Sap pricing vs tap leasing

[HazensNotchSugarShack]

I have seen the sap pricing sheet for sap delivered to you. As well as seen that people pay per tap for leases. I have two different scenario's I have never seen covered and I want to go the fairest way possible to compensate for bad years and good years as both are very good friends.

Scenario #1--------I have extended my tubing system onto my neighbors property and added 450 taps to my existing vac system. I provided all tubing and taps, vac etc.
This year I gave him about 3 1/2 cords of fire wood.

Scenario #2--------I can tap a small bush down the road about 300 taps. I would provide all equipment, tanks, lines and taps and trucking but he would provide electric to run 1/2 hp vac pump.
Years ago he had someone tap it and was paid per gallon of sap. What is reasonable for entire season sap per gallon in this situation for 2% sap? I know this is probably not cost effective
for me but he keeps getting approached by someone to tap it that he doesn't want to do it and he wants me to do it.

Hope you can give me some suggestions! Rick

[delivron]

Most of the dollar value leases I have heard about run from $.50 to $1.00 per tap. The wood exchange is a great deal for the land owner. Value of sap is not generally done when you own the equipment. I have talked to others who have said the land owner is happy with a few gallons of syrup. Just remember if you put line out in the woods you want a long term commitment from the owner.

[Scribner's Mountain Maple]

Rick, the going rate for leasing a bush is .50 to $1.50 depending on a few factors from what I have seen. If it pipes directly to your sugarhouse (no trucking costs), generally it will be closer to $1 or more. For remote sites that are less appealing the cost will be less.

For your 450 taps from your neighbor that is a sweet deal for both of you. You don't have to spend the cash and he is getting way more value than $1 per tap. In my area in central VT 3.5 cord of firewood is worth 700-1000 delivered.

For the other 300 taps I suggest offering a per tap lease for a 7 year period that has an option to renew every 5 years after that. There is a lease I found I think on the Proctor research Center website. That way you are assured to recoup the investment of the tubing and have a set rate you can budget for annually. Offer $225 (.75 / per tap) per year and convert your vac to gas powered to avoid using his electricity if possible. Secure the lease, that cost is minimal when compared to the cost of tubing.

Another option which I just signed into this year is a flat rate lease for acreage. I am leasing 84 acres that pipes into my existing wet/dry system for 1K per year.

Lease option purchase agreement is even better. Good luck.

[spud]

I would say the firewood deal with the one neighbor is a good fair deal for both. The other neighbor who is willing to pay the electric needs to know just how much his electric bill will be for the sugaring season. I pay about $1500.00 per season just for my pump. It is very hard to say what your electric bill would come to. Some people tap very early ( January ) to catch some early runs. Some people leave their pump on 24/7 the entire sugaring season. Some people keep sugaring well into the end of April even though they are making nasty tasting commercial grade syrup (because it sells). My point is your friend could be shocked when he gets his electric bill at the end of the season. If the electric bill should be $300.00 for the 300 taps and then you only pay him one dollar per tap he will make nothing. If I was the owner of the land I would pay the electric bill and want 25% of what you make off my land. If you average .4 GPT that gives you 120 total gallons made off the land. You would then get 90 gallons and the owner would get 30 gallons.

There are sugar maker's that will ask a land owner if they could tap their trees. The sugar maker then goes on to tell the land owner how much it would cost to set up his woods. The trick is to try to overwhelm the land owner with the high cost of set-up so they can low ball him on the lease. I am a land owner not a leaser. I payed hundreds of thousands of dollars to be a land owner. The last thing I would care about is how much it would cost a sugar maker to set up my woods for sugaring. Two things I know for sure are the price I payed for my land and the amount of syrup one could make off my land (using the .4 GPT average). My cost on buying the land and paying interest and taxes are far more then a persons set up cost. In all fairness a land owner should be getting about $3.00-4.00 per tap. At this price the lease should be about 7 years. If a person was to lease a 5000 tap operation at $3.00 per tap they would pay the land owner $15,000 per year. The person leasing would have to spend about $50,000 for set-up. Using the .4 GPT average the sugar maker would get 2000 gallons of syrup per season at a bulk price of $32.00 Gallon. That would give the sugar maker $64,000 per season. After paying the lease the sugar maker would get $49,000 per season on average. If the sugar maker plans to sell syrup in jugs his profits would be much higher. Although the sugar maker has yearly expenses his profit would still be very good at the end of the seven year lease.

Spud

[HazensNotchSugarShack]

Delivron
First thanks for your opinion!
Not looking to sign leases. Both would do it for just syrup which I give them anyway. The 450 to my sugar house I am thinking $1K for now. The 300 I am thinking $700 per year till I recoup my costs then slightly higher. Wonder if I could put an electric meter before the vac pump to meter electric costs?
Thanks

[HazensNotchSugarShack]

Rick, the going rate for leasing a bush is .50 to $1.50 depending on a few factors from what I have seen. If it pipes directly to your sugarhouse (no trucking costs), generally it will be closer to $1 or more. For remote sites that are less appealing the cost will be less.

For your 450 taps from your neighbor that is a sweet deal for both of you. You don't have to spend the cash and he is getting way more value than $1 per tap. In my area in central VT 3.5 cord of firewood is worth 700-1000 delivered.

For the other 300 taps. Offer $225 (.75 / per tap) per year and convert your vac to gas powered to avoid using his electricity if possible. .

Firewood every year would work for both of us but not sure if I will have another supply next year.

As far as the 300 taps he is adding more electric so this is feasible. My son taped 200 there for three years on gravity and it cost me more for the materials than my son made. I am thinking $2 per tap plus electric. If I install a timer to the pump I will know how many hours it runs during the season and calculate amps on 1/2 hp motor.

Thanks for your input!
Rick

[HazensNotchSugarShack]

Spud Thanks for the reply!
I like the idea of 25% to start and adjust it when I recoup my costs and we know better what the electric will cost.
I got to see first hand this year what the cost of electric was for a 1 1/2 hp sihi pump as I bought another 40 acres and had electric turned on just for pump. Need to total that up!!!!!!
Rick

[Thad Blaisdell]

There are sugar maker's that will ask a land owner if they could tap their trees. The sugar maker then goes on to tell the land owner how much it would cost to set up his woods. The trick is to try to overwhelm the land owner with the high cost of set-up so they can low ball him on the lease. I am a land owner not a leaser. I payed hundreds of thousands of dollars to be a land owner. The last thing I would care about is how much it would cost a sugar maker to set up my woods for sugaring. Two things I know for sure are the price I payed for my land and the amount of syrup one could make off my land (using the .4 GPT average). My cost on buying the land and paying interest and taxes are far more then a persons set up cost. In all fairness a land owner should be getting about $3.00-4.00 per tap. At this price the lease should be about 7 years. If a person was to lease a 5000 tap operation at $3.00 per tap they would pay the land owner $15,000 per year. The person leasing would have to spend about $50,000 for set-up. Using the .4 GPT average the sugar maker would get 2000 gallons of syrup per season at a bulk price of $32.00 Gallon. That would give the sugar maker $64,000 per season. After paying the lease the sugar maker would get $49,000 per season on average. If the sugar maker plans to sell syrup in jugs his profits would be much higher. Although the sugar maker has yearly expenses his profit would still be very good at the end of the seven year lease.

Spud

I agree with this. To shine a little more light on several items above. If the sugarmaker plans on selling jugs...... To me that is a completely different business. That is the retail end. Making it is the production end. Those numbers need to be kept separate. Lastly the 3-4 dollars per tap, is not unrealistic, but only for a bush that is close, and a lot of trees. It would not be worth that if it were 800 trees 45 min away.

[Amber Gold]

To calc. electric cost take the amperage x voltage = watts / 1000 = kW x electric rate (say $0.17/kW) = $/hr to run

i.e. my pump uses ~5 amps at 230V and it runs 24/7 during the season. I figure it costs me ~$4.50/day to run. I record when I turn the pump on for the season and when I shut it off and pay him the total. I also pay per tap, syrup, and confections above that. It's actually cheap to install your own electric service if you want and the property owner's agreeable to you sinking a post on his property. I'm doing it this year to get the vac. pump down to the tank instead of at the property owners house, and it'll allow me to use an electric releaser. Electricity is far cheaper than running a gas pump.

I agree, the sap production side should be kept separate from the retail side. Lease fees need to be determined on the bulk rate of syrup, so the maple producer can make money if he doesn't sell in jugs. If the producer sells mostly retail, then great for him for making the extra money, but I don't see why the property owner should benefit from the producers hard work.

I almost got into an agreement with a property owner with compensation based on sap produced (his request). The only reason I was going to do this was he was buying all the tubing/fittings/etc. and I was buying the tanks/releaser/vac. pump (stuff I could remove). I would help him set up and maintain the woods, but he was responsible for daily upkeep during the season. Since he was being paid by the gallon, this really put the onus on him to keep a top notch woods, and we both would've made out very well. In the end, it didn't work out, which is very unfortunate because it's a beautiful woods. Where the maple producer is supplying all the parts/labor, I don't think the property owner should be compensated per gallon because he's compensated for the damage done to his trees which is irrelevant of how good of a season it is. Also, if the producer's a go getter and able to get 0.5gpt, why should the landowner benefit from the producers hard work, and on the flip side, if the producer's lazy and/or has a bad year, why should the property owner not be properly compensated.

I'd be hard pressed to justify $3-4/tap in a lease agreement. The producer's supplying all the materials/equipment at say $10/tap, plus the labor to set the woods up, plus all the costs/labor at the sugar house, plus equipment replacement costs...without running numbers, I don't think he'd be profitable at those lease rates. I thought I read somewhere that if property owners are compensated around $1/tap, and assuming a standard density forest, the property owner was making more than if the trees were being logged every 10 years. I could be wrong, but I thought I read this somewhere. If the property owner's making the same or more than logging the trees, then I think he's doing alright. It's at least covering his taxes, and the property value's still appreciating.

My thoughts.

[maple flats]

Delivron
First thanks for your opinion!
Not looking to sign leases. Both would do it for just syrup which I give them anyway. The 450 to my sugar house I am thinking $1K for now. The 300 I am thinking $700 per year till I recoup my costs then slightly higher. Wonder if I could put an electric meter before the vac pump to meter electric costs?
Thanks
HazensNSS, not looking to sign a lease may well cost you big bucks, and the landowner big bucks too. If the landowner changes his mind after a few months and you need to remove the tubing either before any production or after only 1 or 2 years, you will be out big time and trying to put up used, salvaged tubing is a pain at best. Then on the other end, a lease allows the landowner to qualify for an Ag Assessment which will radically lower his taxes, every year. In New York you, the farmer, must have annual sales of $10,000 average for the last 2 years (on your tax return) to qualify the landowner. That is from all farming sales, not just relative to the lease land. If you meet that he can get an Ag assessment . One of my landowners got the ag assessment when I started leasing his trees. He told me that his taxes went down by over $600 and my lease at the time paid him $185, thus he made $785 having the lease. No lease, no tax savings for him.
I see you had 950 taps in 2011. Even at that if you get .4 gal/tap on high vacuum, you should have 380 gal of syrup. If you sell it all bulk this should be over the $10,000 each year. Then any you sell retail gains more and all the growth since 2011 is even better. You should have no problem qualifying him for ag assessment, as well as any farm land you might have, will qualify for you too.

[PerryFamily]

I have a pretty basic lease. Not a lot of legal mumbo jumbo. Basically gives me permission to be on the property for a given time ( 10 yrs), and eliminates all liability on the landowners part should I or anyone with me get hurt. I still tend to work on a word and a handshake. I have found if you come through with what you say you will do, everyone is happy. Without my landowners, I wouldnt make any syrup so I do whatever it takes. ( within reason )

[spud]

Also, if the producer's a go getter and able to get 0.5gpt, why should the landowner benefit from the producers hard work.

Josh- I don't think you understand who the real go-getter is. The go-getter is the one that worked his butt off for years to go-get the land with his hard earned money. The young whipper snapper that comes in and sets up the woods should make a nice profit but not a killing. Let us not forget that without the help of a land owner the leaser is nothing.

I'd be hard pressed to justify $3-4/tap in a lease agreement. The producer's supplying all the materials/equipment at say $10/tap, plus the labor to set the woods up, plus all the costs/labor at the sugar house, plus equipment replacement costs...without running numbers, I don't think he'd be profitable at those lease rates. I thought I read somewhere that if property owners are compensated around $1/tap, and assuming a standard density forest, the property owner was making more than if the trees were being logged every 10 years. I could be wrong, but I thought I read this somewhere. If the property owner's making the same or more than logging the trees, then I think he's doing alright. It's at least covering his taxes, and the property value's still appreciating.

Josh- Read the first 6-7 sentences of my last post. As a land owner I don't care how much a person has to spend to set up a woods to lease. As a land owner I know what I payed for the land and I know how much can be made from my land. I also know how hard I worked to buy the land. I could lease a woods for $3.00 a tap and sell the sap and still have a nice profit. Please put yourself in the shoes of the land owner. The land owner most likely has a lot more money invested in his land then someone leasing his land. The land owner deserves a nice size chunk of the money made from his property.

Spud

My thoughts.[/QUOTE]

[unc23win]

I would say that I agree with Spud on many points. As a land owner I consider owning and maintaining the land the job of a go getter. If I were a land lord to a sugaring set up I would nto be interested in how much it costs the leaser to set it up. I would be more concerned with first the impact it might have on my land is it maybe unsightly for instance will there be any land damage ruts etc.. then I would be interested in how much money I could make.

I think $1 a tap is a very good starting point and $3 would not be unreasonable especially if one could have vacuum. $3 a tap might be a little high for gravity. Of course trucking and all of that can cut into profits quickly, but it is still more of the leasers problem. Like doing hay I rent 2 other farms and well the owners don't care how much the machinery costs or how much fuel it takes or any of that its not there problem they jsut want a fair price for their hay.

[delivron]

Michael Ferrell from Cornell has done and extensive report where you can calculate the "Net Present Value" of a maple lease vs turning a maple forest into wood products. All the instructions, formulas are available at. http://maple.dnr.cornell.edu/produc/tvs/index.htm You will have to spend a little time on this but well worth the effort.

[Scribner's Mountain Maple]

I tend to agree with you Spud. Land ownership is the ultimate challenge and goal for a sugarmaker. Everything I have I have earned. On the other hand, what comes to mind are all those landowners that didn't earn it (I can think of several). In Vermont we are the highest Trust fund baby per capita state in the country. That means there are thousands of privileged land owners that likely didn't earn it as you did. I guess my point is that not all landowners are created equal. Now I believe in being fair, but as a person trying to grow a small business, isn't it in my families best interest for me to secure the most advantageous lease agreement that I can for the longest duration I can?

The rate being paid landowners in my area of VT is .5 to $1 per tap. For the land I just leased I am paying the taxes and more since it is in land use. It is landlocked too. I am paying around $15+/- per acre to the landowner per year. The 84 acres may have 4000 taps on it. I can't put up the money to install all that this year or even next. I think I can get 1000 in this year which would be $1 per tap since the lease is for 1k this year and 1500 per year after that. After 5 years and 4000 taps at $1500 per year, I will end up with less that .5 per tap. My landowner is very happy with this. His taxes are paid and that's what really matters to him. Am I getting a good deal, yes, am I screwing him, I don't think so. He is getting the amount he wants and we are both taking risk. If I gave him $3 per tap, or 3,000 this year, and 12,000 in 5 years, that seems a little extreme. The $2,000 extra this year would reduce the number of taps i could install by 300 +/-.

As I see it in VT, the supply of available trees to tap is huge (on both state and private land). I have seen the supply of taps getting bought up more and more though. I heard of a new bush of 80-120K taps being installed in the Rutland area. Once the supply is diminished more the market rate price will come up. Until then, I wouldn't offer anyone more than the current market rate. Just my thoughts on stretching pennies.

[GeneralStark]

I am presently paying $1.50/tap for my lease.

As of two weeks ago yesterday my fiancee and I am now officially own 13 acres of the great state of VT. I feel it is an honor and privelege to own land and I have worked hard to get to this place. I have been leasing equipment from 2 friends but this fall I will be setting up my own sugarhouse and equipment on our land. There is lots to do, but it is very exciting and I look forward to boiling on my own property this spring. We believe there is potential for at least 500 taps on our land and more on adjacent properties. I will likely be able to set up 150-200 this fall after we have some thinning done and then another 150-200 in the fall of 2014. I will be trucking sap from my leased land and will be boiling from approx. 500 taps in 2014 and 1,000 taps in 2015. I will be adding an ro in 2015 once an energy audit is done in hopes of securing nrcs funds.

I am now working with an accountant who is advising me on all aspects of my business planning. I have recently switched to an LLC type entity to keep my business assets somewhat separate form my personal assets. One thing that my accountant suggested is having my business lease land and taps from myself and my fiancee as the land owners. I only mention this as it seems that this is one more thing for a sugarmaker to consider in this matter of leasing and selling/buying sap.

[spud]

I agree with what you're saying. If both the land owner and the person leasing the land are happy with the amount charged then thats all that matters. My point is that a sugar maker should not get angry with a land owner who wants $3-4.00 per tap because it really is worth it. There are some who inherit property and never had to work for it. The fact of the matter is the land is now their's and they should be payed a fair price (regardless if they bought the land or got it for free). I believe the price of sugar woods will continue to go up. If the big operations start paying a higher dollar per tap amount this will raise the amount the little guy pays also. This is why I am spending my money buying other property (sugar woods ) rather then setting up my sugar house for boiling. My thought is to buy the land when it is still affordable so my kids can someday own their own sugar woods. No doubt my kids will be getting some free land in time.
My goal is to teach my kids to appreciate what was giving to them. My job as a parent is to teach my kids to respect others and work hard and they will be blessed with a good life. So far things are working out good for me and my family. There is much to be thankful for. Sorry for getting a little off topic.

Spud

[BreezyHill]

SMM you are correct. For an agreement to work it needs to be beneficial to both parties. You have meet the land owners wishes; while you have given yourself room to grow.
Every situation is different and therefore needs to be treated as such. There is no one contract that fits all.

I would suggest prior to the end of the agreement sitting down and looking at where the taxes have gone and discuss the renewal of the agreement to adjust for change. This way you don't open the door for another tapper to slid in.

Owning of property is not for everyone. The taxes and insurance need to be calculated into the cost of land.

Realistically we are renters too...taxes are our annual rent to the town and county.

[halfast tapper]

Also, if the producer's a go getter and able to get 0.5gpt, why should the landowner benefit from the producers hard work.

Josh- I don't think you understand who the real go-getter is. The go-getter is the one that worked his butt off for years to go-get the land with his hard earned money. The young whipper snapper that comes in and sets up the woods should make a nice profit but not a killing. Let us not forget that without the help of a land owner the leaser is nothing.

I'd be hard pressed to justify $3-4/tap in a lease agreement. The producer's supplying all the materials/equipment at say $10/tap, plus the labor to set the woods up, plus all the costs/labor at the sugar house, plus equipment replacement costs...without running numbers, I don't think he'd be profitable at those lease rates. I thought I read somewhere that if property owners are compensated around $1/tap, and assuming a standard density forest, the property owner was making more than if the trees were being logged every 10 years. I could be wrong, but I thought I read this somewhere. If the property owner's making the same or more than logging the trees, then I think he's doing alright. It's at least covering his taxes, and the property value's still appreciating.

Josh- Read the first 6-7 sentences of my last post. As a land owner I don't care how much a person has to spend to set up a woods to lease. As a land owner I know what I payed for the land and I know how much can be made from my land. I also know how hard I worked to buy the land. I could lease a woods for $3.00 a tap and sell the sap and still have a nice profit. Please put yourself in the shoes of the land owner. The land owner most likely has a lot more money invested in his land then someone leasing his land. The land owner deserves a nice size chunk of the money made from his property.

Spud

My thoughts.[/QUOTE]

Yes the landowner has more invested that is true. You have to consider that the person leasing the land has to make money to. If it is going to cost him to much to lease then he will go some place else, then how much are you making on your land? Nothing. There is no way even a larger producer will pay 3-4 dollars per tap. with the cost of equipment and fuel there is no money to be made for them. And logging lets face it, it's pretty much a once in 50 years money maker. You can't log a maple orchard every 10 years. Maple trees don't grow that fast, and if you logged it that heavy there won't be anything left. Only softwood forests can be reasonably logged every 10 years. The cost per tap without tanks and vacuum is 13 dollars per tap to set up woods. Then you have main. every year from wildlife chewing on lines to trees coming down in wind storms to human damage from people that just don't give a crap.
Now figure this. You have a lease for 5 years for a thousand taps, at your price of lets say 3 dollars per tap. Thats 3,000 a year in lease. Now it cost 13000 to set up woods and another lets say 5000 dollars for tank and vacuum. I know thats low . Stretch that out over five years. So it looks like this per year just to have a lease.

3600 per year for setup for five years.
3,000 per year for lease
500 per year for maint
total of 7100 dollars a year just to have lease, not including electricity gas etc. Now if he has a fairly good year and makes lets say .4 gallon per tap. Thats 400 gallons. Now divide 7100 by 400. It's costing the sugarmaker 17.75 per gallon Just to get it out of the woods. Now figure the guy who is only selling the sap. At the current price per gallon for 2 percent is about .34 cents per gallon. This guy is going to be in the hole by 2600 dollars.

The landowner and leaser have to come to a reaonable agreement. Everyone thinks that because syrup is 50 dollars a gallon that the sugarmaker is getting rich, as we all know that is not the case.

[Scribner's Mountain Maple]

I think you have a good plan Spud, get the land and worry about the rest later. I tried to get the land owner to agree to a lease option purchase for the 84 acres. He said let's do the 5 years lease and then we can discus purchase. I work very hard at sugaring, but I can't say I did it all on my own or that the land is mine, yet. Our sugarhosue is on 100 acres that I am working on buying now from family at a below market value price. So I am not complaining about generations helping the next generation. I too suspect my son will get some free land with a turn key business. I also hope that he will appreciate and earn it.

Regarding tap price. I would pay 3 per tap if it comes to that. The lease price is very insignificant within reason. for 1000 taps, at .4 gpt or 400 gallons of syrup at $32 per gal, that is $12,800. - $3,000 for tap lease per year and you have $8800 per year for lets say a 7 years lease. This is $61,600. If the cost to set up the woods is $8 per tap, I expect to pay $6 myself, but will use $8 for this. 1000 taps, at $8 per tap is $8000. Tank $4,000. Vac $4,000. Total expense for set up. $16,000. $61,600-$16,000 = Profits over 7 years of $45,600.

Now this is $45,600 in profits after paying the land owner $3 per tap over 7 years and while paying for equipment that doesn't lose much value (vac, tank). This is only $6500 per year in profit, but from 1000 taps this is still pretty good. Sell half retail and profits increase substantially.

Although, I don't think we will be paying $3 per tap anytime soon. The supply of untapped maples is still so huge and start up cost are getting heavier every day. This combination I think will keep new sugaring operations being created to be slow but steady. Less mom and pop and more big business. We will see.

[unc23win]

Scribner's I think $6 a tap to set up is pretty close for all the tubing and mainline. As you said vacuum and tanks are a one time purchase. I think $1 a tap is good in my area.

One thing I know of in my area is that some of the bigger operations are leasing a lot but they also loose leases as well because they are sloppy and leave old tubing lying around and make a mess. If I was the land owner I for sure would have a clause where you get booted if you make an unsightly mess or damge property. Yea a landowner might get $5000 for 10,000 tap lease at .50 a tap but they don't want things messed up.

[mikeo]

I think you have a good plan Spud, get the land and worry about the rest later. I tried to get the land owner to agree to a lease option purchase for the 84 acres. He said let's do the 5 years lease and then we can discus purchase. I work very hard at sugaring, but I can't say I did it all on my own or that the land is mine, yet. Our sugarhosue is on 100 acres that I am working on buying now from family at a below market value price. So I am not complaining about generations helping the next generation. I too suspect my son will get some free land with a turn key business. I also hope that he will appreciate and earn it.

Regarding tap price. I would pay 3 per tap if it comes to that. The lease price is very insignificant within reason. for 1000 taps, at .4 gpt or 400 gallons of syrup at $32 per gal, that is $12,800. - $3,000 for tap lease per year and you have $8800 per year for lets say a 7 years lease. This is $61,600. If the cost to set up the woods is $8 per tap, I expect to pay $6 myself, but will use $8 for this. 1000 taps, at $8 per tap is $8000. Tank $4,000. Vac $4,000. Total expense for set up. $16,000. $61,600-$16,000 = Profits over 7 years of $45,600.

Now this is $45,600 in profits after paying the land owner $3 per tap over 7 years and while paying for equipment that doesn't lose much value (vac, tank). This is only $6500 per year in profit, but from 1000 taps this is still pretty good. Sell half retail and profits increase substantially.

Although, I don't think we will be paying $3 per tap anytime soon. The supply of untapped maples is still so huge and start up cost are getting heavier every day. This combination I think will keep new sugaring operations being created to be slow but steady. Less mom and pop and more big business. We will see.


Maybe I am missing something but I don't think you accounted for any sugarhouse expenses for producing that 400 gals of syrup!! We have the equipment depreciation, labor, electricity and fuel; not to mention transporting sap, if applicable, and insurance.

For leasing to work there has to be a mutually beneficial relationship. The sugarmaker has to be profitable to make the lease payment!!

[Amber Gold]

Spud, I agree the go-getter is also the property owner, but the lease terms need to be agreeable to both parties, and as far as the property owner's concerned, it's irrelevant to him if the producer's making money. Without running numbers though, it seems it wouldn't be profitable for the producer to pay a $3-4/tap lease, plus cover all the other costs of running an operation, and have some left over to pay his labor costs and there's a lot of labor in sugaring. I also agree that startup costs, particularly in the sugarhouse, have gone up dramatically in recent years.

If lease rates do go up that high in the future, I sure how syrup prices go up proportionally, but then again, if syrup costs that much, who's going to buy it.

[Scribner's Mountain Maple]

unc, you are very correct. I don't count labor cost. I don't want to be discouraged like that. Plus I have the sugarhouse, arch and vac set up for expansion, so I didn't factor that into the equation either.

I think this makes a reasonable point as to why the lease prices are not going to hit 2-3-4 $ anytime soon. The cost to build a sugarhouse, buy equipment, etc is to much to pay that high a lease rate. Also, I don't think the price of syrup can go up much more before consumers say enough. Another factor that comes to mind why lease rates will stay in the 1$ range is that state governments are opening up state forest for tapping and providing incentives to farmers who lease land for sugaring. We are in the midst of a large expansion in sugaring. Other places may be tapped out, but if my memory is working I think VT is only 10-15% tapped.

[unc23win]

Scribners I don't count labor at all I am a one man show and I can do it for $6 a tap sometimes less. In my opinion if I paid labor costs it would not be factored into the cost per tap to set up anyhow. I agree with you on the sugarhouse and all of that too. I don't know too many people that are leasing all of their taps I am sure there are some but most have their set up at their place and then expand out by leasing bushes where they are easy to collect from.

Isn't NY doing the state lands for $1 a tap I think it was in the paper a couple of years ago and I think they are similar to Pa, which is is similar to what you said about Vermont only about 15% tapped. The state price will keep some prices down. I could see where some would pay more for location for instance I would consider giving my neighbors more because I can do theirs by adding on to my mainlines.

[Thad Blaisdell]

Spud, I agree the go-getter is also the property owner, but the lease terms need to be agreeable to both parties, and as far as the property owner's concerned, it's irrelevant to him if the producer's making money. Without running numbers though, it seems it wouldn't be profitable for the producer to pay a $3-4/tap lease, plus cover all the other costs of running an operation, and have some left over to pay his labor costs and there's a lot of labor in sugaring. I also agree that startup costs, particularly in the sugarhouse, have gone up dramatically in recent years.

If lease rates do go up that high in the future, I sure how syrup prices go up proportionally, but then again, if syrup costs that much, who's going to buy it.

You don't seem to understand the point Spud is trying to make. He was saying that certain leases would be worth it. If I found a sugarbush that had 5000 taps in a great location, power available and reasonable distance from home..... I would absolutely pay 4 dollars a tap. The potential is to make 75000 a year in syrup for a cost of 20,000, that is a no brainer. I would jump on that like a fly on a fresh cow patty. Would I like it for less, of course, but that is what I would pay.

[Jeremy Hanna]

Sounds good on a good year but not all of us have good crop every year... with that being said how could it work for both parties and it profitable?
We are Working on a lease that pays by the tap plus an agreeable amount per gallone of sap like (.02/ at 2brix) if the sugar goes up they get payed or if the sugar goes down they lose that way we are both taking a risk as the rest of the farmers/business people do after all we are all in it to make some money I think but.... It is alot of fun playing at it

[BreezyHill]

Great point! For an agreement to work the best for all parties they could be a base rental. This would be so that the tapper is covered on a poor year. Then for an average year and great years there cold be a profit sharing clause.

I did notice by going to a higher rate of vacuum that I made a much higher production rate. A neighbor that has a southern facing bush that runs low 20s wasn't getting much if any sap and I was over flowing storage tanks running 27" on a eastern facing bush.

That being said; if you start an agreement and are running 20" and then change to higher vac then you will be paying a premium when you invested in a new pump system. All things being fair there should be a recouping term set forth to help cover the cost of the new pump/equipment.

The best way to keep any land owner happy when using their land is to treat them as you would want to be treated; but there is a fine line between treating fairly and leaving too mush on the table and leaving yourself open to loss. If you loose money you will have to quit. That does nobody any good.

With the cost of fuel and trucks/utvs and tractors as they are. It would be very profitable to pay a neighbor extra $$$ for a bush you could plumb to your mains. Just the $2000 to set up a collection tank and a pump and a tank for a truck you could pay $2 extra per tap and still be $$$ ahead.

I know a guy that got a $500 fine for not having his 500gal leg tank properly secured in his truck. With DOT getting pinched they are out on back roads all the time looking for people running posted roads over weight in my area. And all it takes is one guy getting stopped and all of DOT gets an email to watch for tanks in pickups or trailers. 8# x 500 gallons is 4000# in a 6000# truck registered at 9000# is not an easy pill to swallow. Then if it doesn't have two straps that cover the loads weight, double whammy. Safety triangles, fire extinguisher, etc.

You can easily make a case for $3/ tap on the right bush.

[HazensNotchSugarShack]

Then on the other end, a lease allows the landowner to qualify for an Ag Assessment which will radically lower his taxes, every year. In New York you, the farmer, must have annual sales of $10,000 average for the last 2 years (on your tax return) to qualify the landowner. That is from all farming sales, not just relative to the lease land. If you meet that he can get an Ag assessment . One of my landowners got the ag assessment when I started leasing his trees. He told me that his taxes went down by over $600 and my lease at the time paid him $185, thus he made $785 having the lease. No lease, no tax savings for him.

In Vt it has to be minimum of 25 acres after homestead of 2 acres. And from what I have read to be a "qualified farmer" you have to make more than 50% of your income from the farm. Neither situation works!
But still exploring the possibilities. Thanks for the reply!

[HazensNotchSugarShack]

I have a pretty basic lease. Not a lot of legal mumbo jumbo. Basically gives me permission to be on the property for a given time ( 10 yrs), and eliminates all liability on the landowners part should I or anyone with me get hurt. I still tend to work on a word and a handshake. I have found if you come through with what you say you will do, everyone is happy. Without my landowners, I wouldnt make any syrup so I do whatever it takes. ( within reason )

I carry insurance to cover all properties I list.

[HazensNotchSugarShack]

I am presently paying $1.50/tap for my lease.

As of two weeks ago yesterday my fiancee and I am now officially own 13 acres of the great state of VT. I feel it is an honor and privelege to own land and I have worked hard to get to this place. I have been leasing equipment from 2 friends but this fall I will be setting up my own sugarhouse and equipment on our land. There is lots to do, but it is very exciting and I look forward to boiling on my own property this spring. We believe there is potential for at least 500 taps on our land and more on adjacent properties. I will likely be able to set up 150-200 this fall after we have some thinning done and then another 150-200 in the fall of 2014. I will be trucking sap from my leased land and will be boiling from approx. 500 taps in 2014 and 1,000 taps in 2015. I will be adding an ro in 2015 once an energy audit is done in hopes of securing nrcs funds.

I am now working with an accountant who is advising me on all aspects of my business planning. I have recently switched to an LLC type entity to keep my business assets somewhat separate form my personal assets. One thing that my accountant suggested is having my business lease land and taps from myself and my fiancee as the land owners. I only mention this as it seems that this is one more thing for a sugarmaker to consider in this matter of leasing and selling/buying sap. Best of luck Gen stark. I agree buying is best. Plan on buying more in the future but just wish I had started this at a younger age!
Rick

[PerryFamily]

Hazen- once I get everything straightened around insurance is the next priority. Got one quote and need to get one from my current agent who deals with alot of agriculture and is a sugarmaker himself.

Also I was told in Vt if you have under the minimum number of acres to qualify for land use but tap or lease taps to someone that will qualify you as well. It is a actual dollar figure but equates to like 300a taps or something like that. Tapping trees is considered forestry so long as there is diversification in your woods and not a monoculture. It was at the Bellows Falls maple conference.