Monthly Archives: July 2015

Evaluating and Leasing a Woods for Maple Syrup Production

Les Ober
ANR Coordinator
Geauga Co. OSU Extension

Expansion in the maple syrup producing regions has been in high gear over the last several years. In New England and New York there is little doubt on how and where expansion will occur. In both areas you have mountainsides with 1000’s of maple trees. Much of this land is owned and leased by the government or large private companies. Obtain the operating capital; lease the land run the pipeline down the mountainside to the sugarhouse and you are in business. Ok I realize it is not that simple but it is a lot easier than expanding in Ohio. We have fewer trees, in smaller concentrations, which are spread across the state. There is also the issue of convincing landowners to lease their trees. This can be very difficult to say the least.

Let’s look at the process of leasing trees for maple syrup production. The majority of trees in Ohio are privately owned. Most of the government owned woodland is located in SE Ohio in areas that have never been considered prime maple producing area. Sixty percent of the maple production in Ohio is done in the northeast quadrant of the state. This is an area that has seen increased pressure from urban development and the price of that land reflects developmental value not agricultural value. This often makes it unaffordable for someone to buy a woodlot for maple production. To compound the problem much of this land is owned by “Baby Boomers” who have passed away or are now ready to leave Ohio and transfer ownership to a sibling or a third party. Often the cost of ownership (land tax) or the cost of settling an estate will determine what will happen to the estate. Many times the family is forced to liquidate assets such as timber to offset these expenses. As a result many of our prime sugar bushes have been cut down and lost in the process. Unfortunately in times of duress families do not receive the full market value of the timber as a result of a quick sale to take care of financial obligations. This often compounds the agony of estate settlement. They also do not take the time to explore all of the options for utilizing their woodlot.

Today a profitable maple operation relies heavily on technology to be successful and that includes a vacuum tubing system. Installing a tubing system requires a long term (7 to 10 years) lease. Many landowners are hesitant about entering into this type of agreement for a variety of reasons. One of the primary reasons is that the owner does not want to be bound to a binding contract if something would happen and he had to sell the property. Even if a sale is not forthcoming coming many owners are uncertain about how their actions might impact the next generation. This needs to be a consideration when designing a lease. There need to be an emergency escape clause that protects the rights of both parties. One ways of softening this objection is for the owner to get a substantial financial return for leasing the woods. Consider the fact that an average lease on cropland now starts at $100.00 per acre (this is high for some areas and low for others). This means that woods with 80 taps, renting for $1.00 per tap would be equivalent to many cropland leases. This also this also demonstrates why maple lease rates need to start at $1.00 per tap to keep a woodlot lease comparable to a cropland lease. The only way to determine a rental rate is to accurately estimate the number of taps per acre.

Since the millennium it has become increasingly hard to find an unused sugarbush in prime condition in Ohio. Often times a maple producer hears about a stand of timber that might be available for taping and he decides to look at it and it falls way short of his expectations. I can tell you from experience that I have walked more than one woodlot where the owner was sure he enough trees to make syrup. Yes he did have maple trees but not nearly enough to be economically feasible for maple production. The reason for this is that many of the woodlots are 2nd and 3rd growth timber containing large numbers of smaller trees. Because these woods containing trees that are not ready for a timber harvest due to their size the owner is years away from harvest and potential financial gain. This makes maple syrup production a very viable option that can be attractive to the owner because he can get an immediate financial return from his woodlot. On the other side, the producer is looking at single tap trees and trees that may not immediately be big enough to tap for several years. The long term goal of the producer should be to convince the woodlot owner that maple syrup production is a worthwhile use of his resource resulting in the continuation of the lease over time. If these were large mature maples it would be very difficult to make a case that he could make more money by leasing for maple syrup production. In this case the only chance you have is to increase the rental rate and make a case for selective harvest that will preserve some of the larger trees. In both cases the axiom; “The best way to preserve sugarbush is to tap a sugarbush” , applies.

What are the criteria that I go by to determine the feasibility of transforming a woodlot into a sugarbush? Start with a good layout plan. The producer wants to avoid excessively long mainlines going to trees scattered over a wide area. Slope is important but there are ways to work around slope issues. The most common problem with slope is that the woods often slope away from the collection point. This problem is usually solved with the installation of auxiliary tanks, long pump lines and a transfer pump big enough to handle the volume of sap produced. All of this adds to the cost of installing the tubing. The best way to determine layout is to use a GIS map with contours to find high and low points. If you are lucky enough to find a woodlot where to dominant tree is the sugar maple of tapable size and those trees are dispersed evenly across the landscape, you have found a real Jewel. However, most time you end up with sugar maples mixed in with red maple and other hardwood species. A good sugarbush will average 80 taps per acre. Anything below 50 taps per acre is considered marginal. If it is in a woods that has been previously harvested then size of the tree (smaller than 10 inch cum.) becomes an issue. You need to use an angle gauge or prism to determine size at a distance. For closer examination a 32 inch circumference chain will equate to 10 inch diameter tree. The best way to determine tap numbers is to lay out a circle with a 26.4 inch radius from the center. Count all of the tapable trees in that circle and multiply that number by 20 to give you the number of taps in an acre. Example (in a circle with a 26.4 inch radius) 5 taps X 20 = 100 taps per acre. You want to do this randomly at multiple locations across the woods. Average all the results of those locations together to come up with an average number of taps per acre for the woodlot.

Now it is time to develop a management plan. A well-managed vacuum tubing system should produce ½ gallon of syrup per tap. At $50.00 per gallon that grosses you from $1250 up to $2000.00 per acre. That is a gross return, all of your production expenses including your labor needs to be deducted to give you a net return on you investment and your cost to produce a gallon of syrup. One of those costs is the initial cost of installing your tubing, spread over a 10 year period.. You need to know your cost of production before you can put together a lease offer.
What are the selling points of a good lease? A good lease agreement is built on the premise of Best Management Practices. This includes tree size determination, general tapping practices, access for the owner and operator, BMP responsibility, owner liability protection and finally rent per tap. All of these need to be adapted to the woodlot you are trying to rent. For example the owner depends on the woods as a source for firewood. He has to have access to the woods in the off season. You must lay out your system to allow access. This includes being able to disconnect certain mainlines and removing several laterals to allow for that access. He is also concerned about liability if you or one of your workers gets hurt in the woods while making syrup. You need to include him in your insurance liability policy as a co-insured, taking the risk off of him while you are on his property.

You now have a reasonable lease offer that works for you but will you be able to sell the idea to the landowner. You need to put yourself in the shoes of the landowner and ask yourself would you consider entering into this contract if it were offered to you. Hopefully the answer is yes but if it is not then you need to reassess the plan before moving on. What happens next will determine the success or failure of adding this woodlot to your operation. You now become a salesman trying to convince the owner that this is a good idea and both of you will benefit. If you have done your homework and you make your case honestly and sincerely you should be successful in expanding your maple syrup operation.

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Filed under Expansion, leasing, Planning, Sugarbush Management, Tapping, Tubing & Vacuum Systems