counties) and assuming 50 percent of the trees are damaged, this would equal 204 million board feet of damaged timber. This figure should be viewed as conservative since the assessment did not detect lightly damaged areas. The Missouri Forest Products Association valued this moderate to severe damage at $12 million. What is Being Done? Since the storm, state and Federal resources have been assisting county governments and rural communities restore public safety by clearing debris so utility crews can safely do their job. They also have been hard at work re-opening campgrounds and trails. Salvage operations have begun on both public and private forest land. The USDA NRCS was able to reallocate $1 million dollars of unused EQIP money to assist private forest landowners in salvaging their timber. However, the sign-up period for those funds has already ended due to the upcoming end of the Federal fiscal year (Sept. 30) and the time required to process applications. State agencies would love to be in a position to financially assist private landowners, but they have no discretionary funds available and the legislature has not appropriated any emergency funding to date. Forest landowners are encouraged to keep this issue fresh in the minds of their state and Federal congressional delegations to commit dollars to salvage operations in the coming fiscal year. What Can Affected Landowners Do? The damage caused by this storm raises a world of questions. And if you do not consider the toppling of complete trees, this weather event is comparable to the ice storms landowners across Missouri have experienced over the past few years. So, what can you do if you find yourself staring out across what you might now consider a wasteland? We will start with two obvious pieces of advice and in future issues of Green Horizons we will address some of the less obvious and longer-term challenges that forest landowners will face. If you have specific questions you would like to see us tackle in this “After the Storm” series, feel free to call, write or email us here at GH. Be Safe First and foremost, be safe. No tree, forest or special place in your forest is worth your life. Leaning trees, tree tops or entire trees ‘hung up’ in neighboring trees, and trees bent over, have the potential to release great amounts of energy in very unpredictable ways… even when ‘experienced’ loggers go to cutting on them. Do yourself and your loved ones a favor and leave the salvage operation to professionals. Here is one that I would not have thought of, except for the fact that I witnessed it firsthand. While surveying the damage along the entrance road into the Mark Twain National Forest’s Sutton’s Bluff campground, out of the corner of my eye I saw some movement. As I turned, a 20-inch red oak simply fell over… on a clear day… and no wind. I suspect that a lot of trees that are still standing have had their root systems compromised. So, even if your forest only sustained light to moderate damage you might want to turn up the gain on your personal safety radar if you venture out, especially on rainy and windy days. Be Patient With over 200 million board feet of timber on the ground, loggers will be in short supply… very short supply. Couple that with depressed timber markets and it is going to be difficult to move this wood. Professional foresters and loggers estimate that we have 12 to 18 months to salvage what material can be salvaged safely. So, there is time. ********************************************************************** Agroforestry Comes of Age Michelle Hall, University of Missouri Center for Agroforestry Agroforestry promotes land use incorporating the "Four I's": intentional, intensive, interactive and integrated. After attending the recent 11th North American Agroforestry Conference, I would add one more "I" to that list - innovative. I was struck by the diverse ways people across this country, continent and planet put the science of agroforestry into practice. And that's the way it was meant to be - "Putting Science into Practice" was the theme of this biennial meet-up, hosted by the University of Missouri Center for Agroforestry May 31-June 3 at Stoney Creek Inn, Columbia, Mo. A highlight was the four talks - including two keynote sessions - given by landowners who truly are putting the science into practice. Attendees heard from Nicola MacPherson, owner and operator of Ozark Forest Mushrooms, Timber, Mo. MacPherson grows shiitake and other specialty mushrooms under a pine canopy on the family farm in southeastern Missouri and markets the gourmet offerings to restaurants and at farmer's markets in St. Louis. Chris and Jennifer Cunningham, Pinantan, British Columbia, spoke about their grass-fed, free-range lamb farm. The Cunninghams use direct marketing to sell cuts of meat at farmer's markets and on-farm. At the Monday night landowner show-and-tell, three others shared the secrets of their enterprises - Terry Durham of Eridu Farms, Hartsburg, Mo., and Penny and George Frazier, Goods from the Woods, Salem, Mo. Durham provides newly released cultivars of elderberry to interested Midwest growers and bottles the juice from his own plants. The Fraziers harvest natural plants, fruits, nuts and other "goods from the woods" sustainably on their land, creating different products, such as witch hazel hydrosol. They recently opened a store in downtown Salem for their products and many other local offerings, such as handmade art. Pre- and post-conference trips brought some of the attendees to the farms or stores of these innovative landowners. Saturday, a group toured Eridu Farms, while Thursday visitors saw Ozark Forest Mushrooms and the Goods from the Woods store, both near Salem, Mo. In addition, Tuesday the entire group visited another landowner, Dan Shepherd: Shepherd Farms, a large, unique operation combines pecan trees, eastern gamma grass and buffalo in Clifton Hill, Mo. Attendees snapped up the pecan and buffalo products at the on-farm store and feasted on a dinner of buffalo burgers. Field trips also included touring various University of Missouri farms, including Bradford Research and Extension Center, Columbia; Horticulture and Agroforestry Research Center, New Franklin; Greenley Research Center, Novelty; and Wurdack Farm, Cook Station; in addition to the Jefferson Farm and Gardens educational facility in Columbia and Maramec Spring Park near St. James. Back at the Stoney Creek Inn, researchers from across the globe gave oral and poster presentations on a wide variety of topics, including carbon sequestration/carbon markets, bioenergy, forest farming, agro-ecosystem interactions, production and management, soil and water quality, and economics and marketing. Presentations at the Monday evening conference banquet reflected on the past, present and future of agroforestry in the temperate zone. As part of these talks, Gene Garrett, director of the University of Missouri Center for Agroforestry and professor of forestry, was honored with a lifetime achievement award by the Association for Temperate Agroforestry for contributions to the science of agroforestry. Andy Gordon, a professor at the University of Guelph, Ontario, who began the North American Agroforestry Conference series in 1989, presented Dr. Garrett with the honor. In addition, Shibu Jose, associate professor at the University of Florida, spoke on the "future" of agroforestry. Dr. Jose will take over Dr. Garrett's position as director of the MU Center for Agroforestry Nov. 1; Dr. Garrett retires Dec. 31. The conference was sponsored by the Association for Temperate Agroforestry, the MU College of Agriculture, Food and Natural Resources, U.S. Forest Service-Northern Research Station, USDA SARE, USDA CSREES, and USDA National Agroforestry Center. The University of Georgia will host the 12th North American Agroforestry Conference in summer 2011. ********************************************************************** Forest From the Trees: Join the Missouri Tree Farm Program! Dave Murphy, Conservation Federation of Missouri In October 2007, our farm became certified in the Missouri Tree Farm Program. Over the past several issues of Green Horizons, we have run a series of articles recounting why and how this came about. This is the sixth and final installment in our story. We have earlier reported on the many benefits to our forest, to our resident wildlife and to our family resulting directly and indirectly from our active management efforts. We are well on the way to meeting our overall objective from the start; of creating and maintaining a productive, healthy and sustainable forest. In fact, our forest continues to improve in all three of these aspects with each additional management action we put into practice. From the beginning, we chose to certify our farm in the Tree Farm Program. So, what does it take to become certified? Why is it important to our forest? Why is it important to wildlife? Why is it important to our family? Your property must have at least 10 acres of continuous forest, and no more than 20,000 acres. You must have a written management plan prepared by a professional forester. You must consider air, water and soil quality, for conservation of fish, wildlife and biodiversity. You must also consider the visual impacts of your forestry practices and recognize historical, biological, archeological, cultural and geological sites. Your timber harvests, forest operations and reforestation efforts must all be responsible and comply with federal, state and local laws. These criteria were second nature to us and I expect it to be the same for most well-managed forest properties. Why is certification important to our forest? In a nutshell, because meeting all the requirements is the most direct path there is to ensuring a productive, healthy and sustainable forest! You must have a written plan. You must actively and responsibly manage. Meeting these essential requirements translates directly into improvements in your forest. Why is certification important to wildlife? Because a forest under management for productivity, health and sustainability will provide more and better food, cover and water for wildlife. Acorn and fruit production in the stands of timber making up our forest is now many, many times what it was before we began. Overstocking, crowding and stifling of growth and productivity of our best acorn, nut and fruit producing trees has been virtually eliminated. Food abounds. There is much, much more cover for all kinds of wildlife now. Biodiversity has been enhanced by our management efforts, not diminished. Why is certification important to our family? Certainly it is a point of pride for us to have achieved this level of stewardship. We are proud that our efforts and investments have produced a forest which exceeds the requirements for certification. But there are plenty of direct benefits of certification as well. Certification meets international standards of sustainable forest management. Today this means access to markets for timber, forest products and, perhaps in the near future, carbon credits. Other direct benefits that are no less important include all the information, training and professional advice we have received since becoming Missouri Tree Farmers. Call them up! Go to their Web site! Get moving on this, and I promise you one thing...your property will be worth more for your efforts. After all, the more you invest in anything, the more you can expect to get out. ********************************************************************** Missouri Tree Farm to Celebrat e 60 Years Tammy Homfeldt , Missouri State Tree Farm Committe e By the early 20th century most of the Missouri Ozarks had been cut over, burned and turned into hard-scr abble farms. Uncontro lled burning had become a rite of spring and free-ran ge livestoc k grazing was the norm. In the 1920s the Rev. Paul Wobus of the United Church of Christ traveled into the area with the intent of developi ng rural churches . He establis hed a church at Shannond ale. When the Rev. Vincent Bucher arrived in the early 1930s to serve as Shannond ale’s first pastor he also took on the job of serving the communit y. The church purchase d more than 4,000 acres of land. This area has since become one of the largest demonstr ations of private forest manageme nt in the Missouri Ozarks. The hope was through the purchase , good forestry practice s could be demonstr ated to local landowne rs. A formal ceremony was held in a Shannon County stand of virgin shortlea f pine on Hwy. 19 in October of 1949 to commemor ate the initiati on of the Tree Farm Program in Missouri . Tree Farm membersh ip certific ates were presente d to the first 10 landowne rs entered into the program. Shannond ale Tree Farm was one of those original landowne rs. Today, Shannond ale Tree Farm is the oldest continuo usly owned Tree Farm in Missouri . To celebrat e this historic event on its 60th annivers ary and to honor Shannond ale Tree Farm, the Missouri Tree Farm committe e is planning a ceremony at Shannond ale Tree Farm in Shannon County Oct. 23 and 24, 2009. The event will highligh t this outstand ing 60-year commitme nt to sustaina ble forestry , environm ental improvem ent and communit y outreach effort. For more informat ion or to register contact Tammy at the Missouri Forest Products Associat ion, 573-634- 3252. Informat ion is also availabl e online at http://w ww.mofo rest.org /educati on/treef arm.html ********************************************************************** Missouri Tree Farm PEFC Certific ation Update Steve Westin, Missouri Tree Farm Committe e Last summer saw the beginnin g of a new era for the American Tree Farm System, of which Missouri Tree Farmers are a part. On Aug. 7, 2008, the American Tree Farm System, and all of its member Tree Farms, were recogniz ed as being sustaina bly managed by an internat ional certifyi ng organiza tion called the Programm e for the Endorsem ent of Forest Certific ation schemes (PEFC). PEFC is an independ ent, non-prof it, non-gove rnmental organiza tion, founded in 1999 which promotes sustaina bly managed forests through independ ent third party certific ation. To maintain PEFC recognit ion, third party audits are performe d on a state-by -state basis with a few Tree Farms in a state being audited once every five years. In Tree Farm's North Central region, Missouri , Kansas and Kentucky were selected for the first round of audits since PEFC recognit ion. Thirty of Missouri 's 800+ Tree Farms were randomly selected for inspecti on. Two auditors from Pricewat erhouseC oopers visited these Tree Farms during the first week of June. They were checking to see if the individu al Tree Farms were being managed in accordan ce with the American Forest Foundati on's Standard s of Sustaina bility for Forest Certific ation, 2004-200 8. The same auditors also visited Tree Farms in some states in the other Tree Farm regions. Differen t states will be audited next year. Missouri 's turn for audits will come around again in 2013. Sustaina bility certific ation may benefit Missouri forest landowne rs in the future by facilita ting particip ation in environm ental services markets, such as carbon sequestr ation, or access to forest products markets which require wood from certifie d lands. Stay tuned to Green Horizons for the results of our audit. ********************************************************************** Preserving the Family Forest: New MU Resource David Watson, Missouri Tree Farmer and Financial Planner As many long time Green Horizons readers know, we have been discussing the many issues involved with successfully transferring the family woodland to a new generation of owners. For some families, this could mean transferring it to one child, for others it could mean dealing with multiple heirs. For some families, it means transferring the farm outright, for other families, it may mean splitting some of the management roles between heirs, or donating a conservation easement on some or all of the ground. No matter what the specific objectives are, it always involves a host of somewhat complex legal and financial issues, as well as difficult inter-personal issues that are always present within successful families. We have been referring to this whole area of planning as “Succession Planning.” In the last issue, Kirk Fine (the co-author of this column) began to detail an actual case study involving a Missouri family who is going through the succession planning process. This provides an excellent opportunity for Green Horizons readers to see how those family members are dealing with the specific financial, legal and emotional issues related to transferring this “heirloom” asset. In addition, it allows other Missouri timberland families to begin to think about their situation, their property, their objectives, and their heirs, and to make comparisons with the case study family. Before Kirk resumes the case study in the next issue, I wanted to suggest a publication that may be useful to readers who are contemplating succession planning. Larry Godsey, an economist with the MU Center for Agroforestry, and I have written a guide, “Succession Planning for Woodland Owners”. This publication is meant to provide a thorough, but readable discussion of the “tools and techniques” of modern day timberland succession planning. Timberland properties are unique assets – part financial, part legacy and part recreational. They are private assets, but have great societal benefits. Therefore, families have their hands full when trying to transfer the timberland to their heirs, while not sacrificing the specific aspects of the woodland that have become so vital to their lives, their families and their legacies. This guide addresses the various financial, legal and relationship issues, leading up to, and surrounding, a successful transition of timberland. We hope this guide will make you more comfortable with the basics of succession planning, and will help to facilitate a conversation with your spouse, your heirs and/or your advisors. Hopefully, it will be a “stepping stone” for more in depth planning for your family timberland. We all know Missouri is blessed with a wonderful resource in its timberland. This resource provides wood, jobs, wildlife habitats, water filtration, carbon sequestration and recreation. Succession planning is essential if families want to avoid forced sales, sub-divided property, development or mismanagement of the forestland. Hopefully, this guide will help to further true inter-generational stewardship of this great resource. Material discussed herewith is meant for general illustration and/or informational purposes only, please note that individual situations can vary. This information is not intended to be a substitute for specific individual tax, legal or investment planning advice. Please consult a qualified professional for legal advice/ services. David Watson is a financial advisor specializing in working with rural landowners, sportsmen and conservation-minded families. Securities offered through Royal Alliance Associates, Inc., Member FINRA & SIPC. Advisory Services offered through Pines Wealth Management, LLC, a Registered Investment Advisor, and is not affiliated with Royal Alliance Associates. ********************************************************************** Succession Planning Workshop Set for Aug. 24, 26 6:30 - 9 p.m. St. Charles County MU Extension Center 260 Brown Road St. Peters, Mo. According to the National Woodland Owners Survey, 80 percent of family forest landowners say their primary goal is to pass their property intact to the next generation. But, most do not have a succession plan for the forest property they have worked so hard to develop and maintain. Are you one of them? If so, then this two-evening workshop is for you! The first evening will explore the often overlooked and emotionally challenging aspects of transferring your legacy to your heirs. This will set the stage for presenting the legal aspects of succession planning during the second evening. Both sessions will be led by David Watson who is not only a financial planner, but a Missouri Tree Farmer too! The $50 family registration fee includes workbooks and refreshments. Forest landowners are encouraged to bring their heirs to the workshop. Register today by contacting the St. Charles County MU Extension Center at (636) 970-3000. ********************************************************************** Missouri Wood-to-Energy Updates Hank Stelzer, MU Forestry Extension Pardon the pun, but wood-to-energy projects are “heating up” around the state. In mid-April, the University of Missouri at Columbia announced plans to replace one of its six boilers with a state-of-the-art unit that will burn 100 percent biomass fuel. While it will be capable of burning switch grass, corn stover, and pelletized clean paper waste, its main diet will be wood chips; 100,000 tons annually. Installation is scheduled to begin sometime in 2010. The target date for full commissioning of the boiler is set for the third quarter of 2012. MU foresters are currently working with the Energy Plant in developing a comprehensive procurement program that will integrate a number of woody biomass streams including urban wood waste, utility right-of-way trimmings, clean paper waste, logging residues, and forest thinnings. Stay tuned to GH for the latest developments on this project as well as others that may be announced in the coming months. ********************************************************************** Understanding Casualty Losses in Timber Larry Godsey, MU Center for Agroforestry With the recent storms that have moved through Missouri, many landowners have been asking how to report the casualty loss of timber on their federal income tax returns. Unfortunately for many timberland owners, the federal tax rules that deal with casualty loss are often difficult to understand and may seem to penalize landowners who have suffered losses from damaged or destroyed timber. Many tax professionals have written publications regarding casualty loss for timber, but to truly understand the implications of the rules it is necessary to work through the process step-by-step. The first step in the casualty loss process is identifying whether or not you have suffered a casualty. A casualty is defined as the damage, destruction or loss of a property resulting from an identifiable event that is sudden, unexpected or unusual. From a timber investment standpoint, the most common causes of casualty losses are fires, wind storms, vandalism, floods and earthquakes. It is important to understand that losses in timber due to progressive deterioration, such as fungus, diseases, insects, worms or similar pests are typically not considered casualty losses, because they are not sudden, unexpected or unusual. The next step is to determine the maximum amount of deduction (this is not necessarily the actual amount of deduction). The maximum amount of deduction is the adjusted basis in the single identified property (SIP). The Internal Revenue Code states that the casualty loss deduction is the smaller of the adjusted basis of timber and the difference of the fair market value (FMV) immediately before and after the casualty. Therefore, the deduction is capped by the amount of adjusted basis in the SIP. A single identified property can be the entire timber stand, individual units of timber, or even distinguishable tracts of timber within the timber stand. More importantly, if there is no basis in the timber, there is no deduction. The deduction is further reduced by any insurance payments or revenue generated through a salvage sale. For example, Landowner Ruff owns 25 acres of investment timber with an adjusted basis of $25,000 in the 25-acre SIP. A wind storm damages 15 acres of the timber. Landowner Ruff hires a professional forester to estimate the FMV before and after the casualty. * Scenario 1: The professional forester estimates that the decrease in FMV is $30,000. The maximum deduction would be the adjusted basis of $25,000 minus the revenue generated from a salvage sale. * Scenario 2: The professional forester estimates that the decrease in FMV is $15,000. The maximum deduction would be $15,000 minus the revenue generated from a salvage sale. * Scenario 3: The professional forester estimates that the decrease in FMV is $15,000. Landowner Ruff has a salvage sale and sells the damaged timber for $20,000. In this case, there is no deduction. Landowner Ruff has an involuntary conversion. Ruff may use the proceeds from the salvage sale to reestablish the timber that was removed or purchase a similar timber property to defer paying tax on the salvage sale proceeds. This situation is treated as a like-kind exchange and the adjusted basis in the newly acquired timber property would be equal to the basis in the original property plus any additional money paid to reforest or purchase the new property. As illustrated by the three simple scenarios, casualty loss can become very complicated. It is important to realize that damaged or destroyed trees may be a great loss of personal time, sweat equity and emotional investment; the IRS is only concerned about the ability of the landowner to recover the adjusted basis (financial investment) in those trees. A new tax guide is being published by the University of Missouri Center for Agroforestry dealing with casualty loss. The publication is currently under review and will soon be available online and through hard copy. This publication uses a real world example and takes a step-by-step look at the rules that apply to casualty loss and the forms that are used to report casualty loss. For more information regarding casualty losses, contact the University of Missouri Center for Agroforestry at 573-884-3216. ********************************************************************** Gullies Be Gone Michelle Hall, University of Missouri Center for Agroforestry Research sponsored by the University of Missouri Center for Agroforestry has shown that forest buffers with less tree density and more ground cover result in more effective buffering of surface runoff from crop- or pastureland by preventing the creation of deep gullies. Riparian forest buffers - living filters comprised of trees, shrubs, forbs and grasses, established in distinct zones - are an important agroforestry practice that reduce runoff, stabilize stream banks and increase food and cover for wildlife. The Iowa State University Riparian Ecosystem Management Team has been evaluating the performance of riparian forest buffers and developing management plans that will maintain the benefits of the buffers over time. While many buffers have been planted over the past 18 years, little research has been conducted on their effectiveness over time and on the long-term management needed to maintain their functionality. There is evidence that some of these buffers (i.e., narrow strips of natural forest), without adjacent warm-season grass filters, are not effectively slowing and spreading surface runoff from adjacent crop fields as it enters the buffer. As a result, surface runoff and pollutants make their way to the stream channel by creating gullies that begin in the field as ephemeral gullies, but become classic gullies as they pass through the buffers. They remain ephemeral gullies in the field because the farmer can cultivate through them each season, creating a gentle depression that carries the water in lieu of a more deeply incised classic gully that develops without annual management - the problem as it passes through the forest. Identifying the most effective species, composition, distribution and overall width of riparian forest buffers has become a major focus of the Iowa State Team as these attributes can be controlled by riparian forest buffer design and long-term management. Many "natural" and "planted" riparian forest buffers do not support much year-round perennial ground cover with their present tree densities. Research showed ephemeral gullies that ended in wellmaintained warm-season grass filters did not continue through the grass filters, nor did they create gullies in adjacent forest buffers. However, width of grass filter and density of grass stems were important in determining how far into the grass filter sediment was deposited. In some cases, sediment was found choking out portions of the grass filter, making the filter less effective. Many cool-season grass filters may not be wide enough to handle the sediment load that is delivered by many of the ephemeral gullies. The results of this study should help refine the ideal ratio of gullyshed to buffer width to assure trapping of most of the gully sediment. These studies are providing the information required for developing an assessment tool that will allow conservation professionals to quickly identify potential sites that could benefit from a grass filter planting or a timber stand improvement of an existing buffer. ********************************************************************** The Back Page Deadlines for Newsletter Submissions Spring Issue: March 15 Summer Issue: June 15 Fall Issue: September 15 Winter Issue: December 15