This was an interesting time to talk to parties about Broubster. First to Mr Karl Baxter - Wholesalers - about harvesting Christmas Trees at Broubster and possibly selling his compartment.
Then to Mr Mike Butler of Fountain Forestry about Management Issues at Thormaid, generally.
There seemed to be clients selling there pines for Christmas trees prematurely. .
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Talking to Mr Karl Baxter - Wholesalers - About harvesting Christmas Trees at Broubster
It was interesting meeting you at Broubster this week. As I mentioned before, it seems to problematical to change the arrangements for extracting my Christmas Trees this season, but I may well contact you when planning for next year.
Concerning the value of your plantation after your Christmas Tree harvesting, I have done a little research and, given the need to fertilise again soon at about £20,700 and the unknown factors concerning how the missing pines would affect the growth habit and fertility of the spruces, you should consider offers in the region of about £280 per hectare or £32,500 at a rough estimate for the lot.
Hopefully, this would still have left you a fair profit after harvesting the trees. Alternatively, you would need to spend the £20,000 right now and another £20,000 in 8/10 years time on fertilisation (in view of not having the pines to fertilise the spruces) and budget on around £5,000 per year other costs for the next 30/40 years to make a further £200,000 to total some £280,000 at today’s prices.
This would return you several hundred thousands (hopefully) more in due course! It is impossible to anticipate what the eventual return would be as it would depend upon the market in the year 2030/2040 and I think that investors should have no more that 5/10% of their assets in forestry because of the long-term risks and potential needs for the money.
Another approach is to part with some of it and keep the rest as it is divided roughly in two by the road and, as a neighbouring owner, I could be a buyer for part and still get some economies of scale.
I have already quite a significant stake in Broubster and am not too fussed but, at the right price, I could be a cash buyer for all or some of your land. I could be interested around £30,000 for all, £15,000 for half.
Let me know soon as possible if you are serious about selling as I am fertilising another 100 hectares by air shortly and could acquire yours and do it at the same time.
Mr Mike Butler, Fountain Forestry Ltd. Dear Mike, Management Issues at Thormaid, Broubster
Further to my visit to Broubster this week, and discussions with Stuart, Donald and yourself, I have summarised below my areas of concern and views in relation to the management of the Broubster plantation.
In overview, I must first be frank express disappointment at the way your company appear to have lost strategic control of the overall management and condition of Broubster, given the clauses that each owner had agreed to with regard to notice of cessation of the management agreement and buy-back rights in the event of owners wishing to sell.
It seems to me that the owners who have disposed of their investment at such low prices to new owners having a very short term view had themselves been very poorly advised and I would have expected to see a far more influential guiding hand from yourselves to protect the overall plantation.
I feel that I have been let down in that you both allowed these developments to happen and that you singularly failed to inform me about what was going on and submitting budgets regardless so that I was left to find out for myself. I hope that you will briefing my co-owners better from now on.
This winter’s developments will be decisive in determining my own plans for the future and I would expect to see a far better performance from Fountain Forestry in managing the estate during this period or I will have to consider how best I can provide for the management of Thormaid after this year.
As for this year, I would comment in more detail under the following heads:
Co-Owners and Management Policies- As discussed, I remain very concerned about the recent changes in ownership from fellow Fountain clients sharing my objectives in maintaining the plantation to high standards for long term investment to a growing number of short-term Christmas Tree dealers, stripping out the pines and expressing the view that they will not be spending on roads, fences etc.
Also the general appearance and design of the estate has been damaged by the ploughing up of carefully-designed rides for short-term gain. In my view it is imperative that the co-owners are called together to agree common objectives for management and the maintenance of roads, fences, drains and fire precautions to at least some minimum standard.
In the meantime, you may not assume that the figures for maintenance in the draft 1996/7 budget are acceptable and I am only prepared to fund my share of emergency fence repairs pending your confirmation of the willingness of these new owners to meet their share of an agreed level of proportionate costs.
Furthermore, I am of the opinion that it is against my own interests to maintain roads to the former standard for others to use heavily and would myself favour a lower standard of road surface to discourage the large numbers of cars presently accessing Broubster.
I would also favour a ban on bicycles. In relation to the wildlife management, this can also be reduced to a minimum now that both myself and the Danes are dealing with this ourselves within the plantation.
Security and Access- As mentioned, I found the upper chain padlock missing and the main gate perpetually unlocked and left propped open and then this lock itself was broken and unable to function.
Again, I must express disappointment that the standards of security have lapsed so much and that there has not been obtained a mutually-agreed level of site security and access restriction.
Public access is at a high and growing level and there have been reported incidents of my trees being stolen by gypsies from Northumberland.
You will know of past incidents of my loch being fished by unauthorised persons, of excess trees being taken by cutters with insufficient supervision and you must be aware of widespread petty theft and fraud within the cash-dominated Christmas tree industry; even amongst authorised contractors which all makes security and restriction of vehicular access very important.
Christmas Tree harvesting - I have discussed widely the relevant aspects concerning the cutting of Lodge Pole Pines and have examined the re-growth of trees cut both last year and the year before.
I am aware of the conflicting advice about the effects of taking these trees on the growth habit and fertility of neighbouring Sitka being nursed by them and also of the nature of the different methods of extracting the trees and the companies operating in this field and have concluded the following:- 1. In areas of poor or patchy growth (fortunately rare at Thormaid and restricted to the edge of compartments on the upland areas), the trees should be left. 2. In the areas of moderate growth, a single tree can be taken (preferably in the middle if a choice exists), leaving a whirl of branches for re-growth.3. In the areas of strong and bushy growth, two pines can be taken, leaving a good double layer of branches at the base.
The above methods are estimated to conservatively increase the take from 7,000 to 10,000 trees this season at a price of at least £3.30 + VAT per tree (otherwise reported as £3.50) prior to the Fountain commission.
I have discussed the question of which contractor to use for this process with Stuart and I know that he feels obligated to Paul Hayley. However, I would point out that I had yet to confirm my requirements and so we can not be under any contractual obligation to one contractor.
I would ask you to favourably consider using Sutherland’s of Reay for the following reasons:- 1. Charlie Sutherland is known to me as a personal friend, fellow grower and sporting acquaintance and, in an industry where fiddling and ruses are rife, I trust him to do the job with the minimum of costly supervision and to have the future of the plantation and trees in mind. 2. Sutherland’s, unlike Baxters and Hayley, use local labour and machinery and I am anxious to be supportive of the local economy. 3. Whilst I understand that you have a preferred relationship with Paul Hayley, he is the largest tree cutter of his kind and I feel it to be unhealthy for so much trade to be concentrated in one contractor from the point of view of our future negotiating position.
Of course, this would be a large contract for Sutherland’s and they would have to satisfy you of their ability to meet their obligations under such a contract, but they have intimated that they will match or better the Hayley price.
Please advise me of your intentions in this matter before making a commitment on my behalf and bear in mind that as growers of Alaskan/N. Coastal Lodge Pole pine are in a particularly strong position this year, I would wish to take full advantage of this.
Fertilisation - Given the potential of the above revenue, I have reconsidered the programme of fertilisation and it does seem prudent to complete the second application for the (110-odd Ha ?) of trees left after last year.
I have seen the effect of such fertilisation on other areas and it does seem worthwhile but I would still like to have sight of the Commission analyses for the intended compartments and in view of the larger programme and improved economies of scale would ask you to see whether the cost of £170 per Ha could not be improved upon as it represents a significant outgoing.
Other costs - Once the above budgetary elements are re-calculated, I would like to discuss with you afresh what other fees and charges you have in mind for the forthcoming year and how they relate to the management agreement.
In view of the commissions and over-riding charges arising out of the above programme of work, I wish to review these with a view to keeping other costs to a minimum and getting them back to the levels originally envisaged in the initial forestry proposal.
The last decade has been an expensive and loss-making exercise and my view of applying the current income is to defray some of that and not an opportunity to spend upon increased expenses and overheads.
Budgetary Approval Process- Please resubmit your revised plans and costs by fax early this coming week (and in any event by Wednesday) for my approval prior to authorising any expenditure on my behalf. Yours sincerely, David
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