Getting Started with Timber Property Loans
Investing in timberland yields both economic and environmental benefits.
In times of economic volatility, diversifying your revenue can make a significant impact on your operation’s future and the future of U.S. agriculture. In addition, timberland plays an integral role in the fight against climate change.
Timberland ownership in the U.S. also plays an influential role in reducing foreign ownership of U.S. agricultural land. As of 2020, nearly 37.6 million acres or 2.9 percent of all privately held agricultural land in the U.S. is foreign-owned. It’s important to keep timberland in the hands of U.S. farmers and ranchers, as land is the foundation of American agriculture’s strength.
U.S. Timber Industry Overview
The U.S. timber industry is a crucial component of agriculture with significant contributions to our nation and the world.
Some facts about the U.S. timber industry include:
- There are 823 million acres of forests and woodlands in the U.S.
- Over $200 billion in products each year can be attributed to the U.S. forest products industry.
- Employment in the U.S. forest products industry totaled 955,400 in 2018.
The U.S. is the largest producer and consumer of wood for industrial manufacturing, making timber both a lucrative and essential industry.
The U.S. Timber Industry by Region
While timber is grown across the nation, it varies by region. The South is the top producer of timber in the nation, followed by the Northwest. In fact, 46 percent of all timberland is located in the South. In 2016, timberland acreage by region was:
- South: 209MM
- Northwest: 94MM
- Midwest: 61MM
- Appalachia: 50MM
- Northeast: 41MM
Investing in the Future with Timber Property Loans
Timberland is a strong investment in both your operation’s future—and our collective future. With the increase of foreign land ownership, keeping timberland in the hands of U.S. farmers is essential. 46 percent of foreign-held agricultural land is timberland, with a total of 17.8 million acres of timberland being foreign-owned.
In response, recent legislation has been introduced to reduce foreign land ownership. Last year, the Appropriations Committee voted to ban China from acquiring additional U.S. farmland. Eventually, the proposal was revised to a request for a USDA report on the matter. In another step forward, the America COMPETES Act (passed in the House in February 2022) includes provisions to require the reporting of foreign land ownership.
Financial Benefits of U.S. Timberland Ownership
Purchasing timberland is a strong way to hedge against inflation and diversify your operation with additional revenue. Before purchasing timberland, it is important to consider that it is a long-term investment that can take a while to show results. According to The Wall Street Journal, only four percent of timberland per year yields income because it takes 25 years for the pines to be used to make lumber.
However, the financial benefits of investing in timberland make it an attractive investment over time. Investing in timberland is a strong long-term investment because the initial capital that it takes to purchase eventually leads to profit as the land appreciates. Over the past few decades, the long-term trends of timberland values have remained positive. As a result, they are not easily affected by inflation.
Environmental Benefits of U.S. Timberland Ownership
American timberland not only contributes significantly to the U.S. economy, it is also an instrumental contributor in the fight against climate change. Forestry is the single largest carbon capture industry in the U.S. In addition, agriculture is the only industry that can offset emissions with terrestrial carbon sequestration.
Some facts about the environmental impact of the U.S. timber industry include:
- Forests are the largest terrestrial carbon sink in the world.
- 90 percent of land sequestration capacity is attributed to forest ecosystems.
- 15 percent of U.S. fossil fuels are offset by forestlands.
- For every 100 trees, 53 tons of carbon dioxide are removed from the atmosphere every year.
Private working forests sequester much more carbon than national forests—20 times more, on average. By increasing private ownership of timberland, carbon sequestration efforts can also be accelerated.
AgAmerica’s Timber Property Loans
When purchasing timberland, it’s important to find financing that meets you where you’re at and evolves with you. AgAmerica’s timber property loans are designed to empower you with the flexible upfront capital needed to make the best decisions for your operation. Easy cash withdraws, interest-only payments, and penalty-free payoffs give you the flexibility you need to make the best decisions for your operation.
Returning Borrower Expands Timberland with $27MM Timber Property Loan
Understanding both the financial and environmental benefits of purchasing timberland, a North Carolina landowner purchased an expansive timberland tract with a flexible, interest-only loan package. This provided additional liquidity for future property enhancements.
Diversify Your Operation with a Timber Expansion
AgAmerica is dedicated to keeping U.S. farmland in the hands of American farmers and ranchers. Between the financial and environmental opportunities with timberland, purchasing it yields a multitude of benefits.
Timberland requires a unique financial structure that takes the lifecycle of timberland into account. That’s why AgAmerica offers upfront financing with flexible payment options to provide the necessary liquidity to support you through those beginning stages.
