georgia christmas tree association, inc. tree...
TRANSCRIPT
GEORGIA CHRISTMAS TREE ASSOCIATION, INC.
TREE TALKMarch 2012 Edition
Gary Black, Georgia’s Commissioner of Agriculture, cut his 16’ Leyland at Greg and Jennie Smith’s farm this Christmas.
Published by the Georgia Christmas Tree Association, 120 Cordele Hwy, Hawkinsville, GA 31036
Volume 26, No. 1, March 2012
Table of Contents
Advertisers Index 2
Association Officers 3
Association President’s Letter 4
Grower Spotlight 5
Website Report 8
Letter to President Obama 9
Christmas Season at 7 G’s Farm 10
GFB Legislative Report 14
Foliar Feeding 16
The Forest Landowners Guide to the Federal Income Tax 22
Avoid the Dangers of Mulch Volcanoes 28
Georgia-grown Fraser fir Christmas trees on the horizon 30
Advertisers Index
Bass Trees & Supply - - - - - - - - - - - - - -36
Byron Lakeview Nursery, LLC - - - - - -37
Cinco Plastics, Inc. - - - - - - - - - - - - - - - - 7
Evans Christmas Products - - - - - - - - -35
Fraser Knoll, (Wagoner’s) - - - - - - - - - 11
Kelco Industries - - - - - - - - - --- - - - - - - - 16
Oak Pond Nursery, LLC - - - - - - - - - - - 6
Southern Christmas Trees,------------------Nursery & Plantation (Bill Murray) - - 13
Veldsma & Sons, Inc. - - -------------------27
Yule Forest Inc. - - - - - - - - - - - - - - - - - 12
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Association Officers
President--
Chuck Berry -- 2010185 McCord St. Covington GA 30014. 770-786-1370 Email: berryplace~yahoo.com
President Elect --
Greg Smith -- 20112375 Old Kings Bridge Rd. Nicholson GA 30565 706- 757-3560 Email: gjasmith~windstream.net
First Vice President -- Position Vacant
Past President --
Tommy Thompson -- 2012 1829 Prospect Rd, Law- renceville, GA 30043. 770.513.2552. Email: tstrees~bellsouth.net
Executive Director --
Linda Wilson -- 2008120 Cordele Rd, Hawkins- ville, GA 31036. 478-919- TREE (8733) Email:treefarm~pstel.net
National Director --
Chuck Berry -- 2010185 McCord St. Covington GA 30014. 770-786-1370 Email: berryplace~yahoo.com
Northern Directors
Liz Kinsey--20127171 Jot-em-Down Rd, Gainesville, GA 30506 770- 887-5541
Walter Lee -- 20131540 Old Bishop RdBishop GA 30621 706-769-4231
Central Directors
Position vacant -- 2013
Jim Butler -- 20123850 Hwy 81 West, Hamp- ton, GA 30228Email: jim~christmastreehome.com
Southern Directors
Rick Palmer 20116899 Thompson Pond Rd. Tarrytown GA 30470, 912- 529-3702 Email: secretforest~planttel.net
Lacy Jackson --2013 3452 Pateville Rd, Cordele, GA 31015 229-273-5748
Webmaster: Jim Butler 3850 Hwy 81 West, Hamp- ton, GA 30228, 770-707- 0584 Email: jim~christmastreehome.com
Tree Talk Editor
Natalie Cooper, 40 Spring St, Buford, GA 30518, 404-642- 1101, Email: twougaalums~bellsouth.net
Tree Talk assistants:
Advertising Sales: Denise Thompson, 770-513-2552, Email: tstrees~bellsouth.net Printing, Coy Dillahunty, 770.884.0022, Email: dillahuc~bellsouth.net
Advertising Rates
Full page ---- $150.00½ Page ------$75.001⁄3 Page ------$65.00¼ Page -------$45.00
Rates given are for black & white ad copy. Spot color or color strip $10.00 additional. Full color ads are available at double the base price. Con- tracts on four or more con- secutive ads are discounted 10%. New ad submission deadlines are the 1st of month preceding the issue date. For design assistance contact Coy Dillahunty, 770-884-0022 Email: dillahuc~bellsouth.net
Published Quarterly,
March, June, September, and December.
Georgia Christmas Tree Association, Inc.120 Cordele Rd,
Hawkinsville, GA 31036 Phone 478-919-8733
Email: treefarm~pstel.net Visit our web site at
www.gacta.comEstablished 1961
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Association President’s Letter Chuck Berry
Christmas is over and here we GROW again.
I hope everyone had a great selling season and is on the way to planting for the new year. On the note of selling, I encourage everyone to record your 2011 trees sales on the GCTA website. This information is anonymous and can be used in many ways. It helps when reporting our results for the grant monies that we have received. Please contact me if you need assistance with the reporting process.
As of December 2011, we have spent all of the grant money received in 2009. This money was spent on billboards across the state to promote our product. The grant totaled $30,000. The current grant monies (2010 - $30,000) are being spent to develop a video that shows the steps taken in growing a Christmas tree in Georgia. Along with this video, we are also creating some new visual aids and marketing tools to be used at the Perry fair and other exhibits.
As your NCTA Director, I attended the CT Plus marketing conference and director’s meeting in San Antonio, Texas on February 17-19. Several discussions were held to establish the direction of the NCTA. With a new management company on hand, the NCTA has a bright future ahead.
As always, I would like to thank everyone for their continued support of the GCTA. Please remember to submit your annual dues in a timely manner so that we can continue or good work of promoting the numerous benefits of the Georgia grown Christmas tree.
Please call me if you have any questions. Chuck Berry 770-602-6002
editor’s Note: This issue will have the first tree farm spotlight in it. This is a quarterly profile of some of our growers. I contacted
several of you who couldn’t do it this issue--so my dad got interviewed instead. HA! If you would like to volunteer for me to
interview please email me at twougaalums~bellsouth.net Thanks!
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Grower Spotlight
Tommy Thompson, Thompson’s Tree Farm
How long have you been farming? Planted in 1997 before we built our house; First began selling in 2001
How big is your farm? Five acres in trees
Where is it located? Lawrenceville, which is in Gwinnett County, north of Atlanta
What type of trees do you grow? All the Arizona Cypresses and their varieties
What made you get into the Christmas tree farming business? That’s a good question. (Laughs.) When I was right out of high school my buddy and I went to Michigan. We cut 600 trees and brought them back. We rented a lot in Sandy Springs across from Green Brothers. Our trees were half the price of Green Brothers so we had a very good Christmas season! I always said I wanted a Christmas tree farm after that. I didn’t have the opportunity to do that until Denise’s parents bought a farm and gave us some property and Natalie said, ‘Now you can have your tree farm!’
Have you ever had any pest or disease problems? What did you do to get rid of them? Needle Blight has been the biggest problem. We’ve a lot less problems now since we plant more Murray Cypress than anything--they seem to be a lot less susceptible. We also stopped planting ‘Silver Dust’ (variegated) for that reason. One time we had a small problem with Bag Worms, but we found them early enough to pull them all off. It’s a good idea to walk through the trees as often as possible.
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Do you propagate or buy liners? We tried propagating for several years, but it’s so time consuming. We find it more economical to just buy the liners and pot them up for the next year. We plant gallons (liners that have been in a gallon pot for a year) in the field.
When do you plant? Usually February, but this year we got it all done in January because of the unusually mild winter.
How many times a year do you shear the trees? Spring and fall.
What’s your favorite thing about growing Christmas trees? (Laughs.) Oh, mercy! I guess just knowing all the hard work pays off when you see all the families come out to your farm at Christmas time.
Your least favorite thing? Basal cutting!
If you could go back and tell yourself anything when you began what would it be? Join the association at the first thought of planting a Christmas tree because after talking to other farmers you can get a better idea of tree farming reality.
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Website ReportJim Butler
The website had a lot of traffic last year, so I hope it generated a lot of tree sales. During the selling season, I spent about 30 minutes a day answering customer email. If your website allows customers to send you email, check it often and reply promptly. Don’t use spam filters, because no filter will always pass mail from someone you don’t know. If you don’t reply, they will think you’re ignoring them. To prevent spam, don’t allow your email address to be displayed on any unprotected web page.
Make sure the association has your correct email address. Linda sends and forwards email intended for all members. If she does not have your email address, you will miss a lot of useful information.
The member-to-member contact information that has been printed in the December issue of Tree Talk is now available in the member area of the website. Blue links at the bottom of the last page, will send email to all members in each district. We have too many members for one link to send to all members. Multiple layers of security protect these email addresses from spammers.
When the website moved to the new server, it created many problems. Some required code changes and others were caused by server configuration. I think everything is working now. One improvement allows larger picture uploads in WebPage edit. The picture is automatically resized after upload.
Several of our members have created their own websites using WebPage edit. This is not difficult, so start now while no one is looking for Christmas trees. Websites created by professional designers look flashy, but lack content and quickly become out dated. Only you understand your operation well enough to keep it updated. You can do it yourself or try to explain it to someone, who will never fully understand. The more information you have on your website, the more likely search engines will send people to your site. If the words people search for are not in your page text, the search engines will not send them to your site.
The bulletin board has been under attack by hackers/spammers. If anyone finds an inappropriate post, please send me an email. I removed one message advertising knock-off designer handbags, but most are not able to get past the pre-registration. To block robotic access, the per-registration process now requires the identification of a picture of fruit. The Ohio association eliminated their board and only the administrator can post messages on the Texas board. I think Georgia has the only bulletin board, dedicated to real Christmas trees, where anyone can still post messages and everyone can read them. Facebook may eventually eliminate the need for this.
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Letter to President ObamaChuck Berry thought you all might be interested in reading this letter. It was sent to President Obama on behalf of the GCTA (and other state associations) in support of the check-off program.
DRAFT
The PresidentThe White House 1600 Pennsylvania Avenue, NW Washington, DC 20500
Dear Mr. President:
The undersigned Christmas tree organizations support the Christmas Tree Promotion, Research and Information Order published November 8th and stayed on November 17, 2011. Our industry views this check-off tool as critical for our growers to thrive in a very competitive marketplace where our main competition is the plastic tree imported from China. The program will provide research for product improvement to respond to the demand for a tree that can be cut earlier, last longer and shed fewer needles. Science-based research would provide data on the environmental impact of real Christmas trees and their alternatives. Check-off information could set the record straight about our product’s carbon footprint and the costs and benefits of using it. Christmas tree growers need to – and want to – pool their own dollars to tell the story of this very American product that adds about $1 billion a year to the U.S. economy – plus the impact of the 100,000 jobs it provides.
Distorted blog posts, media attacks and ill-conceived legislative proposals are attempting to negate the nearly four years of the due process used to create the Christmas Tree Check-off. This process included two comment periods adding up to 105 days. As you know, this program would be funded by the growers with their own money. The oversight provided by the USDA is paid for by the growers at no cost to the federal government.
Our members see the check-off program as an investment in our future and in our ability to provide employment in rural areas, an investment which they and their fellow producers voluntarily support. We ask that the stay be lifted immediately and our program be allowed to continue unobstructed by yet another comment period.
Sincerely,
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Fellow Christmas tree growers,
I hope you all had a successful sale season and the winter months have been kind to you. As we all know these winter months are still busy seasons with equipment maintenance, ground preparations and planting season. Nothing new to report on Trees for Troops from the previous issue of Tree Talk, I’m still looking for a volunteer to coordinate this program. Let me know if you have an interest.Over the next few months I will be contacting as many of you as possible to gain input on how to gain new members for our association as well as finding current members interested in hosting one of the annual association meeting.
Greg N. Smith gjasmith~windstream.net GACTA President Elect
Christmas Season at 7 G’s Farm The following account is typical for all of you during the time of year when we are able to market out trees and finally make a little money. Maybe for some of our new growers, it will be an insight of things to come. I’m sure you all have similar processes, but I thought just writing it down to share with you might make for interesting reading. We start our season on Nov 1 in order to be ready to officially open the week before Thanksgiving. Placing our roadside banners and signs is the first thing done. Getting the public’s attention is pretty important; we want them to know where we are. Usually if you’re driving on Highway 441 and 129 in Jackson County you can’t miss our banners - 8. Once you’ve gotten onto Kings Bridge Road, Antioch Church Road and Old Kings Bridge Road, the side roads to our farm, our roadside signs- 40- lead you straight to the farm. Fortunately State D.O.T. and Jackson County entities are pretty lenient as long as you don’t block line of sight at stop signs. Tagging trees can be a headache. Measuring and pricing is a tedious but important job that keeps 1 person busy for a couple of weeks. We usually tag 2000 trees using a 3 part tag. When cutting the tree one part stays on the tree and the customer takes 2 parts. We use one of those parts for our data base info and the other for the annual 7 G’s prize drawing on 12-24. We give away $100 to that lucky customer. The third part will also help the customer identify their tree at the processing area. Preparing the fields by mowing the fields comes next, there is nothing worse than having knee deep weeds for your customer to walk through with their freshly cut trees. Make sure pot holes in the field and old stumps are flush cut to avoid trip hazards, nobody wants to risk having to use their liability insurance. With that said make sure your liability insurance is up to date.
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Make sure your parking area is clearly marked. On those busy day’s you don’t want to have a dedicated flag man to make sure cars / trucks / trailers / buses park correctly. You’ll have plenty to do for all your staff than that. Bring in additional gravel to avoid having to use your tractor to pull stuck vehicles on those rainy days. Visiting the local schools and meeting with the principals and teachers to set up their field trips is a must. We offer them, for a fee, learning about Christmas tree farming, a walking farm tour, a coloring book, candy cane and a visit with Santa. Setting up your equipment correctly will help your flow will save unnecessary steps. By the end of those busy days you’ll be glad you did. Shaker to drill to baler to check out station works well for us. Make sure you have adequate inventory of supplies on hand. Our main items are Yule Stands, netting for the baler, coloring books and candy canes for the kids. Get your staff lined up ahead of time. Luckily for us, we have a large family that is interested in participating. Make sure they know what their job assignment is. We keep a person dedicated to greeting our customer – how did you find us, here’s a saw, location of trees to be cut, collecting unused saws, types of trees for sell, location of restroom (port-a-john) . We have 2 John Deere Gators that we keep in the fields to shuttle trees to the processing area. Each gator has one of our “muscle team “equipped with a chain saw for that customer that needs help. Especially those big trees. We keep 2 of our muscle team at the prep area for shaking / baling / drill / tie down on cars. In
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the 7 G’s “Store” we check out tree sales, jelly sales, ornament sales and wreath sales. This past year we graduated the store from the old tent to a 10’ x 20’ converted storage unit which made things much more comfortable and much easier to display our wares. Sure does seem like a lot of staff huh, on those busy Saturday and Sundays we are in constant motion from 10 a.m. – 6 p.m. (and sometimes later). On the day we are preparing for our Trees for Troops commitment we bring in a couple of additional people. Cutting 250 trees / hauling them to processing area / shaking / baling / tagging in one day can be a pretty good job, especially since it has to be accomplished on a busy Sunday. I call on the local high school Jr. R.O.T.C. to assist loading the trees onto the Fed Ex trailers. Pre selling sponsorships for those Trees for Troops trees is a task I begin Oct. 1 and continue throughout the sale season. Many of our local businesses and customers participate in this project. I don’t wait for them to come to me. Local newspapers, t.v. stations and radio station like to help with this, not only on the day they are picked up but also getting the word out the public in Oct. and Nov. This is a big help to our advertising budget, as this is a public service announcement from them. We have begun a daily blog on Face book to keep our “friends” informed of the day to day activities of the farm. It has brought in several new customers. Keeping our website up to date certainly has increased our sales. We did learn that it is good practice to keep a cut tree in a stand on hand for that “dark thirty” / “rainy day” / “need one in a hurry” customer, (continued next page)
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it paid off numerous times. It also helps you sell a tree that might “straighten up” a row. We do not bring in pre cut trees (yet). When my brother Gary started our farm his thoughts were “if we can’t grow it here, I don’t want to sell it”. Most of our customers have adapted to using our cypress varieties. Finally with sale season complete make sure you get everything inventoried and stored so that it will be usable next year. Selling our Christmas trees has become an event that we look forward to every year. It gives our family a time to work together and enjoy the Christmas season. As you well know, it’s hard work. We enjoy having our friends and neighbors come out to 7 G’s Farm to select the tree they will put in their homes. We enjoy meeting making new friends of those that “saw our signs” and came by rather than go to the local “box stores” for their tree. I hope you have enjoyed reading about our experiences from the 2011 sales season. We are always looking to improve our process and would enjoy hearing your comments.Greg N. Smith gjasmith~windstream.net 7 G’s Farm www.7gsfarm.com
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GFB Legislative Report
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Editors Note: While the article on the following 6 pages does not specifically discuss foliar feeding in regards to Leyland Cypress it does give you something to think about. I can't help but believe a Leyland would respond the same way as the Red Cedar or Virginia Pine did in this study.
Foliar Feeding Article begins on next page.
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NOTE from Coy Dillahunty on foliar feeding. A few years ago I had just bought a 15 lb package of Miracle Grow 30% that is recommended as a foliar feed fertilizer. I was selling some leylands as dug trees to landscape market. The buyer was complaining about the color of the trees on a Thursday and was not going to dig them until the next Monday. I told him I would try a trick. My sprayer was on the tractor so as soon as he left I loaded a tank of 50 gallon of water and threw two packs of the Miracle Grow. Sprayed the field in question with this mixture. By Monday the trees were noticeably greener. The buyer looked close thinking I had painted them. I finally told him what I did and he told me a few years later he had used the same thing on some of his trees.
The Forest Landowners Guide to the Federal Income Tax
Chapter 11-Christmas Tree Production
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www.timbertax.org/aghandbook/ch11
GENERAL CONSIDERATIONS
Most Christmas tree producers are subject to the same Federal income tax provisions as forest owners in general. There are, however, several important distinctions. Unless stated otherwise in this discussion, the assumption is that the Christmas trees are more than 6 years old when cut and sold and therefore qualify as "timber" for tax purposes.
Christmas tree growing, because of the nature of the activity, usually constitutes a business rather than an investment. Therefore, Section 631 of the Internal Revenue Code (Code) is particularly relevant. Both Section 631 and the regulations relating thereto provide that the term "timber" includes evergreen trees more than 6 years old at the time they are severed from their roots and sold for ornamental purposes. This definition includes Christmas trees.
It is possible, but unlikely, that a person who grows and sells standing Christmas trees on an occasional basis could be considered an investor as opposed to the owner-operator of a business. In that case, the rules for investors, instead of those for a business, as discussed elsewhere in this handbook, would apply.
TREATMENT OF COSTS
Establishment CostsThe general rule with respect to establishment costs, as discussed in Chapter 5, is that all such costs–including replanting–are capital expenditures and must be capitalized to the timber account. This applies to Christmas trees, just as it does to other timber, whether you use the cash method or the accrual method of accounting. The only exception is that Christmas trees do not qualify for the reforestation amortization and tax credit. All capitalized costs associated with Christmas trees, therefore, are recovered by deducting them at the time of cutting or sale if not recovered earlier through involuntary conversion.
What if you plant trees with the intention of growing them for commercial timber production, take advantage of the reforestation tax incentives, and then later sell the trees as Christmas trees or balled nursery stock? The issue is more-or-less moot because of recapture provisions. If the trees - are harvested or sold within 10 years, the amortization deduction would be subject to the amortization recapture rules . If harvested or sold within 5 full years, the tax credit recapture rules also would apply.Operating Expenses and Carrying Charge.
The rules for deducting timber-related operating expenses and carrying charges, as set out in Chapter 5, apply as well to Christmas tree production if the trees in question are more than 6 years old when cut or sold. The IRS has specifically ruled that shearing and
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basal pruning costs are deductible business expenses (see the summary of Revenue Ruling 71 -228, page 139). Because Christmas tree growing is almost always a business, rules for deducting business costs are applicable. The passive loss rules (see Chapter 5) also apply to everyone with an ownership interest in the Christmas tree farm. Only those who materially participate in the business (see page 40) can deduct current expenses against non-Christmas tree income, unless the passive owner has passive income to offset passive losses.
Uniform Capitalization RulesProducers of Christmas trees that are 6 or fewer years of age when sold or cut are subject to the uniform capitalization rules with respect to operating costs and carrying charges. These rules require that pre-productive costs must be capitalized if the preproduction period of a crop is more than 2 years (see IRS Publication 538, Accounting Periods and Methods). The law, however, permits certain farmers to elect not to have the uniform capitalization rules apply. If this election is made: (1) any gain on the sale of the crop is recaptured as ordinary income to the extent of the deductions permitted by the election and (2) you must use the alternative depreciation system (straight line method) for all assets placed in service in any year for which the election is in effect. This election does not apply to Christmas tree growers who sell trees more than 2 years old but not more than 6 years old.
TREATMENT OF INCOME
Christmas Tree Sales Income Income realized from the sale or cutting of Christmas trees is subject to the same rules as for other types of timber. Both Sections 631 (a) and 631 (b) apply. There are, however, some unique aspects of Christmas trees that must be considered.
Section 1221 - As mentioned above, it is theoretically possible for an occasional producer of Christmas trees who sells the standing trees on a lump-sum basis to qualify for capital gains treatment as an investor under Section 1221 (see page 52). In most situations, however, growers will be considered to be holding the Christmas trees primarily for sale to customers in the ordinary course of a trade or business, not as a Section 1221 capital asset.
Section 631(b) - If capital gain treatment is desired, you should use the provisions of Section 631 (b) for sales of uncut trees. In most such cases, the unit of measurement would be either the individual tree or linear feet of tree height. The same rules and procedures to. qualify as a disposal with an economic interest retained apply for Christmas trees as for other timber.
Section 631(a) - Section 631 (a) will apply to most producers, particularly those who sell cut trees on the wholesale market. It is immaterial whether you cut the trees yourself or pay to have them cut. Reporting the cutting of Christmas trees as a sale under Section 631 (a) is done in exactly the same way as for other types of timber, as discussed in
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Chapter 6. Section 631(a) requires that you determine, as of the first day of your tax year, the fair market value of the uncut trees.
• Making the Election. A Section 631(a) election (see page 56) generally can be made for any year. It does not have to be made for the first year of eligibility. Making the election does not limit your options. For example, you may cut Christmas trees under a Section 631(a) election and also dispose of standing Christmas trees under a Section 631(b)-type arrangement in the same year. A grower also can harvest trees under Section 631 (a) for a period of years and then begin to "sell" trees under Section 631(b).• The Computation. Often the Section 631 (a) fair market value is calculated based on: (1) the amount of linear footage harvested times the value per foot or (2) the number of trees harvested times the value per standing tree.• Partnership Considerations. Two or more growers should be careful if they enter into an agreement to grow Christmas trees and harvest the trees themselves. If this results in a partnership for tax purposes, a partnership return must be filed, and the Section 631 (a) election must be made on the partnership return. An election on the individual returns of the partners is not a valid election.• Determination of Fair Market Value. Difficulty may arise in determining the fair market value of Christmas trees on January 1 of the sale year. The value to be used should be your best estimate of what the trees could be sold for on the first day of the tax year based on their condition on that date. Example 11-1 illustrates a recommended procedure for the computation of gains for a Christmas tree operation.
Example 11-1You are a calendar year taxpayer who established five Christmas tree plantations in 5 successive years, each comprising 10 acres and each containing 12,000 trees of a fast growing pine species. Two-year-old nursery stock was used, so the trees in the first plantation are now above the minimum age (more than 6 years) required to qualify as timber under Section 631(a) of the Internal Revenue Code (Code)
You spent $1,210 to establish the first plantation. Later, you incurred $1,060 in capital costs, representing: (1) certain carrying charges you had elected to capitalize and (2) the cost of replanting lost trees. The adjusted basis just before the first cutting in November of that year thus amounted to $2,270. An inventory showed that there were now 11,000 well-formed trees present. Of these, 6,000 were of sizes to be cut this year and 5,000 were to he left for further growth. A depletion unit of $0.21 per tree was derived by dividing the $2270 adjusted basis by the 11,000 trees,
You cut the 6,000 salable trees yourself and delivered them to a wholesaler. You received $4.30 per tree from the wholesaler. The total cost to you for cutting and delivering the trees was $1,800. You elect on your tax return to treat the cutting of the trees as a sale under Section 631(a) of the Internal Revenue Code (Code),The value on January 1 can be estimated by discounting the value when cut for 10 months as follows. Assume the trees were worth $3.60 each on November 1 when cut and that the applicable local interest rate (i) is 6 percent.
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Value: $3.60 = $3.42
1 + (i / 12))10 = (1 + (0.06 / 12))10
You determine your taxable gain as follows:
Gain from cutting:
6,000 trees cut with an estimated fair market value of $3.42 per tree as of January 1$20,520
Less depletion allowance of $0.21 per tree-1,260
Gain on timber (taxed as Section 1231 gain)$19,260
Gain on sale of trees:
6,000 trees sold for $4.30 per tree$25,800
Less fair market value of the trees sold (Jan. 1 value of $3.42 per tree)-20,520
Less cost of cutting and delivery-1,800
Cain from harvesting and delivering (taxed as ordinary income)$ 3,480
Example 11-2
If you had not harvested the trees but had entered into a cutting contract with a jobber you would calculate the gain as follows:
6000 trees sold for S3.60 per tree$21,600
less depletion allowance of $0.21 per tree- 1,260
Less expenses for administering cutting contract- 120
Income
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$20,220
If the cutting contract qualified as a disposal with an economic interest retained tinder the provisions of Section 631(b), the $20,220 would be reported as a capital gain. Otherwise, it would be reported as ordinary income.
Choose and Cut Operations
Typically, "choose and cut" Christmas tree sales do not qualify' for capital gain treatment under Section 631(b) (see the summary of Revenue Ruling 77-229. page 141). In this type of operation, the grower usually provides a saw to the customer who proceeds to choose and cut a tree. The customer then pays a previously agreed-upon price and takes the tree. Under these circumstances, buyers do not have a contract right to cut the tree as required under Section 631(b). They may choose not to cut and purchase a tree at all, at their election. Such sales are of "cut timber" because the buyer never acquires title to or a contract right to cut any tree. The buyer. In effect, acts as the agent of the grower in cutting the tree and purchases a cut Christmas tree. Although It may be possible for you to establish an onsite sales procedures to meet the Section 631(b) requirements, the process probably would not be worth the trouble.Choose-and-cut operators who want capital gain treatment should elect to treat the cutting as a sale under Section 631(a).
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Avoid the Dangers of Mulch Volcanoes
By: Henry Hibbs Oconee County Extension Coordinator
Jan, 25, 2009
“Isn’t that just about the best thing you’ve ever smelled?” my 15 year old son asked me as he and I worked at the Christmas Tree Recycling day at Harris Shoals Park just after New Years Day. Beside us there was a long, neatly stacked row of Christmas trees lined up three and four trees high. Coming up the hill beside the tumbling shoals was and an impressive line of trucks and cars with families bringing there Christmas trees to be recycled. The smell carried on the winter breeze blowing over the stacked trees immediately brought to my mind magical memories of Christmas mornings with excited, sleepy eyed children stumbling into the fire lit living room expectantly prodding odd shaped packages. The next truck pulling up brought my mind back to the job at hand as one dad that had just dropped off his family’s tree with us asked me “When can we pick up the mulch from these trees, once they are ground up?” After I answered him, I added a few precautions about using mulch around his landscape plants.
Mulch is a good thing! Following these droughty years we have experienced lately, it has become essential to the survival of the landscape plants we cherish in our yards. With mulch and a rain barrel or two, we don’t need to hesitate to plant new ornamentals. But, watch out for something that is killing and damaging trees all over Oconee County...The dreaded Mulch Volcano! The old adage of “if a little bit is good, a lot must be better” gets us in trouble every time. When dealing with fresh wood chip mulches like the free Christmas tree mulch, it is tempting to pile it on high and deep with the mulch piled up directly against the plant’s trunk. There are several problems with this practice. First, if fresh wood chips are applied directly in contact with the soil around the plant the raw wood chips can cause a loss of nitrogen that the plant would typically receive from the soil and fertilizers you applied.
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The fresh wood chips are mostly carbon and will steal nitrogen from the plant’s soil in their urgency to begin composting. So, it’s best to stack these fresh wood chips elsewhere and allow them to weather and stabilize for months or even a year before using them as mulch. The second problem with piling any mulch too deeply around your plants is that this practice can actually prevent water from reaching the plant’s roots rather than improving the soil moisture around the shrub or tree. A third risk is that excessively wet soil held under thick mulching can begin to develop fungal growth and diseases that will damage the trees. I have recently visited several yards where the deep mulching and excessive water had suffocated the roots and killed the plants it was expected to protect. I guess this falls under the category of the trees being “loved to death”. Deep mulch challenge number four comes in the form of little rodents that enjoy the protective depth of the mulch, especially if it comes in contact with the plant’s trunk which they find very appealing. Rodents can chew the bark until the plant is completely girdled which causes a quick and sudden death to the tree which seems bizarre until we pull back the mulch and see the chewing damage on the trunk and the rodent’s burrow tunnels in the mulch.
“So, what should I do to get the most benefit from my mulch without creating problems that will cause my plants harm?” asked a frustrated caller to our Extension office last week. Let me share the good news about how to get the most benefit from properly applied mulch. If you will follow these simple mulching guidelines you can reap the benefits and avoid the pitfalls of mulching.
1. Apply mulch only 2 to 3 inches deep over your plants roots, as far out as the drip-line. 2.Keep the mulch at least 3 or 4 inches away from the trunk.3.Avoid applying fresh wood chips like that great smelling Christmas tree mulch until it ages for a few months or even up to a year.
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Georgia-grown Fraser fir Christmas trees on
the horizon
By Sharon Dowdy University of Georgia, College of Agricultural
and Environmental Sciences
When it comes to Christmas trees, Fraser firs top the list. But Georgia Christmas tree farmers can’t grow the tree due to the state’s mild winters, and must buy Frasers from North Carolina to sell to their Georgia customers. A University of Georgia horticulturist wants to change that. Fir trees produce new growth very early in spring, which makes them susceptible to freeze damage. “When new shoots start to grow in early spring, they are often severally damaged or killed by the below-32-degrees temperatures that we often have during the spring here in Georgia and much of the Southeast,” said Mark Czarnota, a horticulturist with the UGA College of Agricultural and Environmental Sciences.
Frasers + Momi'sUsing a $30,000 U.S. Department of Agriculture grant, he wants to deliver another option to Georgia Christmas tree farmers. He is grafting Fraser firs onto Momi firs in his greenhouses and fields on the UGA campus in Griffin, Ga., and working with Georgia Christmas tree growers in Lovejoy and Terrytown.A native of Japan, the Momi fir (Abies firma Siebold & Zucc.) made its debut in Georgia in the early ‘90s. “The planting culture of Momi fir is very different from most other Christmas tree species that growers were currently growing,” Czarnota said. “Needless to say, Momi firs first introduction was a miserable
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University of Georgia research coordinator Lamont Sudduth points out the grafting point on a plant that is a Fraser fir shoot grafted to Momi fir rootstock. Image credit: Sharon Dowdy. (view image)
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failure”. With proper management, though, Momi firs can grow in Georgia. The biggest stumbling blocks are adjusting soil pH to around 6.5 and providing irrigation to young plants for two or three years, he said.
Faster growing is more profitableGrowers in the Southeast don’t like to hear that it takes six to eight years for the tree to reach a desirable Christmas tree size.
Below University of Georgia horticulturist Mark Czarnota is working to graft a Fraser fir with a Momi fir to create a tree that will grow in Georgia. Image credit: Sharon Dowdy.
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Traditional Georgia Christmas tree species like Leland cypress and Virginia pine mature in three to four years. When it comes to growing Christmas trees, the sooner a tree matures, the sooner the farmer can take it to market. Fraser firs will grow in north Georgia, but the downside is that the tree is affected by the root fungus phytophthora. If not treated, it can kill infected plants.
A new Christmas, landscape treeCzarnota hopes to combine the Momi fir rootstock and Fraser scion, or shoot, into a tree that will grow throughout much of Georgia and the Southeast.“I don’t expect it to take over the market, but it will be a great addition,” he said. “A lot of work needs to be done in selecting good Momi grafting stock for desirable uniformity. It’s a lifetime project, and great potential exists in trying to cross Momi fir with other firs.”Researcher John Frampton at North Carolina State University works on the tolerance of Momi fir to phytophthora. He has found the plant is very tolerant to the root disease.North Carolina fir growers have a very difficult time dealing with the fungus. Frampton is trying to cross Momi and Fraser fir to breed a hybrid phytophthora-resistant fir. In the meantime, he encourages North Carolina growers to plant Momi-Frasier grafts, Czarnota said.
On-farm researchOne of Czarnota’s collaborators, 82-year-old Earl Worthington, grows Christmas trees in Lovejoy, Ga.“Dr. Worthington was one of the first growers to try to grow firs in the Georgia piedmont region,” Czarnota said. “He actually got greenhorns like Dr. Frampton and me moving in the right direction, and has been a wealth of knowledge for many Christmas tree growers here in the Southeast.” Worthington hopes to someday grow enough Fraser firs to avoid buying from growers in western North Carolina. He bought 300 Fraser firs this season.Worthington has been grafting Fraser firs onto Momi firs for the past 15 years. In the beginning,
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On facing page Christmas tree grower Earl Worthington points to the grafting point where he joined a Fraser fir shoot to Momi fir rootstock. Image credit: Sharon Dowdy.
it took 10 years for him to grow an 8- to 9-foot tree. “I can now produce a 5- to 6-foot tree in five to six years,” he said.The problem he now faces with his grafting efforts is the inconsistencies. “Some (of the trees) turn out very yellow, some very stiff, some are green all year, some flush early and some flush late,” he said. “Grafting trees is definitely a project for someone with patience.”To search for a Georgia Christmas tree farm near you, go to www.gacta.com.(Sharon Dowdy is a news editor with the University of Georgia College of Agricultural and Environmental Sciences.)
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Georgia Christmas Tree Association, Inc. 120 cordele HwyHawkinsville GA 31036
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