NORTHERN PART 9:: THE LOWER peuwsum OF MICHIGAN ’ ‘ Thesis for the Degreeof PI1 D MICHIGAN STATE UNIVERSITY .I. Edwin Carothers I964 0-169 Date This is to ceitifg that the thesis entitled MARKETING OP RAW WOOD PRODUCTS IN THE NORTHERN PART OF THE LOWER PENINSULA OF MICHIGAN presented by John Edwin CarotheI-s has been accepted towards fulfillment of the requirements for Ph. D. degree in Forestry refleémw Mafl‘r/ professor 11-19-614 II: «1:31: per? km M or 1: “Man portion 0 III for the Earth In Products ”I,“ In ohIectives a: ““8 practices re mu, Mm, u M“! I2) to dete M from the wood “”333 in Nike’s: Moles, Datafled mm Ibof the ”he I 1: ”My “mam Helium w ere Wham M of Wham mills 1 MMMW dea IN. NO SM: ABSTRACT MARKETING OF RAW WOOD PRODUCTS IN THE NORTEERN PART OF THE LOWER PENINSULA OF MICHIGAN by John Edwin Carothers This analysis pertains to the marketing of raw wood products in the northern part of the Lower Peninsula of Michigan. It is based on the Michigan portion of the field data collected during the years 1960 and 1961 for the North Central Regional Research Project, MGM-~27, "Timber Products Marketing in Selected Areas of the North Central Region," The objectives are (l) to evaluate how effectively present marketing practices reflect wood-use demands backwards to wood processors and timber growers, and producers” supplies forward to primary manu- facturers, (2) to determine the costs and margins of moving forest products from the woods to primary manufacturers, and (3) to determine the changes in marketing practices which might raise marketing efficiencies“ Detailed interviews were held with representative firms at three levels of the marketing chainn-producer, intermediate marketing agent, and primary manufacturer. All of the nine pulp and allied firms in the Lower Peninsula were interviewed; 86 sawmills of the 190 known firms in the northern part of the Lower Peninsula were sampled; eleven other miscellaneous mills in this area were also interviewed. Thirteen of the III known pulpwood dealers and 19 producer-dealers were sampled in the study area, No sawlog dealers were foundo Ninety-three pulpwood and 7h sawlog producers were samPled ° hunts are 603$] MW! as £011!!! (1] Pulp and I “lending as far lstorrallroad haul twill are high IKOIIHIIEOI‘. Mil I Ilene factors lea Wes rennin re? Idllme small, nw Whine with on It standing timb (2) Pulp n "Ill. Bonuses are It'll; do not pay In minted. Dealers: Is delivered by . “I! for raw wood. (3) Pulpf I‘ll) Sister. Q IMO mt use a (I) Salllog Is' ”all mm (5) There .mfor aspen; j \. , Yx‘IEs to use lar J. Edwin Carothers Contrasts are sought between pulpwood and sawlog marketing. These are summarized as follows: (1) Pulp and allied mills are few in number; timbersheds are large-~extending as far as 220 miles for motor truck deliveries, 350 miles for railroad hauling, and 1,200 miles for water shipments. Invest- ments per mill are high, usually exceeding $5,000,000; competition for raw wood is minor. Mills operate in an abundant timber and labor market. Thus, these factors lead to mill control of prices paid for raw wood. Also, prices remain relatively constant over several years. In contrast, sawmills are small, numerous, lacking in capital and specialized person- nel, competing with one another, and operating intermittently. Prices paid for standing timber tend to fluctuate with demand for lumber. (2) Pulp firms pay bonuses to truckers for more distant hauling. Bonuses are also paid to recognized dealers for their services. Sawmills do not pay bonuses to truckers; therefore, timbersheds are restricted. Dealers are not recognized. Sawmills are highly dependent on logs delivered by trucks; pulp. companies are less dependent on trucks for raw wood. I I (3) Pulp firms procure raw wood under the agreement-quota (contract) system. Quotas may go to dealers, to producers, or to both° Sawmills do not use a formal quota system. (II) Sawlogs tend to supplement pulpwood in the marketing process. Many producers handle sawlogs after pulpwood quotas are filled. (5) There is limited competition among the two major groups or firms for aspen; however, newer techniques of pulping may cause pulp companies to use larger quantities of denser hardwoods. ._._:~ L41“; 1a . m m um III Jack nil IIoIIlIIIIIns film: It alloy, except 'mI mi things do “w moducer as film production Mums and land mull-paper m ’Wflllve is alre hm appem imp: I“ thieves by V “II 'llears to be J. Edwin Carothers (6) Costs and returns for pulpwood delivered by trucks show peeled aspen and jack pine give highest profit ratio to producers. There are no outstanding differences relative to profit ratio among species used for sawlogs, except elm which is submarginal. Profit ratios between pulpwood and sawlogs do not differ greatly, but the volume of sawlogs handled per producer per year is small. Volume sales and year-round work in pulpwood production is preferred. Producers and landowners are not receiving the benefits of the expanding pulp-paper market. Group action by producers may be possible; one cooperative is already operating effectively. Group action by landowners appears improbable. Stronger and more efficient sawmills can likely be achieved by vertical and horizontal integration, but further research appears to be needed on ways to achieve this objective. '1an mm or am noon mowers Hammerhead PART ormmwuafinmsum ‘ .. ' or mum ' by \\{\ J? Edwin Carothers A THESIS submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Forestry 196A mum is u at we 1960 at its part of th: HIM Products 1%: {3' ll! state agricu] thus, Michigan, Wed tn the pn tau the lakes : WW Service 9‘ PIOJect Was 8 "H, Section 913, W the latch m ”Mating statt lane 5°18cted i: “mined for us “it, interteti 53:10“ and Proce dint its machet- “t r We Veneer, it’d piling. 1' $1 Illfled prod “Ct N E. ”Lb analS’Sis 1 533390. ’1'“; ’(n{ FOREWORD This analysis is based on a portion of the field data collected during the years 1960 and 1961 by the North Central Regional Technical Committee as part of the Cooperative Regional Research Project, NCMs- 27, "Timber Products Marketing in Selected Areas of the North Central Region." Nine state agricultural experiment stationSw-nlllinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, and Wisconsinm participated in the project, The Central States Forest Experiment Station and the Lakes States Forest Experiment Station of the United States Forest Service cooperated, The project Was supported in part by regional funds provided under Title I, Section 9‘03, of the Bankheadeones Act , as amended August 14, 1.9%, and the Hatch Act, as amended August 1.1, 1,955. Cooperating states followed a uniform procedure, Localized study areas were selected in each stateo Standardized interview schedules were developed for use at each marketing stage considered in the analysis "producer, intermediate marketing agent, and primary manufacturer, Definitions and procedures, including sampling, were standardized, Agreement was reached to cover the following woodeproducts industries: lumber, face veneer, container veneer, cooperage, woodpulp, and posts, Poles and piling, In Michigan, minor forest products were also covered, figs, turned products, fishmnet floats, and fuelwoodo This analysis is concerned with the marketing of raw timber ii ( u ‘ . u .1! I; 2:.- E1 ms 113:3? W“ “'1” t W” this It; In! for the write Milan little WES her under: Wilmerely appr products in the northern half of the Lower Peninsula of Michigan. The author takes this opportunity to express his gratitude to Charles R. Miller for collecting the field data for primary lumber manufacturers and sawlog producers in the Michigan study area. The writer is geatly indebted to Dr. Lee M. James for his encouragement, confidence, and advice, as well as restraint shown, throughout the preparation of this manuscript. A further expression of gratitude is reserved for the writer's wife, Susan. Her patience and, at times, impatience when little was being accomplished, kept the writer inspired and working; her understanding, sympathy, and outsidewtheuhome labors are all sincerely appreciated. 38% mm mm mm, son, an MM of the In in the Investit tilt of Procedure titans MIST We Importer: The Contributic Mann ”at melthound Ehl‘. Timberhm will"; 53 \i' Prtrams ate ‘ Achievers '7:- t . . TABIE OF CONTENTS Page FOREWORD ii LIST OF TABLES viii LIST OF FIGURES xiii MODUGTION l OBJECTIVES, SCOPE, AND METHODS OF PROCEDURE 6 Objectives of the Investigation 6 Scope of the Investigation 7 Methods of Procedure 7 TIMBER PRODUCTS EDUSTRIES OF MICHIGAN ll Comparative Importance and Trends 1.3. Economic Contributions of Timber Enterprises 1’4. 19 REVIEW OF LITERATURE General Background The Small Timberland Owner Cooperatives Other Programs Limited Achievement Aggregative Ownership and Marketing Intermediate Marketing Agents W 3‘2 f‘az EU m a, m w m \U «<4 mm DU 0 \O Producers MW! MAMAGTURERS :36 Size of Mills 13-0 Pulp Mills 1‘0 Sawmills 140 Other Mills 7+2 Species Consumption 1&2. Statewide Comparisons #33 Principal Products Produced 1.15 Wood Supply Areas 95 Ma’thods of Transportation 139 Pulpwood 29.9 Sawlogs 51 5:2 Other Prod act 6 iv mu He! 81:: Km Payne: that Business Initiation of A; MD Mania hills Me fins me- Of Agra My nus Smills Pence Comm 7011 0f Agreem Pulp Hills Sawmills Fence Comm Went of Aer: Pulp Hills Smalls - Fence 14:an mom1Deliverie: Elly 51115 3111115 ‘Mfie hnwactur ales or Finished ‘5 from M Mr Sal 9 ES Feme Sales mm“ mm: Break=even Point for Pulpwood Wood Procurement Practices Agent Source Pulpuood Contractors Producers Dealers Sawlogs Posts Wood Purchase Agreements Over-=all View Size Advance Payments or Loans Other Business Aids Initiation of Agreements Pulp Companies Sawmills Fence Firms Timing of Agreements Pulp Mills Sawmills Fence Companies Form of Agreements Pulp Mills Sawmills Fence Companies Content of Agreements Pulp Mills Sawmills Fence Manufacturers Seasonal Deliveries and Wood Storage Pulp Mills Sawmills Fence Manufacturers Sales of Finished Products Sales from Pulp Mills Lumber Sales Fence Sales INTERMEDIATE MARKETING AGENTS Pulmood Dealers in the Marketing Chain The Dealer System of Procurement General Characteristics of PulPWOOd Dealers Products Handled by Pulpwood Dea‘t'lerS Species Purchased and Sold Inventories of Pulpwood on Wood Yards Size of Procurement Area Contracts or Agreements Page Pulpwood Purchases 112 Logging and Hauling 113 Further Aspects of Pulpwood Procurement 115 Prices and Costs and Price Information ll? PRODUCERS 118 General Characteristics of Pulpwood and Sawlog Producers 118 Products Handled 'by Producers 127 Species Handled 133 Procurement Areas 137 Methods 0*” Acquiring Stumpage 1-37 Contracts or Agreements with. Land owners 1&0 Agreements Relative to Pulpwood Stumpage 11“? Agreements Relative to Sawlog Stumpage 145 Subcontracting 11*8 Subcontracting of Pulpmood Production 1&9 Subcontracting of Sawlog Production 156 Delivery Points 160 Pulpwbod Delivery Points 160 Sawlog Delivery Points 163 Funds for Logging and Hauling and Other Aids 163 Sales of Raw Wood 161* Value of Raw Wood Sold 166 Seasonal Variations of Raw Wood Deliveries 1-66 Seasonal Differences of Pulp'wood Deliveries 1-69 Seasonal Differences of Sawlog Deliveries 170 Raw Wood Buyers 171— Pulpuood Buyers 172 Saulog Sales 172 LANDOWNERSHP SOURCES or RAW woou 176 PRIcEs‘AND soars 180 Prices 180 Cost of Production lBl 1.82 Bargaining Power of Buyer and Seller Species and Amount of Wood Available Condition of Raw Wood 187 Competition among Buyers CT‘h’ana’es in Technology 1'91 Bonuses and fo 0. be Rail Prices 1'95 Costs 1-97 Stumpage Costs 1’9: Pulpwood Stumpage 19' Saulog Stumpage :8]? Logging Costs 202 PulPWOOd Logging vi I n;.ugap..ofi‘ W 4: ”um um Hotfl llr __ Analys1s y Hummer: llllt in tin. m mu hot Ills ”Hm Products my Areas All of transport 1 “Sources of Raw I hum for Raw : W R“ Wood to Z "M Deliveries W Products mm? Some: Mm M Costs lurkHell's coupe £2210 Prices Pa mm t he Filling in Hiciencies in the mod “logs m m Savlog Logging Hauling Costs Pulpwood Hauling Sawlog Hauling Returns Returns to Pulpwood Returns to Sawlogs Statistical Analysis of Sawlog Data - SUMMARY AND CONCLUSIONS Primary Mills in the Lower Peninsula Pulp Mills Sawmills Size of Mills Principal Products Wood Supply Areas Methods of Transportation Agent Sources of Raw Wood Competition for Raw Wood Flow of Raw Wood to Mills Raw Wood Deliveries and Storage Sale of Products Landownership Sources of Raw Wood Prices and Costs Prices Workman"s Compensation Insurance Basic Prices Paid Costs Stumpage Leasing Hauling Returns Deficiencies in the Marketing System Pulpsood Sal’logs BlBlyIOGRAPEKf APPENDIX vii 21.9 225 2.26 226 227 .28 228 229 231 231 231; 235 I” I}: I .. f, ‘ I H . . 7 . 7 fl. an“ W __ '3 "JHL'HEI‘. 3:1: 1‘ - . L I -.h". . : . ' —!- n,,-- - l'lllfl'llf m not uleeled year; lhloylent cont Nisan, 195’ lllentlflcatlon ‘ lllstrlbution of classes, 1959 l llstrlbution of classes, 196( l lollies of raw “d by wood-I l hlnclpal m lllls and so 3' M “PM! ar “We class 1. MM and De! sallllletl in 1 L "Ode of tI‘QHS] “ms; 1959 2' he“ soul‘ce ‘ ”My man 13. Agent Source ”“18: 1959 5" tent Source .,‘ lumber and P5 sampled in 1959 Table l—' o H LA) a P—' \J’l 9 LIST OF TABLES Output of raw wood products in Michigan, selected years Value of raw wood products in Michigan, selected years Employment contributions of woodabased exterprises, Michigan, 1951+ and 1958 Identification of manufacturers by products, 1959 Distribution of sampled pulp mills by volume classes, 1959 Distribution of sampled sawmills by volume classes, 1960 Volumes of raw wood consumed, by principal species and by wood-using industry, 1959 Principal products produced by pulpwoodausing mills and sawmills, 1959 and 1960 respectively Wood supply areas for pulp mills and sawmills by volume classes, l959 and 1960 Number and percent of portable and stationary sawmills sampled in the study area, by volume classes, 1960 Mode of transporting pulpwood to Lower Peninsula mills, 1959 Agent source of raw ‘wood receipts by sampled primary manufacturers, 1959 Agent source of pulpwood, Lower Peninsula pulp mills, l959 ' Agent source of sawlogs, study area, 1960 Number and percent of intermediate marketing agents sampled in relation to cords of pulpwood handled, 1959 viii 15 17 37 ill ill 1+3 1+6 1+7 50 50 51; 56 58 93 saw r‘ mm mm, l lllm hulaesss dealers, 1955 tillers who has lltl those 11 mood prod l mu mket‘. “Ill-tile and : dealers, 195‘ 5- Banned prod“ i Palms hand1 agents, 1959 5' sessile E' “We and ave: f0? interned 5' “When“ an: dezilers in , all] sellers 5' lumber of Pro Purchased q 1959 213' Ether of GEE WWW t1 t-lon’ 1959 ;.. We and p‘ Table 16 R) O o 21. 22° 29 o 30. 31. Intermediate marketing agents who were recognized as dealers, i. e., paid a bonus for wood handled, 1959 Number of years as a pulpwood dealer, 1959 Full-time and part-time intermediate marketing agents handling pulpwood or pulpwood combined with other raw wood products, 1959 Other businesses or occupations of partntime pulpwood dealers, 1959 Dealers who handled pulpwood only, as contrasted with those who bought and sold pulpwood and other raw wood products, 1959 General marketing] period of pulpwood dealers, 1959 Part-time and full-time employees hired by exclusive dealers, 1959 Raw wood products handled by sampled dealers, l959 Pulpwood handled by intermediate marketing agents, 1959 Species handled by pulpwood dealers, 1959 Range and average radius of pulpwood supply area for intermediate marketing agents, l959 Agreements and no prior agreements used by exclusive dealers in Obtaining pulpwood, 1959 Estimated pulpwood purchases initiated by dealers and sellers, 1959 Number of producers from,whom exclusive dealers purchased cut pulpwood and volume of such wood, l959 NUmber of dealers, volumes and percents of pulpwood transported, and methods of transportau tion, 1959 Number and percent of pulpwood producers sampled in relation to cords of cut wood sold, l959 Page 95 97 98 99 101 102 102 lot 105 107 109 111 11% 11k 116 119 ,1 I T . nap-L1,. . . aghast-ins - Ru . 1.3 ‘1'"!!st mm“: [W preflld tumors, 19 llllsr as wood unlated ta 1 MW] Nun all as march: 1 Percentage of 1 1959 " Percentage of , 1960 t We and mm Mucus, 1 ‘1' lame and radl Miners, 1 Q' Percent of pa} B(sealants. z ‘3' Percent of saw “Elements 1 mar 0f pul 311 their W twill! sub «'1 Kinds Of subc Table LA) \J'I . 111. #2. 113 e 15 A6, a Number and percent of sawlog producers sampled in relation to M. b. 1‘. of logs sold, 1960 Part-time and full-time employees of pulpwood pro- ducers, 1959 Part-time and full-time employees of sawlog pro- ducers, 1960 Raw wood products handled by sampled pulpwood producers, 1959 Other raw wood products sold by pulpwood producers as related to volume classes, 1959 Pulpwood production by volume classes, as producers and as merchant middlemen, l959 Percentage of species handled by pulpwood producers, 1959 Percentage of species handled by sawlog producers, 1960 Range and radius of procurement area of pulpwood producers, 1959 Range and radius of procurement area of sawlog producers, 1960 Percent of pulpwood purchased by written and oral agreements and from own land, 1959 Percent of sawlogs purchased by written and oral agreements and from own lands, 1960 Number of pulpwood producers subcontracting part or all their woods work and percent of pulpwood handled through subcontractors, l959 Kinds of subcontract work in pulpwood production, 1959 Number of producers and percent of total volume pertaining to subcontracting of pulpwood hauling, 1959 Number of sawlog producers subcontracting part or al'l their woods work and percent of sawlogs handled through subcontractors, 1960 Page 125 126 129 130 132 13% 136 138 138 lhl 1&6 157 I .. ‘r 'g I! lit-M . . - n ‘- ‘ ’ m “ -I.I d .15.. -<‘> 'u .ufitanfi of mlog de] 1 101m and pert which mince agents and tl d that pulpw '00d handled role and min d Value of sawlc 1111171006 and d MEI and k1! 3°16 111111110: d1 dumber of bw‘ 1960 d 151dovmership 19598116 19 d' Marcia fo 5' ““310 Prices Pulp mills , l959 1.111685% 1 meies’ g] and averag. 1' ”Wes adde. "861' tru 1959 '2. . dam Prices Table #9. '50., 51a 58 o 590 60. 62. Kinds of subcontract work in sawlog production, 1960 Number of producers and percent of total volume peztaining to subcontracting of sawlog hauling, 19 0 Number of producers, percent of volume, and points of pulpwood deliveries, 1959 Number of producers, percent of volume, and points of sawlog deliveries, 1960 Volume and percent of pulpwood by volume classes which producers sold to intermediate marketing agents and to pulp mills, 1959 Value of pulpwood sold by producers, excluding wood handled in the intermediate marketing agent role and minor products, 1959 Value of sawlogs sold by producers, excluding pulpwood and minor products, 1960 Number and kind of buyers to whom producers sold pulpw00d, 1959 Number of buyers to whom producers sold sawlogs, 1960 Landownership sources of pulpwood and sawlogs, 1959 and 1960 Commercial forest land in the study area, 1955 Basic prices paid for pulpwood by Lower Peninsula pulp mills, by species and method of delivery, 1959 Prices paid for sawloge delivered to sawmills, by species, grade and average of maximum, minimum, and average, and log rule, 1960 Bonuses added to the basic price of pulpwood for longer truck hauls by Lower Peninsula. pulp mills, 1959 Basic prices paid for pulpwood stumpage, 1959 xi Page 157 158 1.61 162 165 167 168 173 17% 177 179 186 188 196 198 l'r I" 12.5.— .4 an W ~ 1 ~. f” 1“. . -" l, "diuhmesfii ' was” Sir I J' . I, mics manna miss, 1960 f' 1 train and moi dim deliver dhgin and pro: delivered to did log rule 1 'i" values she logrules, f combined, 19 d 'P' values shc Nted to spa d lament of toi and log rub hmle 67 o 68. 69. 70. 7].. 72 Stumpéage prices paid for principal sawlog species, 19 0 - Pulpwood logging costs by species, 1959 Sawlog logging costs by principal species and log rules, 1960 Average truck-hauling costs for pulpwood by varying distances of haul as reported by sampled producers in contrast with costs established by formula, 1959 Sawlog trucking costs by principal species and log rules, 1960 Margin and profit ratios for the production of pulpwood when delivered to mills by trucks, l959 Margin and profit ratios for the production of sawlogs delivered to mills by trucks, by principal species and log rules, 1960 "F" values showing significance of differences among log rules, for six species and for all species combined, 1960 "F" values showing significance of differences attri- buted to species, log rules ignored, 1960 Percent of total variance accounted for by species and log rules, 1960 200 203 205 208 210 212 217 220 221+ asides”? -1 .. 1 7' a) - .-.-..,.; - 3.5.1:; 9.; flflfll" 3"ng Lia-NW“ J3 '- --:s _- _ . . ' .- ‘ . 2:." .- 1 'fi', ""I k1< ._ . .. - r i I. . . ' .- ..'-. 11.41 """"h‘ I u I l I I 51.. .- iiifim ' ; I I. I Whtmlé 3-1 191031960 I I? immorpfli I ~ 111mm] iddrimtion of w 6 4: O LIST OF FIGURES Location of the selected study area, northern part of the Lower Peninsula, Michigan Trend in total growing stock removed, Michigan, 1910-1960 location of pulp mills, hardboard plant, excelsior mill, and flakeboard firm, 1959 Distribution of sampled sawmills, 1960 xiii Page 13 38 39 Me activiti lithe 11ml co: Hm cal-vices ii Illiith the sect ”describe the ; “M of the L 3- om Noducts W is some W of mm “Nested, tn] “indict: and addict, HOHe' WMmM ”"1“ Just here Side Nit and ren 3.1m °f Menu, hiding 13 1101 Lmud in a l‘ Ame," Le.’ ‘ its there i h e militias ETRODUCTION In an economy such as that of the United States one can recognize three basic functions in relation to forestry. These are (l) growing—c- the creation or development of products and services of the forest, (2) marketingu-the activities by which products and services move from the forest to the final consumer, and (3) consumptionmthe use of the products or services in their final forms. This investigation is concerned with the second basic function, namely that of marketing, and seeks to describe the flow of raw wood products from the forests in the northern part of the Lower Peninsula of Michigan to primary woodmusing mills. other products and services are omitted, Marketing is sometimes considered as a segment or part of the over» all creation of utility, in that raw materials such as sawlogs are gram, harvested, transported, then undergo transformation or change into a form which and to a place where consumers can buy the trans» formed product, However, for this study, marketing is arbitrarily separated from the actual growing of trees. When trees are. harvested and/or sold just before harvesting, such as selling standing trees which are to be cut and removed from an owner's forest within one year, the function of marketing is considered to have begun. Marketing is not synonymous with market, Bakken (1953, p. 219,. 226) , Writing in a light manner, suggested that a market is "two women and a goose," i, e., the conditions for buying and selling are estab-a dished where there is a potential seller and a potential buyer, where there are facilities for carrying out a sale, and where there is a “F. ‘1! .- j...‘ r. 1;.~"9_'_fi"_"" BE. '11:. assume an: Mom: m by which Mme from thi W Of tile, 121m It, 1. e., a pm More interested Miners, in M“: am} under mg1,1953; Dues, hitting 1; tr: *' (1)0“ can v ”“1“ Product; “auction c m8? (3) the ties Which 81)er it t" determim his “”5 how it V M “3 Stress aiming are pa Whip, 1959’ \Qlofthe firm; ’Q of determini] product or service to be sold. Markets are necessary in marketing. There can be no transfer of ownership from grower to consumer, except by gifts, without facilities for buying and selling. However, marketing is a broader term, even though closely interrelated with markets, and encompasses the functions or processes by which productsMin this instance forest productsm-or services move from the grower to the final consumer, It covers the concepts of time, place, form, and ownership utilities for a product or service, 1. e.., a product must be offered for sale at a time when buyers are interested in purchasing, in a place where there are potential buyers, in a form which is acceptable or pleasing to purchasers, and under conditions which permit transfer of ownership (Bakken, 1953; Duerr, 1960, 9. 321+), Marketing is traditionally approached or considered in five or six WEI/S: (1) One can view the history of a‘certain marketing chain or a particular product; (2) a commodity may receive special attention, so go, by the examination of channels of distribution, prices, brands, and advertising; (3) the institutions involved may be analyzed, 1. so, the agencies which specialize in performing the functions and services are Studied to determine their roles in marketing; (4) the marketing Process and how it works is called the functional approach; economic Services are stressed, as well as transfer of title, Selling and distributing are part of the functional method (Eeidingsfield and Blankenship, 1959, p, 5-38); (5) marketing is also analyzed in light of theory of the firm; marginal analysis techniques are stressed as a means of determining efficiency° For example, discriminative marketing -'. z'.‘ 1 p. .' .‘ 5.91:0. it it w m nai't‘ ; '--.:Hun‘ * 113” “3—: ...|. '9‘01}; gun.“- qjflfim . , i,‘ .. . P." .. u. " __,3 ‘. - . honest-anon! Miter of on Maidens, pru WI, and predate WI amlysil he, functioning millions or agem "1" of Pulmood WWI) Of an miller serve ”lit Itho" 1m We the W" t he is an im inn; and mm M“- The m the an, of f mm (Duerr’ into see What in of those ‘ mh’ °’ "in de m mum 10] in“ we be coflpat i maybe used under certain conditiOns to bring about maximum returns to growers of a product (Waugh, Burtis, and Wolf, 1936; Dbhren, 1957; Thomsen, 1951, p. 350676); (6) other economists consider mrketing relative to performance, which in turn is a function of (a) structure, 1. e., concentration of “buyers and sellers, product differentiation, and conditions of entry and exit, and (b) conduct, i. e., price and output decisions, product policy, sales promotion, adaptation to com» petitors, and predatory practices. In this analysis, the functional approach to marketing is stressed. However, functioning of the marketing process can be related to the institutions or agencies which are involved. For example, in describing the flow of pulpwood to primary mills, at one stage it may pass through the ownership of an intermediate marketing agentma merchant middleman, Such an agency serves as a convenient means for classifying and describing “who“ handles pulpwood , while at the same time one can describe the "why" and "how" which results from the functional approach, There is an interrelationship of forestry, markets, and marketing in Erming and moving raw wood to primary mills and, finally, to consumers. The market becomes the focal point of silvicul‘ture; here is where the aims of forest policy and the work of forest management are culminated (Duerr, 1.919, p, 1.62). Silvicnlturis‘ts may try many techs Iliques to see what is possible, but they generally work under the Watch- ful gaze of those who find certain species and products to be more valuable, or "in demand," than other p‘roc‘incfltso In application, efficiency of marketing for the individual firm may not be compatible with goals at the industry or society level enema ‘ Hawaii haw-5.1 a '10 z '- ' " “H coy-L'- .. . .- a ,1. . --Qi 1".1‘Nd r_ I :t’ifl ins-am; {Pit ..'?v 1‘ itietim W1 moi-mi My economies Wm of m We efficiency MW Stages 1 "W is rode to '1“ the man M“ the flow c mums. Such whihfls (j .12) uni Why an Moles, and Pi is to northe “1mm 80ch “its effort; Second, a Cont] different I“ w ”fled the more in study area 1%th °°mpare finally: there in etc D°SSibi 1+ (Kohls, 1956)o For example, the profitability of forest exploitation and near destruction of the eastern forests of the United States prior to 1925 is not likely to be seriously questioned relative to production economics and marketing efficiency for the individual firms. However, for the total wooduusing industry and for society such exploitation was probably economically and socially harmful, The theory of the firm or marginal analysis techniques can be used to measure efficiency in marketing, as well as in the growing or manufacturing stages of an economy, In this investigation, however, no attempt is made to use marginal analysis. This study will, first, describe the marketing procesthhose series of happenings or events which show the flow of raw wood in the study area from the stump to the primary mills. Such analyses for pulpwood were begun by James (1957), continued by Iewis (l96l), and by James and Lewis (196‘?)o Also, Manthy (1962) and lihnthy and James (1962) analyzed the marketing procedures for boats, poles, and piling in the North Central Region, Their data pertaining to northern white cedar posts and poles Were largely taken from Michigan sources, Therefore, this analysis will avoid dupli=~ eating their efforts relative to northern white cedar products. Second, a contrast or interrelationship among marketing procedures for different raw wood products will be t'elrijgalzuisiaedo Manthy (1963) described the more recent essentials of pulpwood marketing in the Michigan study area in his North Central Regional. analysis, but he did not seek to compare pulpwood with sawlogs or other raw wood products, Finally, there is an occasional suggestion in this investigation I‘EIative to possible efficiencies in marketing, ! = ‘ 1;.“ E ‘v-l‘flfil. 'n‘"-‘3- -' - " ‘Eu . 3.13.1914}? 1r: 3 In: min-“nus an In! 1 .~ ._ u 151-. gene :5 was _.3 “If." :z-u‘r; a! :_....T _ ‘I ' . ' i ' l . l 3"“ q, '.‘ ~ ‘ “WM !' '- e‘ ,‘i J : '. .-.-'-.2- . - - - _-_":___.”_ l“.- J ' ‘ i . - firms-mi A ;Tl- I ” some i "", , ”M the lost “Imam ioree “litmus! be 1 M1011 and mks] J 7 may hear negative criticisms of the descriptive type of figrheting analysis. However, before marginal analysis techniques and, perhaps, spatial investigations are attempted, a description and understanding of interrelationships in the marketing of raw wood products appear basic. Further investigation may be needed; if so, marginal analysis may play an important part. For example, a deter- mination of the most efficient size and location of sawmills for the Lower Peninsula forest conditions, labor supply, and transportation facilities would be helpful to sawmill owners in planning their production and marketing. m yum .al‘n‘l - «V9!!! A I : Minn sat-21m . . . _"-‘ : ‘ , ... B J.“ r. I I I L -:;~p.ms ‘ flatness; A . - std-:5"; .2 _ g . !:E:l-'"~:Y- ..‘, MW» ---,1- “-3 ,.-.'.,r;-; ... ‘ ' .. 1-_ _._ w. .7 I ‘l. . 'l r . . ‘ ~r-r-. i". . . I I I !B ..’.‘I- ‘1'. .L H l A. '3". .- ‘ I ..‘ Em m, :55 “Wins of i, Ithassmed oi Hut quality re heme mketil 11! In effectin “1": Notectin M Wm" fore than me M are Itrkete M ““118 Mick Wing of the in teams (1) To e WWW de 1% and Prod tumors. (2) To: in MS from the V (3) To I OBJECTIVES, SCOPE, AND METHODS OF PROCEDURE Income payments to individuals from the production and manufacture of timber products in Michigan were estimated at $395 million in 1958 (Hughes and James, March 1963)o To maintain or expand such an industry, an understanding of marketing is necessary, Primary woodwusing mills need to be assured of a relatively constant flow of raw wood materials which meet quality requirements; woods employers or producers and intermediate marketing agents or dealers seek to operate more effia ciently and effectively so as to increase their incomes while, at the sometime, protecting their supply of raw materials; and landowners need to know whether forestry is a profitable business enterprise in comparison with alternative investments, A description of how wood products are marketed should result in a clearer understanding of the problems facing MichiganVS forest economy and contribute to the strengthening of that economyo Objectives of the Investigation The objectives of this investigation are as follows: (1) To evaluate how effectively present marketing practices reflect woodeuse demands backtaards to forest owners and timber Producers, and producers“ supplies forward to primary manufacturers or Concentrators I, (2) To determine the costs and margins of moving forest Products from the woods to primary manufacturers or concentrators, (3) To determine the changes in marketing practices which "BL ' “0.. "gm 5. - I :- '1‘ m weaned mm (when Nation, and ope M on tracing MW; other r: Mr lems and ‘Wisons are his investigat m which lie 1 My in the em Imilled in keep: “service. w mum of “ms and inter “01‘de Within {135 at three might raise marketing efficiencies and strengthen working relations among landowners, producers or woods employers, processors, and marketing agents . Scope of the Investigation This investigation is designed to continue and strengthen previous examinations (which have largely centered on pulpwood) of the structure, organization, and operation of raw wood marketing in Michigan. Emphasis is placed on tracing the major products of pulpwood and sawlogs and, in a brief way, other raw wood material through the existing marketing stages or levels and the method of operation at each level, Contrasts and comparisons are made at each stage, II'his investigation is largely restricted to those Lower Peninsula counties which lie north of a line from Muskegon in western Michigan to Bay City in the eastern part of the state (Figure l). The boundary was established in keeping with that of the Forest Survey of the U, S. Forest Service, Owners of primary woods-using mills who drew sub» stantial amounts of raw wood from within the study area were interviewed. Producers and intermediate marketing agents were interviewed only when they worked within the selected area, Methods 93: Procedure Detailed interviews were held in 1960 and l96l with representatives of firms at three levels or stages of the marketing chainm-primary manufacturer, intermediate marketing agent or dealer, and producer. Interview schedules were standardized for each marketing stage and were 7' .‘ . I ‘ I I. I . m“ mu- . I r I - “him . _ .. = ‘ L 41-. it!” -filflfig‘ H.191“ -- '3 ‘ 7' r elm!!- ‘7 ' rm h: ‘ ..‘fi‘lq ‘ . ‘LA a .. . ‘uy. -m'3 \ .- PiEUre 1. War Penin‘ s \“ f 4: / O KMENAU o 0 \.. A) oumou \--.\ f \ MICHIGAN DEPARTMENT OF . K ECONOMIC DEVELOPMENT 00 I1 ICALC or mull IMAM J vmnnu no 0 o no so ac MROUETTE . LUOE . "er ..... . B we I r nou 1 no" -_][— i i own“ «I CANADA . [- SOHOOLORAFT. ______. moxmsou WL___' '— MAOKWAG .1. __.__.._._.-. L‘ ..K‘ "j [- DELTA L—II } _f‘nv‘ |-% W I. 1 I “MW“ 0.0"“, "cm" 0' 1%,"; .J . to 0+0 % fl ‘ 3mm...“ ) L ‘{ 'n ‘ ’9 I 6 / C 6 $ 'D t gr 6 O 2 HURON _‘___. ,... TUSCOLA \ SANILAC L . ’ - snow“ ,1 ‘ MONTCALM 1 GRA‘noT , 1 . Lu . r” e _ KENT ! 1 L I" ___L____,. j LAPEER L §< -_‘-Jr ' GENESEE 1 ELL:- OTTAWA l r—lomA ——\~— CLINTON \SHIAWASSEE '1 \ ‘ 1 1 1 1 H” I I . Val“ o moons-1 a ._._1_ 1__ _L_ __ #L . 0M Y j INGHAM Liwwssrm \ ALLEGAN 1 BARRY [ EATON “ .H_J_,LHI i 4a VAN BUREN iKALAMAZOO‘. CALHOUN 1 JACKSON 1 WASHVENAW \ ' . 1 . 1 1 1 ’t In- ...__.i._.._.--‘..,.-...,i.\1 BERRIEN, oAss "sroossesu BRANCH LL30ALE1 LENAWEE 1. MONROE \LAA’L' 59,5 . - 1 1 _Hl_h ..... L ..... 1—Lfli'/ \n <0an °'\ 1 1 [44.13915 Figure 1 Location of the selected stud . y area northe the Lower Peninsula, Michigan. , I’m part Of mm; ~ HM (W4 Miles or qufi Mums, excep1 “M which the. My a! ““108 ‘ mm. the fie EMarketing as W“- Tnere we 2mmcers were mess"? an Me. We“ 01‘ dei Mm. reacm W warm: 2W c11133113» We found, 1‘ 5mm mu z315m, Food frfing 50m WE ”the Hood. ékmly fall “he Michigg identical with schedules or questionnaires which were used throughout selected areas of the nine North Central States. Interest was focused on data for the year 1959 for pulpwood; veneer logs or bolts; posts, poles, and piling; and other minor products, Sawlog data apply to the year 1960. (Interview schedules used are appended to this report.) Schedules or questionnaires were filled out with nearly all primary manufacturers, except smaller sawmills. Such sawmills were sampled to the extent which the investigator thought was necessary to give a reason» able view of sawlog marketing without excessive time and cost, Also, in so far as the field investigator was able to determine, all inter- mediate marketing agents for pulpwood were interviewed, with one exception. There were no dealers found in the sawlog marketing structure, Producers were sampled also to the extent which the investigator thought necessary and with regard to time and financial resources available. Problems of definitions often require arbitrary decisions, However, agreement was reached as to the characteristic function of a producer, intermediate marketing agent, and primary manufacturero Some difficulty arose over classifying a person. or firm who served two functions; where these were found, information was recorded so as to show both. roles. A primary manufacturer or processor is defined as a firm that Purchases raw wood products and sells its outputs or products only after Performing some type of processing which greatly changes the original form of the wood. For example, sawmills, wood pulping firms, and veneer mills usually fall into this classification, In the Michigan study area intermediate marketing agents are .'I - I. .I-- :r— ‘ ‘ Ir- .- 1445”: l—nmnfi #1131 I‘ll“ b'm 4 - 1- - . " .‘I . .- I .‘I I.- . aim-{“1 ”a _ lb?” .31 {and . 1 - i ",3". BE 3' .. . .,- 1 1.!..‘{'i '&&'_ 9 {LI I. . 4. ‘43,: “.3“ .__, .- ..g. , 1 t i H ‘ ill-J;- fight .1 7 . . _ . Ewan; I Miami I I “new: II 'Mintem ' ‘Wfiingsfle‘ War 135 Wither or Imedthe: ““15an 01 Imhthangg “Wten hire: IraPersons mum) at It IE‘Im‘stumpage I”arson 01‘ fl IIMidterm hardener? 'dma “Blew ihmlleqam IIIIIOTPIRn' r referred to as dealers. One type of dealerw—termed "merchant middleman" --purchases cut wood products or raw materials from a producer or producers and sells such products to mills without substantially changing the form of the cut wood. There is another intermediate marketing agent called an "agent middleman;" this person is essentially a commission man who does not take title to the cut wood he handles for a mill. No agent middleman was found in the Michigan study area, The two types of intermediate marketing agents are discussed in general terms by Heidingsfield and Blankenship (1959, po 32), A producer is defined as an individual or firm who harvests purchased timber or timber from his own land, then sells the cut product at the side of the road or delivers it to a designated point without changing the form of the woodo Bark removal is not considered to substantially change a round wood product° A producer may work. alone, but more often hires one or more workerso If a person or firm buys raw wood products from producers or woods employers and, at the same time hires wood cutters to cut purchased timber or stumpage or to fell and buck trees on the firms land, then such a person or firm is considered in two roles. He is viewed as a merchant middleman and also as a producer, commonly called a producer: dealer or dealermproducero When the middleman role is dominant, he is noted as a dealer-producer; when the producer function is most important, he is called a producers-dealer. Mills or plants were not classified as producers, even though they Obtained part or all their raw wood products by harvesting their own trees, .‘ r I l' 1 "Ii-{- ’1‘ 1a. "WI-1"}, ‘ I -.. c In» mu the stud; mutating u? “can be seen ”in using 1 “1‘ W saw to]: M often mu ““0 paper, 1) mo. tone from W” high as 7m many a his are Vene e: 3, line timbers: h‘mh stockl m “Man. “at u- reliever ilk apply to PM feet"a “eat in use he Wuctic 1h 2) 1910.15 TIMBER PRODUCTS INDUSTRIES OF MICHIGAN An overall view of the timber or wood products industries of Michigan will establish a background for more detailed consideration, centered in the study area, of "Primary Manufacturers," then "Inter- mediate Marketing Agents," and, finally, "Timber Producers." Comparative Importance and Trends As can be seen from the estimates shown in Table 1, there are two major timber using industries in Michigan, These use either pulpwood or sawlogs and saw bolts as basic raw materials, Mills which use pulp= wood most often manufacture wood pulp, which is then further manufac- tured into paper, paperboard, or hardboard; but flake board and excelsior come from "pulpwood," as the term is currently used. Fuel- wood ranks high as a raw material but its relative position is declining; it is not usually a commercial product“ Other less important timber Products are veneer logs and bolts, chemical wood, piling, poles, hewn ties, mine timbers, and minor miscellaneous products, such as wooden-s ware, handle stock, cabin logs, heading stock, etc, The information presented in Table 1 accounts for the amount of wood cut or removed from the forests of the state in the units which normally apply to each product, For example, ”cords" apply to pulpwood and I”board feet" apply to sawlogsa However, to get a comparative view, cubic feet are used as a common base in Figure 2., The production of raw wood from growing stock, in e., live timber, (Figure 2) 1910-1960 shows a great decline> With the “we“ 1mm" in ”32° w 51:!»er all 3 ‘PEI L] in has mm: wood Neal and Maul wood Mm! he Posts Miners ”1'“ “fl Piling l'fllties “ilhneous \ a“. Not am ”“1962 misc W hen tie Source: Data 12 Table l.--Output of raw wood products in Michigan, selected years Product Unit of 19% 1951+ 1958 1962 measure Pulpwood M cords 81m 797 902 1,090 Sawlogs MM board feet 559 383 330 319 Veneer logs MM board feet 79 35 20 21 Excelsior wood M cords 50 29 2O N.A.a _Ghemical and charcoal wood M cords 1M; 125 112 NA. Tuelwood M cords 1,900 852 750 600 Fence Posts M pieces 10,000 6,739 7,500 3,500 Mine timbers M cubic feet 3,015 3,728 2,100 2,505 Poles and piling M pieces 45 32 20 25 Hewn ties M pieces 28 1+1 20 NaAg Miscellaneous M cubic feet 2,160 1,883 12800 17:920b a’NoA. Not available a b . In 1962 miscellaneous included excelsior wood, chemical and charcoal W005, and hewn ties, as well as products formerly listed as miscellaneous. Source: Data from U. S. Forest Service. i- .I. 1. l3 Million whic flmt 500 - #00 300 —. 200 — /I / lOO _ —--———————_l l I I l 1910 1920 1930 192m 1950 1960 F u 1g“? 2o~~Trend in total growing stock removed, Michigan, 1910—1960. Smmce: Findell, et al,, 1960. Michigan"s forest resources. Station Paper 82, U. S. Do A., Forest Service, Lake States Forest Experiment Station, St. Paul, Minnesota. . FEM”! ‘- 14.7” “Jinn-5",:MI I Wabash -I :I I Imhl fore III eiIen sham IIqumled 33 1 Mom in mm “m. 1119i the m "M19 units I“) then saw] III “I 1962 pt "Wed m1, I ”Wed, 13 dI pg he ec“Ollie I“ “a“ start ”the of mm mm up, In“; data re: ll “Ills or : fling 1,1161% it However, 1951+ and 1958 were also years of low production. Figure 2 does not show changes in various industries, e. g., the downward trena in excelsior wood and sawlogs and the upward trend in pulpwood (Table l). The data given in Figure 2 also omit products from dead trees, so~ called "culls," and limbwoodg most of these are converted into fuel- wood. Live trees less than 5 inches D. B. H. and trees from other than commercial forest land are also omitted from this figure. Fuel— wood is often shown as a percent of total raw wood output, e, g. , in 1951; it equaled 33 percent; but, if only growing stock is considered-- as was done in Figure 2, it dropped to about 11 percent of output for that year. In 1951+ the volumes of pulpwood and sawtimber outputs, when converted to comparable units, Were nearly equal. If excelsior wood is added to pulpwood, then sawlogs and saw bolts would fall farther below pulpwood. In 1958 and 1962 pulpwood (or this product combined with excelsior wood) far surpassed sawlogs and sawbolts (Table 1). The importance of fuelwood, as Suggested, is declining; so is excelsior wood. Economic Contributions _og: Timber Enterprises The economic contributions of wood products to the state of Michigan can start with sales of standing timber. Hair (1963) shows the value of stumpage for Michigan in 1951+ and 1,958 at $13,550,000 and $ll,I+OO,OOO respectively. After stumpage comes the value of raw wood Products; data relative to the value of raw wood outputs delivered at Primary mills or point of use for selected years are given in Table 2., By omitting fuelwood for 1962 , pulpwood accounts for 1+6 percent, sawlogs m an! all vans-5m at W9 I do rag“ n: [“14" L 151 ‘a , 1:4“ 3 -. .5“, her loss helsior wood Home a me new III“ Was um um, I19“ and p111 hnties maceIlaneous 15 Table 2.--Va1ue of raw wood products in Michigan, selected years Product 19511 1958 1962 ---------- Thousand dollars--------- Pulpwood 15,9110 18,0110 21,800 Sawlogs 19,150 15,510 15,950 Veneer logs 3,850 2,720 2 ,860 Excelsior wood 1435 255 N .A.a Chemical and charcoal wood 1,500 1,350 N.A. Fuelwood . 12,780 10,500 8,400 Fence posts 2,360 2:625 1,230 Mine timbers 1,0111» 588 700 Poles and piling 176 125 156 Hewn ties 82 . to NA. Miscellaneous #70 I 1150 11,1180 Total 57,787 52,203 55,576 ___g a11.11., Not available. Source: Output statistics in Table l multiplied by unit values of wood products delivered to primary plants or to wood concentrators, if products are not processed further. Unit values obtained from miss cellaneous trade or market reports. .av wince, utilities 1111,: the added by I m for prom Mme such as Miners, fuel Elm, it 1mm: “I We and 1 I” “I the Year I“Miniatures Mus, 1953" E" I” Preduct III; and Other I“! (1963), 1 PM“ in the “ In“ contrib. its 1951} and timers I I'Imnt- H. ms‘ Were. ‘. W in basis of 52W Michiéa u “whine 16 for 31; percent, and all other products for 20 percent. Moreover, the great proportion of value added by manufacture is in pulp and lumber products. Hence, major emphasis throughout this report is given to those industries which are based on pulpwood and sawlogs. Value added by timber manufacturing is defined as the value of shipments for products manufactured (plus receipts for services given and other income such as sale of scrap) less the cost of materials, supplies and containers, fuel, purchased electric energy, and contract work. In addition, it includes value added by merchandising and the change in finished goods and work—in-process inventories between the beginning and the end of the year (Hughes and James, 1963)» Value added by timber manufactures in Michigan, as reported in the "U. 8. Census of Manufactures, 1958" (U. 8. Bureau of the Census, 1961), lists lumber, veneer, and products at $50,600 ,000; pulp and paper products at $307, 000,000; and other products at $16,000,000--or a total of $373,600,000. Hair (1963), largely from data published by the U.. S. Bureau of the Census in the "Censuses of Manufactures ," furnished a summary of employment contributions of woodnbased enterprises in the state for theYears 1951+ and 1958.. These are given in Table 3. One can see that full-time workers in forest management and protection increased by 200, or 7.1+ percent, However, frills-time workers declined in all other categories. Overall employment declined by 19,050, or 1301 percent, EmPIOYMent estimates were not available for 1962, On a basis of volume and valueof raw material coming from the forests of Michigan, as well as on value added by manufacturing, pulpa W006 and resulting pulp and paper products rank far above all other ~' Til :fg'v.‘l"‘1m ‘ ‘ "5.35“; LBS (2:12! EL {‘1 ‘_ _-- ‘ i. J} : ’.. “-7. u 5 1.165. “on v.6 befibfl win to curs-m .n #9:: inn: Hume-em, In hmstm ”'1'! unmet] WW! mum “Mien, ~(1’6 to wood “mum a film and \ Total \ uMme: Hair ”Misc. M In C, 17 Table 3.--Employment contributions of wood-based enterprises, Michigan, 1951+ and 1.958 Full-time workers 1951!L 1958 'Forest management and protection 2,700 2,900 Timber harvesting 115200 9,850 Primary manufacturing 15,000 115150 Secondary manufacturing LL7,900 18,050 Construction, attr ibutab 1e to wood ‘ 36,000 28, 500 Transportation and marketing of timber and wood products 30,000 28,300 Total 115,800 126,750 Source: Hair, Dwight, 1.963. The economic importance of timber in the U. S. Misc, Publication 94]., U0 S. D. A., Forest Service, Washington, D, C. ”$7533 sawloga and products therefrom account for second place. Other products are far below sawlogs. I . but ill“ ' n - ’5 on ‘94 a w: _‘-.t-’¢!~! ii. in», mil “on of all I in of Matti} lllooi arketi “I M” (1960, 1 W. He def: lflm, These 61 lmpaflver’cisi W501? Marke Marketa WP (1959, “(1951,, “the. m" (1960, l‘wntract 33’5" {“111ng 018. Win" mar Eat"Uri: in th 53. “men (195 REVIEW OF LITERATURE Publications pertaining to the marketing of wood products are numerous. Thus, this review is not an exhaustive and comprehensive examination of all such research but , rather, centers attention on examples of investigations which. appear important to an understanding of raw wood marketing in the northern part of the Lower Peninsula of Michigan . General Background Duerr (1960, p. 323-354) provides a general summary of markets and marketing. He defines marketing as the performance of market services by firms. These services include exchanging economic goods, reports on markets, advertising, and risk taking, He goes on to describe the functions of marketing. Bakken (1953, p., 219226) differentiates between a market and marketing. Others, such as Heidingsfield and Blankenship (1959, p. 5m8), Waugh et al9 (1936}, Mehren (1957) and Thomsen (1951, p. 350-376), add important thoughts to an understanding 0f marketing. Duerr (1960, p° 3h8—35h) gives a description of the "open market,” the "contract system"«=—=or dealer system as described by other researchers “for PUlpwood marketing, the ”concentration yard" for lumber, and "cooperative" marketing for Wood products in general, All these systems are at work in the flow of Wood products from stump to primary mill and beyond a Worrell (1959, p, 293-321) presents another general View of marketing .1191 to forest halal: of mark: Public agencies hat mketing WWfiP.M mum be re alltst Resource “G's future sup; Mots. If , 5115’ More mar lithe U. s. E ”h“ m or cc We their ( hitting dat: {hmfifim Tie of infor Elem many 2:? chase list teas Once 2 ENE“ Such 4 Q“ are th t3fb‘t‘ifil‘s ma W: p. 1 0-,, ‘ Km “at inf 20 as applied to forest products. Also, Rathmell (1962) examines the basic fundamentals of marketing. The Small Timberland Owner Public agencies have been largely responsible for published results of forest marketing researchwoften based on the premise suggested by 1 Gregory (1957, p. 161+) that, if marketing information is available, forestry will be readily adopted. The U, 8. Forest Service (1958) in its Forest Resource Report No. 11+ warned~~perhaps und ulyn—that the nation's future supply of raw wood products must come from small, unmann aged woodlots. If wood products from small acreages are to reach final consumers, more marketing information will be needed, Large land owners, such as the U0 S. Forest Service, various state agencies, and wood—using firms who own or control timberland are supposed to be able to collect and analyze their own marketing information. Marketing data designed to help the small woodland owner often takes the form of a directory or list of buyers, Mosebrook (1957) reports that this type of information is widely published in 37 states. Such direc= tories are usually broken down into commodity products and state areas, Most of these lists of buyers are brought up to date periodically, some as often as once a year. The Michigan Department of Conservation (1962) distributes such a directory. Older lists of buyers and wooduusing industries are those of Telford (1931) and Zirkle and Todd (1949),, Lists 0f Wood buyers may be helpful to both small and large forest owners, but Duerr (1949, p. 186) suggests that sellers of raw wood products who enter the market at infrequent intervals are not affected by the larger market lll leal with t late agricultu marketing res weld for m ml; improved 1 :mlel out in fill (1950) , in Illllillley and Idletall the fill‘mls. Holle W1 lhrketing ”ll-47. an (no :llsmu Drive Elllvomots "3 tlea the St {all in Provf tesugtalnea I "4:: of the [In it? the South Amt out f association Allen (1953: ‘::‘35‘lpp‘1’ and “is to Will "'ilniled St , 7 ______-‘ 21 but must deal with the immediate buyer. State agricultural experiment stations appear to have centered their forest marketing research on farm and other small wood lands. Specifica— tions needed for various wood products and availability of markets are stressed; improved productivity of forests is a goal. Such investigations were carried out in Missouri by Quigley (1950) , in Ohio by Turner and Mitchell (1950), in Illinois by Hutchison and Winters (1951), and in Iowa by Quigley and Yoho (1957). However, Holland (1962) analyzes in greater detail the marketing of raw wood products in the claypan region of Illinois. Holland '3 investigation was part of the North Central Regional Marketing study, "Marketing Timber Products in the North Central Region, " MGM-~27. Demmon (19%) indicates that the Lake States pulp mills are dependent on the small private landowner for raw wood. He suggests pulp firms consider woodlots as areas to be mined rather than cropped. Demmon (19118) later makes the suggestion that public and pulp company foresters should cooperate in providing technical assistance and marketing information to insure sustained yield on forest lands. In this regard, but in another region of the United States, Malsberger (1953 and 1956) describes the Work of the Southern Pulpwood Conservation Association; this organization is carrying out forestry aid to small private forest owners. The work of this association will be mentioned in greater detail later in this review. Allen (1953) gives the history of the DeWeese Tree Farm Family in Mississippi, and Josephson (1963) mentions the importance of Tree Farm Families to small woodland owners. Hall (1961+) reports that Tree Farms in the United States comprised over 61+ million acres as of June 1, 1961;, 3m ' ’3‘ TW’ even “Iv-mi may; ‘ 3911113 I I W] L d: ‘ In; $15,000 . :a . 1- 3- 4" 'HW MIMI-953) H T H h I i” . “WWesen r I i. ‘- W-itfiustria ’ I Itmsters my ‘ v r t I ““100 Associ *5. MM, t] I “We the pu ; If ‘ Withers (19 L I I: WW0; tech Mint, use ”Fromm“ tim. Rush M. Ward (19‘ 1?! MW of WW the whine“ Writing. 336““er Wrath {‘53, Cred it, ‘ 22 Such forest land may or may not be part of Tree Farm Families. One must recognize also that Tree Farms are not necessarily composed of small owner= ships of 500 acres or less. In fact, Schallau (1961+) notes that in Michigan the Tree Farm Program is directed toward private people who own more than 5,000 acres. Roller (1953) describes the work of the conservation forester—«a person who represents a pulpmpaper company in the promotion of forestry among nonuindustrial private landowners in the southern United States. Such foresters may or may not be associated with the Southern Pulpwood Conservation Association. Of course, when forestry aid is given to woodland owners, the pulp company which furnishes this service expects to purchase the pulpwood which will be marketed by such owners. Perry and Guttenberg (1959) also report that pulp mill foresters in Arkansas are providing technical services to non-company, private owners. Leasing, as described by Wright (1961+), appears to he an effective way of promoting forest management in the Gulf States, especially in Louisiana. Leasing offers the landowner an assured return for the use of his land. Stoddard (196l) presents a penetrating analysis of the small forest in the economy of the United States. He points out the handicaps facing i31193 owner of the small woodlot and showis that the economic prospects of forestry on areas of less than 500 acres are only poor to fair by his method of rating. He covers the whole range of assistance programs“, public and private. Then he presents suggestions for modifying certain unfavorable factors relative to private forestry, e. g., taxation,7 sub= Sidies, credit, marketing, and insurance. Finally he explores the possi- ' :1 : i r - if ’2' ads «I: am «not a? Land! IV ‘ . . “m. -_ .391 nos: 10 mill“- 7 I I ’ -( ‘*‘ “..'-‘3 I 1') a . I - = n...‘ WW ‘ ‘ . H i M- L ' “impose! i unmet é l ”protests ‘ Wheaten iterative m” M fores Illlrketed th‘ Wives 1n 1 30m 26 Perce a"tearful “1 “01mm 000] h (1960, p, “it country ‘ iheent of Wh tests that it than fore: ”Opera“ Witter fl in ”Baum h 03' Film 23 bilities of group action. He concludes that further expansion of existing programs will not lead to major improvements in forestry without increasing the size of the operating forest unit. An operating unit may be composed of several woodlots but managed as one. Yoho (1962) substantiates part of the ideas presented by Stoddard (1961). He shows that in North Caro- lina that the most serious deficiencies pertaining to forestry occur on forest properties of less than 75 acres and that forestry practices begin to increase at an increasing rate after forest size exceeds 200 acres. Cooperatives Cooperatives are often considered as a solution to the marketing problems of forest OWners--especially small owners. Farm products are being marketed through cooperatives. Josephson (1963) notes that farmer cooperatives in 1961 handled about $9.3 billion of agricultural products, or about 26 percent of total farm product sales. Such marketing groups are successful with forest products in the northern part of Europe. For example, The Cooperation Committee of The Royal Agricultural Society of Norway (1960, p. 13, 11;) reports that membership in forest cooperatives in that country totaled h8,500 in 1958 and that the association hand led 65 Percent of wholesale trade pertaining to wood products. Holsoe (19MB) Shggests that forest owners form cooperatives to fill the gap left by Public aid foresters, as such men are restricted in making sales. A cooperative formed by wood land owners usually provides the services 0f a forester for its members in the managing of individual woodlots. Such an organization negotiates sales and obtains best returns for the patrons. Farmers" Bulletin No. 1927 of the U. S. Department of Agriculture Weller (19) zieihe is a W in of prod '1“ ii (19M) and mast cOOPel‘E 511w to be difi my; markets f utilities of iii. ibiihel's in recogniZEi ii iiiie and he 3tithe amount :3 accomiishe limited by 1 time Associ; “hears of :10 explain iiiiirement we troublesom: "it competiti F” [1962) e *Eiiraiuctsi 1‘3 cut that i ti’iroduets 1 quoned t 21L (l9h3) and'Koller (19W) suggest that an individual has greater bargaining pover when he is a member of a cooperative because of the over-all, large quantities of products for sale through the group. Cope (19M) and Robotka (1953, p. 353-359) consider the problems facing forest cooperatives composed of wood land owners: Capable managers are likely to be difficult to find or to employ; merchantable timber is a necessity; markets for products are required; a willingness to share the responsibilities of the group with some loss of personal independence is essential. Members must be kept interested; therefore, education and sales are recognized as important. Sustained yield of wood products is a goal. Rettie and Ineson (1950) suggest that forest cooperatives will increase the amount of annual refunds to patrons when vertical integra- tion is accomplished. However, Josephson (1963) notes that the organizas- tion described by Rettie and Ineson, namely the Otsego Forest Products Cooperative Association of Cooperstown, New York, closed down in l962 after 26 years of operation. A combination of reasons is given in an effort to explain why the Otsego group declined and, finally, closed. LOg procurement was difficult, log grading and other buying practices Proved troublesome, member interest was not maintained, and the sawmill “was not competitive with the more modern mills in the area, Fox (1962) explains the history and development of the Au Sable Forest Products Association of East Tawas, Michigan. Josephson (1963) Points out that the Au Sable Association is perhaps the most successful timber products marketing cooperative in the United States. He might haVe mentioned that this organization is not composed of timber growers , WW (1953 M“ Problems I M and priv “1M previo iii in forest: E1“ in Hichige Wis (195: ““9" team mil forestry a, is part c Mame, it in mm M”: ‘iri fWes; des 3"” (1953), 531$de in I w “W and i r. much. futon and {Miami ( 25 but is a centralized agency for marketing pulpwood for some 187 members who are producers. Fox (1962) notes that approximately one—third of the members are part—time farmers. The association handles small quantities of northern white cedar posts also. Other Programs Josephson (1963) concludes that other programs are helping to solve the basic problems of small forest owners, e. g., services extended by government and private forestersn-such as Tree Farm Families and leasing, as mentioned previously. However, Schallau (1961+) shouts that parti= cipation in forestry assistance programs sponsored by federal and state agencies in Michigan has been minimal, Reynolds (1953) and Stoddard (1961, p. 98-100) describes the work of the New England Forestry Foundation. This organization furnishes technical forestry assistance to woodland owners at cost; marketing of products is part of the service. Although the foundation is not called a cooperative, it can be considered as closely related. In an effort to promote forestry through dissemination of marketing information, "price reporting" for raw wood products is being tried by a few states, despite the rather sharp criticisms of Zivnuska and Shideler (1.958)° Mosebrook (1957) also points out that price reports as published in Illinois and Louisiana are ineffective to the extent that they do not and cannot show that specific buyers are in the market for forest products, He lists several sources for obtaining marketing information and compliments North Carolina for its marketing service to Small woodland owners. As an example of price reporting, one can note mm of 5W W ”30; ind-Mill in Mata which E “New on W119! (1960‘ Mr the yea him is of 1 W081! gave him and c mammary Eta, We“! 1““ and Tu it mtgl‘fiate 3" and Pulp ( 2‘: “Meter Roam, bu' Wk, Jhe Ede freque: kflwm 3““ (1961;) 26 the quarterly marketing report issued by the Louisiana Department of Agriculture and Immigration (1961+) in cooperation with the Agricultural Marketing Service of the U. S. Department of Agriculture. Average prices for stumpage by major products and areas of the state are given; then delivered-to-mill information is also shown. Contrasts are drawn with similar data which were taken a year earlier. Some five or six states publish quarterly or annual price reports on timber products. McCauley (1960) considers price trends and forest products prices in Ohio for the year 1959, and Cruikshank and Anderson (1955) show pine sawtimber stumpage prices in South Carolina, 191+8-l951t. Such price information is of little value relative to current markets. Limited Achievement Although government aids are available in a variety of ways and cooperatives and other programs by private organizations are seeking to uP‘=*g1‘ac3e forestry on small woodlands and to develop markets for forest Products, successes in the Lake States do not appear to be common. Sutherland and Tubbs (l959) report that small woodland owners in Wisconsin ‘ are not interested in forest management, leasing arrangements are not ‘ known, and pulp company foresters are not working with forest owners. Timber management assistance is offered by public foresters in this area of Wisconsin, but most forest owners do not use the services which are available. James (1960) reports that small farm woodlots in Michigan Preclude frequent cuttings; long periods between timber harvests result in a lack of interest in forest management and sale of wood products. Schallau (1964.) notes a somewhat similar situation in Michigan as “received Aq M; motherl um received Mutated in s. No have 11m in in the {11)} mm the Love: WW Penn M relative 2mm of mu 33“- He in; iml assist at'recmt ori WWW of fitting re RM“ assoc 3:” purPOSe “iterated i mush t We: on the I \ .5 large tt 4:; mallet: 27 Sutherland and Tubbs (1959) found in Wisconsin. In the northern half of the Lower Peninsula, owners of ll percent of the small private timbers land had received Agricultural Conservation Program forestry cost-share assistance; another 8 percent exhibited some degree of interest. Sixteen percent had received forestry extension assistance; another 27 percent was interested in such aid. Schallau concludes that forestry consultants appear to have limited opportunities in the Lower Peninsula; more interest is shown in the Upper Peninsula. There is little interest among private owners in the Lower Peninsula for forming a forest cooperative; owners in the Upper Peninsula are more interested. Quinney (1962) also makes a report relative to characteristics, ownership attitudes, and forestry practices of small private forest landowners in the Upper Peninsula of Michigan. He indicates that present amounts of public information and technical assistance to small owners in this area are modest and of fairly recent origin. Few owners are availing themselves of these aids and a majority of owners do not know aids are available. Quinney notes no outstanding response to the possible use of consultants, joint management associations, and leasing of lands by private companies for forestry purposes. However, he shows that one—fifth of absentee owners are interested in management associations and leasing. Aggregative Ownership and thrketing Although there is abundant evidence of research publications which center on the problems of the small timberland owner, only a few analyses Stress large to over-all ownerships and take an aggregative view of forest products marketing. For example, Hutchi son and Wikstrom (1952) woman Mort to at: Iflh will expe' “my of 12119. “-11 of establis] 1mm Kentuck Mann FNucts. '1 “”0. 1h alsc M “Semi! Whmu Hum (19 it“ (1963 Elemfilled ft W55 on m. “Wants em. ““6 (1951 M Wketi Q: "It ”his tars, Mint: “Mk Centr “W, an ° Sink,r 28 consider lodgepole pine as a raw material for paper production in Montana. The West Virginia Conservation Commission et al. (l958 and 1960) give general information relative to timber and other resources in that state in an effort to attract more wood-using mills. The expectation is that new mills will expand markets for forest products and, in general, improve the economy of the state. Garrison et al. (1964) report on the feasi- bility of establishing a hardwood pulp and paper mill on the Green River in western Kentucky. The U. S. Forest Service (l959) analyzes the possible use of Lake States hardwoods for newsprint and other pulp and paper products. The U. S. Forest Service (l958) in its Forest Resource Report No. 11; also gives due consideration to large landowners, including government agencies, and gives a broad view of the future requirements for wood in the United States. Zivnuska (1963) considers the future of wood in a competitive market; and Sherman (1963) reports on the Economic Council of the lumber industry which examined four major points, namely (1) population and government Pressures on private forest land management, (2) needed product changes and improvements, (3) changes in marketing methods, and (it) public relations. James (1957), Lewis (1961), and James and Lewis (1960a) show the Pulpwood marketing process in Michigan from stump to primary mills. James and Lewis (1960b) consider the transportation costs to pulpwood ShiPPers. Manthy (1963) gives a general view of pulpwood marketing in the North Central Region of the United States. Primary mills, agents who handle wood, and prices and costs are emphasized. Manthy and James (1963) give a similar view of the marketing of posts, poles, and piling in the .nlentral Stat mm of coope.‘ 1m et al. Intern Kentuck “at 1923, but liar unfinishe i’rmflls are termed a. m ‘1 Suggestio ston and S}; ttsmrketing m by Duerr tether broad “lifts and i {it (1956 an M cuners at“ Unite. “125°? prim EnFTOiucts bu hits of thes fljivisions o awwerssl \. Cr,‘ .aer fOr 1 23:; w #4 29 North Central States; whereas, Massie and James (1961+) concentrate on marketing of cooperage in the same region. Duerr et al. (19%) present an analysis of timber products marketing in eastern Kentucky. This area was shown to have been exploited for timber prior to 1923, but forests are recovering. Timber products are mostly rough or unfinished and enter the market for further manufacture. Cir- cular sawmills are small, abundant, and generally inefficient. The area is described as marginal relative to the general market for hardwood timber. Suggestions are made for improving the situation. Judson and Switzer (1952) present information pertaining to timber products marketing in northeastern Mississippi. Many of the problems described by Duerr et al. (1946) are also found in this area. Another broad (one might say "vast") marketing analysis is given in two parts and is reported by the Northeastern Regional Technical Committee (1956 and 1960). The first volume examines selling practices of woodland owners and extent of home use of timber products in the northeastern United States; whereas, the second concentrates on buying Practices of primary wood—using mills and the use of marketing aids by forest products buyers and sellers in the Northeast. Parts of these aggregative investigations are used in the following two subdivisions of this review, namely ”Intermed iate Marketing Agents" and "Prod ucers . " Intermediate Marketing Agents In order for pulp companies, and perhaps other woodwusing firms, to Obtain large amounts of raw wood from numerous and scattered small 1. unit? ‘ 133* a) min MW “‘1 mint: or: We”. Todd up; is large] hunting ag film. Sm hm] from : “1961,11. 113 the, definite itiht large Li. Men (19! 'd. i311(19119, : 5h10perce :3 i1 dealers in saving mt to saw? “it (1963 When c: " its (195 dinners, es be“ (195 WV is cor “" areas is 30 forest owners, mills may recognize (i. e. , pay a fee or bonus for services rendered) intermediate marketing agents. Such agents in the Lower Penin- sula of Michigan are usually called dealers. Duerr (199, p. 212) describes the intermediate marketing agent system of wood procurement as the "con- tract system. " Todd and Zirkle (1911.9) show that marketing of pulpwood in Georgia is largely accomplished through recognized dealers; such inter- mediate marketing agents are assigned definite procurement areas and work to fill quotas. Such areas are restricted, i. e., the pulp firm will not purchase wood from a second dealer within a procurement area. However, Lewis (1961, p. 113) showa that Michigan pulpwood dealers do not have exclusive, definite procurement districts. James (1957, p. 33-36) suggests that large dealers in Michigan may ship pulpwood to three com- panics. Duerr (19119, p. 2111», 215) lists 11 advantages of the contract system. Duerr (19.9, p. 2115) quotes from a former analysis to point out that less than 10 percent of sawlogs in the Coastal Plain of Virginia are handled by dealers. For the most part, mills purchase standing timber, do contract sawing, or cut trees from their own lands. Other references Pertaining to sawlog dealers were not found. Manthy (1963, p. 108) states that dealers in the North Central Region offer producers credit, largely in the form of advance payments on cut Wood. James (1957) indicates that dealers also purchase pulpwood stumpage for producers, especially when tracts of timber are large. Worrell (1959, p. 55) suggests that on the buyer's side of the market OIiEOPSOny is common; the number of buyers of stumpage or raw wood products in most areas is quite small and a variety of agreements exists among We mketir Wives has lWant info “19 Nuts W Hassle a '5' in Michigan 3W James (‘ ting 0001mm g his (1961’ 8““ the Mick donned b: it mu m m on inte :51.“ in 1g taut When pl )3 “millage ”we“ to E “Wood 11 3:3 Wu“ itaediate 31 them as to prices they will offer. Wackerman (19115) recommends that intermediate marketing agents handle several products. Supposedly this will allow the forest owner to sell small amounts of various products, e. g. , sawlogs and pulpwood, with the latter product coming from the tops of trees previously utilized for sawlogs. Wackerman also suggests that forest owners band together for cooperative marketing and function as a dealer. Literature pertaining to cooperatives has already been presented in this review. Important information relative to intermediate marketing agents who handle products other than pulpwood are given by Manthy and James (1962) and Massie and James (1964). Manthy and James (1962) describe dealers in Michigan who handle northern white cedar posts; whereas, Massie and James (1964) show that dealers are of minor importance in marketing cooperage in the North Central Region. Lewis (1961, p. 110-119) expands on James (1957, p. 33=36) and describes the Michigan pulpwood dealer system in more detail. Dealers, when recognized by pulp companies, organize and direct the flow of raw Wood to mill yards. However, mills in the Lower Peninsula are not highly dependent on intermediate agents; only 11; percent of volume received by these firms in 1958 came from dealers. Intermediate agents are more inlportant when pulpwood is shipped from distant points. Dealers often finance stumpage purchases for producers, but pulp mills do not buy timber for dealers. Howaver, companies will make advance payments to dealers after pulpwood has been cut, which allows dealers, in turn, to make pay... ments to producers. Lewis (1961, P» 115) shows that nearly 60 Percent Of intermediate pulpwood agents in Michigan are partntime dealers. Helm]. in damage} mum in th udten do th 'lulflmy wood h M do the his (1961, mitigated - hunted m M he can no *9 sales. Le W mketn hints in s- M in a ti its are furth 3%" [1963’ p. mitt the Wilmer i died when a.) adJust f 3'5“ when... Ws mt: cams (19 fish's they 32 332312255. Research publications which describe the wood producer, 1. e., the immediate stumpage buyer who harvests and sells raw wood products, and his function in the marketing process are relatively scarce. Woodland owners often do their ovm timber harvesting, which complicates the picture. Also, primary wood—using mills-—especia11y sawmills—z—may buy standing timber and do the harvesting. Lewis (1961, p. 108) notes that the pulpwood producer is a person who is obligated to a dealer for credit and stumpage; thus, he is faced with a limited market for cut wood. The producer‘s capital is generally low and he can not become an active participant in large private or public timber sales. Lewis implies that pulpwood dealers are a necessary part of Pulpwood marketing because of the inability of the producer to make investments in stumpage. Also, when there is only one mill purchasing Pulpwood in a timbershed and when buying is done through a dealer, pro, ducers are further dependent on the intermediate marketing agent. However, Manthy (1963, p. 160, 161) points out that a producer has some degree of flexibility when purchasing stumpage: Prices for pulpwood are fixed and, if a producer is to hold or increase his profit margin, this can be attempted when the timber is purchased. Stumpage costs act as "cushions," 1. e., adjust for changes in logging and transportation costs. The forest owner-especially if he has only a few truck loads of timber for sale~~has little bargaining power when selling stumpage. James (1957) describes pulpwood producers in Michigan and Wisconsin and shove they contract directly with mills or with dealers, but the direct-z. “direct c? in ulplain vi Mcmuhted Ma and a! Hills tend to 2'» Jules not 1‘! other time Mr average id thmhands iduers uh W and the : in. 15.25) t" “0 ham 1% from dz in com. Wu timber 51." ThOse 3“ My hat :‘ém‘lcers Wilmer, km to r. ("ex Q3 agent 33 to-mill approach is most common. Nearly two-thirds of the wood shipped to 27 pulp mills in the two states comes directly from producers. James suggests that when mills favor producers over dealers, no bonus is paid for intermediate agent service; a non-recognized dealer may find he is working in direct competition with producers. James also points out that dealers complain vigorously about cutbacks on contracts or agreements, despite accumulated inventories. Such cutbacks are mainly caused by mill requirements and availibility of woods labor. When local labor is plenti- ful, mills tend to increase local purchases, i. e., purchases from pro- ducers. James notes that about two-thirds of pulpwood producers also handle other timber products, such as sawlogs, posts, and railroad ties. Output per average producer in Michigan was 276 cords in 1951+; dealers handled thousands of cords, with one exceeding 60,000. Producers who handle products other than pulpwood are at work in Michigan and the North Central Region. For example, Manthy and James (1962, p. 15-25) describe producers, as well as intermediate marketing agents, who harvest and sell northern white cedar posts. Their analysis developed from data collected in 1960 by the North Central Regional Technical Committee as part of the Cooperative Regional Research Project, MGM-~27, "Timber Products Marketing in Selected Areas of the North Central Region." Those producers described by Manthy and James may harvest cedar alone or may handle spruce and balsam pulpwood as part of their work. Posts producers may sell to dealers, fence manufacturers, retailers, and final consumers. In Michigan, 55 percent of volume went to dealers and 36 percent to retailers. Thus, the importance of the intermediate Marketing agent is apparent. ' I. lmmii; [Mum are “ml-one 01 W (1961, 1 Min of p M by the A iJ“lichens who] to trim agents 1 ““6, for t “'5 sustain 13‘ all311813 c {HMS H0] is. l“Shiner doth hm a 35130, the] fatechnica‘ Whig ou Wing is What M1] in; '“t 10“ an my? When j 3h The second example pertaining to producers from the NCM-—27 project is that of Massie and James (1961+, p. lit-20). This investigation centers on cooperage marketing in Ohio, Indiana, Illinois, Iowa, Missouri, and Kansas. Missouri is the chief state for cooperage marketing analysis. Coop- arage producers are not found in the northern part of the Lower Peninsula of Michigan--one of the selected areas for the NCM-u-27 project. Lewis (1961, p. 109, 110) discusses the possible employer-employee relationships of primary mills and producers. He cites a court decision published by the American Pulpwood Association in 1959. This particular decision relieves the pulpwood buyer from responsibility for producers who supply cut wood under contract, 1. e., pulp companies, and intermediate marketing agents as well, are not legally responsible for carrying out Labor laws, for title to raw wood, for actions of producers, or for injuries sustained in harvesting timber. However, Carothers (196%), in his analysis of workmen‘s compensation laws, raises the question of whether woods workers and producers are really independent of raw wood buyers. Malsberger (1953, 1956, and 1962) points out that pulp companies in f:he South have accepted as a social obligation, but with self-interest in mind also, the promotion of pulpwood production. Such companies are sup- Pli’ing technical aids and millions of tree seedlings to landowners and are carrying out an educational program through communications media, agricultural fairs, and camps for boys. Malsberger (1958) further indie cates that pulp mills who are members of the Southern Pulpw00d Conservation Association are asking contractors, i. e., dealers, 130 Practice minimum forestry when harvesting pulpwood. Lewis (1961, p. 110), on the other “m dos Hit relief 1 ii: immanent u can find ' Macy of tint film on labm like American 1 1198 relative ‘ in areas of ”19 various ”mute bach W area in ‘1 Movers We involv {W because a is” Men M Which c: it his bee 35 hand, states that pulp firms in Michigan are not carrying on public relations work designed to achieve sustained yield of raw wood. He sug- gests that relief from social responsibility is not primarily determined by the procurement system but by company policy. One can find references which deal with labor requirements and efficiency of timber harvesting. Guttenberg and Perry (1957) center attention on labor costs for pulpwooding in Arkansas and Mississippi; and the American Pulpw00d Association has published a number of case studies relative to pulpwood harvesting in the Lake States, as Well as in other areas of the United States. The various references given, when viewed in total, appear to furnish an adequate background and review of raw wood marketing as related to the selected area in Michigan, Ample consideration of the marketing role of small landowners has been included, partly because of the great number 0f people involved and the vast acreages controlled by this group, and Partly because analyses related to timber marketing have tended to emphaa size such owners. In addition, this review has centered on those investi- gations which cover the first steps of the marketing process; little attempt has been made to enter the secondary marketing stages. Ratification In given in '1 one, fence, ,2 lily and allied lie location ”on in Figure in of sampled ‘tlued in ii it Division ill outputs pa in Hoodpulr ivod firms) ‘7 area but 5+ lllll in the lion Canada i! area} not Mommas 1‘ lie discuss ‘° Supply “new “8 which my area, 3‘ Woe, I It?“ islan PRIMARY MANUFACTURERS Identification of primary manufacturers by products and number of firms is given in Table 1+. However, only brief reference will be given to veneer, fence, and miscellaneous manufacturers. Interest is centered on pulp and allied mills and sawmills. The location of woodpulp and allied mills in the Lower Peninsula is shown in Figure 3. All these mills were interviewed. The distri- bution of sampled sawmills by counties is given in Figure 4. Sawmills not included in the sample were generally small—-classified by the Forestry Division, Michigan Department of Conservation (1962) as having outputs per year of less than 100 M. b. f. The woodpulp and closely related mills (excelsior, flakeboard, and hardboard firms) totaled nine; five of these were located outside the study area but still drew most of their raw wood from that area. One Pulp mill in the southern part of the state imported part of its raw wood from Canada and limited amounts from nearby wood lots south of the study area; another firm got about 15 percent of its raw hardwood supply from counties located in the southern part of the state. Supply areas Will be discussed in greater detail later, but the study area can be said to supply the large proportion of raw wood used by the pulp and related-type mills of the Lower Peninsula; the same is true for those sawmills which lie within the area. No sawmills were sampled outside the study area, even though they may have received logs or bolts from that source. The face veneer firm imported part of its logs from the Canadian islands and from the Upper Peninsula» ' new 1 Incivenin': ._ _IJ I an M, fence, 1 .II I vi an allied it location ihn in Flaw h of coupled the in t it Divine: it outputs Pi la mum; to me.) 31am but a ton in the 1““ Gama, h area; an ”Wiles 1 3h discus: ten “Wily Erelital-av #4115 lillioh “My are: 3‘. Home ‘ PRIMARY MANUFACTEBERS Identification of primary manufacturers by products and number of firms is given in Table 4. However, only brief reference will be given to veneer, fence, and miscellaneous manufacturers. Interest is centered on pulp and allied mills and sawmillso The location of woodpulp and allied mills in the Lower Peninsula is shown in Figure 3. All these mills were interviewed. The distri-a bution of sampled sawmills by counties is given in Figure 1}. Sanills not included in the sample were generally small--classified by the Forestry Division, Michigan Department of Conservation (1962) as having outputs per year of less than 100 M, h, f. The woodpulp and closely related mills (excelsior, flakeboard, and hardboard firms) totaled nine; five of these were located outside the study area but still drew most of their raw Wood from that area. One Pulp mill in the southern part of the state imported part of its raw wood from Canada and limited amounts from nearby wood lots south of the Study area; another firm got about 15 percent of its raw hardwood supply from counties located in the southern part of the state" Supply areas Will be discussed in greater detail later, but the study area can be said to supply the large proportion of raw wood used by the pulp and related-type mills of the Lower Peninsula; the same is true for those sawmills which lie within the area. No sawmills were sampled outside the study area, even though they may have received logs or bolts from that source. The face veneer firm imported part of its logs from the Canadian islands and from the Upper Peninsula. Ylle lie-Idem! Product Pulp and Alli Imber, inclu Veneer: Cont Face Pence “summon: Woo Woo Oak \ am for hIDClUGes chills of 211, Mun 1" “X mill: L“ lfills 1 37 Table l+.,-‘-Identification of manufacturers by products, l959a Product I Number of mills Number of mills in study area sampled Pulp and allied productsb 9 9 Lumber, including pallets 137C 86 Veneer: Container 2 2 Face 1 1 Fence 3 3 Miscellaneous: Fish net floats l 1 Woodenware and turned productsd 2 2 Wood preservinge l 1 Oak for outdoor cooking 1 1 aData for sawmills were taken for the year 1960., bIncludes all mills in the Lower Peninsula, not just the study area° 0Mills of less than 100 M. bo f . annual output are excluded. Very small, Part-time mills contribute practically no commercial lumber; how» ever, six mills of less than 100 M, h, f, were sampled. The total 01' own mills in the study area was 190. There were 277 sawmills in the Lower Peninsula with outputs of 100 M., b. f. and We dMight be considered as partially secondary manufacturers. . eThe wood preserving plant is predominately a secondary manufactur= lug firm; it bought and "treated" small quantities of POS'bS and poles in 1?59, but its main outputs were treated railroad ties, lumber: bridge tlmbers, and highway guard rails. {a "38 S E KEWEENAw a '7 HOUGHYON J I I EARAGA L! ..l I— MARouanz . Icon—TI oo rmnllln LUCE B I ALGER I— SCHOOLGRAFT r-—--I I | I . ___-a F MACKINAO I_._ I _ _‘ “‘1“.on cow, , y m r I In \N’ CHIPPEWA l ”gmwt W 4 MICHIGAN DEPARTMENT OF ECONOMIC DEVELOPMENT SCALE 0" MILE! IO no :0 Jo A320 9“' «a . 4 EMMETIGHEB NI , 4. o ' I 6‘ : ,PRESDUE g V I ISLE o 3 lr— ' : CHARLEVOIX "___—_V 5, .7 V- _ 12' Q ..g __I_Io—Tsaco moumonencq. ALPENA .9 Q: ANTRIM - I C 0 0 33“ S /l y ' ' _ I as c ( _I___ _ _ ,7?" a» KALKASKA CRAWFORD :5ch I ALGONA O Y BENZ|E 5mm ' TRAVERSE Q) - 2 MANISTEE WEXFORD MISSAUKEE aoscomou OGEMAW IOSCO I _ E. , It osoeoLA CLARE GLADWIN" ARENAc , d HURON r BAY 3 r‘ o MECOSTA ISABELLA MIDLAND r TUSOOLA I SANILAc , .4 SAGINAW TL‘I I MONTCALM ammo: I JJLAPEER‘I» / KENT ALLEOAN I VAN BUREN __KALAMAZOO 1 CALHOUN | I_— IONIA “I- CLINTON I5"““”‘§EE I . I ' I ‘_L. _nl_ma. - BARRY T EATON—I INBNAM IL|VINGST;N—I I” GENESEE I I ST. CLAIR __J._.#‘ be I— OAKLAND HAW” I I I I ,0 I | "" ‘ '1'— 51:51? _ .———- 1*” I JACKSON I WASHYENAVI I WAYNE . / CANADA I I __,__JV_r-x\ MONROE _I. - I CASS ST. JOSEP+ BRANCH —I—H‘ILLSDALE I LENAWEE I ) I I ' \_uu‘ (In: .._,. ____..___ _IWL ,0 :\\ II N D DAN A :1 ,_. O H 11 0 6 £44thle Fig ure and flakeboard f Location of pulpmills, hardboard plant irm, 1959. 3. excelsior milh Pitta 39 ,9 / KEWEENAW Q _I NOUGHTON J BARAGA L! ,J I— MAROUE T TE I Inou I I “GER I I—' SCHOOLGRAFY I EMBLEM S lit—I I tab/0% MICHIGAN DEPARTMENT OF ECONOMIC DEVELOPMENT 36“.: Gr MILE: —-—_—_—_—=—— o no so u .9 no \V A. \ I7 ‘ CAN ADA LUGE I CHIPPEWA I {‘9ng “3"!” 0 v {V l_ u :3 cHAm‘EchIxi’ fl , ,5, fig L __r_Jorszso Iuommosmc—VI' ALPENA c .90 Au‘rnm ' . I h ‘ lo _I I+ I 1 I _J_ n _ , a1» KALxAsxA‘I-cnjEWTI’oscooA flI noon 0 BENNE—IicfigaflssI 2 I. l I 2 I l 2 ”ta—trod“ “I’m 1 ‘ I I 6 . 2 . I 5 . 3 ~ 2 _ . ___I_ V __I l__.r_. _I— r4 —LAKE ToscEOLA—I CLARE rEADWIN' 1 g I Al nuaow ' v 2 ' 3 I 3 BAY 0‘ (I Y _’ ,— TUSCOLA I SANILAG I I LVJEAFEER Idomaee I IT‘IONIAFT cumon ISHIAWAss’I I I I I I . ' LLLLL. . j‘IWBV-T-E—AIBA—I INGRAM IL|V|NGST;I MONTCALM GRAY | OT KENT v r, ,___A,J OTTAWA I ILL“ I" gig; MICACOMB I ~I. ___l__ ALLEoAN I .‘ I , L L, I .L VAN BUREN xALAMAzooI CALHOUN I JACKSON I ' l/LJLJ-a LENAINEE I mounoe ) " \lAKE [MI €\ I, \ ,— d 'I. I I ' I ST 405Eefi_s::nvo;—-I—JLLSOALE_I I BERRIEN r! CASS L,_l.._.v., OHIO Figure A, Distribution of sampled sawmills, 1960 IIIIW I“ ~ VIIh Iinllest . I III! are I mum”: IImum mm III Me floats, II“ Heap III- Iiom Imm, “1mm WIMI in,“ firms 3% situa “mmI VIII; We 11 Immm 1+0 Size 2.1: Mills Mills vary greatly in size, or annual consumption of raw wood, beginning with the largest pulpmills which use over 100,000 cords to the smallest sawmill which consumes 29 M, b. 1'. All miscellan- eous firms are small and use very little raw wood (in-all about 860 cords in 1959) and will not be considered further, except to point out (1) that turned woodenware is having a difficult time competing with foreign imports and (2) wood fish net floats are being replaced by plastic floats . Pulp Mills Size groupings of pulp and closely related mills are given in Table 5. Two mills are small, with less than 10,000 cords consumption in 1959; however, one of these imports woodpulp for secondary manufacture. Capital investment per pulp mill above the smallest group probably equals $5,000,000 and up. Such concentrations of capital under control of seven firms leads to power in the purchasing of raw wood, 1, e., , an Oligopsony situation is likely to exist, and the sellers~=—being numerous “have little to say about the price they will receive for their outputs. Sawmills The volume classes of sawmills are shown in Table 6‘. In general, sawmills are low on outputs, especially in comparison with pulpmills. With 137 in the study area with annual outputs of 100 M9 130 i"o and up (01‘, including very small mills, a total number of 190) and capital I‘I \ “3s than M um kl flmle5.-4hstribution of sampled pulp mills by volume classes, l959 Volume classa Number of mills Cords Less than 10,000 2 10,000-h9,999 3 50,000-99,999 2 100,000 and up 2 Total 9 aPeeled volumes were converted to unpeeled or rough volumes so as tonmke the data comparable among mills. If no adjustment is made bamemipeeled and unpeeled volumes, then the third group gains one fimnand the largest class loses one. hmle 6.--Distribution of sampled sawmills by volume classes, 1960 Volume class Number of mills '.—_“ ii b. f. Less than 100 6 loo-A99 at 500-999 , 25 1,000 and up 26 Unclassifieda 5 Total 86 a . Four unclassified mills initiated production in 1960 and operated forless than nine months; another firm did custom sawing only. mm co; mm. that firm flu one of “comm Wential. We are “enter was, ‘ “*‘Vhich Flea ’01 put an M here is Wish); W the r :33?“ of t] “tether ”in which D 1+2 ' investments of the smaller firms of roughly $1,500 to $2,000, sawmills do not have the favorable marketing position of the pulp companies“ either in buying raw materials or in selling manufactured products. Other Mills The two container veneer firms are small and do not operate through= out the year. The face veneer mill is much larger than the two container firms combined, and consumes about the same volume of raw wood as one of the larger sawmills. A listing of actual sizes of these veneer companies might reveal identity or show information which is confidential. There are three fence companies in the study area and they have been adequately explored by Manthy and James (1962). One might point out, however, that these firms are few in number and specializing in a product which uses only northern white cedar; this species is not highly prized for pulp nor for sawlogs. Fence manufacturing firms have a favorable marketing position relative to purchasing raw materials. Species Consugt ion There is relatively minor competition for raw wood by species among the wood-using industries of the study area. This can be observed by Studying the data given in Table 7. Veneer mills may compete with sawmills for some of the better grade logs. Fence manufacturers have practically no competitors for raw wood; minor amounts go to sawmills. Aspen is sought by both pulp mills and sawmill firms, but the latter want larger Sizes which. pulp companies may not be able to use. Pulp firms are not 13311011. calmly : 3filled a; el‘iXed be 53,351), 501 fllinen, 1&3 Table 7.--Volumes of raw wood consumed, by principal species and by wood-using industry, l959a Species Pulpwood Sawlogs Veneer Posts M cords M. b. f. M. ‘0. f. M pieces "Northern white cedar 2,300 Bard maple, basswood, white birch, elm, and soft maple 1,500b Jack pine 120.7 Spruce-balsam 9207c Aspen . 327.0d 5.559 Mixed hardwoods 29.7 24,639e Black cherry it27 Hard maple 8 ,hOl Oak 8,723 Basswood 1+ ,266 Elm 15012 Miscellaneoqu 5 : 89]- a x Total 570.0 61,918 1,500 2, 300 aSawmill data are for the year 1960. bFurther break-down of information might reveal confidential information. cLargely from the Upper Peninsula and Canada. dPeeled aspen was adjusted to unpeeled basis. eMixed hardwoods are compOSed of a variety of species, e. g., oak, beech, ash, soft maple, hard maple, elm, etc. f . . . Miscellaneous covers pine, hemlock, and volumes of unknown spooles. three mi line seems 11 no! the m at increasi ill mt the he nine 1 3th Iills 1' dune 7), itsed by P1 W seam ”“9 moment he, comm “39 state. m 61,91 m “f the Y”? sml wentifie hm hm {tum ‘ ht using large quantities of mixed hardwoods, as are sawmills; hovever, this picture seems likely to change, as pulp companies are becoming more aware of the pulping qualities of the denser hardwoods. Although there may be increasing competition for hardwoods in the future, sawmills will still want the larger logs or bolts. State—wide Comparisons The nine pulpwood-using mills, comprising 60 percent of the number of such mills in the state, consumed approximately 570,000 cords in 1959 (Table 7). This volume was nearly 82 percent of the round wood purchased by pulp mills in Michigan. On the other hand, there were 86 sampled sawmills. Six of these Were very small and will be ignored for the moment. The remaining 79 mills, with outputs of 100 M. b. f. or more, comprised a little over 21 percent of the number of such mills in the state. But to return to the full sample of 86 sawmills, they consumed 61,918 M. b. f. (Table 7) of logs in 1960, or approximately 21 Percent of the state's raw wood which was used for lumber. Very small sawmills are abundant in the study area; 53 such firms were identified and six were sampled. These 53 mills add very little to the annual lumber output of the state--only about 1 percent in 1960. One can say that very small, scattered sawmills have little, if any, influence on the commercial lumber markets of the state. This is substantiated by the fact that the Forestry Division, Michigan Department Of Conservation (1962) omitted such mills from its sawmill directory. The three veneer firms produced roughly 50 percent of the output Of that Product for the state. J tunnel mi N. Pulp ; '3. lo I111: mm, alt in data f film an ”t are of Wes Ihie fills mail, We! grad inn, 3,, an, and 1 3 froI up: {We mm when We '1' CONS 3 ~45 “div 1"}! For n ’+5 Principal Products Produced The principal products produced by pulp and closely related mills of the Lower Peninsula and the sawmills of the study area are shown in Table 8. Pulp mills are mainly pulp-paper or paper—board producing firms. No mill manufactured woodpulp for further processing by some other mill, although at least one firm imported woodpulp from Wisconsin. The data for sawmills presented in Table 8 indicate that» hardwood grade lumber and pallet material and finished pallets are emphasized. Pallets are of major importance because of the nearness of manufacturing industries which use wooden pallets, and the quality of the sawlogs- sawbolts available--which is generally unsatisfactory for production of the better grades of factory hardwood lumber. A possible third reason why Pallets are stressed in the study area is that capital investment in dry kilns and planing machines is not necessary; pallets are manufac— tured from unplaned, freshly-cut lumber. Strength, durability, and deSign are wanted in a pallet; smooth, dry lumber would add cost but not usefulness. Grade lumber is sought for flooring and furniture mameacturing . Wood Supply Areas The raw wood supply areas for pulp firms and sawmills by volume classes are given in Table 9. Pulp mills buying or using less than 10,000 cords annually have a relatively small SUPPlY area—-a maximum Of 60 miles radius. The two mills in this volume class use aspen exclus— 1V91V- For the five mills using 10,000 to 99.999 cords, there is Meier have 300k papa other pap NW6 a “it boa aWhine: Building Total 21110hides “hams 1+6 Table 8.--Principal products produced by pulpwood-using mills and sawmills, 1959 and 1960 respectively Pulp mills Sawmills Product No. of mills Product No. of mills Excelsior l Hardwood grade 32 Papers Pallets 22 Tissue 2 Pallet material 15 Book paper 1 Other manufactured products 1+ Other paper 1 ' i - , Hardwood lumber 7 Paperboard and building boarda Softwood lumber 6 Container board 2 Building boardb 2 Total 9 86 k a Includes corrugated medium. b ‘ Includes flake (particle) board and hardboard. M I hlmeiptl Ms "um um 47 Table 9.--Wood supply areas for pulp mills and sawmills by volume classes, 1959 and 1960 Pulp mills Sawmills Annual receipts Range of Average Annual receipts Range of Average radii radiusa radii radiusc Cords Miles Miles M. b. f. Miles Miles Less than 10,000 20-60 40 Less than 100 1-65 25 10,000-h9,999 125-230 168 loo—A99 5-170 31 50,000-99,999 100-250 175 500-999 lO-lOO 38 100,000 and up 250—l,200b 72570 1,000 and up 5—250d 52 Unclassified 25-50 37 aNot weighted by cords purchased. bThe wide range and large average were caused by wood receipts from Canada which reached Michigan via water. Within Michigan the range was 250-350, with an average of 300. Both the 250 and 350 radii were for railroad deliveries from the Upper Peninsula. One large mill received raw wood by motor truck a distance of approximately 220 miles. cNot weighted by M. b. f. purchased. dOnly two out of 26 of these large mills exceeded 75 miles radius. The mode for this volume class was 60 miles. '"J- 4'4? fl- 'HEQS fllnly excq inc-fir 1f hill were it other. Mints | ‘Mr Get. M101 as to Mes from i“lines or h *1 on mu “3i an obs: 1M3 were A“or a: E' k“ 1111a) Elias, hu' "1 “To M a all "3 truck. ml“: that 'R’i'ls nee "2133596 5 1‘2; “Filed #8 little difference in supply areas: The 10,000-1L9,999 category averaged 168 miles in radius and the 50,000—99,999 class averaged 175 miles. For the two largest firms--those found in the 100,000 and up class--the relatively excessive distance can be attributed to water transportation of spruce-fir from Canada. Yet, if one ignores water transportation, the radii were 250 miles from one large mill in this volume class and 350 for the other. Both firms reach into the Upper Peninsula for pulpwood and shipments are made by way of railroads. Transportation is discussed in greater detail in a later section. However, one can raise the question as to the comparative advantage of locating a pulp mill 250 to 350 miles from raw material, i. e., of shipping via railroad for those distances or by motor truck up to 220 miles. Further research is needed on mill location in relation to raw wood supply. One might hazard an observation that mill location Would be considerably different if plants were being rebuilt in the 1960's. As for sawmills, their radii of wood supply areas are relatively much less than for pulp mills (Table 9). One large firm has a radius of 250 miles, but this appears excessive unless for very high quality, SPecial purpose logs. in general wood supply areas for sawmills seldom. exceed a radius of 75 miles and transportation is predominately by motor truck. One might also conclude, on the basis of limited infor- mation, that sawmills which use bolts rather than traditional logs are not going nearly so far to get them; bolts can be cut from trees which are classed as culls or very low quality for regular sawlogs. Such trees appear to be abundant within shorter distances than are log trees. One can recognize that investments in sawmills are far below pulp lulllm plI Mllly ml Illl that l I! Illtlomzj lllllhe n we loo-l99 fl lllllomr “h mllea “My is “M trl W from W for s Ellwood '11me u 2%“ on ”in film "9 “lune "" nearly in, qu “Or! 1+9 paper-board mills and that to move a sawmill is often relatively easy. The information given in Table 10 shows whether a sawmill owner or operator considered his mill portable or stationary. One operator said his mill was portable but he had not moved it for 15 years. Therefore, portability may be difficult to define. In any event, operators reported that nearly 20 percent of mills were portable and 80 percent were stationary. One can also determine from Table 10 that the larger the mill the more likely it is to be stationary. Two—thirds of the mills in the loo—LL99 M. b. f. class were stationary; whereas, 25 out of 26 were stationary in the largest volume class. Just why the six mills in the smallest class (less than 100 M. b. 1’.) were considered stationary is not readily apparent. Methods o_f_ Transportation Pulpwood Motor truck and railroad are the principal means of transporting PHIpwood' from wood supply areas to primary mills. Water transportation is used for such wood imported from Canada. Method of transportation for Pulpwood delivered to Lower Peninsula mills is given in Table ll. Small firms use trucks altogether. Larger companies are also heavily dependent on motor truck deliveries. The 10,000—1L9,999 mill class received about 78 percent of wood by truck in 1959, while the 50,000- 99,999 volume group received approximately 75 percent, and the largest Glass nearly 57 percent. In all, motor truck transportation equaled slightly more than 6h percent, rail about 211-, and water nearly l2. , !- I WI" H :~: ( Elusfiied total 50 Table lO.--Number and percent of portable and stationary sawmills sampled in the study area, by volume classes, 1960 Volume class Portable Stationary Total M. b. f. Number Percent Number Percent Number Percent Less than 100 o 0.0 6 7.0 6 7.0 100-199 . 8. 9. 3 16 18.6 21+ 27., 9 500-999 7 8. 0 18 20. 9 25 28. 9 1,000 and up 1 1.2 25 29.1 26 30.3 Unclassified 1 1.2 )4» 1+.7 5 5.9 Total 17 19.7 69 80.3 86 100.0 Table ll.--Mode of transporting pulpwood to Lower Peninsula mills, 1959a Volume class Truck Railroadb Water Total Cords ----------- Percent of volume ——————————— Less than 10,000 100.0 100 10,000-h9 , 999 78 . 1 21. 9 100 50,000-99,999 75 .0 25 .0 100 100,000 and up 56.7 23.9 19.11 100 All mills 61m; 23.9 1.1.7 100 aVolumes adjusted to unpeeled basis. cords. Percents based on 569,961 bMotor trucks are generally used to assemble pulpwood at rail heads or shipping points . We at pare: Ham flutter. i: Hue loan ”if in Les 51m of hi 31W to u Ntsize tr “loading Woe is 17 Li"“150 lea 3‘ W 0th: *3 cost pg: tiling legs 5“”, at 1 the reach 53:1de New M 2529:: than “at t N: a“ You qtyglriSm {In “ °f th. 51 Sawlogs Sawlogs, in contrast to pulpwood, are transported largely by motor truck (91+ percent in 1960), small amounts are skidded directly to mills which are portable (6 percent in 1960), and no shipments are made by rail or water. One can conclude that highly portable mills, i. e. , those which are mounted on wheels and can be moved from one log yard to another in less than a day, are not popular in the study area. An analysis of highly portable mills compared with those which are more difficult to move is beyond the scope of this report. However, one can hypothesize that skidding to such mills eliminates loading, trucking, and unloading costs and that costs per M. b. f. of logs within a limited distance is less than by motor trucks. An analysis such as is suggested might also lead to a study of mill operations among highly portable mills and others. If the stationary mills can produce lumber at a lower cost per M. h. 1". --including truck transportation cost, then skidding logs from stump to portable mills is economically unsound. Howaver, at increasing distance and, thus, cost of trucking, a point will be reached where milling efficiencies of the stationary mills will be overshadowed by mounting costs of transportation. As long as stationary mills operate within a range where trucking costs are not greater than relative milling efficiencies, highly portable mills are not likely to become widely used. On the other hand, if highly portable mills are found to be equally or more efficient in milling procedures in comparison with stationary mills, then one would expeCt an increasing number of these mills to enter lumber production. As mentioned, fUrther “problem: - l hthem white . fit, but veneer 1 M of receipts. M considem “Nation is V: W by will 01x nun, ill908311 dual one can | it 100 or even 15 mtg “P to 220 “minty and d‘ the “11108 is 1 W11 of those 1 Why of estab til rail transp i1 00 miles 52 investigation into skidding versus trucking and highly portable versus stationary mills appears to be beyond the scope of this analysis, but may be a problem which warrants further consideration. Other Products Northern white cedar fence posts are transported to fence firms by trucks, but veneer logs depend on water transportation for about ’4-0 percent of receipts. Trucks are used for the remaining 60 percent. Break-even Point for Pulpwood When considering pulpwood , a break-even point between truck and rail transportation is very difficult to determine. The various methods employed by mill operators in relation to costs of transportation are practically impossible to understand by an ou‘tside-the-company researcher. In general one can say that trucks are used for short distances, perhaps up to 100 or even 150 miles; however, one finds pulpwood trucks OPGrating up to 220 miles from the home mill. Mill locationwinclud ing yard capacity and design or lay-out, highways and rail loading points, specific railroads and number of carriers involved, and bargaining strength of those involved in rate negotiations-wall add to the complexity of establishing truck zones (James and Lewis, 1960a). In general rail transportation of pulpwood is not used for distances less than lOO miles . 111$ collie insulation z:I Mina iollmed. ‘ Film are direct Mum agents 1! “tilted to purch W by Specie Wins, and 1 “5 increasingly ””1 “113 snare: mmmm “M and these 1 he; the second : "ills obtain 1. :31”! ”Meet ‘3 My heavuy t; “Wills Peri Emhtionl V WM Fence hrs. her Penins ll: J i i r H l i I i j ': I i 53 Wood Procurement Practices The data collected from sampled manufacturers do not permit a . full presentation concerning procurement, but suggest policies which are being followed. For example, specifications and inventory practices are directly related to procurement problems; ownership of forests and agents who supply wood influence procurement. Supply areas are related to purchases of raw wood. In turn, supply areas are determined by species, volumes of timber, transportation, competition between firms, and labor force available. Thus, analysis of procurement becomes increasingly difficult because of the varying components. Despite this apparent complexity, two segments of procurement will be explored here and differences noted, especially between firms buying Pulpwood and those purchasing sawlogs. The first of these is'CAgent Somme"; the second is"Wood Purchase Agreements." Agent Source Mills obtain raw Wood from various agents. The volumes received by primary manufacturers and agent sources are given in Table 12. All firms rely heavily on producers. Pulp companies use the dealer system in part; sawmills perform "custom" sawing, and use own employees in raw Wood production. Veneer firms buy stumpage; in part, and contract the harvesting. Fence companies do not pay bonuses to self—appointed dealers . Pulpwood Lower Peninsula pulp mills obtain wood supplies from three sources A11 sources X 833111111 data bottom Means W115 and Paid 5 Were not Pure} :. Nee, but re] Wed dealers Wit M M Piece; h flmucers an tillers, 50 this 0 in Show the r______ , Table 12.-—Agent source of raw wood receipts by sampled primary manufacturers, 19599' Agent source Pulp mills Sawmills Veneer Fence firms mfgrs. M cords M. b. f. M. b. f. M pieces Customb 3,876 Mill employees 23,915 Contract cutters 600 Dealers 925 c Producers . 1177.5 34,127 900 2,300 All sources 570.0 61,918 1, 500 2, 300a aSawmill data are for 1960. bCustom means that local timberland owners brought their own logs to mills and paid a fee for having the logs converted into lumber. The logs were not purchased by mills. cThere were 10 self—appointed post dealers interviewed in the study area, but fence manufacturers did not recognize them. Such non» recognized dealers reported 23 percent of sales to fence companies, or about 73A M pieces. 6Producers and dealers sell posts directly to consumers or to retailers, so this figure, representing 587 M posts and 1,713 M pickets, does not show the total output of posts from sampled individuals. shimmers, . Motors. . icons trees i. mm for none E White fact th We were he ““0 Pnlwood ""1 10' Percent, H” too this a hilari- n “Wits came MW“ reduced e 1W1} Rumpus, %~ Dee? Mitre “Y be ”Mimi uh, hm In Othe: 1w Either forg do... Fin mi 1,0: maybe thre Widowed m on “315’s: «Victim. Th“ 55 (l) contractors who harvest stumpage from company owned lands or timber purchased by mills from public or private forest owners, (2) indee- pendent producers, and (3) pulpwood dealers“ Contractors. The contractor who harvests timber on company—owned land or cuts trees from tracts of timber purchased by a pulp firm accounted for none of the reported pulpwood receipts in 1959 (Table 13). Despite the fact that Table 1.3 shows no procurement arrangement whereby contractors were harvesting company timber, this writer interviewed at least two pulpwood contractors who Were doing this kind of work. Thus, a very low percent, probably no more than 3 , of pulpwood receipts was derived from this source in l959. Producers. The great majority (nearly 84 percent) of all pulp— wood receipts came from independent producers. This percentage may have been reduced as much as 3 percent because of contractors working on company stumpage, as mentioned. Dealers. Dealers handled about 16 percent of pulpwood receipts; this figure may be slightly low, as one dealer=-a merchant middleman-m was interviewed who was not reported by the company which purchased his raw wood. In other words, the pulp mill representative who was inter- viewed either forgot about this supplier or else considered him as a Producer. Five mills out of the nine bought no Wood from dealers, two, or maybe three, purchased from both producers and dealers, and one Company purchased only from these agents. In an analysis of agent source, one soon discovers that pulp'mills do not necessarily recognize men who are performing the merchant middle- man function. This means that individuals or firms are functioning as All sources \fi “In figure 1 MW“ to be w W, but the Wham. 56 Table l3.--Agent source of pulpwood, Lower Peninsula pulp mills, l959 Volume class Producer Dealer Total Cord s Cord s Percent Cord 5 Percent Percent Less than 10,000 1,628 100 100 10,000-119,999 59,589 75.2 19,640 21+.8 100 50,000-99,999 116,397 80.1; 28,316 1996 100 10,000 and up 299,881+a 87.1 #11507 12.9 100 All sources 477,198 83.8 92,1163 16,2 100 1 8This figure is somewhat misleading, as at least two contractors were known to be working on company stumpage. The 299 ,8811L cords should be reduced, but the amount to subtract can not be determined from the data at hand . hitch relati film under the :1 a, one can say i ”I 13, one tron “MM by non mile iould 11 “3! MM savmi'. “1° 1‘1), which i m! 13). Limit. ‘1‘ IMilled. c 3, accounted for WW came fr its with aim dirt, contractc 31133 Percent hint of pulp “We that iii-ems. Jusi Mlle data rec: kitted. One m {it of “Dim iii a gal-firs , at 57 dealers but are not being paid for their services nor their timber supplies protected from competitors _who sell to the same mill. Further discussion relative to non-recognition of merchant middlemen will follow under the section on "Intermediate Marketing Agents.’ How- ever, one can say that the 16 percent of pulpwood receipts, as given in Table 13, came from recognized dealers. If one could tabulate all the wood handled by non-recognized, self-appointed merchant middlemen, the percentage Would increase—«perhaps by 6 to 8 percent, Sawlogs Sampled sawmills in the study area received no logs from dealers (Table 11+), which contrasts with the 16 percent of pulpwood receipts (Table 13). Limited amounts came from own lands “5,6 percent of volume handled. Custom sawing, i. e., sawing or milling logs for a fee, accounted for 6.3 percent of volume handled in 1960.. The majority of sawlogs came from producers (approximately 55 percent), which contrasts with about 8% percent for pulpwood, Own employees (perhaps, in part, contractors) working on company owned stumpage, amounted to nearly 33 percent of receipts in 1960; this contrasts to no more than 3percent of pulp mill receipts which were contracted. Thus, one can conclude that agent sources of pulpwood and sawlogs show wide differences. Just why these variations exist is difficult to determine " from the data received; further research concentrating on this point is suggested. One might hypothesize, however, that the structure, relative amount of capital investment, and organization of pulp mills tend to favor dealers, at least for certain firms, Both kinds of manufacm 68$.” Afloin A kgpm TMOHirdm. hunv OOH—Ava ”outmdfiilltx 0 Hnnfihu enuncM ohms mnofioon moasnm 02 a OOH mHmaHo m.e semen H.mm smHaem o.mm oashom Oom mHHhm chances HHa OOH Omo.H s.o OHH m.mo omth ehaaHhhhHoaO OOH momaOm s.m wmqu m.oe mmmamm neon mwOaHH m.m HmoaH as sea OOOeH 8 OOH 30th SW 3th 3e 83 Hi mm; moo emH aaaioom a, HOOH «mo.m O.mH aem e.ON mmOhH m.Oe Homhm m.mH OeohH moeiOOH OOH mam e.NH ea s.am mmH H.se eoH e.O m OOH asap mama peaches .e .n .a cahonhm .m .n .a paoonhm .a .n .2 schochm .a .n .2 pamonom .e .n .2 .a .n .2 coma Hogpo mama aso Hopoa sopmdo Hooduonm moosoflmao n30 mmmao oesfio> momma amend hpdpm unmadzmm Mo monsom pnmwailova manna *1) gab-p )1 tit mu an MP I111: 111; tins. Appar‘ Names. 3 We difficult t1 {Mam mil/0r 9 here is limit W! Process. m“ by mu Est'tired with pi has my be C: W firms. (at Pence Want Willem, With tithe fence : time 10 Self, flint of mm ‘41: 59 turers favor producers in wood procurement, but sawmill operators are more self-reliant, i. e. , they procure a higher percent of wood as I stumpage than do pulp companies. Sawmills are also different in that they out small amounts of logs from their own lands and do custom work. Pulp mills in the Lower Peninsula gave no indication of acquiring timberlands. Apparently there is no shortage of pulpwood from non- company sources. Sawmill operators, on the other hand, may be having a more difficult time to purchase logs and, thus, be forced to buy timberland and / or stumpage. There is limited competition between pulpwood and sawlogs in the marketing process. Larger diameter, better quality aspen is often purchased by sawmills. Sawmill operators may pay a slight premium, as compared with pulp companies, to secure such logs; also, hauling distances may be considerably less, depending on location of sawmills and pulp firms . Posts Fence companies obtain their posts and pickets from large numbers 0f Suppliers, with an average of approximately 230 per firm. In the view of the fence firms, these suppliers are producers. However, there were 10 self-appointed post dealers interviewed and they reported 23 Percent of volume going to fence companies. Nonwrecognized dealers receive no bonuses for the services which they perform. mum practfi In or long, ani MM and contri W, and finall 111k considered 3.113: Mine m10m 20c “hemmed: M“ Ween: ”51th:. 1“ (Equal m “Miners in M“. Thus, minimum mm“. Fart: Mucus “ho pro “t“ quantitie wt income fr QM” three I ‘L‘ x “9ng amour 60 Wood Purchase Agreements Purchase agreements of primary mills help to further analyze wood procurement practices. First, an over-«all view of size, advance pay-— ments or loans, and business aids to producers and dealers will be examined and contrasts drawn between pulp companies and sawmills, Second, and finally, initiation, timing, form, and content of agreements will be considered . Over-all M §_i_z_e_. Producer purchasing agreements with pulp mills range in size from a low of 20 cords to a maximum of 5,000 cords or more, The average Purchase per producer amounted to #62 cords in 19590 On the other hand, Purchasing agreements between log producers and sawmills ranged from a low of 5 M. b. f. (equivalent to about 10 cords) to a maximum of 1,200 M. h, f. (equal to about 2,1L00 cords). The average sawmill purchase from producers in 1960 equaled approximately 609 M, b, f, or about 122 cords. Thus, producers who supply sawmills do not handle, on an average, as much wood per year as do pulpwood producers who sell to Pulp firms. Further exploration would probably show that many of the Producers who produce pulpwood , as PI‘BViOllSly suggested, also handle limited quantities of sawlogs; at best, 60.9 M. b. fa could only sup-u Plement income from other sources. Dealers of the merchant middleman type handled an average of 15866 Cords for three pulp mills out of nine in 1959. This is more than l0 times the average amount of h62 cords handled by pulpwood producers that year, “We inadeq| lull»: purchasd’ Ill recognize Get! “1”: (5) 1mm “an dealers on I'm: 01‘ potenti: it W further imms in the haunt. “same M Wilts or hm this “as ”w“ by making div-em in 19 ill-three or the Ru“ pal’llmts 1! 341m loan. 1 Rummy ll3 pe M3 for 10gs é wally depend tissweqmte : mum of . 61 Sawmills, as mentioned, do not use the dealer system of procurement, so contrasts can not be drawn with pulp firms. One can hypothesize that the reasons dealers do not handle sawlogs are: (l) margins above costs may be inadequate, (2) many mills do not buy throughout the year, (3) volumes purchased are low in comparison with pulpwood, (it) mills do not recognize dealers or may not have finances to pay for their services, (5) producers and mill employees are delivering logs at less cost than dealers can or would, and (6) alternative opportunities for dealers, or potential dealers, are greater in other enterprises. These points need further research and are merely offered as possible reasons why sawmills in the study area do not use the dealer system of procurement . Advance Payments 9; loans. Both pulp mills and sawmill firms make advance payments or loans to producers. Four of the nine pulp companies indicated this was done regularly, i. e., company policy was to assist Producers by making advance payments on cut wood. A fifth firm made such payments in 1959 but claimed this was not usual company policy. Twenty—three of the 86 sawmills (about 27 percent) also made loans or advance payments in 1960; lit more firms indicated they made an occasional loan. If the 23 and the lll are added, one can conclude that approximately 1+3 percent of sawmill operators make loans or advance Payments for logs and bolts. With both pulp mills and sawmills, loans are usually dependent on amount of harvested timber; such cut wood Provides adequate security for the amount loaned or advanced. Reputation or reliability of the producer is a factor in providing loans, but is “readily measured Oth_er_ Blslnejfi mmmm different mint! E, (2) purchasim her get loans’ 1W“ and (6) W“ (nearly muted 16 P humanely. mosh oned tons, Wm] l l “many initia‘ dealer System ‘ hrs in comri mt data; “It imam nerve as I10n~I 51o: their W006 do; new quotaE ital seek out 1 if inventories I a 15 a kmd 0' 1 (0—4—4 62 not readily measured. Loans are usually interest free. 9351" Business gigs. Pulp mills and sawmills also offer other business aids to producers. These services or aids encompass one to six different points as follows: (1) purchasing stumpage in producer‘s name, (2) purchasing stumpage for resale to producer, (3) helping producer get loans, (it) loan of equipment, (5) helping producer buy equipment, and (6) locating timber which is for sale. Seven of the pulp firms (nearly "(8 percent) and lit of the sawmill operators (approximately 16 percent) offered such aids regularly in 1959 and 1960 respectively . Initiation 9: fleements _lfglp Companies. In reference to pulp firms in the Lower Peninsula, approximately one-third of receipts are initiated by mill representatives and, thus, two-thirds by sellers, 1. e., producers and dealers. Only one company initiated all purchases in 1959; it was the firm which uses the dealer system exclusively. The matter of mill initiation with dealers in comparison with producers can not be explored adequately with present data; further analysis is required, but a hypothesis is that mills initiate'purchases through dealers, or through large producers who serve as non-recognized dealers. Apparently mill representatives discuss their wood requirements with dealers and large producers before issuing new quotas or marketing agreements. However, producers in general seek out procurement personnel and try to obtain quotas. When Wood inventories are low, mills may announce unrestricted buying, which is a kind of initiation. Usually quotas are reinstated within a iii or six weeks, urement at 3 cc died later, but iliiis is not mai iilchase agreem ‘liniiiaiive in I it is often so iii quotas and o: “is pulp mu Fillies are noti: \ iii by a mill : “filed by teleph ti In; my suppleme i i fliers 01’ react WE It 2::eca11 that 5 I “Huston SOUIQQ mus initiat‘ W “5 Stumpaz ‘ \ l i | i not reply to ' ”ii-its amounted 73%: , Elpts “ere i M “‘“L‘ie 6' T0 f !__4 J 63 month or six weeks, as storage facilities preclude unrestricted procurement at a constant price level, "Constant price" will be examined later, but one can observe here that the flow of pulpwood to mills is not maintained by adjusting price levels but by using quotas or purchase agreements. Thus, one can understand why a producer takes the initiative in securing as large a quota as he can; competition for ' quotas is often severe and producers even seek out neighbors who have large quotas and offer to help them fill their agreements. When pulp mills initiate wood purchases from small producers, such suppliers are notified by mail or by newspaper advertisements, or are visited by a mill representative. larger producers or dealers may be notified by telephone, letter, or telegram, or visited by a mill person. Mills may supplement wood receipts from dealers or larger producers by using one or more of the above mentioned techniques in discovering new Suppliers or reactivating previous ones. Sawmills. In examining initiation relative to sawmills, one needs to recall that 5 percent of receipts came from own lands and 6.3 percent from custom sources in 1960., Of the remaining 88.7 percent, mill Operators initiated 13.5 percent of receipts in the form of logs and 12,9 Percent as stumpage; whereas, producers and others initiated 39,1 percent 0f Purchases as logs and 18.8 percent as stumpage, One sawmill operator did not reply to the question pertaining to initiation of sales but his receipts amounted to only 001 percent of the total sample; 1&2 percent Of receipts were listed as "indefinite," i. en, the initiator was not identified, To further summarize, sawmill operators initiated 26A Mum othei Hum sales-4 Width mm: “WI loss, 11 W6 and acco “its practical W118 rece ii) of raw Wood M» Is mntic 5" percent was 1 3% if so, 1 miiiim. L‘ii is m, abOVI ME eeme; Riirenntati. the!“ and, When mm $1“an “en st it be cared M k n 61!- percent (13.5 plus 12.9) of receipts and producers or others accounted for nearly 58 percent (39.1 plus 18.8). In comparing pulp mills and sawmills one can conclude that producers and others (non-producer landowners) are very important in initiating sales--approximately 66 percent with pulp companies and 58 percent with sawmills. If one ignores sawlogs received from own lands and custom logs, producers and non-producer landowners become more important and account for slightly over 65 percent of volumes received, which is practically the same as the 66 percent for pulpwood. Sawmills received slightly more than 61 percent (including custom logs) of raw wood as sawlogs and 3h percent as stumpage in 1960; 0.1 percent, as mentioned, was undetermined in regard to logs or stumpage. Five percent was from own lands and might be considered as a form of stumpage; if so, the stumpage figure would equal nearly 39 percent, not 31+. Fence Firms. Producers initiate nearly 91+ percent of post receipts, which is far above either pulpwood or sawlogs. Timing 9;; Agreements Representatives of primary woodwusing mills must plan their Procurement and, thus, their purchase agreements far enough in advance to Prevent delays in mill operation. Such planning appears to be more necessary when storage facilities at mills are limited and large supplies can not be cared for without excessive costs. Pulp Mills. In considering pulp mills, timing of purchase agreements, quotes, or contracts vary widely: For eight of the nine firms agree» Mlisnotei Illenquotasd Mounties con 3min. This a Minder of i H” Wits prior Mullen woodya 9"" to place : EM on hand i Mill lmnlerempi {heiresentau‘ tile forest t, limo Stated "Neitricted lillmy eilpty Edelivering We helm, for the Emmy. At in We befo: Whirl. lining my l '2?» ul d3“) to s] Engaging to l 65 ‘ments are completed from one week, perhaps even less, to 16 months prior to delivery of any raw wood. One small firm claims to have no prior agreements with suppliers. Just how this company times its wood purchases is not clear. One mill has a definite date in April of each year when quotas are distributed for the coming l2 months. Another firm completes contracts with part of its suppliers as far ahead as 16 months. This same firm also uses purchase agreements or quotas with the remainder of its suppliers; such agreements are consumated from six to 10 months prior to wood deliveries. One or more mills issue Weekly quotas when woodyards are relatively crowded. This kind of timing appears to place suppliers in the uncertain position of having cut pulpwood on hand which they may not be able to sell and leads to probably underemployment among suppliers and their employees. Pulp mill representatives should be able to control the flow of cut Wood from the forest to the mill so that suppliers can plan to cut and deliver a stated amount each month. Unrestricted buying for a month or six weeks when woodyards are relatively empty causes a large number of producers to begin cutting and delivering wood; but these persons may not receive a quota or agreement for the remainder of the year, which leads to economic uncertainty. At least the new producer should be warned that he may not get a quota before he goes in debt for or invests in expensive machinery. Quotas may be raised or lowered on short notice, e. g., one to seven days, to suit the convenience of mills. However, such timing may be Confusing to suppliers who also must plan their production. Despite loin or M“. you. In coni‘ iii an shorter; “ll lieu aneenen 1m lies conni film. Seven to 1 "hi” Wheres, 11mills; Change WW Ploduoe “Waters who Mile 3 differs] “in, but a hip W Six months “like Planned 1 @W ‘43” or Member i. fin iol \‘w tum bli‘le in sing one am his to the PI". 66 the apparent deficiencies of the quota system as generally applied in the Lower Peninsula, and of unrestricted buying when mill yards are low on pulpwood, suppliers appear to make decisions on the basis of past quotes or sales. Sawmills. In contrast to pulpwood, the timing of sawlog agree— ments is much shorter; generally one to seven days are required between the time when agreements are completed until deliveries are begun. One mill owner makes commitments as far ahead as six months, but he is an exception. Seven to nine of the mill operators interviewed have "standing" agreements, i. e. , producers deliver logs on a continuous (daily) basis; changes in species, sizes, or amounts are readily worked out with such producers and are made within a week. Of course, those sawmill operators who buy stumpage or who cut logs from their own lands have a different timing problem; data are incomplete on these operators, but a hypothesis is that timberland or stumpage must be Purchased six months to two years in advance of logging in order to insure the planned lumber output. Fence Companies. Fence firms usually negotiate agreements in October or November, well in advance of the peak production months of Winter . £939 9: figreements Raw wood buyers and sellers must be able to reach agreements and understand one another in order to facilitate the flow of wood from the forests to the primary mills. Thus, the form of agreements becomes min ‘ We, on ch MW, and fl! “user mus (‘ We fin has Minimum "WP. ”Those “which issues 31101 the flow < 3’ the fieneral M 01‘ oral. him" and six 1"“ Mticular 1““ onSmite ‘ 31%,th M3 13° Varic M11. A imam) “hi tWMde for 1 tilt offer 1e: ngnts . ’I m. 2%“ use or 6'? important, especially if questions or arguments arise about what was agreed upon. 211.2 %. There are three of the nine pulp mills which use oral agreements, one claims to have no prior arrangement, as mentioned . previously, and five use written agreements or contracts. Only one of the larger mills (50,000—99,999 volume size) uses the oral procedure, but this firm has a carefully selected, limited number of suppliers so that communication is‘relatively easy and disagreements are not likely to develop. [Those firms which use written agreements, except for one mill which issues genuine contracts to part of its suppliers, still control the flow of wood, 1. e., purchases, by the use of quotas. In fact, the general pattern is to use quotas whether agreements are written or oral. A "quota" is not as broad a term as "agreemen " or "contract" and simply specifies the amount of Wood which will be bought from a particular supplier in a week, month, or other time period° Quotas originate with buyers; on the contrary, agreements and contracts indicate a mutual relationship between buyer and seller with both agreeing to various conditions relative to supplying raw wood to a primary mill. A contract is taken as more restrictive and binding than an agreement, which may be merely an "intent to buy," but even a contract can provide for the use of quotes, Written agreements or contracts usually offer less opportunity for misunderstandings than oral arrangements . Sawmills. In‘considering sawmills, nearly all mill owners or Operators use oral agreements when buying logs. However, stumpage memes-shim an ally based on m latch were samp] want. This t3 fllsvhich are 131 in to obtain '. FEE 003251111 WMWMa “her uses only i‘u‘ihutes a pm 3““ needed. EM eeme “agreement tam Various 6 “Mme “Helium, j 3-315 agreed or “Mange W11 stirrer as fl {for Wed her. Immuo 1M" Sthis o .‘ 1‘" Mom ___.—.4 68 purchases~-which are more difficult and complicated to consumate~-are usually based on written agreements or contracts, Two mills out of 86 which were sampled bought limited amounts of logs without prior agreement. This type of buying is rare and is probably limited to those mills which are largely dependent on stumpage and their own timber cutters to obtain logs, rather than purchasing logs from producers. Eggs Coyanies. The fence firms use different methods of obtaining posts and pickets. One company uses both oral and written agreements° Another uses only oral arrangements. The third merely publishes and distributes a price list which shows prices and sizes of posts and pickets needed . Content 93: greements An agreement or contract between a raw Wood buyer and a supplier contains various details pertaining to terms of sale. The kind and amount of wood is usually specified, sizes and quality are considered, time of delivery is mentioned, basis and time of payment are covered, )and price is agreed on. There may be some mention of clear title to the wood and compliance with state and federal laws pertaining to labor, flip M, Among pulp companies, details of contracts or agrees ments differ as follows: One mill may require aspen and pine and another mixed hardwoods or sprucewbalsam. A firm may agree to buy aspen but ask that it be peeled or debarked before delivery. The sizes of bolts or sticks of wood and quality are approximately the same among all buyers, with the exception that certain mills can use larger r bmmes 96I “I on rail 5111' “Int be out i "9 °’ Wk, so 5'00! is usual] medic feet 01 i“ are 55 inch: itboubio feet c it [0461‘ Penn 5“ date, 93pm “striated 1 M' S: W or abom M“ b°u€ht hm buy Stu] in “ill but M r“ all ; um an Duty W thou Woo Biol produce: "h \5 in additio 69 diameter bolts than others and there are differences regarding lengths of bolts. Minimum top diameter is four inches. Three mills require the length of bolts to be 100 inches, i. e., 50 inches times two, instead of the more common 96 inch sticks, or 1L8 inches times two. One firm specifies 96 inch wood for truck deliveries but requires 100 inch sticks on rail shipments. One mill purchases only 55 inch sticks. Wood must be cut from sound, live trees and be reasonably free from sweep or crook, soil and/or sand-gravel, rot, and fire damage. Payment for wood is usually made weekly and on the basis of a standard cord (128 cubic feet of stacked wood), except for the mill which uses sticks which are 55 inches long; its payments are based on a long cord of 116.6 cubic feet of stacked, peeled aspen. No mill purchases by weight in the Lower Peninsula, but this may be an accepted practice at a future date, especially if mills want fresh wood. Measurement is a right restricted to the buyer. Sawmills. Sawlog procurement is more complex. A few millsenfour out of 86 or about 5 percentm-cut sawlogs from their own land. One of these also bought standing timber in 1960. The great majority of mill operators buy stumpage or a combination of logs and standing timber. Only one mill out of 86 which were sampled was dependent on government Stumpage for all its wood supply in 1960 and this was a very small firm with an output of only 50 M. b. f. Eleven other mills bought part of their wood as stumpage from government land but also purchased 1088 from producers; 10 of these firms bought stumpage from private owners in addition. Recognizing some overlapping, 69 of the 86 mills ..‘". 1” fl “5: WW! ‘ w I!” kl H“ mm!” . a... .' 7,._ . °d 1" er: "_I_!\ “‘9’“; <'_: £ I. .. sham: é ". ; ,, . A. n . “Wuhan! Mull time i II has which i ”in stump dial In stump diam in one exceptii a. - Mora in the i ”M for susta War as 2: ate W193 with “We future “he“ or sawlc MW loge E T”‘3'"11‘11 tc Rim miners, 3 3"” 'hich bong] “mete the ' M19 other ; 3i”humanely The“ were W hivate t 70 purchased logs from producers, 51 acquired private stumpage, and 12 bought standing timber from government land. Thus, one can conclude that to facilitate the flow of logs from forests to primary mills requires detailed and different types of agreements or contracts. A few mills want only certain species and restrict their agreements accordingly--both for log purchases and in buying standing timber. Nearly all firms which buy stumpage are restricted as to minimum size trees which are to be cut; this restriction takes the form of a minimum stump diameter-e-usually 12 or 11+ inches; however, four mills used a stump diameter of eight inches in 1960. There is no indication (with one exception) from the data at hand that sawmill owners or operators in the study area buy privately owned timber which is being managed for sustained yield, unless one considers a minimum stump diameter as a start in that direction. Pulp mills, on the other hand, are working with hunting clubs, and perhaps others such as Tree Farmers, to insure future wood supplies. This situation appears to be a basic weakness of sawlog procurement, especially of those mills which need high quality logs. To return to a further consideration of stumpage agreements with private owners, 10 or 11 of the 51 mills, about 20 percent, of those firms which bought standing timber in 1960, were not limited as to time to complete the cutting and removal of logs. The range of time agreed on by the other reporting mills was one to five years, with an average of approximately two years. There were 29 or 30 sawmills in the study area, out of the 51 that bought private timber in 1960, which purchased stumpage by the "lump ‘ ‘ ‘9‘ '1“: 3. R v ‘ 3‘ WI " t" "‘“P c 5' I‘m .5 M . I - I» . . :‘i ‘-. -»-I:'.'l3'.l “a m . a- H Y "'"*“""' .e: grunts . ..‘..l ‘ :V‘I? ' . ".u' H's-9‘: Isfl'flfli "a. ..'i '~ ‘13; wail 'u-A this in; M» murii mm om- “mar or opd Hie hills n “W loss; ‘ i1this aim ‘19 or Insure. WWW fr ”separated an “I! of the We 01” stand imam Spec Manly 15 “in”, 581nm M the 69.. W ”m, 01 hand spruce. Mime trues, Dame Md and 10 A Monty 71 sum, " at least for part of their purchases. HOWever, IA of these also used payment by log scale or measure“ When lump sum buying is done, payments are usually made in advance of cutting the timber. 0n the contrary, if payments are made on a M. h. 15'. basis as measured by a log rule, then the landowner is normally paid weekly or at a convenient time after the measuring is completed. As is done with pulpwood, measuring of privately owned logs is generally considered to be the right of the mill owner or operator. Five mills make settlements with landowners for stumpage after 53‘7ng the logs; this represents approximately 10 percent of those mills which make stumpage purchases. Such settlements are based on lumber scale or measure. This procedure could hardly be used if logs were being supplied from two or more sources; logs would be difficult to keep separated and disagreements might follow. Many of the points found in purchase agreements relative to stumpage or standing timber apply to purchases of logs: Mills may buy only certain species, as was suggested previously. A few mills“ approximately 15 percent of those which buy logs-—grade logs on delivery, especially hard maple, black cherry, and basswood. Seven mills of the 69--about lO percent--purchase only on the basis of a standard cord, one uses piece measurement when buying northern white cedar and spruce-balsam, three prefer lumber scale, and the remaining millS‘:-~6.}_Jproximately 81!- percent of those buying logs~=use one of three 1088 rules, namely International %, Doyle, or Scribner. Two mills use both cord and log rule methods of measuring logs. A majority of the 69 mills which buy logs limit the top diameter a must has! .1» ~ ”I”. a, a “m a“ p. '9 "4:;m -' “:29 ”£1.40“ "'.A.... .1 ‘1' al.: -. ‘1 , _ 1"“ v .. _., '~ -, w . ‘ l I, {M'Iaflfib ' -- ihkflitienai I. . ..‘-m.- I!" Iv not be? lllmu Mamet; "dual log for 1 Whom - W 10 feet 0: .1; I “Ha related ‘ in Hum. 3mm rep:- amnspecfi “'1" producer, “m” can den ‘1“, and time he tine e31 we, One In “day, and St: m“ M mill ‘ mof the“ an a“ Payment ‘ ‘ufll °Peratq he“ is 11 II as practi 72 of the logs to eight inches; however, four mills-~about six percent-~go as high as 12 inches, and 10 or ll firms-~about’ 15 percent-—will buy logs with less than an eight inch top diameter. Mills which buy logs with very small tops may or may not be equipped with bolter saws, instead of the traditional circular or band headsaws; also, lengths of logs may or may not be less than eight feet. Bolter saWS can effectively mill small diameter, short length logs-wreally bolts; whereas, the marginal log for the common headsaw--either circular or band--is commonly thought to be at least eight inches in diameter at the small end and 10 feet or more in length. Further research on log grades and sizes as related to marginality appears to be needed in the Lower Peninsula. Sawmill representatives seldom--probably about 5 percent of mill 0Perators--specify the amount of logs which they will buy from a par... ticular producer. The great majority of mills prefer to take what a producer can deliver, but with oral instructions about species, quality, sizes, and timing as lumber orders are received. The time established for paying producers for their logs is variable. One mill may pay by the truck load, another at the end of each day, and still another weekly or bimonthly. Approximately 1+0 percent of mill owners or operators pay for logs on a weekly basis, but part of these are willing to pay by the load or at the end of each day, Time of payment is readily determined to suit both buyer and seller. One mill operator pays his suppliers when he has the money. There is little indication in sawlog procurement of the quota SYstem as practiced by pulp firms; only about 5 percent of sawmills, as inking deli Impose as um: aired ”ml cutting 5 WI mm mm field 1 he, Hood pr: Mien, wild: 1" “0110111611 Meals is 3W itimhip Hit] War or 0m: h is a mtua has :0} “(Wm Mints cwer Mt: Method 0% “Miss mats are to b we“ 1‘ime. mints are I ‘73 mentioned, specify the amount of logs they will buy from a particular producer. Even these mills may not regard their restrictions in the same manner as pulp mills do. However, a sawmill can stop a producer from making deliveries, i. e. , restrict purchases, which serves the same purpose as a quota. Little direct information was acquired relative to state and federal cutting agreements with sawmills or with producers who cut logs from government land to sell to sawmills. One can assume that sustained yield is an objective of National Forests and State Forests; however, wood production is only one among other uses, such as outdoor recreation, wildlife management, and water conservation. In concluding this section on wood procurement, the following hypothesis is suggested: Sawmill operators have a close personal relationship with their producers. This tends to make the mill operator or owner aware of his producer's problems and vice versa, and there is a mutual willingness to assist one another. £53133 Manufacturers. Among the two fence manufacturers which make prior commitments to producers, contents of agreements are quite similar. Agreements cover species, amounts, quality, time of delivery and Payment, method of payment, and price. One species is specified, namely northern white cedar. Posts and Pickets are to be straight and free from rot. Deliveries can be made at any convenient time. Payment is "on delivery." Bonuses may be paid to producers who deliver large volumes or who separate posts and pickets by sizes. Agl‘eements are not considered binding by either manufacturer or prod ucer. Maybe W, 6W1, . ext III at the l “in to him M1m,‘ e. g. N to palms the! '11]. be f M mm I"Mr Penina time. in hit Why. m 7‘” "it fall, in on, firm < Wham“, “Worm GOI trial ““16 n ttietion, new ta. These re tinny from in” t0 pay h We “Beets 7h Seasonal Deliveries and Wood Storag There may be a seasonal flow of raw wood from forest to primary mills and, consequently, a wood storage problem at certain times because of the excess of deliveries over immediate use. A beginning relative to deliveries and storage was made under "Wood Procurement Practices," e. g., unrestricted buying and quotas were examined in regard to pulpwood procurement. In this section, seasonal flow and storage will be further explored and comparisons made between pulp firms and sawmills; minor reference will be made to fence companies. Pulp Mills Lower Peninsula pulp and related mills usually reach a peak in deliveries in late summer and are often at low ebb from latter March through May. The huge potential flow of pulpwood to mills during the summer and fall, and maybe winter, is, or can be, controlled by quotes or, as one firm calls these, "purchase orders." Without control of deliveries--either by use of quotes, contracts, or changes in prices Paid—-storage costs would become prohibitive or deterioration of raw material would result. During March, April, and May highway weight restrictions usually preclude trucking heavy loads, except on better made. These restrictions often interfere with pulpwood deliveries, especially from more distant points. Price per cord does not increase in order to pay for hauling lighter than normal loads. Pulpwood Producers concentrate on cutting and logging during the spring months with the expectation of extra shipments after highway load limits ‘ . . .e I 5' ' 7 . ,. emits. -3. E: a 4 ‘ '1‘,“ a: L .. '- J r ’- ha . ‘ I . at at . I L . 9 . f ,. !:91” “mm ndeuveries- Mp mu ref slut flow of : ea achieve thi number of w Mailers who Wage Imrestr Mamba meet wide 1 hellfire“ of .345, and crer '3, eke a "11‘ We can obs 5W facili' heeled end ”35‘ Mill yer W the peel WW- One e: ‘11? or con I'-. . i t 'z ‘ . “‘3 Prlor t ill or “flbarke W Wheel 75 return to normal. However, after the highway "frost" restrictions are lifted, mill yards begin to fill and quotas are imposed. Those mills which are equipped to handle incoming pulpwood by rail can partially overcome the springtime drop in inventories caused by the lag in truck deliveries. Pulp mill representatives express their desire for a relatively constant flow of raw wood from forest to mill yards. Those firms which achieve this goal obtain a large percent of their wood from a small number of wellamechanized and specialized pulpwood producers or from dealers who effectively control deliveries. Those mills which encourage unrestricted buying for about a month to six weeks in the spring or early summer are more dependent on the "logging season" and can expect wide fluctuations in inventories and to receive deliveries from hundreds of small producers—«many of whom. appear to want increased quotas, and credit, so they can achieve some economies of size and, thus, make a "living." One can observe that certain pulp mills are restricted on storage space and facilities. One can note, too, that these same mills may buy both peeled and unpeeled aspen, as well as jack pine and mixed hard» woods. Mill yard superintendents apparently have a difficult time keeping the peeled and unpeeled aspen, and the various other species, separated. One or two of the nine mills in the Lower Peninsula Partially or completely solved this problem by requiring that aspen be debarked prior to delivery. Another mill buys aspen only in the rough or unbarhed condition, which helps to solve storage problems on its yard. Whether portable debarkers can effectively remove the bark [Mil the Mom and a “I! load on 115‘ Will: “PM “M. Also WI When sud d] to deterior Spruce-balsa War when the We raw Vooc' ”9‘ by highm13 in aneunt ( “Wm and 1 WW on Mars. The number ( My pone. EH “Pen is 1 Hit}; Mus Vb: ‘M ““93. (for Pulp Ini‘ 76 of Jack pine and mixed hardwoods was not determined; no debarked pine and denser hardwoods were observed. The very hard knots of jack pine may prohibit the use of portable debarkers. Despite problems relative to storage and deliveries, mills like to keep at least a month's supply of raw wood on hand and prefer four to five month's supply. This is especially important about March 15 each year when three lean months are ahead. Also related to storage, mills do not commonly store wood on yards when such inventories extend into the second summer; wood tends to deteriorate badly during the second summer. Spruceabalsam pulpwood is generally cut and logged during the time of year when the ground is frozen. This may preclude the constant flow of these raw woods to mills. Other species are not so restricted, except by highway weight restrictions in the spring, as mentioned. The amount of available labor may be a factor in seasonal deliveries, . but dealers and larger producers keep up their shipments and apparently do not depend on seasonal workers, In other words, they are frills-time suppliers . The number of products which a pulp mill manufactures influences inventory policies, and thus, storage problems. With excelsior, where Peeled aspen is the only wood used, storage is not so difficult as it is with mills which produce two or more products and use a variety of Species . Sawmi lls Seasonal deliveries and log storage for sawmills are more complex than for pulp mills, except that volumes handled are usually far less: m, an, 1 Iii, nether an; illIs and soft? Ml, deliver! iMes of 10; Six of the E W100 11. Ml! concerned "m load or a “1°! supple tiller m mum, MW, bee ”action, and M3 have 0 Emma's. Miner's Job -T—————’ .3 77 First, there are wide differences in mill capacities or annual outputs. Second, many mill operators supplement their incomes with other employ- ment and, thus, do not operate their mills ’40 or more hours per week. Third, weather and highway restrictionSuwhich result from spring thawing and soft roadbedsMinterfere with transportation of logs. Finally, deliveries and storage are complicated by the number of species and grades of logs which are used. Six of the 86 sampled mills manufacture relatively little lumber» less than 100 M. h. f. per year. These small mill operators are not greatly concerned with deliveries at any time and seldom have more than a truck load or two of logs on hand. Larger mills are more concerned that log supplies are maintained. Smaller mill operators-“those who manufacture less than 500 M. b. f. annually-asupplement their incomes by farming, pulpwood production, garage work, beekeeping, carpentry work, landscaping, Christmas tree production, and lumber yard work. At least two of the large mill operators have other employment but keep their mills operating by hiring workers. A small owner tends to do hard physical workwperhaps the sawyer's Job-while the mill is producing. He also does most of his own logging and says he prefers to do this during the winter months “that logs can be kept cleaner and that milling is easier in the summer. larger mills usually operate on a year=round basis and at least 11.0 hOUI'S per week. Therefore, seasonal deliveries and log storage may be ilflPOrtant. The general pattern is to buildnup log inventories during November or December through February, with the expectation that weather in March and April will be less favorable to cutting timber and hauling Him: for 1 mm April, , h50° I. h. f' m «ma 1' mm" and I1 Municturq ll“Protects hi 5*“ '10: month: M11 during I'll firm is 61 “ox mus, t; "fillets, whici herates: and w the; in Sale T” “use i with but a ‘31”! Precequr “it Pallet s Elity lmber ‘ {er 1‘ norm] its “9 Made W “image a :3 Meagary fl ~"Jj vure' In 1 78 logs. Highway weight restrictions may influence log transportation during the spring, as was noted for pulpwood. Despite unfavorable conditions for logging and trucking and the highway restrictions during March and April, about 30 percent of mills with annual outputs greater than 500 M. b. f. receive a uniform flow of logs throughout the year. The demand for different kinds of lumber also influences log deliveries and storage. This can be illustrated by considering a firm which manufactures pallet stock or pallets, contrasted with a mill which produces high grade lumber for furniture. July and August are often "low months" for pallet sales; whereas, furniture stock may sell very well during these months. One can consider a crate and box mill: Such a firm is dependent on the seasonal nature of fruit crops. Crate and box mills, therefore, are likely to manufacture other products, such as pallets, which can be made from the same grade of logs as are used for crates and with the same labor force, thus preventing seasonal declines in sales. The range in grades among logs and species causes mills to diversify, but also complicates log and lumber storage, as well as milling procedures. A high percentage of mills in the study area Produce pallet stock or pallets; pallets are manufactured from low quality lumber which in general comes from low quality logs. Pallet lumber is normally useless for furniture, flooring, and paneling. Pallets are made from freshly sawed, rough lumber; this simplifies lumber storage and precludes air drying and kiln drying-"both of which are necessary for hardwood lumber destined for factory grades, e. g. , furniture. In passing, one can say that milling a high grade log is if}? «+6153 mi 'tor gr m W138 : to return td it In deliver met Me 103: W Ming ca ikfln drying 1 “secondary In 1th, along vi 301111 air dr: “11! done wit} We lumber tiny, Beca‘ ull in the Stu “State, 1. e. Uh] “huh "W“ air a Mm 30;: W deliver 2%“ Which 7:91 with bad H ms tend to 1: tin: or below 79 mne complicated than to saw a pallet grade log; pallet logs are "live seven“ whereas, high grade furniture, flooring, and paneling logs aresawei‘Tor grade," i. e., to get the best possible grades, yet Iflthout spending excessive time in turning the log or cant. To return to log grades, when high grade black cherry or hard mnfle are delivered to a mill yard, these logs are separated from nfllet grade logs and are accumulated until such time as a day or mus of sewing can be done on these alone. Then if proper air drying mm kiln drying facilities are not available, the better lumber is sold M>a secondary manufacturer and the lower grades are converted into paflets,along with oak, elm, beech, soft maple, aspen, etc. However, tfa mill air dries lumber, then kiln dries after air dryingaeas is ummlly done with hardwoods=~storage facilities and investment in mfiomatic lumber stackers, kilns, lift trucks, planers, etc. become mmessary. Because of the low output of high quality lumber by most mine in the study area and the high investment needed to vertically intSgrate, i. e., to further manufacture, mills tend to sell their lhmted outputs of factory grade lumber to secondary manufacturersmawith m=without air drying. To draw some contrasts between pulpwood and sawlogs relative to seasonal deliveries, one can note that mills which store pulpwood mm those which store sawlogs, at least among the larger firms, are fads with bad weather and highway restrictions. Therefore, both grmgm tend to build up inventories in anticipation of two or three mmmhs of below normal deliveries of raw wood in the spring. Both khfls of mills face wood deterioration problems if materials are stored Titer“): ind/or gr: Ill: in this ””1530! Illamflls 9.1 5. pulp I111 : W; to lose : 3». mm ow “1500 M. b. r We“; such Fence coupe 3‘le Winter . W haul POE 22““ 18 rest: Ellie}, are t in, be copj 1‘ “Setup Q 1*“ anti: Fence 001111): ill llue Sta 11 ‘ ""0:- 3001's as 80 into the second summer. Pulp companies and sawmill firms face storage and inventory problems in proportion to the number of species used and number and/or grades of outputs, although sawmills are usually more complex in this regard. Other similarities are less obvious or nons- existent, e. g., pulp mills normally operate at or near fullacapacity, while sawmills are intermittent or considerably below fullwcapacity. Thus, pulp mill representatives probably pay closer attention to wood supply; to lose a day or more of pulpmpaper production is expensive. Also, sawmill owners or operators, especially those who manufacture less than 500 M. b. f . annually, often supplement their incomes by other employment; such is not probable among pulp mill representatives, Fence Manufacturers Fence companies have their lowest inventories in the late fall to early winter. As soon as the swamps are frozen, producers begin to cut and haul posts and pickets. Northern white cedar cutting on State Forests is restricted until January, so as to provide tree tops for deer which are often hard-pressed for winter food. The state restrica tion may be copied by private landowners who are also interested in deer management. Thus, marketing of posts and pickets does not reach a high level until January» Inventories are largest about April l, Fence companies have trouble storing peeled posts. Such posts Will "blue stain" unless stored under cover. However, storage can be 0Ut~=of~doors as long as posts are not peeledo hum-oi II, why, I ”1,111 the 10] “Wt the m WW deflm Mes of ya: 'mlsior) 11 39: First, . 31M allied ‘ ”he firm-..‘ ill115 in the mm m m "H mm H Wits. For “induct; a 25; “Wither f1 2h“teeth, huh “We V‘" of Wu M“: nae WI “Wm M: one m“ Value h._ afiel; "hen Bl Sales of Finished Products Once a product is produced, then steps are generally taken to sell it or, perhaps, to consume it. Without sales and a margin of gain over costs, in the long-run a firm goes out of business. Therefore, in analyzing the marketing of wood products in the areas of Michigan as Previously defined, sales are important. Sales of pulp-paper and allied products (flakeboard, hardboard, and excelsior) in the Lower Peninsula are simple in comparison with lumber: First, one can compare the number of firms. The number of pulp and allied mills is highly restricted, ia e. , there are very few of these firms-“nine in all, Whereas, there are approximately 190 sawmills in the study area. Second, coupled with the weight of numbers, sawmills are widely distributed, low on outputs and value per unit, and have a product which is heavy and bulky, Pulp firms tend to specialize on outputs. For example, a flakeboard firm manufactures only one basic product; an excelsior mill produces baled excelsior and excelsior Pads; another firm specializes in coated book papers, and others in their respective specialities. No mill among the nine in the Lower Peninsula manufactures more than two general products. However, the number of products which sawmills produce is varied, and is complicated by Species, grades of lumber, drying, and degree of manufacture or secondary manufacture a Third, one can also observe that sales by pulp and allied firms are large in volume and value and, thus, are handled by specialized Personnel; whereas, sawmills lack persons with specialized qualifications, Winnie Ema, the ‘ his, selects film the £101 MW mufai WIS and u rOttonsider males: (1) M “Miler day some” eon (2) u ‘E‘Whipuntg 3%“ his new“ (3) N Weds. 82 This is apparent from the reliance on wholesalers to handle pallet lumber and pallets and to sell the better grades of factory lumber to secondary manufacturers rather than directly to furniture companies. 01’ course, the volume of better grades of lumber, e. g., firsts and seconds, selects, and No. 1 common, is not large from any particular mill and the flow of such lumber, as previously considered, is toward secondary manufacturers who concentrate small purchases and continue the drying and manufacturing. Sales from Pulp Mills To consider some specifics pertaining to pulpwpaper and allied product sales, five points are of interest: (1) Mills normally operate five to seven days per week and 24 hours per day, with the exception of one firm. Thus, outputs are more-or—less continuous. (2) Nearly all production goes to fill previous orders. Thus, shipments are continuous and inventories are kept low. Storage is hampered by space requirements and other factors, such as low relative humidity which makes paper brittle. (3) No mill wants seasonal variation of products on hand. (1+) In general, gross value of sales from pulp and allied mills is far above that of sawmills; all pulp firms were unable to report gross incomes but the average appears to be greater than $10,000,000. (5) Sales areas, when known, are very great for three or four 0f the pulp firms; exports are common. In the United States sales may be nation-wide. TWO firms restrict sales to the Mid—West or to 2OO=JLOO h mum: Wm pulp I (1) s h. Is In as Mil. ' There My "V011 Ga; Helm on thi alum, a Way. In Wire and r (2) P Mm have Emu“ Erou 3%” in 1 “imam,” Want, a 11d t, a comParis mus Wars laminae. I .33 Pallets u muting < “Kidding as 33 miles. Further details relative to sales areas might reveal identity of firms. Lumber Sales The following points are given to contrast lumber sales with sales from pulp mills: (l) Smaller mills operate intermittentLy. Even larger sawmill firms, as far as the data show, do not begin to reach their maximum ca— pacitffl's. . There is probably no sawmill in the study area which operates five to seven days per week and 211- hours per day. However, the data are not clear on this matter; many replies were given as 100 percent of usual capacity or output, rather than possible capacity under existing technology. In other words, "full—capacity" is very difficult to define or measure and replies reflect this. (2) Production to fill previous orders is common among saws mills which have an annual output of 500999 M. b. f.; 70 percent of this volume group reported 90wlOO percent of production was covered in this manner in 1960. Smaller mills and larger ones do not reach such high percentages: Mills of less than 500 M. b. f. annual output show 30 percent, and those of 1,000 M. b. f. and larger equal 5% percent. Thus, a comparison with pulp mills relative to production to meet Previous orders apparently places sawmill companies at considerable disadvantage. However, one can say that sawmills which are manufac» turing pallets must have previous orders; pallets are made to fit the sPecifications of the particular buyer. Pallets are not wells Standardized as are factory grades of hardwood lumber. mm i (l) q in; 11-20 per Woo. 10 u’ (5) s Willy res Mal order 01 “a 13 118th Mi mes, billy to My 330 Iileg. “W othe: £9 Sales: ; Materiel.“ has “‘1 1wire it Nuts a Web and a rues and n it hm 3'0“ fistion of n mammary I Show, 33 :1 “I h‘ f- on (3 Emerned ) e 81+ ”(3) Approximately 92 percent of sawmill operators prefer no seasonal variation in product inventories. This corresponds closely with pulp company replies. (13-) Gross value of sawmill sales is far below that of pulp firms; l7-20 percent of sampled sawmills have gross incomes of over $100,000. No mill reached $500,000 in 1960., (5) Sales areas, except for better grades of factory lumber, are normally restricted to 200-225 miles. However, one mill shipped a special order of factory grade lumber 900 miles. Pallet lumber or stock is usually shipped less than 100 miles; pallets may go as far as 200-225 miles. Building lumber and cabin siding are commonly sold locally to many consumers and are not usually transported more than 20 or 30 miles. A few other observations are needed to complete the picture of lumber sales: First, pallets, crates, and boxes are not stored outside; they deteriorate from weathering, warping, staining, and decaying. Crates and boxes are standardized but are produced to meet seasonal fruit outputs and are not stored in large quantities. A failure of the peach and apple crops could find a crate mill owner with thousands of crates and no market until another year. Such mill operators hope that fruit growers will order far enough ahead of harvesting to prevent Congestion of manufacturing. An occasional factory grade log provides Supplementary products to cratembox and pallet manufacture. Second, 33 to 36 percent of sawmills with an annual output of 500 M. h. f. or larger produce without peaks and lows as far as sales are concerned, although the summer and fall months are preferred by a Mom and a: Win and I “5 “0’99, ah Wary stal “surfaced or “”118! am 3miles of 51 Was Organ “be field te ““36 ml. anderamm 1; Was $311.33 hit“ “Wit an. For. Winch 1m thtakes l/l Etta 1mm this a 10m "his“ Wit} hit“- At $31 85 majority of the 86 sampled mills. In general, sales appear higher during the summer months, especially for building lumber and, perhaps, for factory grades. To conclude this section on lumber sales, a comparison with sales from pulp-paperaboard mills is summarized: One can say that mills selling lumber and pallets, in contrast with pulp firms, are small, numerous and scattered, lacking in special sales personnel, complicated by species and grades, and more dependent on seasonal markets. One should note, also, that strictly speaking, pallets go somewhat beyond the primary stage of manufacture, but the lumber is not dried and is not surfaced or planed. Further analysis of sawmills is suggested, especially regarding economies of size, kinds and types of machinery, vertical integration, and sales organization and promotion. Only one band headsaw was noted by the field technician who completed the schedules or questionnaires on the 86 mills. The larger mills, in particular, should give serious consideration to installing band headsaws and other modern devices, such as sash-gang resaws. The reduction in kerf and accuracy of sawing permits a savings in the production of one-inch lumber of at least ll percent. For example, suppose a mill normally produces 1,000 M. h. f. 0f one-inch lumber in a year with the traditional circular headsaw which takes l/ll inch for kerf and requires an extra thick board in order to insure that no lumber is less than once-inch thick. This mill sustains a loss of lumber of approximately 150 M. b. f. per year in Comparison with a mill which uses thin saws and increases accuracy of saving. At $80 per m, h. f. , which is a conservative figure, the, Sales emu “5 t0 23 ate in to its The hues ”M t° 25 who] Eunest cc “fliers in a: Miles. What} :4" firms r1 WNW f: 86 savings would be $12,000. This amount would seem to be applicable toward the installation of more modern equipment, although saw maintenance might be higher with a band head saw and a sash-gang resaw. One could also predict that output per man hour would be greatly increased with more modern equipment. Fence Sales Sales among the three fence companies show great variation. One ships to 28 states and another to 10 states. The third trucks its outputs to its Detroit branch and limits sales to the Detroit area. The largest fence firm sells only to wholesalers. The next one sold to 25 wholesalers in 1959, but also made sales to 735 retailers. The smallest company is mostly a retail firm and made sales to 500 consumers in and near Detroit in 1959; in addition it sold fences to 30 retailers. A majority of fence sales are made in advance of manufacturing, 1. e., firms receive orders before manufacturing the fence. Orders are normally filled in less than two weeks. .45 W18. 3 In]; calledl ileum raw' Hunk of M1: his and an: W cedar posi Wind lute: W and Jame Wit treat-Me in as mom Eh 1°35 to m tit "Pk and m are sold Eliseo by 01 Sign Fiftee Pulmood l in!“ raw w‘ timed, 1. filed 16 Per 351% to t INTERMEDIATE MARKETING AGENTS Intermediate marketing agents of the merchant middleman type, and commonly called dealers, are an important part of the marketing chain for certain raw wood products in the northern part of the Lower Peninsula of Michigan. Pulpwood is the major product handled by dealers and will receive special emphasis in this analysis. Northern white cedar posts are also bought and sold by selfaappointed or non- recognized intermediate marketing agents—merchant middlemen, but Manthy and James (1963) described the functioning of these dealers and further treatment seems unnecessary. Sawmill operators or owners also serve as merchant middlemen. They sold a fraction of one percent of their logs to more specialized mills in 1960. Veneer logs, such as soft maple and elm, go to basket or container firms; hard maple and birch are sold to make face veneer; and hard maple and basswood are purchased by other sawmill operators to be sawed into factory grade lumber. Fifteen of the 86 sampled sawmills, or 17 percent, served as intermediate marketing agents in 1960. Pulpwood Dealers 313 the Marketing Chain Pulpwood dealers form an important part of the marketing function for that raw wood material in the study area. Those dealers who were TGCOgnized, i. e.,, paid a bonus for their services, by mills in l959 handled 16 percent of raw wood receipts. Also, as will be noted under a later section on "Producers," pulpwood producers became merchant middlemen to the extent of approximately 15"percent of their volume Healer uh 6”I an agent Which he bu Twas Wiles the 5d in the PM i“! sent fc “was nos i '13 WWW Zmm) Why Rinses? APP; “In a“ the Way 0 53511th “Se :s companies \I M) Percent is.” System {its mun 3:13th We is the two i W“ Me a —F_——!—————————’r 88 handled, with the greatest volume falling to large producers. These producer-dealers will be considered further in analyzing data pertaining to intermediate marketing agents, but their identity will be kept separate. A dealer who is a merchant middleman can be contrasted with one who is an agent middleman. A merchant middleman takes title to cut wood which he buys from producers and resells it to primary mills; whereas, an agent middleman is a commission representative of a mill and handles the wood without taking title. No agent middleman was found in the pulpwood marketing chain of the LOWer Peninsula, nor was such an agent found to be handling other raw wood products. The Dealer System of Procurement As was noted in Table 13, a large percent of pulpwood receipts come via producers rather than dealers. If the dealer system has advantages, why is it not used for more than 16 percent of pulpwood Purchases? Apparently one primary mill finds the dealer system an effective way of conducting procurement. In addition, there are two mills which use the dealer system in part but, when averaged together, these companies receive 60 percent of their wood from producers and only #0 percent by way of dealers. There are six firms which use the Producer system exclusively, or nearly so; one company claims to use only the producer system of procurement but a dealer who ships wood t0 this firm was interviewed. One can offer an opinion that of the six firms the two which use less than 10,000 cords of raw wood each year may not have a real need for the services of a dealer. However, the s I I “"f le HUI! "Midi ,, . a, .l ‘ap. Md lore v Him for 11 liners and We agree! "is; he t1: M his 01m 1: Mod, and E “M certaix Liftitle am Healer : “the or 13] Mind our dreams ti hasBite t ”then will lists, A r Med here (1) Wind We Must; (2) the 1% km and 1 Lies. “in I 89 other four companies do receive large quantities of pulpwood. A recognized dealer receives $0.50 to $1.50 or, perhaps, $2.00 per cord more than a producer. For this payment he acts as a merchant middleman for the pulp firm and concentrates wood purchases from producers and schedules deliveries to the mill. A dealer receives a purchase agreement and a quota, although he may have a bone. fide contract; he turns to producers and gives them quotas to the point that his own is met. In addition to organizing producers, concentrating raw wood, and guaranteeing its steady flow to the mill, the dealer assumes certain legal responsibilities, such as obtaining wood under clear title and compliance with labor and social legislation. A dealer is usually a local citizen and a businessman who has knowledge of the community in which he lives. He knows producers and timberland owners. He often provides financial assistance to producers, and relieves the primary mill of troublesome details and risks. Despite the apparent advantages of the dealer system, with one exception mills are not using merchant middlemen as much as might be expected. A few suggestions as to why this situation exists are presented here, with the knowledge that further research is needed 2 (1) Dealers tend to be favored when shipping distances are far beyond average. Mills can not afford to work with producers under such circumstances, nor producers with mills. (2) Dealer functions have been assumed by persons or firms who have large quotas and who operate without the extra $0.50 to $1.50 per cord and still make an income which exceeds alternative opportun~ ities. Mill executives apparently prefer this situation. Mm or t! M 111:1ch mm; to be film are con Mme who: Enrico non- hefore, den Miners. Uh “like contin humanized m m at Hand uh M131 reduc aimon, the ”We fro] “”8qu 33th: 900nm “this (1+) has or con :‘d in Tab] .111 shillllem Mantra“, we"lent 90 (3) Dealers may not be recognized as such, e. g., a person may be performing dealer functions-=concentrating raw wood from small producers or those who can not obtain a quota and reselling it at an increased price to a pulp company. The margin for buying and selling is likely to be low, perhaps $0050 per cord, as such self-appointed dealers are competing with producers who sell directly to mills. Producers who can do so will sell directly to pulp firms and at the same price non-recognized dealers receive. Self-sappointed dealers are, therefore, dependent on the lack of capital or of quotas of local producers. When local producers receive quotas and assume that these will be continued or increased to where they can make a "living," non-recognized dealers have difficulty in finding out wood which they can buy and are forced to become producers themselves, at least in part. If and when a non—recognized merchant middleman receives a sub-u stantial reduction in his quota, he is faced with a reduced income. In addition, the quota he expected may be redistributed to the same producers from whom he purchased formerly, One can hypothesize that a Dona-recognized dealer is performing a marketing service for pulp mills but the economic future or security of such a middleman is somewhat uncertain. (it) Recognized dealers are more likely to be used in filling Quotas or contracts when pulpwood is transported by rail or water. As noted in Table 9, procurement by water is from extreme distances, and rail shipments probably extend 50 to 150 miles beyond trucking limits. In contrast, producers are more likely to be found where truck hauling is prevalent ., Healers, mg lure than ts Mag When' W in gre Mum deli W from Her it or small. “B use of it difficult (7) “warding fl mm'll‘agim 23.123, e, 3., Miss as this Perm i“ to“! of ‘ that com ‘5'» Working ismsh f fishers, e‘ 3: Such 1am rs m fore 91 (5) Pulp mill executives may hestitate to encourage the dealer system for fear of possible increasing costs of procurement. A dealer might, in some way, force a mill to increase prices for raw wood. (6) The use of great numbers of producers, rather than a few dealers, may cause woods crews to be small. When a producer hires no more than two helpers, he is exempt, under Michigan law, from paying workmen's compensation insurance premiums. This will be examined in greater detail in a later section, but one can hypothesize that mills deliberately favor producers--and small producers--who are exempt from workmen's compensation. In any event, producers--whether large or small--seldom pay such insurance premiums (Carothers, 196M). The use of large numbers of producers may also preclude or make more difficult any attempt to unionize forest workers. (7) Manthy (1963) suggested pulp companies are interested in safeguarding future wood supplies and, to achieve this end, mills are encouraging more direct communication between producers and them- selves, e. g., through the Tree Farm Program. This might also be done through dealers, especially if they were foresters. Further analysis pertaining to this point is needed. One can observe that at least four of the nine pulp companies hire foresters; these are men without company lands to manage. They are involved in procurement, i. e., working with producers to obtain wood, and in educational work. They furnish forest and wildlife management services to large private landowners, e. g., hunting clubs, and in return purchase the pulpwood from such landowners. The National Forests and the State Forests have their own foresters . flood is sat huts who 1: “my out 1 “haircut ionization 01 £11 M or p] Main and i W! “Dec: W without Wain of m & Wiser i} {ll “hegentl IWeen ‘ Elite market .v.‘ “5 “my 61 ills No a he data "(- diners ha 5‘5th beefing 92 (8) Lower Peninsula pulp companies may be showing an increased interest in wood which has not had time to dry, nor to become stained or begin to show rot or insect damage. Whether dealers or whether producers can provide a constant and efficient flow of such freshly cut wood is subject to further examination. Perhaps the company forester who is serving to organize the flow of wood from producers can carry out this function; such a man is likely to be informed of mill requirements and can act accordingly. Without some field organization of the great numbers of producers, communication between mill yard or procurement personnel and producers is likely to be 1 uncertain and ineffective in providing fresh wood. The flow might be 1 erratic, especially during the summer months. Fresh wood can be stored without deterioration, but extra facilities are required. On the basis of numbers the dealer appears to have some advantage over the producer in supplying freshly cut wood; communication between mill representatives and suppliers would be relatively easy. General Characteristics of Pulpwood Dealers Thirteen exclusive merchant middlemen, 17 producerudealers, and two dealer-producers——a total of 32n-make up the sample of inter— mediate marketing agents in the study area (Table 15). These firms are arbitrarily divided into four groups based on the volume of wood handled. No attempt was made to separate purchases from sales. The data given in Table 15 show that in 1959 about 47 percent of the dealers handled volumes of less than 1,000 cords. This percentage is high because of the importance of producer—dealers who make up | '01! alas! I this Mm 1,004: 1,0004,” moo-9,999 10,000 and up -~.._. 111 agents \5 a1’roducer ““998 than hi11511 one mucus II “t ’_. 93 Table lS.--Number and percent of intermediate marketing agents sampled ‘ in relation to cords of pulpwood handled, l959 Volume class Exclusive dealer Prodnear-«dealera All middlemen Cords Number Percent Number Percent Number Percent Less than 1,000 1 3.1 111‘3 113.8 15 116.9 Loco-11,999 7 21.9 h 12.5 11 311.11 5,000-9,999 3 9.1» ‘1 3.1 h 12.5 10,000 and up 2 6.2 2 6.2 All agents 13 ho. 6 19 59.11 32 100.0 aProducer-dealers, with two exceptions, handled more wood as producers than as dealers. bWith one exception, these producer-dealers are accounted for under "Producers"--the next major section in this analysis. all M; per“ mewea: n“ °r can In °r was nae. Thaw "We“ Sm 019 “"31 mles Fume fiddlfim' Ho metal? in am Suggest Hiram“ Si Eton race”i Piss NCEiVEd :‘ass and Nth Sq seven Out mate maket 'gmcent are 1:;qu mills tent of 1111 iazthey can; Smut pres: Mood g0 13‘ Gabappoifl' in partie‘ :5 from whi‘ ‘44 91L nearly ML percent of the 1&7. In other words, exclusive merchant middlemen--dealers who are not also serving as producers-—seldom operate or carry on business at the low level indicated by this group or class; whereas, this is precisely where producer-dealers do operate. These producer-dealers supplement their incomes by handling relatively small amounts of pulpwood as intermediate marketing agents. One usually assumes that an intermediate marketing agent who handles pulpwood receives a bonus for performing the duties of a middleman. However, such agents in the Michigan study area are often completely independent of primary mills and are recognized as producers, as was suggested previously. This situation is substantiated by the information given in Table 16. The smallest volume group had no person receiving a bonus and only three dealers in the 1,0004% ,999 class received such payments. Two of the three in the 5,000-9,999 class and both the firms in the largest group were paid bonuses. Thus, only seven out of the 32 firms—approximately 22 percent of inter- mediate marketing agents are actually recognized as dealers. The other 78 percent are in direct competition with producers who sell directly to Pulp mills or to merchant middlemen who recive bonuses. The 78 Percent of intermediate marketing agents buy pulpwood from producers when they can, as was mentioned in the previous section, but are under constant pressure of narrowing profit margins and the threat of seeing raw wood go to someone who can afford to pay more for it. In addition, a self-appointed dealer does not enjoy an exclusive territory relative to any particular mill; whereas, a recognized dealer may have a general area from which to draw wood as far as his ”home" mill is concerned. mm 1, 1’00“}! 5’000'9,§ 10:000 Elli \ All age] \ 95 Table l6.--Intermediate marketing agents who were recognized as dealers, i. e., paid a bonus for wood handled, 1959 volume class Recognized Recognized All middlemen dealer dealer-producer Cords Less than 1,000 o 0 o 1,000-h,999 3 0 3 5,000-9,999 2 O 2 10,000 and up 2 O 2 All agents 7 0 lint bayou animation mi mun mi My lills. W and admi "to the real ”lineman rm. lilllmod i). he ran MP Showed the large Interwed £13» 0! co: m". The: M1955 helm. he“ of t] mucer‘dea to, other :L‘lllde tha {do Mime 1“" build 9'6 Of course, those dealers which are paid a bonus may still compete with other dealers who are serving their respective mills. An analysis of the recognized dealer in comparison with the self-appointed one is somewhat beyond the data collected for this analysis. However, such an examination might bring some very interesting results. One can say at this time that recognized dealers result from policies developed by primary mills. Apparently pulp mill executives have appraised the costs and administrative problems of the dealer system but do not agree as to the results of their respective appraisals. The number of mills using recognized dealers was explored in the previous section of this report. Pulpwood dealers averaged 13.6 years in that kind of work (Table 17). The range in years was 2443. Howaver, the exclusive dealer group showed the highest number of years in dealer work, especially in the two largest volume classes. Intermediate marketing agents operate as single owners, partnere- ships, or cooperatives. Twenty-two, nearly 69 percent, were single owners. There was one cooperative and it handled more than 10,000 cords in 1959. Exclusive dealers are usually (9 out of 13, or approximately 69 percent of the time) full—time workers (Table 18). On the other hand, producer-dealers are part-time dealers and may have other employment also. Other businesses or occupations are given in Table 19. One can Conclude that, in general, part-time intermediate marketing agents are also producers, with a limited number operating sawmills, lumber and otherbuilding supply yards, farming, and a few lesser businesses. All 83311 elnclude We lNOO- 97 Table 17.--Number of years as a pulpwood dealer, l959 Volume class Exclusive dealer Dealer-producera All middlemen Cords No. Years No. Years N0. Years Range Average Range Average Range Average less than 1,000 1 5,0 1% 2—21 9.6 15 2-21 9.6 1,000-t,999 7 7-27 13.6 h 3-12 7.8 11 3-27 11.5 5,000-9,999 3 13-h3 32.0 1 19.0 n 13-h3 28.8 10,000 and up 2 20-30 25.0 2 20-30 25.0 All agents 13 5-h3 18.9 19 2—21 9.7 32 2—h3 13.6 aIncludes two firms who were dealer-producers, both of which were in the l,OOO-h,999 class. See footnote "a" Table 15. I lohle ch1 "Ta??- Iels than 1 1,0004, 51000-9; 10:000 a: \— A11 agent 1’An pm W v0lame cEleven mutt-ion. 98 Thble 18.--Full-time and part-time intermediate marketing agents handling pulpwood or pulpwood combined with other raw wood products, 1959 Producer- Vblume class Exclusive dealera dealerb All middlemen Full-time Part-time Part-time Full-time Part-time Cords less than 1,000 1 114‘: 15 1,000-h,999 5 2 1+ 5 6 5,000-9,999 3 l 3 1 10,000 and up 1 l l 1 All agents 9 4 19 9 23 Percent 28.1 12.5 59.h 28.1 71,9 aThese firms were not necessarily intermediate marketing agents for pulpwood only, but largely so. bAll producer-dealers were producers in part. Two in the 1,000- 15999 volume class were actually dealer-producers. cEleven out of 1h had incomes from sources other than pulpwood production. QmQH Kayo?“ .000ng 050.-ng H0 ..1. .1 .HO riser. .HQeNpoltmnfi @HQNH ocean wousaoeH one QOHpodapmmoe omSo: was mmHHmmdm quwHHsn nonpon ammoeHmsn mo wnHM house one no wmfihnco zHchmn «nowpflvww QH «was wooSQHSQ mnHoSeona one: mncHwocnneodwo ea HHas H H H H m e m m H m H msmHaoe HHa H an egg ooo.OH mamaasoooam % m H H H maaieaoooeH H H H H m m N m H oooaH asap mama mwaoo nausea nonsHp ponchomo Amanda ova nausea .wm HHHE ouch HHHE III, pownvnoo whopm poonpqoo Heoo owe; Hannah mung 13am hmeuwh .hnq 13mm anchmUnnooowonm Meadow oefimdfio m mmeHo osbflo> mmmH «macawov woosgfism oeflplwhsm Mo mQOprQSooo ho momchHmsn Monsoanomfi OHQoH on, to : he. In 19 . «.1 a: “lawn " WI no: Ms as saw ”occlude W dealers “has venee P11171003 “ever, thoa ”dealers th ”tea in rel “it suppose it Parttim T0 comm I‘m‘h‘m part Mstigatedl ”it ma 1“dated for its ”like 335’er 10 WW F that, flea it “Mart 100 Intermediate marketing agents may handle other raw wood products in addition to pulpwood, as is shown in Table 20. However, this is rarely done. In 1959 two firms who were exclusive middlemen and one producer— dealer handled northern white cedar posts. In other words, three of the 32 sampled firms, or 9.3 percent, were dealers for both pulpwood and cedar posts. One of the firms which hand led cedar sold the larger pieces as sawlogs but sold them by the piece rather than board feet. One can conclude that, except for northern white cedar posts and logs, pulp- wood dealers in the study area do not market other raw wood products, such as veneer, saw logs, and fuelwood. Pulpwood dealers tend to operate on a year-round basis (Table 21). However, those that are producer-dealers are probably not functioning as dealers the year-round, but replied "year-round" on their question- naires in relation to their combined producer-dealer functions. One might suppose that the limited volumes bought and sold by producers who Were Part-time dealers would require only one or two months per year. To complete the general characteristics of pulpwood dealers in the northern part of the Lower Peninsula, the employment situation was inveStigated. Employment information is given (Table 22) for exclusive merchant middlemen only, since employees of producer-dealers are accounted for under ”Producers" in a later section; also, the inter— mediate marketing agent function of producer—dealers was restricted to relatively low volumes of pulpwood in comparison with wood hand led as Proflucers. From the data presented in Table 22 one can conclude that eKelusive dealers hire very few helpers. Of the 13 firms sampled, 10 hired no part-time workers and 11 of the 13 hired no full-time employees. an: amiaéfi's’ 'J "'- ruortn. ‘5}? I, ‘ ’51:: In than 1,000 moo-0,999 MOO-9,999 10,000 and “P Total I! -- Percent I 9lines not no Nicer-dealers I” 000105 of sawlogs bThe other 1‘3“ l “The other in 101 Table 20.--Dealers who handled pulpwood only, as contrasted with those who bought and sold pulpwood and other raw wood products, 1959a Volume class Pulmood onu Pulmood plus other wood Exclu. deal. Prod.-deal. Exclu. deal Prod.—dea1er Cords less than 1,000 in 1b 1,000-h,999 _q F? 5:000'9;999 U.) P" 10,000 and up 1 1° Total 11 18 2 1 Percent 31kt» 56.3 6.2 3.1 8‘Does not include other raw wood handled in a producer role, such as producer-dealers may have done, e. g., producers often produce small amounts of sawlogs to supplement their incomes from pulpwood. bThe other raw wood products were northern white cedar posts and logs. cThe other product handled was northern white cedar posts. : ‘1 1:000 2L--General loluu class Cords has than 1,000 1,000,999 $000-$999 10,000 and up lll agents With the dat lpnlpvood from t 01015 producers . bData apply In lImo'hl999 size 0? 00 22.--Part—ti‘ 1959 M Mlle class Nu d Cords 1000 than 1,000 0000-0999 5,009,999 10.000 and up \W Total k... 102 Table 21.--General marketing period of pulpwood dealers, l959a Volume class Exclusive dealer only Producer-dealeer Year-round Part—time Year-round Part-time Cords Less than 1,000 1 l3 1 1,000-11,999 7 ll 5 ,000-9,999 3 1. 10,000 and up 2 All agents 12 l 18 l aWith the data at hand, one can not separate the marketing period of pulpwood from that of posts or of pulpwood sold as dealers from that sold as producers. Thus, the marketing period is vague and general. bData apply more to producer function, except for two firms in the 1,000-0,999 size class. Table 22.--Part-time and full-time employees hired by exclusive dealers, l959 Volume class Number of Part-time emplOYees Full-time employees dealers Cords Number Average Number Average Less than 1,000 1 3 3o0 1,000-10,999 7 2 0.3 5,000-9,999 3 4 1.3 10,000 and up 2 1+ 2.0 Total 13 5 0 .4 8 o .6 “__.—___ lolaro occasional Moots. This is nloed in Table 23 00013 of cancerI loomed approxi H = llnes handled as 0100. Logs and ' Because of the loulpoood dealers Moots by volume llltheoe prod ucti llllaodled by Get hoses and type 0: alloslve dealers ‘ 0091s, producer-o hoot. These 116 50105 in the pro 00 approximately “*0 firms exceed 1 lo the 5,000- 103 Thus, merchant middlemen—mot including producer-dealers--are buying wood from other individuals or producers and reselling such wood practically without hired helpers. Products Handled by Pulpwood Dealers As was suggested by the information given in Table 20, pulpwood dealers occasionally (9.3 percent of those sampled) handle other raw wood products. This is further substantiated by the data which are sum- marized in Table 23. One can see that pulpwood is the principal product which is of concern to dealers; volumes handled as merchant middlemen comprised approximately 70 percent of the total raw wood bought and sold. Volumes handled as producers equaled about 29 percent of total raw wood volume. Logs and posts were relatively minor. Because of the relative unimportance of logs and posts as pertains to pulpwood dealers and producer—dealers, no further analysis of these products by volume classes will be made; only three firms were involved with these products, anyway. However, a further subdivision of pulp- wood handled by dealers is appropriate; such an analysis by volume size classes and type of agent is given in Table 21L. These data show that exclusive dealers bought and sold 79 percent of the total pulpwood; whereas, producer-dealers, acting as middlemen, handled almost 21 Percent. These percentages do not include pulpwood handled by producer- dealers in the producer role. Two dealers in the largest volume class show approximately 36 percent of total volume; however, only one of these firms exceeded the combined producer-dealer output 013 the single firm in the 5,000-9,999 class; this man handled about 15,000 cords in tloolve dealer Polplood lawless Posts lower-dealer, as lolpoood tolled-dealer, as 01174000 0101035 Posts W All products w “Five hundred o b(he piece est 1‘ cord. 0Ten thousand j 101+ Table 23.--Raw wood products handled by sampled dealers, l959 Agent category and product Volume Volumea' Volume M pieces M. b. 1?. Cords Exclusive dealer . Pulpwood 75 :73]- Sawlogs 15b 580 Posts 62c 771t Producer-dealer, as a dealer Pulpwood l9 , 66l Producer-dealer, as a producer Pulpwood 39 ,778 Sawlogs 120 2&0 Posts 2 25 All products 79 120 136,789 8‘Five hundred board feet estimated to equal one cord. bOne piece estimated to equal 3.5 cu. ft. and 90 cu. ft. equal one cord. cTen thousand pickets were included as 5 thousand posts. ‘ 1500 00.--Pulpwood 01010 class Cords 1m m 1,000 1,000-0,999 WOO-9,999 10,000 and up 011 agents a110001100 inc bPercents app Montages are of "M,“ '0 105 Table 2h.-—Pulpwood handled by intermediate marketing agents, l959 velume class Exclusive dealer Producer-dealera Cords No. . Cords Esrcent% No. Cords PercentD Less than 1,000 1 180 .2 111 5,932 6.2 1,000-11,999 7 18,500 19.10 1+ 6,999 7.3 5,000-9,999 3 23,109 211.3 1 6,730 7.1 10,000 and up 2 ‘ 33,858 35.5 All agents 13 75,731 79.1; 19 19,661 20.6 aDoes not include pulywood handled as producerso bPercents apply to pulpwood bought and sold as dealers only. Also, Imrcentages are of total volume, not per volume class. I 71001. One can no mllest class as flatly (Table 21) Byreferring hunter of fir Wining bought a Meet 1,035 cor tvolumes by pro 000000 2,0910 cor Intermediate Wes of cut pu fluidspecies, c hr62.5 percent 0 L‘0001ted for slig {5310‘s, functioni flaspen are furt 09100 volumes exc Want species ‘91m1n1959. s 1701 volume; Inixe Table 25 elm Loses. One can 30120 aspen. 05 can be sel 106 total. One can note that the volume handled by the one firm in the smallest class as an exclusive dealer is of minor importance. Pre- viously (Table 21) this person was found to be a part-time operator. By referring to Table 24 and dividing the total volumes shown by the number of firms, one finds that the average dealer who does no producing bought and sold 5,825 cords; whereas, producer-dealers averaged 1,035 cords as intermediate agents. Table 21+ does not indicate the volumes by producer-dealers which were handled as producers. These ; averaged 2,0911 cords per individual. Species Purchased and Sold Intermediate marketing agents in the study area handled various species of cut pulpwood. The data presented in Table 25 show that Populus species, commonly called aspen, are most important and account for 62.5 percent of wood bought and sold as dealers. Exclusive dealers accounted for slightly over 50 percent of the aspen and producer- dealers, functioning as middlemen, sold about 12 percent. The data for aspen are further subdivided into peeled and unpeeled categories; Peeled volumes exceed unpeeled ones. Jack pine is also a fairly important species and totaled slightly more than 21+ percent of cut wood Volume in 1959. Spruce and balsam together totaled about 13 percent of total volume; mixed hardwoods were unimportant. Table 25 also shows percents of cut pulpwood in relation to volume classes. One can see, for example, that larger dealers usually handle Peeled aspen. As can be seen from the data given in Table 2%, five of the largest - 01:25.--Species I ,u ' ‘-. 1‘". 1936‘ ,. x-R“ 70111! class __ Cords -- has that} 1,000 1,000-10,999 50°00'9rg99 10,000 and up All species &30000 on 95, 01001 producers. bl’eeled wood mate it with un, 107 Table 25.--Species handled by pulpwood dealers, 1§59a Volume class Aspen Spruce Balsam J. pine Mixed Total ' Unpee led Pee ledb hwd s . Cord s Pei ..c ..t Less than 1,000 3.3 1.9 .1 .1 1.0 6.11 1,000-11,999 15.1 5.1 1.3 1.2 11.0 26.7 5,000-9,999 6.1 16.9 .5 .6 7.2 .1 31.1; 10,000 and up 13.9 k1 11.9 12-6 35.5 All species 211.5 37.8 6.0 6.8 20.8 .1 100.0 8'Based on 95,392 cords handled as dealers; does not include raw wood sold as producers. bPeeled wood was converted to rough or unpeeled basis in order to compare it with unpeeled volume. mud) sold near§ Murat-dealer 1n- walntely 67. nhtlvely more in] blunting of a nu the same cone 0.0 traitors in Intermediate 0100000 on wood “II in the amalle Ward. The on Mentally to th in dealer assemb fin: mount. In 500190 .2 percent mating agents 1 Iniornation 1: *5 not sought frc The range and We study area “5011011 no def? 108 exclusive dealers (1.5.6 percent of all intermediate marketing firms sampled) sold nearly 60 percent of the cut pulpwood. If the single producer-dealer in the third class is added, then the total percent is approximately 67. Thus, larger intermediate marketing agents are relatively more important than small dealers and producer-dealers in the marketing of cutpulpwood in the study area. (The 67 percent, with the same conclusion, can also be noted in Table 25 by adding the last two items in the "Total" column.) Inventories of Pulpwood on Wood Yards Intermediate marketing agents were questioned about inventories of pulpwood on wood yards. However, with the exception of the one exclusive firm in the smallest volume class, no dealer assembled pulpwood in a wood yard. The one dealer who did so carried out this operation incidentally to that of handling northern white cedar posts and logs; this dealer assembled only 90 cords of his 180 handled-~51 relatively minor amount. In fact, this firm's total volume of pulpwood only equaled .2 percent of all the wood bought and sold by intermediate marketing agents in the study area (Table 21+). Information pertaining to inventories of cut pulpwood in wood yards was not sought from producer—dealers. Size of Procurement Area The range and average radius of pulpwood supply area for dealers in the study area are presented in Table 26. From these data one can establish no definite pattern or trend. One exclusive dealer in the 1000 than 1,000 l,000-h,999 8 LOW-9,999 1*5 £0,000 and up “Producer-den bl'nia dealer 'tl; information 10: out pulpwood . m the wood he he. iilte cedar. 109 Table 26.—-Range and average radius of pulpwood supply area for inter- mediate marketing agents, l959 Volume class Exclusive dealer Producer-dealera All dealers Range Average Range Average Range Average rad ius rad ius rad ius Cords Miles { Less than 1,000 15ob 3-100 30.2 3-150 38.2 1, 000—0, 999 8—80 33 . 6 20-25 22. 5 8.80 29 . 5 5,000-9,999 45-100 71.7 50.0 45-100 66.3 10,000 and up no.0 l+0.0 aProducer-dealer functions can not be separated. bThis dealer went 150 miles to buy northern white cedar posts and logs; information on his schedule does not show that he went this far for cut pulpwood. However, one may assume that he did, as spruce-balsam was the wood he handled and it is normally associated with northern white cedar. ”* milestvolune c : a 00003:, but no 6 0100000 that far 0,009,999 class 0 0:, but both the 000. The poaitio 00000, 1. e., one 0m far away as 010 procurement : mood deal t00000 is obtai 0000010001’ those tenement. Data bean note that 050 000 except ion 0m no prior a 301 procedures. :30Hithout some Healer suggest 7510000 they ex; 00010er uncerte 000w dealer and [350 in hardening ”Ming the 88.1! 110 smallest volume class went 150 miles from his home office to buy posts and logs, but no definite information was recorded about his buying pulpwood that far from headquarters. One merchant middleman in the 5,000-9,999 class definitely operated as far as 100 miles from his home, but both the largest firms went only 1+0 miles to obtain their cut wood. The position of the producer—dealers is clouded by their dual roles, i. e., one can not be certain that their cut wood procurement was as far away as 100 miles; producer-dealers may have required this size procurement area in their production of pulpwood as producers. Contracts or Agreements Pulpwood dealers usually have agreements with producers whereby cut wood is obtained. Agreements may be written or oral, with the exception of those dealers who claim they have no prior purchasing arrangement. Data relative to agreements are presented in Table 27. One can note that in the study area no written agreements were used. With two exceptions in the 1,000-1+ ,999 volume class, where these firms claimed no prior agreement or arrangement, all exclusive dealers used oral procedures. How two dealers obtained a total of nearly 6,000 cords without some kind of written or oral arrangement is not clear. One dealer suggested that producers knew he had bought wood for many years and they expected him to do so again. Oral agreements may be relatively uncertain--depending on the understanding or interpretation between dealer and producer--but no prior agreements appear to be even Worse in burdening producers with uncertainties and instabilities reSarding the sale of their wood. However, to devise a means of 00 than 1,000 1,000-1W” two-9,999 0,000 and up abate pertain filers were not 0 ”011960 the Bitten agreements T 111 Table 27.--Agreements and no prior agreements used by exclusive dealers in obtaining pulpwood, 19593 Volume class Written agree. Oral agreements No prior agreements Cord s No . Cord s No . Cord s No . Cord s Less than 1,000 1 180 1,000-h, 999 5 12, 590 2 5 , 95k 5 , 000-9, 999 3 23 , 149 10,000 and up 2‘9 33,858 All exclusive dealers 11 69,777 2 5,952+ aLData pertaining to cut wood purchase agreements by producer- dealers were not obtained on producer questionnaires. bIn 1960 the largest of these two firms was beginning to use written agreements. Ween the negoti. were suggested layer. For tho Mimi aspen, 5 Wing or contin Units each year Miners cut and Details of as ”practically th fiber from 131160 Dealers usual ills before they ' 2m dealers out INeale. This Wood producers Fire only 55 perc :i'lota with buye We under the Exclusive dee ‘30: as can be c 112 reducing uncertainties such as these must rest with the dealers concerned. One can not imagine that producers prefer to have no agreements with buyers. When exclusive dealers were questioned about the time needed between the negotiation of an agreement and the delivery of wood, answers suggested that the time required ranged from one or two days to one year. For those dealers who preferred to buy peeled and partially air-dried aspen, six to eight months was standard. One dealer had a standing or continuous agreement with his producers to take the same amounts each year until further notice. Another dealer commented that producers cut and stack wood, then hOpe to sell it. Details of agreements for cut wood purchases by exclusive dealers are practically the same as those used by producers in buying standing timber from landowners and are described under the section on "Producers." Dealers usually have marketing agreements or quotes with primary mills before they buy out pulpwood from producers. Except for possibly one or two dealers out of 13, agreements are prevalent prior to buying wood for resale. This contrasts sharply with the situation relative to PulPWOOd producers, as will be seen under "Producers" in a later section, where only 55 percent of sampled firms show any kind of loose agreement or quota with buyers before purchasing stumpage. Thus, dealers do not Operate under the uncertainties which face producers. Pulpwood Purchases Ebcclusive dealers may initiate pulpwood purchases or sellers may do SO: as can be observed from the information in Table 28. The firms hhhe 1,000'h’999 gochoses; whereas her all 13 dealer hpercent and by her initiati hh conversation h i ) l I hhletters are US Information to ho producer-deal he data were se hthhe larger th :hucers who supp Dealers were itrees, producer~ hhrs do not car teetrunks into I I! ahahsshipment p1 k M another ma “bad or else Midi) then it We his om tru h“) “Whom woe 3%th is u ! Shelly ‘4 A 113 in the 1,000-#399 volume class depend heavily on producers to initiate purchases; whereas, the largest firms do most of this for themselves. When all 13 dealers are considered, initiation by own firms shows about 56 percent and by sellers or producers approximately 1+2 percent. When initiating purchases, dealers in the study area usually do so by conversation or oral communication, but newspaper advertisements and letters are used occasionally. Information was not recorded regarding the number of producers from whom producer-dealers obtained cut wood. However, for exclusive dealers, these data were secured and are summarized in Table 29. One can say that the larger the volume a dealer handles, the greater the number of producers who supply the wood. Logging and Hauling Dealers were asked about logging and hauling of cut pulpwood; whereas, producer-dealers were not questioned on this point. Exclusive dealers do not carry out logging, i. e., the felling of trees, cutting tree trunks into proper lengths, and skidding or moving the wood to a transshipment place. Logging is done by producers. Hauling cut wood is another matter: Dealers buy wood which is stacked by the side of a road or else buy it f. o. b. railroad car. If it is bought roadside, then it is hauled by way of motor truck to a mill. A dealer may do his own trucking or, more likely, he will contract the work. With excelsior wood particularly, the producer from whom the wood is bought is usually the contract hauler, The data given in Table 30 show the number of exclusive dealers, estimated volumes and percents Iolm elm cord: In: than 1,000 IIW,999 5’000'91999 mm and up x“- Total x “Data in mm W on a total { hhle 29"‘Number Pulmo‘ Mum class 1111 Table 28.--Estimated pulpwood purchases initiated by dealers and sellers, 1959 Volume class Own firm Sellers Indefinite Cords Cords Percent Cords Percent Cords Percent Less than 1,000 90 .1 90 .l 1,000-1+,999 1,002 1.3 15,509 20.5 2,033 2.7 moo-9,999 9,360 12.11 13,789 18.2 10,000 and up 31,752 119 2,106 2.8 Total 112,201+ 55.7 31,101+ 1m6 2,033 2.7 8‘Data in this table apply to exclusive dealers only. Percents are based on a total of 75,731 cords. Table 29.--Number of producers from whom exclusive dealers purchased out pulpwood and volume of such wood, l959 Vohmm class No. of Cut pulpwogdpfrom;producers dealers Average no. Average cords purchased of producers per producer Cords Less than 1,000 1 15a 12 1,000-.1; , 999 7 26 . 7 99 5,000-9,999 3 3L3 22 10,000 and up 2 b aInformation seems to pertain to Producers who 5016 Posts rather than Cut pulpwood. bData lacking on one large dealer° The other had over 100 but the exactrummer will not be given here in order to avoid identifying the firm. ‘f pin‘ldealer my 3 rather sf PM“. Approx: W113 or to raj h“; 1‘0 Percent M ears. Approximtel “m t0 Produ 3W9 offered 0 “"111 with bank “Wing for b Wed t0 assign Mmkcted t hung 50m as shunted Sale When asked a that”, of c Elders sampled u him“ to de “her 30 Pare 3:113 mbebly ha Md from Prod nee and Prices of A 115 of wood transported, and method of transportation. One can see that exclusive dealers, not...including cut wood handled by producer-dealers, supply a rather small part of their own transportation, namely eight percent. Approximately 92 percent is transported by trucks directly to mills or to railroads by contractors or producers acting as contrac- tors; to percent goes directly to mills and 52 percent goes to rail- road cars. Further Aspects of Pulpwood Procurement Approximately 85 percent of exclusive dealers made advance payments or loans to producers who supplied them with cut pulpwood; about 39 percent offered other business aids to such suppliers, e. g., (1) con- ferring with bankers relative to quotas assigned to producers who might be applying for bank loans, and (2) financing machinery. No dealer at- tempted to assign a special territory to a producer. Only one dealer of the 13 objected to his producer supplying other dealers with cut wood. There was some agreement between this firm and his producer which restricted or prevented sales to other dealers. When asked about procurement policies designed to prevent wide fluctuations of cut wood from producers, nearly 70 percent of the 13 dealers sampled used restrictive quotas or simply stopped buying if they needed to decrease or stop the flow of wood to primary mills. If the other 30 percent had been questioned further on this point, they would probably have replied that they were under no obligation to buy wood from producers. There was no indication that dealers raised or lowered prices of pulpwood. Thus, producers are working under relatively Cords Ian than 1,000 1,000-1,999 MOO-9,999 10,000 and up \ Total \h“ aWood was ltr that tTUCkers ch“ edeatler 1.91%] 1““ taPPea 116 Table 30.-~Number of dealers, volumes and percents of pulpwood transported, and methods of transportation, l959 F. o. b. railroad Volume class Dealers Tracked to mill Own trucks Contractfia' Contractorsa Cords No. Cords Perc. Cords Perc. Cords Perc. Less than 1,000 1 180b .2 1,000-1,999 8c 5,889 7.8 6,986 9.2 5,669 7.5 5,000-9,999 3 23,1119 30.6 10,000 and up 2 33,858 Mk7 Total 6,069 8.0 30,135 39.8 39,527 52.2 Wood was transported by producers, from whom it was bought, or by contract truckers. bThis wood was probably transported to a primary mill by the dealer. He was mainly interested in northern white cedar posts and logs, so re- Plies to questions often ignored pulpwood. COne dealer used both trucks and railroad. Therefore, the 1,000- LL,999 class appears to have an extra firm; really there were only seven dealers in this class. utter the twat they 0: Prices paid ; tithes" and In Only fourtf “M V0111!» f: Ital for wood ‘0: malted in Gene: 1°? 1000 which “I l hm"- The 0t] ”“1911le:: m: hm” Paid for ‘0 dealer in Rte inform ion 117 uncertain economic conditions in relation to dealers; producers have no control over the price they receive for out wood and little to say about the amount they can sell. Prices and Costs and Price Information Prices paid for out pulpwood are summarized under the section "Costs and Prices“ and need not be presented here. Only four of the 13 exclusive dealers, representing about 32 percent of total volume from dealers sources, indicated they paid different prices for wood based on distance it was transported. This usually resulted in decreasing the price paid to producers by $0.50 per cord for wood which was farthest from the mill, than giving this amount to truckers. The other nine dealers, representing about 68 percent of total pulpwood volume handled as exclusive dealers, made no adjustment in price paid for wood based on distance it was hauled. No dealer indicated that he had difficulty in obtaining market price information on products bought and sold. 5")“ In 01hr to; Mary mufectl' “h We: are ! Manly nugget it help of hired “WI Mg m1 Hun-.33 With C “W Ior bolts. Why and .7 dilution of no: Win-ed furthe ”Wing “POI Nuts m 1m ”01‘ rag M59115 teal Thegeneral film: The as u [853% ta 3931mm. The W01: Wood R :‘i V W] cut fro“ as attributed tc PRODUCERS In order to obtain a description of the marketing process from the primary manufacturers, through the intermediate marketing agents-~when such agents are used, the raw wood producer is finally reached. As previously suggested, a producer is a person or firm who, alone or with the help of hired laborers, buys stumpage (standing trees in a forest) or cuts his own trees then sells raw material without further processing, except--as with certain pulpwood producers-~to debark or peel the wood sticks Ior bolts. Manthy and James (1962) discussed the producer's role in the production of northern white cedar posts, so that product need not be considered further in this analysis. On the other hand, because of the outstanding importance of pulpwood and sawlogs in the study area, minor products are largely omitted and special emphasis is given to these two major raw materials. General Characteristics 9_f_ Pulmood and Sawlog Producers | The general description of producers can begin with those who handle PUIPWood: The sample covers 75 exclusive producers and 18 producer-dealers (one less than tabulated under "Intermediate Marketing Agents"), or a total or 93 firms. These are arbitrarily divided into five classes based on volume of wood soldnregard less of whether wood was purchased or whether it was cut from own lands (Table 31). One finds that purchased stumpage and wood cut from own lands differ in volume from out wood sold; differences are attributed to storage. As purchases are not substantially different 1m than 100 1W599 6W999 1,000-1,999 2,000 and up \ Total \\ am V°1umes Won: The w ”1196 inches, 0 M90 as the 6t Film“ Producer 119 Table 31. —-Number and percent of pulpwood producers sampled in relation to cords of cut wood sold, l959a Volume class Number of Percent of producers producers by volume classes Cords Less than loo 11+ 15.1 100-599 35 37.5 600-999 8 8.6 1,000-1,999 19 20A 2,000 and up 17b 18.3 Total 93 100.0 aAll volumes were adjusted to unpeeled standard cords, with this exception: The wood which was cut 100 inches long was considered to be only 96 inches, or M x h x 8 feet equivalent. bFour out of the 17 sold 5,000 or more cords. If these # were counted as the 6th class, they would equal h. 3 percent of the number of Puhmood producers sampled. This, in turn, would reduce the 5th class tolfi. 0 percent with a range in volume of 2, OOO~ h ,999 cords. Muss. whi In emisci fluid into four Wily like a‘ M“, humor, 9: "WW8 5001 “he PHI-1710M p: ““08 Producc MPHOOG pm bum in which WW1? home: this, except 1): Mm“! Thiw WW been a 1 ”1"” in that « 5W 31km n sums Pmdu the to “lube; us “flog : 5% hr say”log : z“lies years distances “011g T0 teatime ' i “Hog PI‘od UCI «fume and par A 120 from sales, amount sold is taken as the basis for analysis and comparison with sawlogs, which are also based on volume of sales. In comparison with pulpwood producers, sawlog counterparts are divided into four classes based on volume of logs sold (Table 32). One can hardly make a comparison among pulpwood and sawlog producers at this point, however, except to note that pulpwood producers tend to larger size. If one takes 500 M. b. f. as roughly equivalent to 1,000 cords, 39 percent of the pulpwood producers are of larger size as compared to 12 percent of the sawlog producers. Pulpwood producers averaged 11.5 Years as timber producers in the location in which they were than working, i. e. , in the general area around their homes. There is little difference in years among yvolume classes, except producers in the third class who equal 8.5 years above the average. This is explained by the fact that one producer in that group had been a pulpwood operator for #7 years and two other persons or firms in that class had also worked for relatively long periods, namely 25 and 31 years respectively. Sawlog producers are only slightly below their pulpwood counterparts relative to number of years in producing logs. The average equaled 9.5 Years for sawlog firms compared with 11.5 for pulpwood producers. The range for sawlog suppliers is somewhat less than for pulpwood firms, namely %~26 years as compared with 1—47. Sawlog producers show only minor differences among volume classes. To continue the exploration of the general characteristics of pulpwood and sawlog producers, one can determine the number and percent who work full—time and part-time, note the percentage who work the year-round, and 101m class: 1 1m than 50 50-119 1504199 500% up \\ Tota‘ \H WW wen Wipereént ah. “H1335 “14,195.03" Value class Number of Percent of producers predacers by value classes n; a. :4 Less than 50 20 27.9 59-1’49 31 141.9 150-199 it 18.9 500 8115 HP 9 12.2 Total 71+ 100.0 a’i‘l’olumes were adjusted to M. h. f. International 31; rule. i i | E ”@101“ f. litholorka 12 M91 as a sail in! therefrom After exam inclusion is th m. Nearly 69 ”W in raw wo mm basis; “Period, 311 included mm” Whoa] Prod "1W Plus ot: T° “We fitment of as trout are full W Wucts, I hbpulpmd c1 in: 51mm Prod 3111;; higher the Wucer S the 1306;10ng 2 25” ra; wood D: ”nets, 1‘6 Pro: ..th 01' 622 p1 122 find out what percent handle one product only. Just because a person says he works full-time at pulpwood production does not necessarily mean that he works 12 months per year. Also, just because a person is inter- viewed as a sawlog producer does not imply that he receives his major income therefrom. After examining the data pertaining to pulpwood producers, the Conclusion is that part—time producers are more numerous than full-time ones. nearly 69 percent of the 93 pulpwood producers indicated they worked in raw wood production--not necessarily in pulpwood alone--on a part-time basis; 31 percent were full-time. As for their general produc— tion period, slightly over 74 percent produced the yearuround; outputs inchfled pulpwood and, possibly, other products. Approximately h? percent of pulpwood producers handled pulpwood only, while 53 percent produced Pulpwood plus other raw wood products. To compare sawlog producers with pulpwood producers, (1) nearly 61 percent of sawlog producers are part-time workers, while only 39 percent are full-time. These percentages include sawlogs and, other raw Wmm products. Part-time sawlog producers are about 9 percent less than Umir puprooa counterparts. (2) As for the general production period for sawmill producers, nearly 80 percent work the year-round, or about 6 percent higher than pulpwood firms. (3) Approximately 30 percent of sawlog producers handle sawlogs only, which is 17 percent lower than those producing pulpwood. Thus, 70 percent of sawlog firms produce othafiraw wood products; of the 52 producers who handled other raw wood Imoducts, #6 produced pulpwood. When one considers that #6 firms out Of'flh or 62.2 percent, are also handling pulpwood, one can conclude that . y f 28R “"5” i 7 - r : ~ '4 ‘ . an -~ j» diff" 51" V mural ”mm m exceed3 1‘1“ v: die meant of with by W i; already ii mzehiiveli mo wine "10re m mapped P” in work ("hm Want; semi]. 11.. with part Mice; 21 0“ dining and 11“ hid recognize mi activities in been diffiou iiiionmires. One can cone the raw woo ’oibility or in iiixaiple, thee m“quilted it “Her unit 011' ,. or ii, marks *_1— the two products supplement one another. However, volumes produced have not been examined as yet. In fact, limited data justify only a tentative or general conclusion, namely that pulpwood handled by sawlog suppliers far exceeds the volume of sawlogs produced. However, an approximation of the percent of pulpwood supplied versus that of sawlogs is not Justified by the data at hand. As already noted, part-time producers of both pulpwood and sawlogs are relatively more numerous than full-time operators. Part—time firms may have more than one source of employment other than raw wood production. With pulpwood producers, farming ranks highest, but intermediate marketing agent work (which is closely allied with pulpwood production) is also important; sawmilling and working for wages are nearly tied for third place. With part-time sawlog producers, farming is again of top importance; 21 out of 1L5 part-time producers were farmers in 1960. Sawmilling and bulldozing work were also relatively important. One should recognize that contract timber cutting and intermediate marketing agent activities are closely related to the work of a producer and may have been difficult to distinguish when filling out schedules or questionnaires. One can conclude from the information just presented relative to Partntime raw wood producers that diversification permits a degree of ' flexibility or independence from producing pulpwood, sawlogs, or both. For example, those who are performing two or more kinds of work may be using equipment in more than one enterprise and, thus, reducing fixed costs Per unit output. Also, income is being supplemented. On the other hand, marketing quotas or agreements, as with pulpwood particularly, went in 11.- iorounfl-oui Mum in the. mount situai Mums outnumi (”1933). Howe Whites are re] Wilt, excepi Pincers, they 1 ”its often pr; 0“ CED are; it from the is l" ten to sup; (1) Ni 111;. Well as i (2) P1 2211;;ong the S Emulation 1‘ (3) T1 5. Miners . (It) Be Lgm‘tiih wort (5) T1 323'. A 12h- may be restricted, which often precludes handling large volumes,_heavy investment in machinery, and, thus, specialization. To round-out the picture of general characteristics of raw wood producers in the northern part of the Lower Peninsula of, Michigan, the Part-time employees of pulpwood employment situation was investigated. producers outnumber full-time workers in the smaller volume classes However, for the two larger volume classes, full-time Family labor is generally not (Table 33). As for sawlog employees are relatively more important. important, except possibly in the 100-599 volume class. Those that do employ producers, they hire very few persons (Table 34). helpers often produce pulpwood in addition to sawlogs. One can draw few conclusions, if any, concerning the efficiency of labor from the data given in Tables 33 and 31L. The following reasons are given to support this statement: (1) Nearly all producers perform some labor, 1. e., do physical work as well as make decisions as employers. There were 23 (2) Producers tend to form loose partnerships. or 21: among the 93 pulpwood firms and 10 among the 71; sawlog producers. This situation led to confusion relative to employees. (3) The productivity of part—time workers can not be estimated from the data at hand; days of employment and outputs were not given by Producers. (4) Because outputs of partmtime workers are not given, outputs 01° full-time workers are also clouded. (5) The picture is further confused because producers often For example, in the 600—999 volume handle film or more raw wood products. blue class I} P?) lords has than 100 100-599 600-999 1,000-1,999 21°00 and up 125 Table 33.-—Part-time and full-time employees of pulpwood, producers, 1959a Part-time eylozees Full-time employees Volume class No. of producers Regular Family Ave. Regular Family Average Cords less than 100 11+ 32 2 2.13" 7 o .5 100-599 35 1:4 ‘ 14 1.7 15 3 .5 600—999 8 A2 3 5.6 10 1+ 1.8 1,000- 1, 999 19 24 5 1. 5 31 o 1. 6 2,000 and up 17 53 7 3.5 71+ 0 AA Total 93 195 31 2.4 137 7 1.5 aThere was considerable confusion regarding the term "employee." Many producers claimed to be dealing with subcontractors or subproducers. In general, when subcontractors were suggested, they were recorded as employees. Further explanation of subcontracting is covered later in this chapter. bHigher than average figures for the first and third volume classes means that more emphasis was given to post production by certain small The small amount of pulpwood producers and more labor was needed. handled by the first volume class producers would not justify hiring more than one partatime man. Table 3h.--Part- Volume class Nu pr 14. h. 1'. less than 50 50-119 ISO-E199 500 and up K. Total \ 7 as“ footnot m the SM an 1M1" Other than i“ being handle ?6 A i 126 Table 311.—-Part-time and full-time employees of sawlog producers, 19603 Volume class Number of Part-time employees 1 Full-time employees producers Regular Family Average Regular Family Average M. b. 1*. Less than 50 2o 15 9 1.2 2 2 .2 50-1119 3 1 21+ 12 1 . 2 7 7 . 5 150-199 1h 1+ 1 .h 12 5 1.2 500 and up 9 2 5 .8 11+ 3 1.8 Total 711 115 27 1.0 35 17 .7 3‘See footnote "a" under Table 33 above. Also, one should recognize that the small amount of sawlogs produced would require practically no labor other than the producer himself, unless other raw wood products were being handled, e. g., pulpwood. ”1;;- m . lite cedar peat film! can not We to produ (6) r Mums report tte- by contract W of further mm were bra. M, except tho Winthis stu . Mung a lo: Wham, n he“ or “nPeei that 96 inches 211W. “Mist: mbolts, it; often expr: flats are 1% ted very Cam turtle width 1 A —__———’r 127 class of Table 33, one firm hired 21+ partmtime workers and 6 full-time employees. This producer was mainly concerned with producing northern white cedar posts; pulpwood was secondary. The man-hours devoted to pulpwood can not be determined from present data. Further analysis per- taining to productivity of labor appears to be needed. (6) The picture is further confused by the fact that many producers report that they hire no helpers; all wood is supposedly cut, etc. by contractors. This is subject to considerable question and is in need of further analysis. For the data presented in Tables 33 and 31;, contractors were counted as employees when the number of such persons was known . Products Handled by Producers Pulpwood producers use the standard cord as a basis for selling their wood, except those producing excelsior woodmwhich is considered as pulp... wood in this study. Ehrcelsior bolts are 55 inches long and are peeled, thus giving a long cord of lit-6 2/3 cubic feet. Excelsior bolts are usually aspen, hand peeled, with a loss for bark of approximately 12 Percent of unpeeled volume. In common usage, pulpwood sticks are cut either 96 inches (#8 x 2) or lOO inches (50 x 2) long, depending on mill 3 P011637. No distinction is made in this analysis between. 96 inch and l 100 inch bolts. Producers who sell wood to mills that require loo inch ‘ bolts often express concern about width of loads on the highways. Sticks 1 01‘ bolts are loaded cross-wise the truck or trailer. If sticks are not loaded very carefully, trucks become hazardous on the roads. The maximum allowable width for a truck hauling forest products is 101+ inches. A may, a ‘ kyle, Scribner, mat a, 10, 1' MW inches. Ware out she ”urement. 35 preview; it! raw wood F "19h are *5er ill: 36. Despi W feet of 10 Nance of P11 “er 75 Wm M out PulPVOd “it or total it, Despite t; ”filed PrOducer; flirted and 80h tin sufficient 1 f‘tinces are on it cedar Post; [mated to: 1“" rather the Tab1e36 Sh: (In data are C 128 Sawlog producers commonly use one of three log rules, or may use mill tally, depending on what the buyer requires. The log rules are Doyle, Scribner, and International 11;. Except for pallet bolts, logs are cut 8, 10, 12, 114-, and 16 feet in length with a trim allowance of three to four inches. Pallet bolts are counted as logs in this analysis, but they are cut shorter than 8 feet and are generally sold by standard cord measurement. As previously mentioned, 53 percent of pulpwood producers handle other raw wood products. This is further substantiated by the data which are summarized in Table 35, then subdivided by volume classes in Table 36. Despite somewhat arbitrary converting factors for changing board feet of logs and number of posts to standard cords, the outstanding importance of pulpwood is apparent. Pulpwood producers handle approx-i.= mately 75 percent of their output as producers in the form of pulpwood. When cut pulpwood is added, this raw material equals approximately 89 Percent of total volume handled. Fuelwood and veneer logs are insignifi= cant. Despite the outstanding position of pulpwood production among 5311113186 producers, about 6 percent of the better, larger bolts are selected and sold as sawlogso The price differential makes this attractive when sufficient numbers of such bolts or logs are found. Also, trucking distances are often closer for sawlogs than for pulpwood. As for northern white cedar posts, these are cut at the same time that spruce and balsam are harvested for pulpwood and may be the primary product of certain pro, ducers rather than pulpwood. Table 36 shows much the same information as is given in Table 35, except data are distributed by volume classes. Pulpwood and cut pulpwood ”when“ law he: 1038‘: ”MB, Posts, ; Mm \ Total \ Ward 0! Fl Whats . he“ pulpwo. fipm'ehaged by 0H" hundrl GA r0"€11 es 129 Table 35.—-Raw wood products hand led by sampled pulpwood producers, l959 Product Volume Volume Volume Total volume M pieces M. b. f. M cordsa Percent if H Pulpwood 10h..9 75.5 , . a “i Cut pulpwoodb 18.8 13.5 E; Sawlogsc h , 032 8. 1 5 .8 Veneer logsc 169 a 3 .2 Pickets, posts, polesd S61 6.8 h.9 Fuelwood .2 .l - ‘ .11 Total 561 h,201 139‘. l 100.,0‘ aStandard cords appeared to be the most convenient common base for all products. bCut pulpwood was purchased from other producers, i. e., this wood was purchased by producers acting as intermediate marketing agents~=merchant midd lemen. cFive hundred board feet International % was used as equal one cord. 61‘- rough estimate is 80 posts equal one cord. Table 36.--0l‘.her to vc --—--—_—.-. Volume class Cords less than 100 100-599 600-999 1,000.1,999 2,000 and up \E Total \ , allHither pro L’ll “d9 those wh l) ‘ Approximat cInCludes 7 130 Table 36.n-0ther raw wood products sold by pulpwood producers as related to volume classes, l959 volume class Number of Sawlogs Veneer logs Posts, etc. Fuelwood producersa Cords wr Fara; less than 100 13 890 llh 3,112 198 100-599 13 2,3llll 66 20 600-999 7 560 3,500b 21 1,000-1,999 10 2,166 210 135C 2,000 and up 6 1,810 lh Total A9 8,070 338 6 ,813 239 aNumber producing pulpwood and other raw wood products; does not inchfle those who produced pulpwood alone. bApproximately 99 percent of this volume was from one producer; his manilivelihood was from posts. 0Includes 700 30~foot piles from one producer. a » r llllrllntion orl “1:37. From the interned: Mound in the h 100599 volt: llama 600.999 “1 Irehant mid Mince of wc ”l as dealers; lllucerg alone tilts. This 35 melted in Ta‘: Blrefeml lull. number < W 1,128 .( tlntermiate llllvalent to al :z'posts, and 1‘ hp WY c I“ already We other 1‘: has“ of the ' “gluing . dilate”. rem: A 131 are not given in Table 36; this table applies only to those 119 producers who handle other raw wood products in addition to pulpwood. The over-all distribution of pulpwood production by volume classes is presented in Table 37. From these data one can conclude that small producers do not act as intermediate marketing agents-umerchant middlemen; large producers are found in that role for approximately 10 percent of total volume handled. The 100-599 volume class accounts for ll.5 percent, but producers in volume classes 600-999 and 1,000-1,999 seldom act in the dual role of producer and merchant middleman. One can conclude from these data that the importance of wood handled as producers far outweighs the wood bought and sold as dealers; the comparative percentages are approximately 85 for Producers alone and 15 for producers acting as intermediate marketing agents. This same conclusion was reached after considering the data presented in Table 35. By referring to Tables 35, 36 and 37 and dividing the volumes by 93-wthe number of producers sampledmone finds that the average producer handled l,l28 cords of pulpwood as a producer, 202 cords of such wood as an intermediate marketing agent, 18,355 board feet of saw logs which is equivalent to about 87 cords, less than ll cords of veneer logs, 73 cords of posts, and less than 3 cords of fuelwood. In all, the average producer hfilial-ed l,1l97 cords of raw wood products in the year 1959» As already indicated, 52 of the 7h sawlog producers; or 70 Percent’ Produce other raw wood products, and 1+6 of these 52, 01' slightly over 62 Percent of the 7h sampled, handle pulpwood. UnfOrtunately supplementary data regarding volumes of pulpwood, veneer logs, posts, etc. were not adequately recorded on questionnaires, e. g., 21* 0f the 52 sawlog producers Table 37.--Pulp1 mercl Volume class Cords Ilsa than 100 100-599 600-999 1,000.1,999 2:000 and up \‘ Total X a1I‘ll-lilies a( bards. bThese ind: aiming agent; films figm mustered, as l A film figw ““idered, as 1 132 Table 37.--Pulpwood production by volume classes, as producers and as merchant middlemen, l959a b volume class Producers Merchant middlemen Number Volume Volume Number Volume Volume Cords Cords Percent Cords Percent Less than 100 111 621 .5 100-599 35 13,159 1007 7 5,590 h.5 600-999 8 6 ,717 5 . £1 1 120 a 1 1,000-1,999 19 26,1110 21.1 3 1,0112 .9 2,000 and up 17 58,301 1+7.1 7 12,0311 9°7 Total 93 1011 , 938 an , 8c 18 18, 786 15 . ed d aVolumes adjusted to unpeeled basis. Total volume equaled 123,72h cor s. bThese individuals were serving as both producers and intermediate marketing agents. 0This figure changes to 7505 percent when all W006 handled is considered, as given in Table 35. 6This figure changes to 13 5 percent when all W006 handled is considered, as given in Table 35. mind. he: llalmlogs an: mm! produc' None for pu‘ W extrapola One finds W 1085; f0 Raw mod p M» or occas Wen will‘ 1mMood p W (Table bee'fmll‘ths 0 Mange W W155“ are 113’ lay inere The data p Wes and out} car mg no er :2 Slightly 0v 2"“ Volume Dr 133 who said they also handled pulpwood were not asked how much pulpwood they produced. From the 28 whose pulpwood volumes were recorded, one can say that sawlogs appear to supplement pulpwood, i. e., pulpwood is the major raw wood product. However, to make comparisons for sawlog producers as was done for pulpwood firms (Tables 35 and 36) can not be done without broad extrapolation. One finds that five sawlog producers sold small amounts of face veneer logs; four sold a few container veneer logs; and five sold northern white cedar posts . Species Hand led Raw wood producers in the study area purchase various species of trees, or occasionally cut and sell trees from their own lands. Pulpwood Producers will be considered first. PUIPWOOG producers are mainly concerned with Populus species (3. W) E. grandidentata, and E. tacamahaca), commonly referred to as "aspen" (Table 38). Aspen comprises approximately 73 percents-almost thre‘fi=fourths of total volume. Jack pine (Pinus banksiana) is next in importance with a total of nearly 211 percent. Other hardwoods, spruce, and balsam are of minor importance, but the use of hardwoods, such as oaks, may increase in the future. The data presented in Table 38 also indicate the production by sPecitES and outputs in relation to volume classes. The importance of larger producers is apparent; the 2,000 and up volume class, which accounts for Slightly over 18 percent of sampled firms, handled almost 56 percent 035' total Volume produced in 1959, The minor importance of the smallest volume 1,000-1,999 21000 and up \——— - Total \ “Based on E “led “8 intez 131P Table 38.--Percentage of species handled by pulpwood producers, 19595 Volume class Aspenb Spruce- Jack pine Other Total balsam hardwood s Cords Less than 100 .2 .2 .l Negl. .5 100a599 9.7 .3 2.7 12.7 600-999 2. 9 . 9 2 . 5 Negl. 6 . 3 1,000-1,999 21.2 3.2 .5 2+9 2,000 and up 39.2 1.0 15.11 ‘ 55.6 Total 73.2 2.1+ 23.9 .5 100.0 aBased on a total of th,938 cords, or Column 3, Table 37; volumes handled as intermediate marketing agents are not included here. bPeeled wood was converted to rough or unpeeled volume in order to compare it with unpeeled. 0f the 73.2 percent of aspen, 49$L W85 unpeeled and 23.8 was peeled. .- mm“ 7 m 39 W l u ”I” m 11. Wié llm Mimi; Men with th «approximate Mei "e or ‘ mm to “mm M not “1°“ u m WW Aspen is “' “Element Yer} Mother "hard mood speciei fill-MW Prodl 33°, the low I" ll: species is recent of ”I“! There may ] “(L-wide contra‘ a far 1W” W the scOP‘ 2'21 the range i hit the pulp @112an for A I-y———_— r 13 5 class is also recognized. One should keep in mind, however, that Table 38 does not show volume of wood hand led in the intermediate marketing agent role, most of which, one assumes, came from small producers. The species distribution of sawlogs is confined to totals rather than sub-dividing the data by volume classes (Table 39 ), Oak is the species with the highest volume, namely 21» percent, while elm and aspen are approximately 18 each. Hard maple rates nearly ll percent. Other species are of minor importance. One can note that mixed hardWOods amount to about 7 percent; this classification was used when producers did not know the volumes handled or simply reported their volumes as mixed hardwoods. Aspen is not nearly as important for sawlogs as it is for pulpwood (18 percent versus 73 percent)“ The importance of oak, elm, hard maple, and other "hard" hardwoods, in general, contrasts with those same dense hardwood species used for pulpwood. They are of very minor importance in Pulp-paper production in the study area and the Lower Peninsula in general. Also, the low percent of jack pine used for sawlogs is of interest, as this species is relatively important for making papermapproximately 21" percent of volume handled by pulPWOOG producer 5 (Table 38)° There may be technological reasons, as well as economic reasons, for the wide contrast in species between those woods used for pulp and those used for lumber. However, an exploration of these reasons appears to be beliond the scope of this investigatiom One can hypothesize, however, that the range in species and, perhaps, quality and quantity Of timber Permit the pulp and related firms to co==exist with sawmills without major Competition for raw wood. Further investigation may show these two larger Species you]? Oak sine Elm 18.5 Aspen 1.8.3 Hard maple 10.8 Mixed - hardwoods 7. l Basswood 6.8 Beech 6.6 Soft maple 1‘5 Black cherry 1.0 Jack pine 1.0 White and red pines .5 White or paper birch .Sb Hemlock t .2 Ash .2 Total 100.0 ———___~ 8'Based on 11+,316 M. b. f. International % rule. bSmall amounts of white birch were reported with aspen, ___. __.- _._--...-._—__—— . . Rmood 1)] Wu, and prod Um. Sinner pu] Wit three M timber as item one gr: mm“ to obi Wotan. This “1hr produce: “he“ consid aimed also; film so farthe item from t dh 17.2 Niles “test you i!“ do pulprod Ming 1am Only l3 A 137 groups of wood-using firms to be complementary, i. e. , both attain higher incomes and more efficiencies when working in the same area. Procurement Areas Raw wood producers have procurement areas in which they locate, obtain, and produce their products. Pulpwood areas will be considered first. Smaller pulpwood producers-~shown in Table ’+O as a combination of the first three volume classes commonly being used in this analysis” obtain timber nearer home than larger firms. The large producers-- given as one group (Table 1+0) of 1,000 cords and up-ngo much farther from home to obtain sufficient volumes to meet their marketing agreements or quotas. This is understandable in that they need more timber than do smaller producers. When considering sawlog operators, radius of procurement area is patterned also; small operators produce near their homes, and larger pro... ducers go farther away (Table #1). The overall average is not much different from that of pulpwood producerswl6.9 miles (Table ’41.) compared With 17.2 miles for pulpwood operators (Table 1.10). The sawlog producers in the largest volume grouping show a larger radius of procurement area than do pulpwood producers. Methods of Acquiring Stumpage Buying land is one way to procure the forests which may be on the land, Only #3 percent of pulpwood volume and 1+5 percent of sawlog Velume came from land owned by sampled producers. g l i ‘. Value class! cords loss than 1,01 1,000 and up ‘0...“ W11]. range 1 \~ “One PTodut ”counted as : 138 Table 1+0.--Range and radius of procurement area of pulpwood producers, Volume class Range of operation Average radius of area Cords Miles Less than 1,000 l=35 11+.3 1,000 and up 1—1009‘ 21.8 Over-all range and average l-lOO 17.2 aOne producer lived in a trailer in the woods; his radius of operation was counted as 1 mile. Table lthe-”Range and radius of procurement area of sawlog producers, 1960 Volume class Range of operation Average radius of area M. b. f. Miles Less than 50 1-30 7.6 50-119 1-50 15A 150499 1-80 22.1; 500 and up 25=~35 28.8 Over—all range and average l~80 16.9 . ”pvt-~53” 11th that! mm mute" W3 tune of Wasted. "£11 an agree“ Mare or me h“ We true ME to bw, I hm ”ans of ; insured. A ‘ “Mien Which Mme rem; “Willy, t1 Mace“ them W keep in n Wing timber iiifltemediate lacontract be Mr math “mom, ea WK “We in laminar bu Wang Par :11 t he compara- A 139: A second way to obtain standing timber is for raw wood buyers to purchase stumpage and resell it to producers“ No pulpwood producer indicated that he obtained stumpage in this manner in 1959, A third, and somewhat related way, is for a raw wood buyer to purchase standing timber in the name of the producer, with the producer paying for it as the wood is harvested. Only 7 percent of l959 pulpwood volume was produced under such an agreement. One may question why this percent is so low; the procedure or method appears to be an effective way to secure pulpwood from large tracts which many producers would probably not be financially able to buy. In order for this type of purchasing to succeed, however, legal means of protecting firms who provide the finances would have to be assured» A closely related procedure is indicated by certain pulp companies which buy large tracts of timber, then contract the cutting; the title remains with the company“ Finally, the great majority of pulpwood stumpage is purchased by producers themselves and amounted to 88.7 percent of volume in 1959, One should keep in mind that all the above figures relative to acquiring standing timber apply only to wood produced by producers, not that handled as intermediate marketing agents nor that purchased by pulp firms and cut on a contract basisa As for methods of acquiring sawlog timber, 405 percent of volume, as mentioned, came from own lands in 1960, 07 percent was purchased by the 108 buyer in the producer“s name, and 1+.l percent was bought by the 108 purchaser but resold to the producero The great majority=~90.7 Percentwwas wemm by prodimers themselves” This is 2 percent more than the comparable figure for pulpwood producerso One can conclude, Matters M can obtain Iillbe seen u “mists are 1 “We one War is sold, “5 when 1317111 Data rem i‘hmi‘m Mitten , with“ Volm mm“ are themes (1) 1 @1331)th hkpine. Nea; R7 ”mutt “it. (2) ; itinum 1501; d: A 1&0 therefore, that there are no major differences between sawlog and pulpwood producers relative to acquiring stumpage or standing timber. Contracts 3 Ageements with landowners Producers must have contracts or agreements with landowners whereby they can obtain timber, unless the land is already owned by producers. As will be seen under the section on "Landownership Sources of Raw Wood ," suppliers are largely dependent on stumpage from outside sources, in ac, from lands owned by other people or agencies» On public lands when timber is sold, written agreements are used, but this is not necessarily true when buying from private owners. Agreements Relative to Pulpwood Stumpage Data relative to agreements to obtain pulpwood, including own lands, are summarized in Table 1+2. The large amount of pulpwood which is secured under written agreement can be noted~=nearly 84 percent° One can also note that volumes obtained by written and oral agreements with private landowners are approximately equalwabout 12 percent each. Agreements with private landowners usually reflect mill requirements: (1) The species to be cut is of major interesto These are aspen (333% species), paper birch, black and white spruce, balsam fir, and 380k pineo Nearly all producers reported that they are permitted to cut every merchantable treeo This practice appears to be acceptable Silvie culturally, (2) Sizes of bolts or sticks are considered, Sizes range from a minimum top diameter of 1+ inches to a maximum of 18 inches or more, llm'1,999 2.000 and up Mala aInforms Either of I, wore, “Wily ‘ e1re one inflated and ”131%,938 blow befl lhl Table 1+2.--Percent of pulpwood purchased by written and oral agreements and from own land, 19598‘ Volume class Own Written aaeements Oral ageements Totalb lands Public Private Private only Cords . ram: Less than 100 .l .2 .1. .1 .5 100-599 .6 8.9 .8 2.1+ 12.7 600-999 1.1 1;.2 .8 .2 6.3 1,000-1,999 .9 18.9 3.9 1.2 21+.9 2,000 and up 1.6 39.1 6.8 8.1 55.6 Totals 11.3 71.3 12.1» 12.0 100.0 a‘Im‘formation was collected pertaining to number of purchase agreements and number of persons from whom stumpage was bought. However, the data include stumpage for all raw wood products, not just for pulpwood alone. Therefore, number of agreements and number of persons selling standing timber are omitted in this investigation. On the other hand, volumes were tabulated and are based on total pulpwood volume handled as producers, namely 101+,938 cords. bNoted before in Table 38. u live tree (11) ”f Wants. very 9:11 tra Int: range fr “agreements ' Illlbe cut an h" some beer ”2 writer knew 8 Period ; ’62 “time, to n (5) "when m We“ here-.1 meat of 381'! is time, in t $136 on cords me'chSe em :36 “81s, is same was i 5196 timber, my“ core "“‘Vuy or cut A 1&2 depending on mill requirements. Lengths of bolts, as previously mentioned, are 96 or 100 inches, except for excelsior wood which is 55 inches. (3) Agreements usually specify sound wood which is to be cut from live trees. (1+) Length of time allowed for harvesting is an important part of agreements. lI'he range of time given by producers was one monthmfor a very small tract of timber-ato 10 years. However, the majority of ageeu— ments range from one to three years. Approximately 1&5 percent of contracts or agreements with private owners set no time limit as to when the timber will be cut and removed. Size of tract or objectives of the owner may have some bearing on the number of years allowed to do the harvesting. The writer knew of one timber sale where cutting was planned over an 18 year period; the owner of the land wanted to harvest pulpwood and, at the same time, to carry out deer management. (5) Agreements specify methods and times of payments. With the reservation that three producers made two kinds of agreements=~~which are ignored here-mthe "lump sum" arrangement with private owners covered 21 percent of agreements with such owners in 1959 and called for payment for the timber in advance of harvesting. The more common method, however, ‘xis based on cords of harvested Wood; this arrangement amounted to 79 percent of purchase agreements made. Payment for stumpage, when made on, a standard cord basis, is usually delayed until mill measurement is available; such a procedure was followed by 69 percent of producers who purchased privately 0Wned timber. However, approximately 10 percent of private agreements Specify a cord basis for measurement and settlements are made prior to delivery of cut wood to a mill. Those landowners who received payment for W61: 36 new. PM in mm a: Ms with Proviucera Ming time “Interment Miners fall 11M °f agreen; chent of F In "0’6 includv We that 1 Wise, T] Wants are Wt aged De“rustic 5mm by Je h, 1“ teller MB 11m 53' The ELnd m fimdmu Hith the e M Wheat it ho“ timbe \ :n \ 6 percent, 1 11:3 for stumpage on a cut-wood-and—cordwbasis prior to mill scaling or measuring apparently sold to producers who made roadside deliveries where measurement was easy. Producers like to use mill scale tickets or measurement records when paying for stumpage in an effort to prevent misunderstandings and arguments with landowners. Mill measurements are taken as final. Producers often assume they will have a market and, thus, will buy standing timber when they do not have a quota or marketing agreement with an intermediate marketing agent or a mill. Approximately 1&2 percent of producers fall into this group. Nearly 55 percent are protected by some kind of agreement, however loose, before buying stumpage. Approximately 3 percent of producers cut pulpwood from their own lands exclusively, thus are not included with those who have or do not have agreements. One can conclude that purchasing timber for pulpwood marketing is a rather uncertain enterprise. This is even further substantiated by the fact that quotas and agreements are considered to be non-binding, as defined by intermediate marketing agents and primary pulp mills. Descriptions of State and Federal (Forest Service) stumpage sales were described by James (February 1957, p. lac-1+2, hit-=16) and need not be repeated here. In general, State and Federal sales are based on written agreements and are a little more restrictive than private sales, although not always So. Time and method of measurements and payments are usually more complicated t118m under private agreements. With the emphasis on harvesting all merchantable trees, one would exPact contracts or agreements with private timber owners to be nonmrestrictive as to how timber is to be cut. However, 32 of the 1&7 private agreements, or 68 Percent, reported some kind of restriction in 1959., Answers were manual on producer i W]: prf mth Ientionz‘ Pulmod t«replies in *9 Mines 1 Water: “1 per tract , WNW in Wine rep] (1) (2) ”Mable. 1M; variable and difficult to tabulate and evaluate. Typical answers are as follows: Use care in making roads; save the hard maple and pines; take care of small trees; increase food for deer; start no fires; etc. Only one producer specifically mentioned being careful with fire in the woods. Apparently private landowners do not consider forest fires a problem worth mentioning when working out agreements with producers. Pulpwood producers generally initiate purchases of stumpage. According to replies from producers, about 68 percent of the initiating action leading to purchases in 1959 began with producers. Producers expressed opinions as to volume of pulpwood needed per acre and per tract, as well as minimum value of a tract, before they would be interested in buying the timber. Many answers were conditional; the following replies are typical: (1) Locational factors must be considered. (2) A large volume on 10 acres of a forty maybe sufficient to be profitable. (3) One sometimes has to cut thin stands. (1;) Fifty to lOO cords in clumps would be minimum. (5) Jack pine can have less volume per acre than aspen. (6) Topography may influence price offered. Despite the above answers from producers, the minimum volume per acre averaged slightly over five cords, as reported by 82 of the 93 producers, The minimum volume per tract amounted to 11m cords, and minimum value per tract equaled $223.. One should note, however, that when schedules were being completed tracts were often considered on a forty basis, i. e. , Volume per tract and value per tract were applied to a forty acre area. My 0114‘ ' I this fro: My 2,000 and n V. 1959. In all, WI, 01' 7 P6 ”Brent esti 0f Acquiring s but”; Prod lie: M“ M: “die 13. x] 515 Percentii m” 13 caused it. Oral 53, ampulpmd’ ‘3 with Du hummus E35, and only (1) : We “Hers ‘ tuthose who ms? other 1 die, mugged“ lips Also, difference in species caused confusion. Only eight out of 93 producers (8.6 percent) in the study area received funds from buyers to purchase pulpwood stumpage. Five of these were in the 2,000 and up volume class and they bought 5,976 cords by this method in 1959. In all, the amount purchased by buyers in this manner equaled 7,315 cords, or 7 percent of the total 10h,938 cords handled as producers. The Tpercent estimate was mentioned previously in this chapter under "Methods of Acquiring Stumpage." One can conclude that stumpage purchases'by cut wood buyers is of relatively little importance, except possibly among the largest producers. Agreements Relative to Sawlog stumpage Data pertaining to agreements to obtain sawlog stumpage are summarized in Table 1+3. The amount of sawlogs secured by written agreements total 38.5 percent--far below that of pulpwood with nearly 81» percent (Table 1&2). This is caused by the lack of sawlog stumpage purchases from the govern- ment. Oral agreements with private owners rank higher with sawlogs than with pulpwood, namely 57 percent for logs as compared with 12 for pulpwood, As with pulpwood , agreements with private owners usually reflect mill SPecifications or requirements. Agreements arehighly variable, 'neverthe-n 1853, and only a few major points will’be discussed here: (1) Eighteen of the 62 (29 percent) who bought stumpage from Private owners were restricted in some way regarding species to cut. This means those who wanted only aspen, primarily for pulpwood, bought Only that Species; other producers purchased just hard maple, elm, or a mixture of maple, basswood, and elm; others said simply that restrictions were imposed. Value chi I. b. t.- less than sq 50-119 150499 500 and up \ Total \% REM on 1116 Table h3.--Percent of sawlogs purchased by written and oral agreements and from own lands, 1960a Volume class Own Written Oral Total " lands Public Private Private only M. b. r. 11- W; less than 50 .3 1.2 .6 1.0 3.1 50-119 .1 2.2 11.6 10.5 17.11 150—1199 2.5 703 5.8 1.1011 27.0 500 and up 1.6 5.1 11.7 311.1 52.5 Total h.5 15.8 22.7 57.0 100.0 8‘Based on 111,316 M. h. f. International 71;. “11111111006 pr ““5 or size we. (3) M“ Point doe Wins the (1*) “9 limits we: m m questj 'ZL' to Hire e 3 , "51'. (5) tinny by the i 111 7 The majority of those producers purchasing from private owners cut any or all species. (2) Specifications were often clouded by the fact that producers were thinking of pulpwood when they replied to questions in this regard. However, 31L of the 62, or approximately 55 percent, indicated they agreed to observe a minimum stump diameter or minimum size log. Stump diameters range from six inches (for pallet bolts) to 18 inches (for logs) but, generally, 12 or ll; inches is the minimum. Because of the primary interest in pulpwood production by many producers, answers concerning diameter limits or sizes of logs were obscured and no definite tabulation could be made. (3) Only two producers of the 62 mentioned buying logs by grade. This point does not appear to have been adequately stressed by the person completing the questionnaires and no conclusion will be offered. (’4) Twentyweight of the 62 producers, or 145 percent, indicated time limits were set on stumpage purchases. Others gave no replies or were not questioned carefully. Of those who replied, the range is one» half to three years. The average probably equals one year or slightly over. (5) Only five out of 62, or 8 percent, of log producers bought strictly by the "lump sum." Five more used this method in part. Generally settlements are made by using one of the three common log ruleSwDoyle, Scribner, or International 11;. Eleven, about 18 percent, used cord measurement. The different log rules were found to be confusing and a standard one should be adopted by the state. Cord measurement is adequate for pallet bolts. . an We of an; d cotylete I! he who pay '1 Insure ’51: “he 1068 ma “6 Insuring. "9 Insured b; 1”“1011 use, ““11! accept. ”Mm“; “118m the . One should “We apply “State Fore i, in general hint 10% ru 555' and men. £49 to Wing daemon, as 1 files. H‘ if their hau A b lh8 (6) Producers who buy stumpage by the "lump sum" method pay in advance of any timber cutting, or else make a down payment in advance and complete payment before all the timber is cut and logs are removed. Those who pay landowners by the cord or the thousand board feet (M. bo f.) mw'measure the logs in the woods with the producer doing the measuring, mrthe logs may be transported to a sawmill where the mill operator does the measuring. Logs being produced and sold from one large owner’s land are measured by a representative of that ownero This procedure is not in common use, if at all, among other private landowners. Mill scale is usually accepted as final but does not appear to be emphasized as much as with pulpwood; 35 of the 62, or 56 percent of producers, indicated that IMllsdid the scaling or measuring. One should keep in mind that the above points relative to sawlog shmmage apply only to agreements with private landowners. Sale agreements with State Forest and National Forest administrators are always written and,in general, more strict as to species, sizes, manner of felling and logging, log rule used, time to complete the cutting and to remove the has, and method of paymento Better grade logs will be sold “on grade." lhmage to young growing stock is discouragedo Sustained yield for wood Imoduction, as well as other allied uses, is considered by government agencies. Producers often work out subcontracting arrangements pertaining to thmmr cutting and raw wood skiddingo They may also sdhcontract part or allof their hauling, unless the wood is sold at roadsideo An examination Informti WM study Table “4 show in subcontrao ”contract. Wit]. Approxima Ileontractors Value class, We; skiddi he“ Prod um is" 22'5 Pace Subcontra< M135 pe % 36,5 PErcel :1th over 5 11mm "as "he” Produ “my I‘e filmed Pro‘ \.. ‘4: I teel‘s who 6 lh9 of subcontracting will begin with pulpwood producers, then be followed by sawlog suppliers. Subcontracting of Pulpwood Production Information relative to subcontracting pulpwood production in the Michigan study area is given in Table 141+, and in further detail in Table 1+5. Table ML shows the division in percent of volume handled among producers who subcontract, either part of time or regularly, and those who do not subcontract. Table 15 further clarifies by giving the kinds of work performed. Approximately 1+6 percent (Table ’44) of pulpwood was produced by subcontractors, with the large proportion falling in the 2,000 and up volume class. Nearly 18 percent of subcontracted volume was felling and bucking; skiddling alone was minor with 5.5 percent of volume handled. Sixteen producers subcontracted both felling-bucking and skidding and show 22.5 percent of volume. Subcontracting of pulpwood hauling in the study area (Table 146) equaled 13.5 percent of total volume handled as producers in 1959. Of the 86.5 percent of volume not contracted, 20 percent was sold at roadside, Slightly over 55 percent was trucked directly to a pulp mill, and about 11 Percent was delivered to a railroad siding and placed on care. When producers were questioned about why they used subcontractors, the majority replied that their time was more valuable for other work. One can raise the question as to whether subcontracting as defined by Pulpwood producers is really subcontracting at all. In interviewing producers who claimed to be using this system of timber production, the o 195% ! M Value «had We [All than 1,“ In” aid up N Total \ aPercent; , “the sever We a port: \ MW 91333 m 3 ts than 1,00c 2m and up \ Total \ ‘. this tabl rents are be 150 Table Min-Jumber of pulpwood producers subcontracting part or all their woods work and percent of pulpwood handled through subcontractors, 1959a Volume class Subcontracting Not subcontracting Part of time Regularly Cord s No . Percent .No . Percent No .b Percent Less than 1,000 2 .6 18 8.6 39 10.3 1,000 and up 5 2.6 13 33.8 23 MA Total 7 3.2 31 112.11 62 5m e‘l’ercents are based on 1015938 cords handled in the producer role. bThe seven "part of time" producers also appear under "not subcontracting," because a portion of their outputs fell here. Table h5.--Kinds of subcontract work in pulpwood production, 19598L Volume class Sub- Felling-bucking Skidding Felling-=bucking contracting and Skidding Cords No. No. Percent No. Percent No. Percent Less than 1,000 20 13 6.6 2 .7 5 1.9 1,000 and up 18 5 11.0 2 1+.8 11 20.6 Total 38 18 17.6 1+ 5.5 16 22. 5 aThis table applies to 38 producers (Table 14h) who did subcontracting. Percents are based on 1015938 cords handled as producers. 151 Table 1+6.--Number of producers and percent of total volume pertaining to subcontracting of pulpwood hauling, 1959a Volume class Sub- Not subcontracti contracting Roadside Trucking to mill To railroad Cords No. Percent” No. Percent No. Percent No. Percent Less than 1,000 7 23 7.8 11 13.8 20 hT.6 2.1 21 6.3 1,000 and up 6 11.1; 8 3.3 3 7.7 Totalc 13 13.5 29 20.1 h3 55.h 14 11.0 a"l‘hose producers who subcontracted their pulpwood hauling may or may not be different producers from the 38 listed in Tables 111+ and 5. bPercents are based on 101.5938 cords handled in the producer role. 0This table shows 99 producers. As only 93 producers were inter- viewed, 6 producers handled their pulpwood in two ways. In no instance did a producer use three ways° 9.“ . " ‘5’“- dim“: “lithe Inbor. The (WI percent Merit of vb Miners war. We at work. ’W Nucera Wing only he to“; m we" Preduc “Wed on, 1° the work We ml” One vou Mr "0011s “0: Wontractors This mm induced by t] 1% Review “Mom, c “mind-bug 1‘91 no “16 1°C rd in the w ‘c‘t. There is he. 511 M P. 15 2 writer noticed that producers claimed they were subcontracting when they seemed to be using a payment per piece or per cord as a means of paying labor. The tabulated data tend to substantiate this view: The 18 producers (19.11 percent of those interviewed), who subcontracted cutting of 17.6 percent of volume produced (Table 115), did their own skidding; these producers were probably in the woods at the same time the timber cutters were at work. Communication between producers and cutters seems likely. Four producers (#3 percent of those interviewed) subcontracted their skidding only and handled 5.5 percent of volume (Table 1+5) in this manner. These four producers did their own felling—bucking. Again communication between producers and subcontractors appears probable. When communication is carried on, then one might suppose that orders as to when and how to do the work would follow, thus establishing an employer-employee relation- ship. One would also assume that the 16 producers who subcontracted all their woods work, accounting for 22.5 percent of volume, used bona fide subcontractors . This writer also noted confusion in the minds of producers as evidenced by their replies in reporting number of employees, as was men- tioned previously. Many producers hesitated and were reluctant to report any employee, often commenting (1) that they used a subcontracting method for fellingmbucking, or (2) that they paid by cords produced and really hired no one for wages. Yet, these same producers were sometimes inter- viewed in the woods where both they and the cutters or skidders were at Work. There is uncertainty concerning the status of an employer and an eInployee. Pulpwood Production a. (1.958), considered the question of whether Gen' exercise York ace aubJect ‘ The done has Elmer o: 1W3 to contract The Raga: We affirm Wear) 1s 153 a logger or pulpwood contractor (producer) is an independent person or an employee of the firm receiving the wood. This magazine suggested the following criteria: Generally speaking, an independent contractor is one who exercises independent employment and contracts to do a piece of work according to his own Judgment and method, without being subject to his employer except as to the results of his work. The test is whether the party for whom the work is being done has the right to control the worker with respect to the manner or method of doing the work, as distinguished from the right to require certain definite results conforming to the contract. The magazine went on to raise certain questions which, if answered in the affirmative, provide a reasonable basis for saying a contractor (producer) is truly independent. These are shortened and adapted as follows: (1) Is the contractor's business separate from that of the dealer or mill? (2) Is the contractor given full use of his skill and judgment? (3) Is he doing a specific work at a fixed price, or for a lump sum,or upon a quantitative basis? (h) Is the worker subject to discharge because of the quality Of his work? (5) Is he free to use whatever assistance he thinks proper? (6) Does he select his own time of working? (7) Does he have control over his helpers? (8) Does the contractor choose when, where, and how to work? (9) Does he own the equipment he is using? (10) Does he select his own workmen and establish their rates of pay? Abner, ‘ ml of raw : W3 question was more of has such a 1 Wee relat: Mun“ We Prem R $100 We] “mm. m 0,. a r m" 1“ PM}: (“I'm possible fitted by No; Ewe: Plus 2359 Pr0ducers‘ Etna Mum's ( H? We 9'th ?:—— 1 151% (ll) Does he control the amount of pulpwood or logs which he produces? A buyer, or even the producer who claims to be using a subcontractor system of raw wood production, needs to be able to answer "yes" to all the above questions and prove his answer in court, if necessary. With producers working nearnby or alongside so~called suchntractors, one or more of the above criteria are likely to be negative; and, if so, places such a producer in an employer classification. With an employer- employee relationship comes possible liability for injuries and, with three or more employees in Michigan, mandatory workmen“s compensation insurance premiums. Such payments for legging work in 1961 equaled $18.80 per $100 payroll as a basic rate; in 1962 the basic rate was $l5.9l per $100 payroll. Rates may be higher or lower, depending on a firm's accident record over a period of years. Intermediate marketing agents and pulp mills, in purchasing wood from producers who may be employers, are also facing possible liabilities for injuries when such woods workers are not protected by workmen"s compensation insurance. Yet, the high rates for insurance, plus added responsibility for Social Security payments, apparently cause producers, intermediate agents, and mills to take the risk of liability suits when injuries occur. Workmen's compensation insurance is not mandatory in Michigan with one or two employees, but employers may choose or elect to carry such insurance anyway and, thus, be protected from liability suits when workers are injured, as well as giving some financial protection to the workers. Workmen's compensation laws and their application are discussed further by the writer in a Journal 93: Forestry article (Carothers, l96lL) and need not Hulk, 3'; «mum-J. Mimuln mi Milan's «oi In eoncl Wears, th (1) "MW, in : Producers and “tractor 15 “ii approxiu me(intruder, (2) timer a: Mans ghoul 3'l’ellsatim j a!" Years er W“ Pay hi Flslam “long hilarity and (3) fictive to Su‘ 3533311121011 or 9:11, should ' would redu #— . 155 be repeated here. However, one figure will be mentioned: By rough estimate, approximately 12 percent of the 159,650 cords (Pfieffer, 1960) of pulpwood--unpeeled basis-~produced in and largely delivered to Lower Peninsula mills in 1959 was produced by workers who were covered by workmen's compensation insurance. In concluding this section of subcontracting relative to pulpwood producers, the following suggestions are offered: (1) Further investigation appears to be needed, perhaps urgently, in regard to subcontracting, or even contracting in general. Producers and others in marketing of pulpwood need to know what a sub~ mnmractor is and is not, if this method of wood procurement is to be used; approximately 23 percent of volume handled in 1959 (Table #5) by subcontractors may have been simply piece worko ' (2) Present workmenVS compensation insurance rates indicate a high number and/or severity of injuries. Proper and applied safety PTOgrams should result in a substantial drop in normal workmenVS compensation insurance rates. Those with less than average injuries for a few years enjoy below normal premiums, while those with poor injury records pay higher rates. Just who is responsible for a safety IWOgram among producers and woods workers is debatable, but the final mmhority and responsibility rests with the stateo (3) Employer~employee relationships are part of the picture relative to subcontracting and lack of workmenVs compensation insurance. ReCOgnition of the problem by primary mills, state officials, and the PMflic should bring changes which would help woods workers, especially, Wm would reduce possible liabilities of raw wood buyers. The present Inform: W! area 13 ilble 117 gm, “boning “contract, 1‘. further 018 Wreath, Approxim “960 (Table ’ in. mg. Mt“ V011 :31“ my (E Miners sub“ 221.7 Dene: Subcontrac “‘9’ With 8.6 l0 Wilmer “lag °f 0the 7'7 156 Michigan workmen's compensation law, if strictly enforced, would likely have a deep disequilibrium effect on the primary pulpwood industry in the Lower Peninsula, at least... (h) Other suggestions relative to improving workmen's compensation laws and their application are made in the writer”s Journal of Forestry article (Carothers, 1961b).. Subcontracting of Sawlog Production Information relative to subcontracting sawlog outputs in the Michigan study area is given in Table 1&7, and in further detail in Table 1&8. Table 1+7 shows the division in percent of volume handled among producers who subcontract, either part of time or regularly, and those who do not subcontract. Table 1+7 parallels Table Mir, subcontracting of pulpwood; it further clarifies the subcontracting situation by giving the kinds of subcontracting done, Approximately 1+0 percent of sawlog volume was produced by subcontractors in 1960 (Table #7); this is only 6 percent below that for pulpwood (Table 1+4), The largest volume class handled nearly 60 percent of the sub-:1 contracted volume. Seventeen and onewhalf percent was for felling» bucking only (Table #8); skidding alone was less than 1 percent. Eighteen Producers subcontracted both fellingmbucking and skidding and accounted for 21.7 percent of sawlog volume handled by sampled producers in 1960. Subcontracting of sawlog hauling in the study area is relatively Minor, with 8.6 percent of volume falling in this category (Table 19). All the 10 producers who subcontracted sawlog hauling also subcontracted the hauling of other raw wood, most of which was pulpwood; sawlogs were i 701m 01: H. b. ' has then 1} 150 and u] \N Total \ aPercent "Fiction of "Wrath bluelude We l'8---Ki: \ 701m clas: W has than 15C ‘\ ,...“w. 29 We” on 1 157 Table lii-eflumber of sawlog producers subcontracting part or all their woods work and percent of sawlogs hand led through subcontractors, 1960a Volume class Subcontractig Not subcontracting 1y Part of time Regular M. b. f. No. Percent No. Percent No.” Percent Less than 150 8 3., 5 11 11.0 to 1.3.0 150 and up 1+ 3.1 6 29.3 17 117.1 Total 12 6.6 17 33.3 57 60.1 aPercents are based on 115316 M. b. f.; data collected did not permit separation of pulpwood and sawlogs, so replies may have reflected pulpwood subcontracting situations. bIncludes 12 producers who were also subcontracting part of time. Table h8.-~Kinds of subcontract work in sawlog production, 1960a Volume class Sub» Felling-«bucking Skidding Fellingmbucking contracting and skidding M. h. 1’, No. No. Percent No. Percent No. Percent Less than 150 19 6 2.5 l .7 12 1H2 150 and up 10 11- 1.5.0 6 17.5 Total 29 1.0 17. 5 1 .7 18 21.7 m Percents 8‘Shows 29 producers from Table 1+7 who did subcontracting. are based on 115316 M. b. f. handled as producers. " ' ‘ lolu claJ [b0 fa less as u 150 and up M Total“ M "hose 1x fifteen: pm bPfiI‘cent: 0113118 ta] ”Wars ham 158 Table l$9.--Hum‘ser of producers and percent of total volume pertaining to subcontracting of sawlog hauling, ' 1960a Volume class Sub- Not subcontractig contracting Roadside Trucking to mill M. h. 1‘. No. Percent!1hr No. Percent No. Percent " Less than 150 7 3.1 u 1.3 In 16.1 150 and up 3 5.5 1 LA 21 72.6 Totalc 10 8.6 5 2.7 62 88.7 a‘I‘hose producers who subcontracted their hauling may or may not be different producers from the 29 listed in Tables #7 and 148. bPercents are based on 11+ ,316 M. b. 1‘. cThis table shows 77 producers. As only 71+ were interviewed, 3 producers handled their sawlogs in two ways. In no instance did a producer use three ways. 1818031: volI My area 1 1960; this a The gré “or trucks 11W of ra The saw We Various mints: Meats and “my, 11 3'11““an Edema Pie it 11-5 P61 332th Under 61' This Cc 1;;Plom (Tab Emma- £1”th he “5 piece ha 159 incidental to pulpwood, with the exception of the one producer in the largest volume class. Roadside sale of sawlogs is very minor in the study area (Table 219) and accounted for slighly less than 3 percent in 1960,- this contrasts with 20 percent for pulpwood (Table 1+6). The great majority--nearly 89 percent-~of sawlogs are transported by motor trucks directly to sawmills (Table 49). No logs are being shipped by way of railroads, as contrasted with 11 percent for pulpwood (Table 1+6). The sawlog producers who subcontracted, either woods work or hauling, gave various reasons for doing so. Replies usually covered four major points: I (l) Subcontracting is cheaper. (2) Producer's time is more valuable for other work. (3) Lack of equipment~-for trucking, primarily. (1+) Subcontracting avoids workmen“s compensation insurance Payments and possible liability suits in event of injuries. Many, if not all, the earlier comments about pulpwood subcontracting apply to sawlog production. For example, payments for labor are often made on a piece basis rather than actual subcontracting. One can note that 17.5 percent of volume handled came under fellingubuching and .7 Percent under skidding only, or a total of slightly over 18 percent (Table 1‘8). This compares with 23 percent for similar producers when handling Pulmood (Table 1+5). Again one can assume communication between worker and Producer and a probable employer-employee relationship. One prod ucer said that he owned the truck which hauled the logs, but paid his driver on a piece basis so as to avoid insurance payments and liability for injuries. This kind of reasoning on the part of producers is subject to hdotem mm «1 I us still 311' Mrs. Deliver; Wes 16 and Informal int; 01 pull MW 8 11mm of biting deliv than bump “he 69 Pare hint Which 1 mem 21m to Lu al.-1 DIOfl need _f— 160 court interpretation. If such producers are actually employers, as may be determined by the courts, and have three or more men employed, then workmen's compensation is mandatory. If they hire only one or‘two, they are still subject to liability suits under common law in event an employee is injured . Delivery Points Delivery points were previously noted from the information given in Tables 1+6 and 1+9. However, these data are condensed for clearer under- standing in Tables 50 and 51'. Pulpwood will be considered first. Pulpwood Delivery Points Information relative to number of producers, volumes handled, and points of pulpwood deliveries for 1959 is contained in Table 50. Trucking directly to a mill is the most important point of delivery and shows about 56 percent of producers handling approximately 69 percent of total volume. Roadside delivery is next in importance with about 29 percent of producers delivering 20 percent of total cords produced. Trucking to railroads is last with 1.1-!- percent of producers and 11 percent of total volume handled. As the 69 percent of volume which was trucked directly to mills and the 20 Percent which was stacked and sold at roadside is also hauled by trucks, one can conclude that trucks are of outstanding importance in delivering Pulwood to Lower Peninsula mills; such deliveries totaled 89 percent of V0Mme produced by the 93 persons interviewed. Yolnle clef Cords : less than 11 100-599 600-999 1,000-1,995 2,000 mid u] \ Total \- a31X prc “War of bPErcent Mucus, ccWhine 161 Table 50.-—Number of producers, percent of volume, and points of pulpwood deliveries, 1959's Volume class Roadside Tracked to R. R. Trucked to m111° Cords No. Percent? No. Percent No. Percent Less than 100 )4- .l 1+ .3 6 .2 100-599 11+ 4.2+ 1+ ,7 20 7.4 600-999 3 1.8 3 2. 3 h 2.3 1,000-1,999 a 5.2 15 19.7 2,000 and up u 8.6 3 707 11 39.3 Total 29 20. 1 11+ 11., 0 56 68. 9 a‘Six producers sold at two points, thus causing an apparent increase in number of producers from 93 to 99. bPercents are based on a total volume of 1015938 cords handled as producers. cCombines columns 2, 3, 6, and 7 of Table 1+6. i i I 3 l l I I I Volume all .. I “.1 has than 5 50-119 ISO-#99 500 and u] \___ Total \ me I M9339 in z buombine cPercent —-:¥ 1 162 Table 51.--Number of producers, percent of volume, and points of sawlog deliveries, 19 0a Volume class Tracked to millb Roadside M. b. if. Number Percent Number Percent Less than 50 18 2.7 2 .5 50-119 30 16.5 2 .8 150—1499 15 25 . 7 l 1. it 500 and up 9 52.1; Total 72 97.3 5 2-7 a‘l'hree producers sold at two points, thus causing an apparent increase in number of producers from 7h to 77. bCombines columns 2, 3, 6, and 7 of Table 19. c’Percents are based on a total volume of lh,3l6 M. ‘0. f. International % i value handll lie can note W1! lore Willi deli all at road: “9 can cone] “liter true 3“ Wood “facilitate a 5 Percent “is f1Millie: “4W when “added; . Neel; Press: Approxim mums rec: tiller direct] milieu, l 3:! mohiuery 163 Sawlog Delivery Points Information pertaining to number of sawlog producers, percent of volume handled, and points of deliveries for 1960 is contained in Table 51. One can note the outstanding importance of trucking directly to mills, with slightly more than 97 percent of volume produced falling in this category. Roadside deliveries are restricted to slightly less than 3 percent. Logs sold at roadside are also moved to mills by way of motor trucks. Therefore, one can conclude that sawlogs in the study area are completely dependent on motor truck transportation. l Funds for Loggia and Haulig and Other Aids Raw wood buyers in the Michigan study area sometimes provide funds to facilitate logging and hauling. In 1959 33 percent of pulpwood producers and 5 percent of sawlog producers received such help. The main purpose of this financial assistance was to help producers in meeting their obligations incurred when logging. Money is "advanced " on wood which is already cut and skidded; thus buyers take little risk and raw Wood suppliers are able to meet pressing financial needs prior to final settlement. Approximately ll percent of pulpwood producers and, also, of sawlog Producers received other business aids. Most of this help was financial“ either directly or indirectly-~and was used to purchase or repair machinery. In addition, two sawlog producers reported that buyers loaned 01' rented them machinery. w o fife-amt t I I truth toi fold; nonel dialogs l Mlle ma 1 the m] IntMediate Flues. Ba "d Percent ten in lab lle lost trap "lumen pu- ‘hllll reign in Produce t m. ' Pulpm E”Ellen. ”it me “m cm can” in 116 Further Emmi-011 W1 16%|L Sales 93 .133? Wood Producers sell their raw wood to intermediate marketing agents or directly to mills. With sawlogs, no intermediate marketing agent was found; none was reported by a sawmill owner or operator. Thus, all sales of sawlogs were made to mills, even though approximately 3 percent of volume was purchased by roadside as already noted (Table 51). The sale of pulpwood by producers is more complex than for sawlogs. Intermediate marketing agents--merchant middlemen--come into the marketing Sales are also made to primary mills. The number of producers process. and percent of total volume sold to intermediate agents and to mills is given in Table 52. One can see that sales directly to mills is by far the most important market, with 83 percent of volume; whereas , merchant middlemen purchased only 17 percent of volume handled as producers. One should remember, however, that a dealer, or merchant middleman, as seen by a producer may not be classed as a dealer by the mill which receives the wood. Pulpwood and sawlog producers were questioned about market price information. Practically all producers had no difficulty in obtaining market price data——either in buying timber or in selling raw wood products, One might conclude from this that producers in the study area are not greatly in need of government price reports for stumpage or for raw wood. Further information about prices received for raw Wood and costs of Production will be summarized under a later chapter, "Costs and Prices." 165 Table 52.--Volume and percent of pulpwood by volume classes which producers sold to intermediate marketing agents and to pulp mills, l959 Volume class Merchant middlemen Mills Cords Number Percent}? Number Percent Less than 100 7 .4 7 .2 100—599 12 3.6 2h 9.0 600-999 R 2.3 5 h.0 1,000-1,999 3 3.5 16 21.4 2,000 and up 3 7.1 lh 48.5 Total 29 16.9 66 83.1 5 3Two producers sold to both merchant middlemen and mills, thus the total number of producers here is higher than the number sampled. bPercent of total volume handled in producer role, 1015938 cords° { Yum build an Mots an! Ilmt or 0‘ In con W hat tut Mucus, . Mom; of 1 Mucus“! “rm Pulp; '1“ 1”Port ”1"" class W mm M” “Y be Manly, In cont M111 w: mi“ a hig‘ 53986111108 We 51 De: lb 12 Peru seasmu 166 . . Value 93 3%.?! Wood Sold Value of products sold by producers, not including the cut wood handled as intermediate marketing agents by pulpwood producers nor minor products such as veneer logs, fuelwood, and posts, increases rapidly by amount of output and, thus, by increase in volume classes (Tables 53 and 54). In considering pulpwood sold (Table 53), one can add the data for the last two volume classes--the larger producers-wand find that 36 producers, or nearly 39 percent, produced and sold approximately 80 percent of pulpwood value. Thus, despite the large number of smaller producers--about 61 percent of the total number-«the conclusion is that larger pulpwood producers--those who market 1,000 cords or more—~are of major importance in the Michigan study area. Producers in the largest volume class are really most important; this group equals about 18 percent of the sample and supplied 55 percent of the value of pulpwood sold. This may be of considerable interest to pulp mill executives. As noted PreViously, this class accounted for about 56 percent of volume sold. In contrast with pulpwood, sawlog value figures are less impressive, especially when comparing average outputs (Table 54). Pulpwood in general brings a higher gross return per producer. The relative importance of large sawlog producers, as was noted with pulpwood firms also, is indicated by the 51 percent of value handled by the large sawlog firms, who make up only 12 percent of those sampled. Seasonal Variations of Raw Wood Deliveries Seasonal variations of deliveries were mentioned previously under ~“""i Value ch 1 Cords has than I 100-599 6W999 1:W1,99S 2M and U] \— Total \ “These 911 wins, u 0. b. 1:“ 167 Table 53.--Value of pulpwood sold by producers, excluding wood handled in the intermediate marketing agent role and minor products, 1959a Volume class Producers Total value Total value Average value Cords Number Dollars Percent Dollars less than 100 1A 10,085 .8 720 100-599 35 167,095 12-3 4,774 600-999 8 96,818 7.1 12,102 1,000-1,999 19 336,090 2h.7 17,689 17 7h9,2h3 55.1 nu,073 2,000 and up Total 93 1,359,331 100.0 Average 1h,616 aThese data do not show the actual value of pulpwood delivered to the pulp mills, because 20 percent of sales were made at roadside and 11 percent f. o. b. railroad; nor do they show value of other wood products handled. @115 be ) “be dat 168 Table 5h.--Value of sawlogs sold by producers, excluding pulpwood and minor prod ucts , 1960a Total value Total value Average value volume class Producers M. b. f. Number Dollars Percent Dollars Less than 50 20 11511.13 3.0 721 50-119 31 80,238 16.8 2,588 150-499 12+ 137, 597 28 . 8 9, 828 500 and up 9 215,812 51.11 27,312 Total 711 478,060 100.0 Average 6,1160 aThese figures do not show the actual value of sawlogs delivered to sawmills, because nearly 3 percent of sales were made at roadside; neither do these data indicate the value of other wood products handled. Ninety “‘11 Wood I no: of raw "related 1 “5 not typj “Men In About 2 its certa Wily 13 p 3m“. The zeferable b. ”“3 Here 1 tam. In E 34th and d( :fims' Nan Mint sum .2319“ ”is $1? or Woo “is ml. ‘quot. . u .. ‘33. '1 QM; 169 "Primary Manufacturers."r . However, a brief examination of such varia- tions from the producer level may add to the understanding of raw wood marketing in the study area. Pulpwood producers will be explored first. Seasonal Differences of Pulpwood Deliveries Ninety percent of pulpwood producers indicated that the timing of their wood deliveries was typical for the year 1959, i. e., the time of flow of raw wood to buyers--largely woodpulp millsMwas usual or normal as related to deliveries in past years. Only 6 percent said their timing was not typical; a few (1+ percent) were uncertain and did not reply, as they were newcomers to the work of pulpwood production. About 24 percent of producers indicated that buyers required delivery during certain time periods. About half of the 21+ percent Just mentioned, roughly 13 percent of sampled producers, would have preferred a different timing, The most common reason given was that summer deliveries are Preferable but mills restrict their purchases during the summer. Also, Cmotes were mentioned as being too restricted, especially in the summer months. In addition, the Suggestion was made that quotas are not binding enough and do not allow producers enough certainty to plan their future outputs. Manufacturers can be expected to hold somewhat different views regarding summer deliveries and the use of quotas. For example, storage Problems arise when deliveries are concentrated in the summer. 01’, the Supply 0f Wood may be greatly reduced during the winter or spring, thus ”“5ng mills to slow down or stop production. A Quota is arbitrarily defined as a written or oral "promise to pur- Chase." Quotas can change or stop the flow of pulpwood to "1111-5 at the flu. of pulj (lotus are i in such we Prices are I Nearly 31W) sa Mm 196. "“1 or non dcent Said myeries m he var16d e in”? Heatk W“ 1”per :ltmy’ m1 Eateries 0v M113 seem tam. fipDroxim‘ fiellveriesl {532,311} OPE (stats of 1 A 17o discretion of the mill representatives. Thus, restrictions are often imposed at times when the amount of wood is potentially abundant; the flow-of pulpwood is not restricted by dropping prices. On the contrary, quotes are used to insure the movement of wood to pulp mills in periods when such wood tends to be less abundant or more expensive to produce. Prices are not increased during such periods. Seasonal Differences of Sawlog Deliveries Nearly 73 percent of sawlog producers (compared with 90 percent for pulpwood) said that the timing of their log deliveries was typical for the year 1960, i. e., the time of flow of logs or bolts to mills was usual or normal as related to deliveries in past years. Twenty-seven percent said their timing was not typical--that their usual patterns of deliveries were interrupted in some way. The causes of these interruptions were varied and no concise tabulation is attempted. Such a factor as adverse weather for logging and trucking during January through March appears important; also, mills sometimes stop buying or close. On the contrary, mills may want more logs than usual, thus causing increases in deliveries over past years. In comparison with pulpwood, log hauling to sawmills seems to be more interruptede-nto vary from what is usual or customary. Approximately 31+ percent of producers are restricted as to timing 0f deliveries, which is 10 percent higher than for pulpwood producers. Reasons for restrictions need further analysis, but apparently many mills are small, operate partntime, and are not able to maintain daily or weekly shiPments of lumber. Certain mills are interested in secondary manufacture, to my II Ihlling 14 Which my hhe 3h per ha Iills, ‘ “though w AMiro: u to delih hhey here 1 Ilthohh tin “1171006; I “lied fir “h promo “he 26 p ROdll0111011 h ates inte; ”her em mm“ are 1millee 51m "S‘Wrel 171 e. g., pallets and crates, thus do not want to produce more lumber than they can use in their "home" firms. Mill owners or operators do not like to carry large inventories, especially into the second summer. Also, milling is easier during late spring and through the summer and fall, which may cause deliveries to be restricted during the winter. Despite the 34 percent of producers who reported restrictions on hauling logs to mills, quotas were not mentioned, as is common among pulpwood suppliers, although verbal instructions may have brought similar results. Approximately two-thirds of sampled sawlog producers were not restricted as to deliveries; therefore, they might have increased their sales until they were restricted. However, in explaining why their logs were delivered without timing requirements, one can see that sawlogs are incidental to pulpwood; logs are delivered to sawmills, by about 26 percent of the 711- sampled firms, when producers are not able to haul pulpwood. Sawlogs from such producers are delivered to mills at unspecified times. In addition to the 26 percent who deliver logs to sawmills as incidental to pulpwood Production and hauling, about 13 percent of producers show that weather causes interruptions in trucking, and 19 percent are engaged in farming or other enterprises which cause log deliveries to be intermittent. How sawmills are able to maintain outputs, if they do, is difficult to understand . Raw Wood Buy ers Producers in the study area of the Lower Peninsula of Michigan sell their raw wood to mills and, with pulpwood, to intermediate marketing agentszerchant middlemen. All sawlogs are sold to mills; whereas, (We 52) holhel pr: h "d Pulmoh Palm (me 55), N data 111 hp in mine hi timi- of sums. Th lhhhte hark "04 has heih W to that “d hre like Me Win hadled hog a “seat, wh a, to more it?“ to £1 2: m "Ould ‘3. This me: 172 pulpwood producers sell about 17 percent of volume to merchant middlemen (Table 52). No mention has been made thus far about the number of buyers to whom producers sell their wood. This point will now be considered and pulpwood will be taken first. Pulpwood Buyers Pulpwood producers usually sell to one manufacturer or to one dealer (Table 55), but three firms sold to a combination of mills and dealers. The data in this table are somewhat misleading, however, and one should keep in mind that when these producers replied relative to the number and kind of buyers they were also thinking of all the wood they were selling. Thus, the cut wood which was bought in the role of an inter-a mediate marketing agent was being sold at the same time their producer wood was being marketed. If one adds the intermediate marketing agent wood to that of producer wood, then the larger the volume of wood sold, the more likely a producer is to sell to more than one mill. For example, the one producer in the second volume class who sold to three manufacturers, handled lLOO cords as a producer and 2,900 cords as an intermediate market= 1118 agent, which makes this producer a large supplier. A producer seldom sells to more than one intermediate agent. Sawlog Sales Producers sell logs to as many as ll sawmills and sales are common ’00 three to five mills (Table 56). This wide distribution of sales is what one would expect in view of the large number of mills in the study area, This means that small amounts are sold per sale, or even per year hm him 100-593 600-993 1,000.15 21000 and \ Tote \ ”Three 3h total n “lied. bInter ' had be Widered ‘ 1“th “W's u, 3h 173 Table 55.--Number and kind of buyers to whom producers sold pulpwood, l959 volume class Producersa Manufacturers Merchant middlemen Cords Number Number Number 1 2 3 R 1 2 3 Less than 99 1’4 7 7 100-6991) 37 18 5 1 13 600—999 9 3 2 1+ 1,000-.1399 19 11 5 2 1 2,000 and up 17 8 2 3 l l l 1 Total 96 117 111 1+ 1 27 2 1 o a'I‘hree producers sold to both manufacturers and to dealers. Thus, the total number shown here, 96, is three more than the actual number sampled . bIntermediate marketing agent wood is not shown in this table. If this had been shown, the one producer in this class would have been considered as a large supplier. The largest volume group also handled large volumes of intermediate agent wood. Replies about number and kind of buyers were made with total sales in mind, not sales of producer wood only. 150499 500mm Total amasmfimmm « «V»:- ." I. .n. .'-.|_.:."r. manufacturer’s ts when” reissues has WM: tiara" hardware “as: hf. rNsmber ' a ’ fans-er ‘7 " , _ . 1“" ”2' '~ '- E '5 11 20 1.3 6 31 11; 10 Less‘ than 50 59-1119 W-E‘Hw so P 150-499 1’4- 5 500 and up 9 3 1h l 1 Total ' 7h 35 . — __.._._.—-.-_. _ ___—— .~n_ ’ “mm mlh re mm 1. uttering per week i Worth Wire hi this We loge Ifhhis is aceOrdingl Ineff hem, 0 hhhribute [‘5 that pm A“, “We 0t] ”id 86111134 We sah £1960. *7— 173 of sales. A hypothesis is, that if mills consolidated, economies of size would result and both producers and sawmill owners would be better off. Further investigation relative to this hypothesis is suggested, but this scattering of sales, with an average output per producer of 3.7 M. h. f. per week in 1960, to three or more mills appears wasteful of labor and transportation. 0n the contrary, if mills are producing products which require different species and grades of logs, then producers may be justified in selling to various mills, e. g., one mill may require pallet grade logs and bolts and another may purchase only factory grade logs. If this is true, then producers are adjusting their production and sales accordingly; there is sufficient reason for selling in two markets. Inefficiency in milling was mentioned previously under "Manufacturers." However, one can now point out that one of the factors which appears to contribute to small size of mills and to low volumes handled by producers is that producers are mainly interested in pulpwood production, farming, or some other enterprise and only supplement their incomes by producing and selling logs. Perhaps this would be a good place to mention that the average sawmill which was sampled sawed 13,821} ‘0. f. of lumber per week in 1960. | all: cons: F111 Iills the mills infusion 1‘ he! farmer: 13.112 in pm “this at W in as tutors, 1 “We from 5 Inform t WI see “I“ are ve .514 one mil in little Mom. PMVate Q: mm mm tr 1alids It? and 0the 3mm 1 Sawmill mpg is dc LANDOWNERSEIP SOURCES OF RAW WOOD Landownership sources of pulpwood and sawlogs-uthe two major products under consideration in this analysis-mare somewhat clouded. First, two pulp mills were unable to give estimates. Thus, sources of wood for these mills in considered as "unknown." Also, there seems to have been confusion in replies from pulp manufacturers regarding raw wood received from farmers; such suppliers may have been "other private owners ," at least in part. Sawmill owners or operators did not appear to be confused on this matter. Finally, pulp mill representatives are farther removed“ both in distance and agent sourcewfrom timber growers than are sawmill operators, thus estimates from pulp mills may not be as accurate as those from sawmills, Information regarding landownership sources is given in Table 57., One can see that percents of pulpwood and sawlogs from land owned by mills are very low , especially for pulpwood (1.2 percent of volume), Only one mill reported any pulpwood coming from its own land. Sawmills are a little more dependent on own lands with 5 percent of volume coming therefrom.) Private sources of both pulpwood and sawlogs are more important than government sources» Sawmills are especially dependent on private timber lands for logs. There is no major difference between farm owner= Ship and other private sources for both pulpwood and sawlogs, but pulpwocd information is weakened by the "unknown" figureo Sawmill operators differ from pulp mill counterparts in that "custom" Milling is done occasionally; 6,3 percent of sawlog receipts were "custom" 177 Table 57.-Landownership sources of pulpwood and sawlogs, 1959 and 19603 Pulpwood Sawlogs Ownership ‘ Percenth Ownership I Percentc’ Own lands 1.2 Own lands 5.0 Farm 23.3 Farm 35.0 Other private 25.7 Other private 32.5 Total private 50.2 Total private 72.5 National Forest 15.1 National Forest 10.5 State Forest 17.9 State Forest 10.7 Total public 33.0 Total public 21.2 Unknown 16.8 Custom sawing 6.3 All sources 100.0 All sources 100.0 al959 applies to pulpwood and 1960 to sawlogs. bPercent‘of pulpwood is based on 509,961 rough cords, which does not include approximately 60,000 cords which were imported. If imports were added, the "Unknown" figure rises to 25.5 percent and other percentages so down slightly. cPercent of sawlogs is based on 61,918 M. h. f. International. private ma, ml: logs. The data. 5 acres and perce table with tho: W cones fron Wit land is [6'3 Percent ma mm“ °f Pulp In Waking lathe Study 81' Prolmrtiomte a mi 35 perce tip, This Sit 3&1 state Pores. from public lam __...- .. V—v—f 178 sawed for an agreed price per M. b. 1'. These logs probably came from private land, although the data at hand do not specify the source of such logs. . The data given in Table 58 show commercial forest ownerships in ‘1“ acresoand percents for the study area. By. comparing percents from this . ‘16:! table with those of Table 57, one can see that about 33 percent of pulp—- wood comes from the nearly 35 percent of government land. In other words, public land is supplying its proportion of pulpwood. However, the unknown 16.8 percent makes any definite statement concerning proportionate contri- butions of pulpwood from public or private land somewhat doubtful. In making a like comparison of landownership with sawlogs produced in the study area, one can notice that public land is not supplying its proportionate share of logs; only 21 percent of logs is coming from the nearly 35 percent of commercial forest land which is in government owner» ship. This situation is likely to change in the future; as National Forests and State Forests increase sawtimber sales, a higher proportion of sawlogs from public land appears probable. Total pr: Federal ( Ratio: State Fe: County at ‘m... Total N x All scum \ “30%: mm“ PaPer E fl' 3‘ Dept. Of V—i—i 179 Table 58.n-Commercial forest land in the study area, 1955a Ownership Thousands of acres Percent Farm ' 1,615 21.5 Other privateb 3,288 #3.8 Total private h,903 65,3 Federal (nearly all National Forest) 805 10.7 State Forest 1,780 2307 County and municipal 20 093 Total public 2,605 ‘ 3A.? All sources 7,508 100.0 a'Source: Findell, etc al., 1960. Michigan"s forest resources. Station Paper 82, Lake State Forest Experiment Station, Forest Service, U. S. Dept. of Agriculture, Sto Paul, Minnesota. bIncludes "Own land" of Table 57. Prices pai Ming trees ofraw wood mar are the to raw W8; and retu Pulsed p, (1957 )1 by Levi Md 81mm 1liOssible. Th Mats and to 6‘ Mon in the Prices are “Mutation, V it hauling, and “1191'; (3) iflchhanale ram 5310“ °f the ra {skeled or mp fl m Changes Yes “1011 PErmi [.11 Dresem; spe These meta A PRICES AND COSTS Prices paid, production costs, and returns to marketing firms--—from standing trees to primary manufacturerSuare important to an understanding of raw wood marketing in the study area. However, as pulpwood and sawlogs are the two raw materials which are paramount, the analysis of prices, costs, and returns is largely restricted to these products, Pulpwood price-cost relationships were analyzed in Michigan by James (1957), by Lewis and Jamesiei (1961) , and more recently by Manthy (1963).. i To add significantly to these previous studies appears formidable, if not ‘ impossible. Therefore, the objective here will be to pick a few pertinent points and to develop contrasts and comparisons with sawlogso This will be done in three stages, namely (1) 'Prices," (2)”Costs," and (3) "Returns," Prices Prices are determined by various factors. Among these are (1) cost Of-production, which includes such items as stumpage, felling, bucking, and: hauling, and margin for profit and risk, (2) bargaining power of buyer and seller, (3) species and amount of wood available, (1+) agents or firms which handle raw wood and the amount of wood supplied per firm, (5) cons dition of the raw woodnwhether it meets quality standards and whether it is peeled or unpeeled, and (6) competition among buyers. One can also add (7) changes in technology, such as improved pulping or sawing techni.= Ques which permit use of more species or more efficiency in producing with present species, These factors overlap or are interrelated, but one can begin by Wilt of salq train for risk mama tramhimem : Mas intereg tfinance of “1111 ““8 are mo] Prices are not the Wuer equal Mucus mm W from Stun] Cost of 1)] an relevance W wood “1131313 mm“, W Frametion is < a nice to exFem 181 examining cost of production. Cost of Production Cost of production is broad and includes all the cost items up to a point of sale, e. g., cost of standing timber, felling, bucking, hauling, margin for risk and profit, The number of firms or agents handling the wood may add to cost; adverse weather is likely to cause extra expense; transshipment results in extra unloading and loading expenditures. Items such as interest on loans, insurance, taxes, and depreciation and mains- tenance of equipment-mall add to cost of production, Of course, labor costs are involved throughout. landowners may be concerned that stumpage prices are not established by cost of producing timber plus a margin for the owner equal to or better than alternative opportunities. Raw wood producers may wonder why prices received do not cover costs of moving. wood from stump to mill, at least at timeso Cost of production is complex and only in a long run view is of major relevance to prices received for outputs. As the wood—using mills and wood suppliers operate under market and short run demand and supply situations, with mills more-ornless in a oligopsony category, cost of Production is of limited use in determining price. This appears to apply to stumpage in particular. Whereas, with wood suppliers possible costs from stump to mill can be estimated. Producers and intermediate agents know the Price to expect for their raw wood. The difference between selling price and cost of felling, bucking, and hauling is ”conversion surplus“ and includes profit and risk margin and stumpage. Mill prices for raw wood are "sticky," especially for pulpwood, i. e., despite his c1; Me: is abm Even the Natit onabasis of deducting est: done, in Pm‘ 1"“ 110? much “mm pm After ret MW, at 1 mmimtion 01 “Wilson be Bargainil We “11 now 1 Mills ter Was to flee Encouraging ft will when 50%, as are es tofactory Era balsam and hen 182 prices change slowly and slightly over time. Thus, the amount paid for standing timber becomes the cost item which is relatively variable and the landowner has little or no control over selling price for his timber despite his cost of production. This-is especially true in areas where timber is abundant, such as the northern part of the Lower Peninsula. Even the National Forests do not attempt to set minimum stumpage prices I on a basis of cost of production, but on a residual amount determined by deducting estimated logging, hauling, and profitwriskfi Perhaps this is done, in part, because of the multiple use of government lands; to say Just how much cost goes to timber production and how much goes to recreation, watershed protection, or wildlife management is difficult to determine. After recognizing that cost of production may not determine price received, at least in the short run, one can now go forward with a limited examination of other factors which influence price and, finally, make Comparisons between pulpwood and sawlogs. Bargaining Power of Buyer and Seller Bargaining power was mentioned very briefly under "Cost of Production, " but will now receive more adequate treatmento Mills tend to establish prices which will obtain raw materials in / v amounts to meet the demand for their outputs, with perhaps some regard to 2Q } encouraging future supplies“ Sellers have little control over what they will receivewespecially when volumes of wood are plentiful and are increasi 111%, as are estimated in the study area. There may be exceptions relatiVe to factory grade hardwood logs, face veneer logs, and possibly spruce, balsam and hemlock pulpwood; these are relatively scarce or limited in the I Irenble topr tilhel'. Prim Wood, are ‘ Marge group Wining. A M lore differ. one exceptnm° effective in bl Wad of la] y” their um I m 11“ ”Saul: m such Organ butane can as: Nucers are t “reflective be 5M Mums, {Mividuals “he uptake act Kills that they mews crews i Mills which mid always ta ch as the Pre 183 Lower Peninsula. Another factor which limits the bargaining power of sellers is the number of sellers themselves, Only National Forests and State Forests are able to predetermine what minimum prices they will accept for standing timber. Private owners, who supply the majority of sawlogs and, probably, pulpwood, are numerous, often absentee, and are not organized to bargain in large groups. The large number of producers also limits chances for bargaining. A pulp mill, for example, may purchase wood from 50 to 500 or more different producers. These suppliers are not organized, with one exception. Producers are working through one cooperative and are effective in bargaining for pulpwood sales. This cooperative is not composed of landowners, but is a group of producers who band together for their own self-interests. One might ask why more such cooperatives are not organized; or, to state the matter positively, can one look for more such organizations? Further investigation is needed on this point, but one can assume that many of the same reasons why landowners and Producers are unable to bargain with power also tend to limit the formation of effective bargaining agents, e. g. , the great number of both landowners and Producers, lack of effective leadership, general independence of individuals who are reluctant to give up autonomy, lack of tradition in GOOperative action, and, of course, the possible action on the part of mills that they would buy stumpage or timberland s or both and hire their OWE woods crews. The present cooperative is doing well and is satisfying the mills which it supplies, A new organization or series of organizations Would always take the risk of not reaching a position of financial security 511611 as the present cooperative is able to enjoy. outside the an One can 0 h the Ratio “Prim n1 co"castration 5” that Predu where there an 5va in the 2 orI’I‘Odllt‘erg tl “than“ in W ”115 as a We can a: were ”Prensa: 190 “1115 Here Is on capital sting sporadic: c“‘Pulp first, t‘ Wills, V wm%m it 1‘ . Ei113 a fa‘I'C ninested in I 181+ The abundance of potential part-time labor for timber harvesting is high in the study area. Returns are low in agriculture and, consequently, farm Lands are being abandoned, There appears to be a lack of mobility of labor away from the land and rural living, as well as a lack of alterm native opportunities within the area or knowledge of such opportunities outside the area. One can conclude that the bargaining power of landowners, other than the National Forests and State Forests, is relatively far below that of primary mills, especially pulp mills with their small numbers, large concentrations of capital, and tremendous volumes purchased. One can also say that producers are numerous, scattered, and operating in a labor market where there are hundreds of other potential producers, Thus, the labor supply in the area does not permit or encourage a strong effort on the part of producers to seek an increase in price for raw wood, Yet, there is a cooperative in the study areaman organization which is serving producers and mills as a dealer, despite the handicaps mentioned, One can also note that, in general, sawmills are numerous (there were approximately 277 of 1.00 Mo h, f, output and up in the Lower Peninsula; 190 mills were identified in the study area), scattered, small in outputs, low on capital and equipment, competing with one another, and often opera sting sporadically. Thus, these mills do not have the bargaining power 0f P1111) firms, However, there is little competition between pulp mills and sawmills, with the possible exception of obtaining aspen, Sawmills must Pay as much or a little more for aspen in order to get that species, which is a favorite of pulp millso But, for the most part, sawmills are interested in harder hardwoods, so go, oak, elm, maple, ash, beech, cherry, Will all | 50,000 cords i 11113110111 W Seller." Except to quality hflrdwo WI, timber M- 3. Form (1960, p, 1+2) 1 ”and Other : oManet and , Piping. Elm; W mu am lyre”We a 1, Recallse of What diffic ahlgh return a News 1c Mare 1ng %Peninsu1& mm Price field by hand ‘ .. '48 the mst ‘ A 185 birch, etc. This picture can change, as one pulp company began buying substantial amounts of oak in 1961 and was expecting to purchase about 50,000 cords in 1962. Species and Amount of Wood Available This point was suggested earlier under "Bargaining Power of Buyer and Seller." Except for hemlock, which is a pulping species, and perhaps the better quality hardwoods which are wanted for factory grade lumber and face veneer, timber supplies in the study area are increasing, according to the U. S. Forest Service, Forest Survey data given by Findell, at, al, (1960, p. 1+2) and U. S, Forest Service (1959, p, 81+), , Low quality oak and other "mixed hardwoods" are abundant; such species are favorites of pallet and crate manufacturers and may be increasingly important for PulPing, Elm seems to be difficult to pulp but is widely used for pallets and small amounts are used as basket veneer, Inroads of Dutch elm disease may remove a large proportion of this species from the forests of Michigan. Because of their superior pulping qualities, scattered tracts, and somewhat difficult logging, spruce and, to a lesser extent, balsam, bring a high return at the mill yard. (Data for spruce, balsam, and other species~~=basic mill priceware given in Table 59), In fact, spruce and balsam are largely imported to the Lower Peninsula, either from the Upper Peninsula or from Canada, Aspen is farthest down on the basic Pulmood price scale, This species is abundant, light in weight, can be peeled by hand during the late spring or by portable machine at any time° It is the most widely used species in the Lower Peninsula, as was noted Aspenb Rough Peeledc med hardwood: Mm spruce hum \ “The data M allied mil? ”Wm, flotsam, a I Minted, a: Mwmm bsIall am. enaflc Dr: med aspen0 186 Table 59 -—Basic prices paid for pulpwood by Lowera Peninsula pulp mills, by species and method of delivery, 1959a Species Truck F. o. b. F. o. b. to mill rail yard rail car ---------------- Dollars per cord-~-~------------ Aspenb Rough 12~l2n50 10.50 12.50 Peeledc 17~21 192540.25 1748 Mixed hardwoods l2-l3 Jack pine 16..50~20 18 Spruce 32 25 Balsam fir 28 21 8'The data as given in this table are merely summarized for the 9 pulp and allied mills in the Lower Peninsula. Manthy (1963) gave these data by individual mills, However, for the purposes of this analysis, such a procedure appears unnecessary. Comparisons with sawmills would be greatly complicated, as sawmill data were too divergent and complex to be submit= ted by individual mills° Sawmill data are summarized in Table 60 Small amounts of white birch were mixed with aspeno Basic prices do not necessarily show $1 per cord extra for machine “ peeled aspen, Wanda ma (saga; J “”8 the 58.11; blah I111 prod for face veneer "I not at band mien. Aspen 11“. Further To be 53,13 ”“9 1'ere disc humanized ”Mot, insec “than 1033 Pulpqood a fill. Mem, am“ quite My install As “ggest tub and a is apparel] Q i"creasing A 187 under “Manufacturers." Other prices for pulpwood species range between spruce and aspen. Hard (sugar) maple is priced highestnespecially the better grades-=- among the sawlogs and sawtimber in the study area (Table 60). Timber which will produce such logs is not found in abundance and is also sought for face veneer. Black cherry rates high for the same reason, but data are not at hand to draw a close comparison with hard maple and/or other species. Aspen, elm, and mixed hardwoods fall at the bottom of the price list. Further discussion relative to prices will follow. Condition of Raw Wood To be salable, raw wood must meet mill requirements or specifications. ' Grades and species These were discussed previously under "Manufacturers.' are recognized by price differentials. Logs which are sound, 1. e., free from rot, insect damage, and stain, are also recognized as being worth more than logs of comparable volume which are not sound. Pulpwood may be peeledwespecially aspen-mprior to delivery at a mill. However, log debarkers were not noticed in the study area, although they are quite common in other regions of the United States where they are usually installed at stationary sawmills. Competition among Buyers As suggested before, with nine pulp and allied mills in thepLower Peninsula and after considering that two of these are very small, competi, tion is apparently not adequate to cause a price increase for raw wood. The increasing wood supply, long distances between firms and resulting 188 Table 60.--Prices paid for sawlogs delivered to sawmills, by species, grade and average or maximum, minimum, and average, and log rule, 1.960a Log rule Hard maple Mixed hardwoods GradeO Maximum Minimum Average 1 2 3 1!- Ave}; Dollars per M. b. f. Int'l ed 130 75 50 3o 80 1+2 21+ 35 Doyle 120 711 52 33 77 55 to 1+6 Scribner 130 76 5o 30 51 1+0 30 30 Oak Basswood Mimum Minimum Average Maximum Minimum Average Dollars per M. h. f. Int'l 11; 55 35 1+2 89 32 62 Doyle 57 1+0 36 9O 35 63 Scribner 50 32 1+3 90 32 1+2 Elm Aspen Maximum Minimum Average Maximum Minimum Average Dollars per M. h. 1’. mm g 1.5 30 131. 37 26 33 Doyle 50 30 1+2 1+1 30 38 Scribner 1+7 30 31- 37 30 39 189 Table 69 . -- (Continued ) Log rule Black cherry 9.1;qu l 2 3 Average ---------------- Dollars per M. b“ flu-"unmann- Int'l -.1; Doer 110 65 30 71+ Scribner 5'Prices per M. bo fa are rounded to nearest $1. Blank spaces under black cherry indicate insufficient data. bGrades noted are probably a reflection of factory grades of lumber, but the particular grading rule was not determined. A majority of mills simply gave an average price or a range in prices and did not specify grades. cAverages were derived from sales by producers and were weighted by volumes sold. 6One would expect to find International prices to be lower than Doyle and Scribner; however, factors other than volume differences appear to prevail at timeso Ileomte vi Ion-price “the My n1 Miner's ten and m: with mints on an Mints comp the States“: a W Michigan “‘11 dolly a which fissure t “13111: differe Hi13h 8an WW Nor M115 are mm in °r “We mi “fiction of 1 by are min] ecuPete among Tam 1% are i}! he 1mm: 0He also Making dist; ,A 190 limited overlapping of timbersheds, and choice of species preclude intense competitiom Also, the great number of producers and potential producers tends to hold prices at present levels, except that producers may compete with one another and hid too much for standing timber. Non-price competition and quotes are more important when consi- daring pulp mills. Mills which pay quickly for raw wood, unload a producer's truck so that he can make an extra load per day, are generous and fair with measuring, and are willing to make loans or advance payments on cut wood-authese mills are building up a loyalty which surmounts competition from other buyers, But, perhaps the quota is the greatest assurance of nonaprice competition which is evident among Lower Michigan pulp mills. Producers are not as greatly concerned with small dollar differences in ”conversion surplus" as they are with quotas which assure them steady, annual production. If they have enough cords, slight differences in prices per cord are of little consequence, With sawlog buyersnmwhich are mills in this analysis==one assumes relatively more competition among mills than among pulpwood buyers, Mills are numerous, as mentioned, and timber supply areas often serve two or more mills. However, the low volumes used may point in the direction of less competition, As for sawlog producers, in general, they are mainly concerned with pulpwood; they are numerous and may compete among themselves for stumpagewboth for pulpwood and sawlogs. Where logs are present, the bid price for apparent pulpwood stumpage may be increased; sawtimber carries the extra price, One also finds that pulp mills pay extra amounts relative to trucking distances and volumes handled, Thus, base prices, as given in me is eatim 0* Ierchant 1: Hints. lead Mition anon Samu \ tuck deliver he base Prim H“ "“"Versi' sh“ differem Chanms 1 MW teem WW» Mi] 1&1 hefllock, ti minim] mm M. h. f Berg“ la in g1Yen in First, in is Water A 19']. Table 59, represent the prices paid to suppliers in the immediate vicinity of the mills and/or to low volume producers in the immediate area of the mills° Such extra payments are common for seven or eight of the nine Lower Peninsula mills° The amount of payment per radial zone is estimated later (Table 61). Bonuses for large suppliers and/ or merchant middlemen range from. $0.50 to $1.50 per cord. Such extra payments lead to an expansion of a mill"s timbershed and reduce com-= petition among suppliers in the proximity of the mill. Sawmill owners or operators do not pay extra for more distant truck deliveries and apparently give no bonuses to larger suppliers, The base price is the amount a producer can expect and he must figure his "conversion surplus" accordingly. Thus, stumpage is likely to show differences per M. h. f. between timber which is near a mill and that which is'located 5060 miles or more away. Changes in Technology Changes in technology may affect price. For example, improved Wiping techniques permit the use of aspen and oak in the manufacture 0f Paper. Mills are no longer dependent on high priced spruce, balsam, and hemlock. Mechanization in the woods, e. g., chain saws, tractors, and mechanical loaders, tends to keep the cost of production per cord 01' Per M, b. f. from increasing, despite increasing wages for labor, Before leaving this section on prices further exploration of the data given in Tables 59 and 60 will be made: First, in examining species requirements (Table 59), one might expect greater differences in prices, say for aspen trucked to mill «Mum mm by WI! 1 mete: MN; .11 to $21 ye in very lit Price in mm “1' land peeL W the stick Mucus anal m“ for unpel tin sticks to Second, 1 mm per con tiled and row ““1? Mo . Word of row 1mm ca} W “W equa: Forth $20 per iifference be1 mm "0011 Wrcent in If its “ugh ‘ sled wood a1 # 192 yards. Hosever, there is not intense competition for this species as far as mills are concerned; prices show this in that rough aspen varies by only $0.50 per cord among the four mills which buy this species delivered at mill yards. For peeled aspen the range is greater“ $17 to $21 per cord, but as the $17 price is paid by one firm which uses very little wood, one can say that the range is really $18 to $21,, Price is usually $1 per cord higher for machine, peeled aspen than for hand peeleda The machine debarking removes bumps as well as bark, and the sticks fit closer together when stacked, Debarking permits producers and /or truckers to haul more actual wood fiber per load than for unpeeled wood, and thus a higher value load, and also allows the sticks to lose moisture more rapidly than with the bark on them. Second, debarking of pulpwood results in the use of more local labor per cord; basic price differences at mills (Table 59) between peeled and rough aspen, when based on original volume, show that approxi, mately $1580 or $5.60 are the amounts allowed for debarking0 For example, a cord of rough aspen is basically worth $12 at the mill yard; to pee]. it by hand causes the cord to shrink 12 percent, in en, the stacked wood now equals 88 percent of its original volume, If “88 cord is worth $20 per cord, this gives $1.160 for the original volume, The difference between sale price of peeled wood ($17060) and sale price of rough wood is $5,600 Machine peeled wood, on the other hand, decreases 20 percent in volume when peeled; the original cord equals 80 percent of its rough volume, If 080 cord is worth $21 per cord, this gives a sale price of $16080. The difference between sale price of machine peeled wood and the original rough cord is $1580., Producers who peel ith the am '1‘P1‘011Ila’ae]:I him: prid Fourth, rules. no“ '“Pflliers. ‘j edivalent t Fifth, 1 difffil’ences. “I attemptef “hated to 1 '0‘ 1hard we scrim“ abou dices, hOWev Scribner, and the 5““ aPM for hard mp1, Sixth, h when in the We“ are am has and abou be not wanted With him gra We 1mm 1 _7, 193 may want to estimate whether they are profiting by doing so, Third ,, in considering Table 60 , principal species are emphasized, with the exception of beech. Maximum and average prices for beech are approximately equal to the maximum and average prices for elm; whereas, minimum price is slightly above the minimum for elm. Fourth, the prices given in Table 60 are divided by major log rules. However, some mills use lumber scale as a basis for paying suppliers. For purposes of comparison, such purchases were considered equivalent to the International :1; log rule. Fifth, prices given in Table 60 are complicated by the log rule differences, No adjustment of Doyle and Scribner prices to International was attempted. For one reason, the Doyle and Scribner rules were expected to reflect overrun, This was not shown consistently, e, g" , No, 1 hard maple by the Doyle rule should be approximately $lh0 and Scribner about $133 per M, b. fl, not $120 and $130 respectively, Oak prices, however, do reflect overrun, except for maximum and minimum of Scribner, and might be converted to International without serious error; the same applies to elm and aspen. Further investigation of prices paid for hard maple and basswood by different log rules is suggested. Sixth, hard maple is the most valuable species for sawlogs and face veneer in the study area, as noted for sawlogs in Table 60, Face veneer prices are approximately equal or slightly higher for Noo 1 hard maple loss and about $16 lower for No, 2. No, 3 and No, 11- hard maple logs are not wanted for face veneer. Noo 1+ hard maple is about on a par With lower grades of elm and oak and can be used for pallets or low grade lumber in general. M: m In: hula prices for m lile and mi hum chem 10831311113 at beconsidered Basswood We (Tabl My; wher We of the t“ 1°“ 2 and bet Vlth IMces 3 ”tested, The high 1%, which "Never, the ‘ MS may be better factor In one ’0 for “Rainer 30mm gr: near legs a: equal $62 Boy: not give 4 191» Black cherry is a valuable species for factory grade lumber, but data are limited to a few mills which all purchase by the Doyle log rule. The No. 1 grade cherry falls short of its hard maple counterpart by $10; prices for No. 3 cherry are approximately equal to those for N0. 1+ hard maple and minimum grade elm. Note that only three grades are used in buying cherry; whereas, hard maple has four. The price of No. 2 cherry logs falls about mid-away between No. 2 and No. 3 hard maple and might be considered as equal to an average of those grades. Basswood is sought for sawlogs and veneer. The maximum price for sawlogs (Table 60) is nearly identical to that of veneer logs of comparable quality; whereas, No. 2 basswood veneer logs are priced at $0 Scribner. One of the two veneer mill owners who were interviewed buys basswood as No. 2 and better and pays $70 per M. h. 1". Doyle. To compare this price with prices given for basswood in Table 60 is troublesome and will not be attempted° The higher quality oak and beech logs are made into factory grade lumber, which is reflected in the maximum prices given for these species. However, the bulk of oak, elm, aspen, beech, soft maple, and other hard-=- woods may be considered as "pallet grade,“ io e., below standard for the better factory grades. In one timbershed higher quality elm and soft maple are purchased for container veneer manufacture. Prices for elm veneer logs are equal t0 maximum grade sawlogs of that species~m$50 Doylewand soft maple veneer logs are approximately equal sawlogs of that species; sawlogs equal $62 Doyle, and veneer ones are priced at $60. Soft maple prices are not given in Table 60, but are considered as mixed hardwoods. ‘ No bonu '9 Was mnti ‘0 Pulmood mute v1 “lease zone “though at '- «11%,. “bonus; a fl hombeym j considered a: Peninsula is EXcept 1 Vhich is 31111 H11 bays as] “One M101 trad lint i1 also racemes wales, Pu :‘nenby rail, Michigan c P315 t° truck A 195 Finally, the data given in Table 60 also indicate that sawmill owners and operators are grading hard maple and black cherry logs. With other species as well, price differentials show that grades are recognized. Bonuses and f. o. b. Rail Prices No bonuses are given sawlog suppliers for extra hauling distances, as was mentioned previously. However, such payments are commonly paid to pulpwood suppliers who truck raw wood to mill yards from beyond the immediate vincinity of mills, i. e., beyond 25 or 30 miles. Bonuses and mileage zones are given in Table 61. Data are incomplete on two mills, although at least one of the two pays extra amounts for more distant deliveries. Another firm which uses very little pulpwood does not pay a bonus; a fourth firm pays only $1 extra for wood which is delivered from beyond 50 miles, i. e., for this mill a radius of 50 miles is considered as "vicinity of mill yard.” The maximum bonus in the Lower Peninsula is $1“ 50 per cord. Except for one firm out of nine in the Lower Peninsula, pulpwood which is shipped via railroads is purchased f. o. b. rail cars. This mill buys aspen at a particular rail head. If the wood is rough, peeling is done prior to shipment. If the wood has already been peeled, it is stored until such time as the mill asks that it be shipped. This company also receives raw wood directly to its mill yard by motor trucks. In any event, pulp companies assume an added cost for wood which reaches them by rail. James and Lewis (1960b) found that railroad transportation in Michigan costs pulp companies more than the added distance bonuses Paid to truckers for directa»to«»mill deliveries. 196 Table 61.--Bonuses added to the basic price of pulpwood for longer truck hauls by Lower Peninsula pulp mills, l959a Distance Mill Mill Mill Mill Mill Mill of haul 1 5 6b 7 8c 9 =-Miles- Dollars per cord 0-25 26=50 .50 .50 Sl=75 1.00 1.00 1.00 .50 76~100 1.50 1.50 1.00 101=125 2.00 2.00 1.50 126~150 2.50 2.50 2.00 151=r75 3.00 2050 176=200 3.50 3.00 201-225 3.50 0=3o 3l=h5 .40 .50 u6m60 .80 1.00 61-75 1.20 1.50 76~100 1°60 2°00 lol=2oo 2.00 2.50 aUnless otherwise noted, bonuses apply to all species purchased. For pine, $1.50 is the bonus he 76mlOO zone; $3.50 is r 150 miles. bScale shown applies to peeled aspen. for the Sl~75 mile zone; $2.50 is added for t the payment for the 101,150 zone; and $L.50 is added for ove For rough aspen, the bonus C The i. to eeled aspen. ‘ . scale Shown appl as P ed for over 45 miles. is $0°50 for the 3l~h5 mile zone and $1 is add The raj he receives; difference l the volume ¢ Costs 1 finely (1) a (3) mm “11 establj costs or net Stumpag proYide a M New For accepted for ”mining p1 specified on cf not obtai] bucking, Ski: 1‘ no fire 00mg {a} W 8L“ m ‘ mum prlee .‘I .\ I 197 Costs The raw wood producer has relatively little control over the price he receives for his product. The amount he earns is dependent on the difference between his cost of production and selling price, as well as the volume of wood which he handles. Costs in raw wood production are determined by three major factors, namely (1) stumpage, (2) logging (felling, bucking, and skidding), and (3) transportationaulargely truck hauling. These will be examined and will establish the base for estimating differences between prices and costs or net income. Again pulpwood and sawlog suppliers are emphasized. Stumpage Costs Stumpage costs are somewhat controlled by producers, and therefore PTOVide a possible margin for income when sales are made. Except for National Forests and State Forests which set minimum bids that will be accepted for standing timber, other landowners are in a relatively weak bargaining position. If a producer bids more than the minimum amount sPeeified on a government timber sale, he is taking an increased risk 0f not obtaining any profit or of taking a loss unless his felling, bucking} skidding, and hauling are more efficient than other producers who are competing against him. Eglflflggd stumpage The data given in Table 62 indicate the average and maximum and minimum Prices paid for standing pulpwood timber in 1959" these prices m lands we; Wins tm blf set" Prices for hi “chine peer morifiiflal w 01' Whine 1 198 Table 62.-~Basic prices paid for pulpwood stumpage, l959a Species Maximum Minimum Average — --------------- Dollars per cord--—~--~--~=~~a=- Aspenb 1.70 1.00 1.3h Nflxed hardwoods 1.22 1.00 l.lh Jack pine 5.00 2.00 3.h6 Spruce 5.35 3.50 l+..69 Balsam fir n.50 3.00 3.79 aAmount allocated to stumpage for those who cut pulpwood from their ; own lands was generally lower than prices paid when actually buying 1 standing timber. blf settlement is made for stumpage on the basis of peeled volume, prices for hand peeled wood should be increased 13.6 percent and for machine peeled 25 percent. These amounts allow a 12 percent reduction in original volume for bark if wood is hand peeled and 20 percent reduction for machine peeled wood. W approximt‘ “ 0“ lill and “W subcontra. Flee delivered M “We P ‘12 also. A PI Mung aspen ‘m’ t° loan: The inform "We 51211111941é Em for the 3" W031. hart My ”We )1? “(midday one Can u lithe imbue isdifficult t is corresp 011d Elite amount Ms are Inc ,A 199 are costs to producers. Mixed hardwoods rate lowest in price, but other costs may more than offset any advantage gained on stumpage as far as producers are concerned.' For example, less cords can be trucked at one time because of the extra weight of the denser hardwoods. A producer gets approximately $0.2}+ per cord more for mixed hardwoods than for aspen at one mill and $121+ more at another mill. These are the amounts left after subcontracting average stumpage for mixed hardwoods from a basic Price delivered at mill yards of $12 and $l3 respectively, as compared with stumpage paid for aspen and a delivered price trucked~to=mill of $12 also. A producer must try to determine whether he makes more by handling aspen or mixed hardwoods when he has a $0.21} or $1.21} margin to apply to logging and trucking. Sawlog St Iflage ‘4 - The information given in Table 63 shows the maximum, minimum, and aVerage stumpage prices paid for principal sawlog species in the study area for the year 1960 by three log rules. The ranges are widewup to $0 for hard maple by the Doyle rule. Differences in demand by primary manufacturers are reflected backward in prices, e. g., producers pay considerably more for hard maple than for oak, elm, and aspen. One can note further (Table 63) that average prices for stumpage by the Scribner rule are usually less than that of International. This is difficult to explain, unless the amounts producers receive for logs are correspondingly low, i. e. , Scribner stumpage prices may be low becauSe amounts received for logs at mill yards are low. However, net I’ei‘aurns are more important to producers than apparent differences among Int'l % Doyle Scribner Table 63.-~Stumpage prices paid for principal sawlog species, 196051 200 Log rule Hard ma le Log rule Mixed hardwoods Maximum Minimum Average Maximum Minimum Average -=-Dollars per M. b. farm” ”Dollars per M. b. f.-~- Int’l 71; 60 27 mac], Intvl fi- 20 2 8.69 Doyle 65 25 41.66 Doyle 22 1.0 17.78 Scribner 1L0 l8 2.0. 88 Scribner l5 5 5 . 57 Log rule Oak Log rule Basswood Maximum Minimum Average Maximum Minimum Average “Dollars per M. b. f.---= “Dollars per M. h. f.“- Int'l % it 9 10.82 Int"l % 1+0 25 30.78 Doyle 25 5 11.96 Doyle 140 20 27.25 Scribner 10 10 1.0.00 Scribner 25 8 12.22 Log rule Elm Log rule As an Maximum Minimum Average Maximum Minimum Average “Dollars per M. b. fwww “Dollars per M. b. f0“... Int'l %; 15 3 10.37 Int”l @— 10 3 6.77 Doyle 25 6 15 . 92 Doyle 20 11 8. 81. Scribner 15 5 6.69 Scribner 10 3 6.89 L08 rule Black cherry Maximum Minimum Average “Dollars per M. ‘0. fun“ Doyle 50 25 110.22 abhximum and minimum prices are rounded to nearest $l. 1W tree: Memtiom cord, e. g” Ifltermtiom “'5 0f sale W8 this on Mic on 1° pay Extra W re of 10881113 0 Mom; comp hr(”ration . :osts by pm ism appeal fijttmntfl 1 M 01m $10] logging to, °08ts c Men In {SE18 to 10We 20]. log rules. Net returns will be examined in a later section of this analysis. Aspen stumpage is closely allied with that for pulpwood. Producers usually buy aspen for pulpwood at $l.OO~l.70 per cord, but often cut the larger trees into sawlogs and sell such logs for $25 to $35 per M. b. f. International % at sawmills. If aspen sawlogs are obtained at $1.50 per cord, e. g., that price is roughly equivalent to $3 per M. h. f. by the International rule and gives the producer an extra margin of profit at time of sale, unless his logging and trucking costs are excessive. Perhaps this "sorting ou " of aspen is more common on private lands than on public ownerships; one producer reported that the state required him to pay extra for aspen sawlogs obtained from scucalled "pulpwood" stands. Logging Costs Data relative to logging show that producers, in general, are aware of logging costs. However, a producer may not distinguish between the Various components of such costs unless he subcontracts one or more parts. Information taken from questionnaires indicate that estimates of logging costs by producers who do their own work and amounts paid to subcontractors do not appear to differ greatly. Thus, in this analysis, with minor adjustments for obvious errors, estimates of costs by producers who do their own work and subcontracting costs are combined. Logging costs are not as readily controlled as are those of stumpage, A150, costs of logging are likely to differ from one timber tract to another. In addition, increased mechanization-achange in technologym— tends to lower costs. Manuel Guitar, 1! to lilb tha: mom equ‘ toI’Osraphy 1 find of log; often incre: probable may rims L°€giné 1"Table 51h We and k “3 be attrj during 10881 ”“115 when logging even Mixed h cost. Why 1'. anaren’c, 1111 fine. Also, to tr°uble w‘ mm to 23 1% Thi: 1 l A _7 202 Various factors contribute to variation in logging costs. There are differences among forest stands, e. g., number of trees per acre and the diameter, length, and species of trees. Some species require more time to limb than others. Large trees may be more difficult to handle without special equipment. Locationm-say in a swampmmay cause extra expense; topography may be a' factor. Protection of water supply may change the kind of logging which is carried out. Roads, insurance, and supervision often increase costs. Stumpage prices are normally adjusted to cover probable major variations in logging costs. Pulflood Logging Logging costs as reported by sampled pulpWOOd producers are given in Table 61;. The range appears large for each species; within species spruce and balsam fir are relatively more costly than all others. This may be attributed to scattered stands and to adverse weather conditions during logging; these two species are usually harvested during the winter months when the ground is frozeno They grow in swampy areas which make lodging even more difficult during the warmer part of the year. Mixed hardwoods (exclusive of aspen) also Show a fairly high logging 90%» Why this species group should exceed jack pine is not readily apparent , unless the merchantable height per tree is greater for jack pine. Also, hardwoods may have fewer trees per acre with more underbrush to trouble woods workers. In any event, mixed hardwoods appear more expensive to harvest than aspen and jack pine. Aspen is the least costly to 108. This species is relatively free of branches on the trunk, usually grows in dense, evenmaged stands, and is much lighter in weight I 203 Table 61L.—-Pulpwood logging costs by species, 19593 Species Maximum Minimum Average ---n~--—-~-—4-Dollars per cord ------------ A-- Aspen 6.50 h.75 5.81 Mixed hardwoods 8.30 6.00 7.09 Jack pine 7.50 5.00 6.22 Spruce 10.00 7.00 8.55 Balsam fir 10.00 7.00 8. 55 aAmount allowed for machine peeling aspen, add approximately $h.80 per rough cord. 51-3 in, ..‘I 7’ 20h than jack pine or the other hardwoods found in the study area. ___.sSavlo Praises Sawlog logging is complicated by number of species, specifications , wanted, and log rules used, as well as differences in stand character- 5‘ istics, length of merchantable trunk or stem, size of logs, topography, and other factors .. Information relative to sawlog harvesting or logging costs is given in Table 65. As with pulpwood, wide variations are apparent between maximum and minimum data; the figure of $25 per M. b. 1’" International for maximum under hard maple appears to be at least $5 too high, whereas $5 to $7 per M. b. f. minimum by whatever log rule seems unusually low. Differences between data by log rules are not readily explainable, en g., the average for hard maple by the International rule is more than $3 above that for Doyle. A similar situation is evident for oak where Doyle is low and Scribner is far too high; under elm the average by the International rule again appears high relative to those by Doyle and ‘ Scribner. 0n the basis of differences among rules, one would expect averages by Doyle to be highest, Scribner next, and International lowest. One can not determine from the schedules or questionnaires whether pro: ducers understand differences among log rules. A hypothesis is that these differences are not generally known; further research on this matter is % Suggested . - Hauling Costs Hauling of raw wood products in the study area refers to moving or 205 Table 65.—-Sawlog logging costs by principal species and log rules, 1960a Species and log rule Maximum Minimum Average - ~~~~ Dollars per M. b. f.-e--~- Hard maple Int"1 % 25 15 16.12 Doyle 16 7 12.99 Scribner 13 8 11.95 Mixed hardwoods Int'l % 2o 7 13.18 Doyle 16 9 13.116 Scribner 13 8 12.29 Oak Int'l % 18 10 11.25 Doyle 17 10 9.73 Scribner 20 10 16.67 Basswood Int'l % 16 15 15.10 1 Doyle 16 9 12.06 Scribner 13 10 12.0h E Elm Int'l % 18 7 l3°h2 1 Doyle 16 5 12.03 I Scribner 2O 8 11.38 I 1 ASPen Int'l % 2O 7 10°80 I Doyle 18 5 10.95 Scribner 20 10 12 . 60 Black cherry Doyle 20 10 14.13 aMaximum and minimum data are rounded to nearest $1. .1?! 206 transporting such products by motor truck to mills or to railroad reloadw ing points. Railroad transportation applies to pulpwood only; such wood is purchased before it is shipped. water transportation is not considered in this analysis, at least in relation to costs. Total cost of truck transportation is related to various factors, e. g., loading and unloading, distance involved, amount hauled per trip and number of trips per time period, measurement used as reflected in differences among log rules, peeled or rough as applied to aspen pulpa wood, conditions of roads, highway restrictions, amount of labor used, and other inputs. Eroducers may not be able to determine or understand fixed and variable costs unless they subcontract their hauling; then they are forced to pay an agreed or negotiated fee. This appears to be particu- larly applicable to pulpw00d producers who may be transporting wood at 1 less than total costs until their truck must be replaced (James, 1957). About 20 percent of sawlog producers lose money on at least one species g handled, but whether this is a result of excessive estimates of costs, e. g., PaYments for trucking, logging, or stumpage,is difficult to evaluate. In any event, the net return is what producers are primarily seeking and, after examining hauling costs, such information can be calculated. 5 PLIIPWood Hauling —'—~_..____ James and Lewis (1961) published a rate schedule for determining Payments to a contract trucker for hauling pulpwood. This formula was Obtained from a large pulp mill in the Lower Peninsula. Rates by this . formula can be calculated as follows: 207 Distance Rate per mile per cord (Miles) (Dollars) 75-100 0.065 101-150 0.055 Over 150 0.0h9 Rates for distances less than 75 miles, as reported by James and lewis (1961), are negotiated with producers rather than contract haulers. These authors show prevailing rates up through 70 miles, then, by use of formula, the rates for 80 miles and above° Their rate schedule is given in Table 66 and is contrasted with truck hauling costs=~averaged graph- ically--as reported by sampled producers in this investigation. For distances up through ho miles, negotiated rates as given by James and Lewis (1961) exceed estimates of costs as reported by producers, but from 50-70 miles producers show their costs exceed the negotiated pay- ments and also from 80-140 miles their costs as reported are greater than rates determined by formula. From 150 miles and above the formula Payments for hauling exceed estimates of costs by producerso The formula method of rate determination for 75 miles and up gives three straightu-but disconnected--lines when plotted on cross section paper. Mills smooth out these steps and do not follow the formula at transition points, eo g., l60 miles x $0,0h9 : $7.8h, which is less than the amount paid at 150 miles, Actually the rate as given for 150 miles is slightly below what the formula gives, then the l60 mile rate is held equal to the 150, or $8,20. Thus, transition points caused by rate changes are made less obvious. Trucking to rail heads seldom exceeds 30 miles and costs are higher :4 Vi ..r -. aJrl 208 Table 66.--Average truck-hauling costs for pulpwood by varying distances of haul as reported by sampled producers in contrast with costs established by formula, l959 Distances Formula costsa Hauling costs reported by producers ~Miles- ---------------- Dollars per cord -------------- 10 3.00 20 n.00 3.80 30 4.50 n.35 to 5.00 n.90 50 5.00 5.h1 60 5.00 5.87 70 5.50b 6.28 80 5.50 6.60 90 6.00 6.88 100 6.25 7.1u 110 6.25 7°37 120 6.60 7°57 130 7.20 7.76 1&0 7.70 7.90 150 8.20 8.0a 160 8.20 8.1M 170 8.h0 8.23 180 8.80 8.30 190 9.30 8.36 200 9.80 8.u2 aSource: James, L. M. and Gordon D° Lewis, 1961. Transportation costs to Pulpwood shippers in Lower Michigan, Michigan Agricultural Experiment Station, Quarterly Bulletin h2(3): hhhmh69. bCosts up through 7h miles are negotiated between mills and producers, i. e., the formula for determining rates does not apply until 75 miles is reached. Even then the formula is not strictly applied, as transition Points in the rates are smoothed over. Such a point occurs at l6O miles in Comparison with l50 miles; the 160 mile rate is higher than the formula gives, whereas the 150 mile rate is slightly lower than given by the formula. 209 than for comparable distances of direct-to—mill hauling. The extra costs are attributed to loading rail cars. For example, at 20 miles, producer data show that trucking to rail heads, plus loading on cars, is approxi— mately $0.80 more than the comparable distance of directnto~mill delivery. Mulls usually perform the unloading when pulpwood is hauled directly to mill yards. James and Lewis (1961) suggested that an average of $1 per cord should be added to negotiated or formula rates as shown in Table 66 to cover the additional unloading and loading necessary to place pulpwood on railroad cars. Sawlog Hauling In contrast to trucking pulpwood, sawlog producers are not given extra payments for hauling logs from more distant locations. Thus, sawlog producers must reduce the amount paid for stumpage with increasing distance from mills, or else face a financial loss. Information relative to maxim mum, minimum, and average trucking costs per M. h. f. by species and log rules is given in Table 67. Differences among log rules are evident in the average figures (Table 67). Fbr all the species given, the International % is lowest per M. h. f., which is what one would expect, as there is little if any overrun when this rule is used. Except for oak and elm, Doyle ranks highest, which again is what one might predict. Apparently some other factor contributes to Scribner being higher in the two instances just noted. Only the oak Scribner figure is greatly above its Doyle counterpart. Minimum and maximum data controlled by varying distances, log sizes, volume per tract, efficiency of equipment, condition of roads, highway 210 Table 67.—-Sawlog trucking coats by principal species and log rules, 1960a Species and log rule Maximum Minimum Average ----- Dollars per M. b. f.--~—-- é Hard maple Int'l t 15 10 10.52 Doyle 15 10 13.6h Scribner 20 7 11.50 Mixed hardwoods Int'l fi- 12 6 9.81 Doyle 15 10 13.5h Scribner 12 9 10.11 Oak Int'l % 12 10 10.18 Doyle 15 5 11.74 Scribner l5 12 14.17 Basswood Int‘l % 15 10 10.86 Doyle 15 10 12.62 Scribner 2O 10 11.57 Elm Int'l fi- 12 7 11.10 Doyle 15 10 13.14 Scribner 2O 10 13.68 Aspen Int“). 11; 17 6 9.69 Doyle 15 10 12.75 Scribner 15 8 10.95 Black cherry Doyle 15 10 13.50 E 8. . . Max1mum and minimum rates are rounded to nearest $1. i _’ -_.__,_..—. 211 restrictions, species to be hauled, weather, and other factors. Returns Prices and costs have been examined. Now one can determine, in a general way, the returns to producers for harvesting timber and trans- porting raw wood to primary mills. Contrasts will be given between pulpwood and sawlogs, which limits the analysis to truck transportation. By taking the basic price for raw wood and, after adding amounts allowed for mileage differences~~as with pulpwood, and then subtracting costs of stumpage, logging, and hauling, one can reach an approximation of the amount left for the producer's profit margin, or the amount he has left to pay expenses not considered in this analysis, such as work— men‘s compensation insurance, Social Security, supervision, and taxes. Returns to Pulpw00d Although pulp and allied mills, with exceptions, pay price bonuses with increasing distances (Table 61), these do not equal the cost of transportation as given in Table 66. Therefore, pulpwood producers must still recognize, as do sawlog suppliers, that less and less can be allo~ sated to stumpage as distance increases. Where contract hauling is done, e. 8., at 75 miles and up, or where bonuses are paid to large producers, the timbershed may be extended, but at increased cost of raw wood to Pulp mills. Without considering variations in price agreements which mills Work mm with individual producers, margins and profit ratios for pulpwood dSlivered at mill yards by trucks are estimated in Table 68, except for A311612 Peel Jack D \ 212 Table 68.--Margin and profit ratios for the production of pulpwood when delivered to mills by trucks, l959a Species and Price Stumpage Logging Hauling margin Profit mileage zone receivedb cost cost costc ratiod Dollars per cord --------- Percent Aspen- 20 12.31 1.70 5.81f 4.00 0.80 6.5 rough to 12.81 1.50 5.81 5.00 0.50 3.9 60 13.31 1.3ae 5.81 5.00 1.16 8.7 80 13.56 1.26 5.81 5.50 0.99 7.3 100 13.81 1.19 5.81 6.25 0.56 h.1 120 1u.31 1.13 5.81 6.60 0.77 5.4 140 1h.81 1.08 5.81 7.70 0.22 1.5 160 15.31 1.0h 5.81 8.20 0.26 1.7 180 15.56 1.02 5.81 8.80 «0.07 ~-- 200 15.81 1.00 5.81 9.80 -o.80 «_- Aspen— 20 19.05 2.12 9.72f n.00 3.21 16.8 peeled to 19.55 1.85 9.72 5.00 2.98 15.2 60 20.05 1.686 9.72 5.00 3.65 18.2 80 20.30 1.57 9.72 5.50 3.51 17.3 100 20.55 1.h9 9.72 6.25 3.09 15.0 120 21.05 1.h2 9.72 6.60 3.31 15.7 1&0 21.55 1.36 9.72 7.70 2.77 12.9 160 22.05 1.31 9.72 8.20 2.82 12.8 180 22.30 1.27 9.72 8.80 2.51 11.3 200 22.55 1.25 9.72 9.80 1.78 7.9 Jack pine 20 16.25 5.00 6.22f n.00 1.03 6.3 to 17.12 u.h0 6.22 5.00 1.50 8.8 60 17.95 3.90 6.22 5.00 2.83 15.8 80 18.70 3.146e 6.22 5.50 3.52 18.8 100 19.37 3.07 6.22 6.25 3.83 19.8 120 19.92 2.72 6.22 6.60 b.38 22,0 1&0 20.36 2.u5 6.22 7.70 3.99 19.6 160 20.75 2.25 6.22 8.20 n.08 19.7 180 21.08 2.10 6.22 8.80 3.96 18.8 200 21.3u 2.00 6.22 9.80 3.32 15.6 213 Table 68.--(Continued) Species and Price Stumpage Logging Hauling Margin Profig mileage zone receivedb cost cost costc ratio -------------------- Dollars per cord---—----- Percent' Nfixed 20 12.47 1.22 7.09f 4.00 0.16 1.3 hardwoods 40 13.00 1.18 7.09 5.00 -0.27 --- 60 13.62 1.148 7.09 5.00 0.39 2.9 80 14.15 1.09 7.09 5.50 0.47 3.3 100 14.50 1.05 7.09 6.25 0.11 0.8 120 14.72 1.02 7.09 6.60 0.01 0.1 140 14.88 1.00 7.09 7.70 —0.83 —-- aData from this table should not be used for individual job analysis. This table shows cost-price relationships only in a general way, e. g., under average logging conditions. Hauling costs are averaged for all species. stumpage prices are varied by species and mileage zones, but other factors can contribute to stumpage price changes. Bonuses are not included, except for a general increase in prices paid by mileage zones. Prices given for peeled aspen are approximately equal those paid for hand peeled wood. bPrices received were weighted by volume of wood purchased by mills. Prices at 20 miles indicate the basic mill prices. Bonuses paid by mileage zones do not necessarily proceed by 20 mile intervals, but these were determined by graphic procedures from data which mills provided. Prices vary by species, as indicated. CA5 hauling costs were found to be somewhat questionable as reported by producers (Table 66) and as contract hauling rates were available from 75 miles and above with negotiated rates up to 75 (James and Lewis, 1961), the negotiated-contract rates were used. These rates apply to all species, and are not strictly applicable to individual species. For example, one would expect hauling rates to be higher for mixed hardwoods and jack pine than for aspen. dProfit ratio is the ratio of the margin to price received, e. g., under aspen~mrough, $0.80 divided by $12.31 equals 6.5%. 8Average stumpage cost for this species and condition. fAverage logging cost for the particular species. 214 spruce and balsam for which data were somewhat lacking. Most spruce and balsam is delivered by rail or ship anyway; whereas, this analysis is mainly concerned with truck-to-mill hauling. A series of mileage zones is used up to 200 miles, Which is nearly the maximum distance for truck deliveries in the Lower Peninsula. Table 68 should be used with caution. It is not meant to provide a basis for individual job analysis. First, stumpage figures do not always follow the pattern given. Factors other than distance may cause variations. Second, logging costs are averaged. Particular logging conditions may vary considerably from the average. Third, hauling costs are difficult to estimate, as producers often do their own hauling and, perhaps, tend to underrate their labor. This was the reason James and Lewis' (1961) negotiated—contract hauling costs were used in the table under consideration. Fourth, margin is an estimate of net profit. However, workmen's compen- sation insurance, Social Security, and taxes have not been deducted. One can see that when producers complain about not having funds to pay workmen’s compensation premiums, they are truthful, especially on rough aspen and mixed hardwoods. Finally, profit ratio is the ratio of the margin to price received. It indicates something of the profitability of the enterprise. Producers who handle rough aspen and mixed hardwoods are facing an uncertain future. A slight increase in expenditures may mean that produc— tion is being carried on somewhat below total cost; as the data presented are averaged, approximately half of the producers who handle these species are already operating at less than the profit ratios given. Coupled with the uncertainties of the quota system, such production becomes even more hazardous. This situation appears to mean that a small producer, who is 215 limited on capital and/or mechanical equipment such as a debarker, large trailer truck, efficient tractor for skidding and loading, and a small truck for general transportation, can expect a rather low income from pulpwood production. If such a producer is a farmer, he can supplement his income by using his farm tractor and a chain saw and by taking a lower than standard wage; roadside sale to someone with a quota is his best assurance of added income from pulpwood without investing in expen= sive machinery. By hand peeling aspen, he can increase his labor income; he may be able to subcontract his aspen debarking, which would permit the production of that species at any season of the year. Alternative employment or business opportunities may offer greater financial security, especially to those producers who are operating at higher than average costs. Cooperative action among producers is another alternative, but the problems involved in developing such an organization are usually prohibitive. Therefore, the present recommendation is that small prom ducers do not try to expand to a point of more efficiency unless they have financial resources to do so and a large quota, say 2,000 cords per year. Obviously buyers can not give all small producers such quotas; mills would be flooded with wood. AS pulpwood producers often supplement their incomes by handling sanogS, returns to sawlog producers will be examined next. Returns to Sawlogs With sawlogs, producers do not receive bonuses for more distant trucking, Therefore, timbersheds tend to be more restricted than for Pulpwood. Also, this analysis is made considerably easier by not having 216 to consider mileage zones. On the other hand, sawlog cost-pricewreturns are complicated by more species than pulpwood and by the three log rules. Data on costs and prices so far have been given in terms of grades or of maximum, minimum, and average, and by principal species and log rules. One can take any combination of these figures and determine profit ratio. However, averages will be considered here; these are presented in Tab le 6 9. In general, sawlog production is a profitable business, except for producers who handle elm. For those who are more efficient than average or who can sell at a price greater than average, the profit ratio will increase. Maple is a valuable species, but stumpage is relatively costly. Basswood shows a high profit ratio, and aspen is high by all log rules. Aspen stumpage is probably obtained at pulpwood prices, which accounts for its favorable position. The reason for the excessive profit ratio for oak--International-—is not clear; perhaps economies of size contrin buted to this high profit, as oak producers who bought stumpage and sold 108$ by the International log rule were larger operators. The profitability of sawlog production on a 1,000 board foot basis is evident (Table 69), but amounts handled determine annual net profit. Firms in the 500 and up volume class in 1960 produced an average of 834 M. b. f. based on International rule. Suppose that the margin is $5 Per M, then total margin equals $hl70, which is above labor cost. When one considers a producer who handles less than 50 M. b. f., a margin of $5 per M supplies a net return of less than $250. Such a return can only be considered as supplementary to other sources of income. 217 Table 69.--Margin and profit ratios for the production of sawlogs delivered to mills by trucks, by principal species and log rules, 1960a Species and Average log rule amount Average costs Margin Profit received Stumpage Logging Hauling ratio ------------ Dollars per M. b. f.-----------—-- Percent Hard maple Int'l t 79.68 48.01 16.12 10.52 5.03 6.3 Doyle 77.46b 41.66 12.99 13.64 9.17 11.8 Scribner 50.96b 20.88 11.95 11.50 6.63 13.0 Averagec 59.58 31.51 11.34 10.40 6.33 10.6 Mixed hardwood sd Int'l t 35.08 8.69 13.18 9.81 3.40 9.7 Doyle 46.28 17.78 13.46 13.54 1.50 3.2 Scribner 30.45 5.57 12.29 10.11 2.48 8.1 Average 33.22 9.10 11.84 9.83 2.45 7.4 Oak Int'l t 41.61 10.82 11.25 10.18 9.36 22.56 Doyle 35.70 11.96 9.73 11.74 2.27 6.4 Scribner 43.33 10.00 16.67 14.17 2 49 5,7 Average 32.09 9.47 9.17 9.57 3 8 12.1 Basswood Int'l t 61.55 30.78 15.10 10.86 4.81 7.8 Dby1e 63.32 27.25 12.06 12.62 11.39 18.0 Scribner 42.30 12.22 12.04 11.57 6.47 15.3 Average 39.77 16.04 9.28 8.63 5.82 14.6 Elm Int'l t 34.15 10.37 l3.h2 11.10 «0.74 ~~~ Doyle 41.85 15.92 12.03 13.14 0.76 1.8 Scribner 31.10 6.69 1138 13°68 ”0°65 =-== Average 31 . 81+ 10. 27 10. 85 10. 83 --O. 11 m... Aspen Int.l t 33-07 6 7 10.80 9.69 5.81 17.61: Doyle 37.85 8 81 10.95 12.75 5.3% 14.1f Scribner 38.80 6.89 12.60 10.95 8.36 21.5f Average 31.90 6.58 9.90 90h? 5.95 18.7 Black cherry Doyle 73,79 40.22 14.13 13.50 5.94 8.0 M 218 Table 69.~-(Continued) aData from this table should not be used for individual job analysis, except in a general way. The amount received is an average; also stumpage, logging, and hauling are averaged. bAverages were expected to be greater than International but, with the data at hand, this expectation could not be supported. A larger sample might have given different results. cAverages applied to log rules recognize approximate overruns. dMixed hardwoods is a general term, but usually means the denser hardwoods, e. g., soft maple, ash, oak, and beech. It does not include aspen. eThis profit ratio is unusually high. There were only M producers in this group, three of whom were in the 500 and up M. b. f. volume class; they were opperating efficiently. fThe high profit ratios for aspen can be attributed to the fact that stumpage is low--often purchased for pulpwood prices. Stumpage for elm, in contrast, appears to be too high and profit margins are very hazardous. 219 Producers often do their own work. Therefore, labor income may be as high in sawlog or pulpwood production as in alternative work. Perhaps the amount of wood handled is of less importance to the producer when considered from this viewpoint. Thus, for those producers who supply their own labor, annual margins are over-and-above amounts allocated to labor, and might be considered as returns to management, interest on investment, or a combination of the two. Statistical Analysis of Sawlog Data Oneaway analysis of variance with unequal subnclasses was carried out on the sawlog data given in Table 69, with the exception of black cherry which was omitted. Tests of significance were made between log rules~~International fi, Doyle, and Scribnera-relative to average prices received at sawmills, costs of stumpage, logging, and hauling, margin of profit and profit ratio. Then all species were treated as a group in testing differences among log rules. ”F" values are given in Table 70. There were significant differences in amount received for hard maple, mixed hardwoods, and basswood. Note that for hard maple, for example (Table 69), amount received by International % is above that of Doyle and far above that of Scribner. On the other hand, one can conclude that for oak, elm, and aspen differences among the three log rules are recog= nized by producers, e. g., aspen purchased by International % is less than Doyle and Scribner (Table 69), as one would expect in light of Probable overrun differences. Mills that buy comparable grades of logs which are less than 26~28 inches top diameter for the same or lower price by the Doyle or Scribner rules as others are paying by the International 220 Table 70.--"F" values showing significance of differences among log rules, for six species and for all species combined, 1960a Ave. ,F , Species amount Average costs weighted Unwt. Profit ‘ ‘T rec'd Stump. Logg. Haul. margin? margin ratio x~ .7 Hard maple 5.2* 2.7 6.0* 0.9 0.6 0.6 0.4 Mixed hwds. 19.4** 16.1ME 1.2 22.6** 0.7 0.0 0.5 Oak « 0.1 0.3 0.2 2.5 0.1 ~~e ~-- Basswood 7.4** 1.8 3.2 0.6 3.7 3.9* 2.7 Elm 2.5 4.5* 0.5 6.9** 1.1 1.2 1.0 Aspen 3.1 2.3 0.1 7.5** 0.2 0.3 0.5 All species l3.0** 9.5** l.2 39.8** 0.9 O.h 1.8 * and ** significant at 5 and 1 percent levels respectively. 8.The analyses of variance were based on the data summarized in Table 69. bWeighted by volumes handled. 221 rule are taking undue advantage of producers and landowners. Hewever, grades could not be checked by the information at hand. Relative to profit ratio, which is what really concerns producers, there are no significant differences among log rules for any species or for all species combined. Even hard maple, mixed hardwoods, and basswood, which show important differences in prices received by log rules, have no significant differences in profit ratios by the various log rules. One can conclude, therefore, that sawlog producers (and private landowners in general) are aware of differences of overrun among log rules as shown by profit ratios. By referring to Table 70 again, the data given in the "All species" row show significance among log rules when differences of species are ignored; amount received, stumpage, and hauling are all significant. Thus, one can say that if all species had been grouped, i. e., various species had not been noted in collecting data, than differences among log rules would be important relative to amount received, stumpage and hauling, and the characteristics of the log rules poorly understood. The fifth and sixth columns of the table show relative significance of profit margin calculated in tw0 different ways. The columns are similar; thus, margin could have been calculated on the basis of weighted (by volume) or unweighted values. "F" values showing significance of differences attributed to species, 108 rules ignored, are given in Table 71. These data indicate that, if differences among log rules are omitted, the amount received, stumpage, and hauling are again significant at the one percent level; also, both margins are significant at the one percent level and profit ratio at the *T—. 222 Table 71.--“F" values showing significance of differences attributed to species, 103 rules ignored, 1960a Species Ave. grouping amount Average costs \Weighted Unweighted Profit rec'd Stump. Logg. Haul. margin margin ratio All species 73.2966 82.2%!6 .6 h,9** 3.h** 3.hH 2.9* * and ** significant at S and 1 percent levels respectively. aBased on data given in Table 69. bWeighted by volumes handled. 2111»: .360! — differences by leg rules, there would” have heel: g ._ . differences" for species as a group relative to an mime tested I_ «a _. except legging... . Table 72 gives the percent of total variance attributed to species, i log rule, and error for the seven variables. One can note that species 7* -.,_.. and log rule account for 90 percent of the variance for prices received at sawmills; stumpage cost is close to this with 87 percent One can . say that logging costs can not be forecast on the basis of species or ‘ .,_ L log rule. On the other hand, trucking costs are directly related to ' log rule but not so much to species. Variance relative to margins and e profit ratio are not attributed to species or log rule. __ —_ -- ___—___— -.. ___.—_————.— 22h Table 72.--Percent of total variance accounted for by species and log rules, 1960a Group Ave. amount Average costs Weighted Unweighted Profit rec‘d Stump. Logg. Haul. margin margin ratio Species 72 7h 0 12 8 8 6 Log rule 18 13 O kl O O 2 Error 10 13 100 1+7 92 92 92 Total 100 100 100 100 100 100 100 3Based on "All species" data from Tables 70 and 71. Percents are rounded to nearest whole number. bWeighted by volumes handled. SUMMARY AND CONCLUSIONS Pulpwood and sawlogs are the most important raw materials coming from the forests of Michigan. The trend in pulpwood production in the :- ., .. _ -:m ‘f.,.fae»«.:- : ," Y '. ‘ state is upward, whereas that for sawlogs is declining. Volume of raw wood outputs for pulpwood surpassed that of sawlogs in the mid—1950's and the gap is widening. At the present time, raw wood producers are primarily pulpwood orientated but handle small quantities of sawlogs and, perhaps, veneer logs or bolts, to supplement their incomes, For the few producers who handle northern white cedar fence posts and poles, sawlogs and pulpw00d are incidental; but in the total picture, the output of cedar posts and poles is minor—~two to three percent of the annual volume of all raw wood products harvested in the state. The value prior to manufacture of pulpwood and sawlogs in Michigan was $37,750,000 for the year 1962. Declining volumes and values of sawlog outputs are more than off~set by increases in pulpwood production. Improved pulping techniques make possible the utilization of aspen, denser hardwoods, and pinemmall of ‘ which are abundant in the state. Pulp firms are no longer dependent on sPruce and balsam fir; these species are not plentiful in the Lower ' f Peninsula and, when used, are imported from Canada or brought in by rail ,f from the Upper Peninsula, for the most part. Primary Mills in the Lower Peninsula ___—__..me The primary woods-using mills of the Lower Peninsula are mainly concerned with pulpwood and sawlogs. Veneer firms and others are minor, 226 and account for a very low percent of the raw wood used annually. Pulp Mills There are nine pulp and allied mills in the Lower Peninsula and, with the exception of two small firms, probably represent capital investments per mill of $5,000,000 and up. Such mills are permanently located; they manufacture one or two special products per firm, which, in general, do not compete with outputs of the other Lower Peninsula pulp mills. Because of the distribution of mills, abundant wood supplies, 6 limited overlapping of timber sheds, and large numbers of pulpwood producers and potential producers, pulp manufacturers tend to be¢fligop= sonistic, that is, have control over prices paid producers and, indirectly, landowners. Pulp mills in the Lower Peninsula consumed approximately 569,961 unpeeled cords of pulpwood in 1959, which was about 82 percent of the state”s consumption for that year. Aspen was the chief species used in PU1p manufacture. Sawmills Sawmills are numerous$n190 in the study area; they are far below Pulp firms in capital investment per firm, with the smaller mills Probably valued at $1,500 to $2,000. Outputs of lumber are low when considered on an average basis. There is likely to be more competition among firms for logs and markets than with pulp mills; also timbersheds are small in comparison with those of pulp companies. Mills are often portable, or potentially so, and are usually equipped with circular 227 headsaws. Sampled sawmills produced about 61,918 M. h. f. in 1960, which was approximately 21 percent of the lumber production in the state for that year. Various species were used; no particular species was of outstanding importance. Size of Mills When considering size of mills, one can do so with regard to annual consumption of raw wood. On this basis, one pulp firm and the flakeboard mill were considered as "small," as they used less than 10,000 cords each in 1959° The small pulp mill supplemented its consumption of raw wood by importing wood pulp from Wisconsino Most (about 97 percent) of the pulp— wood consumed in the Lower Peninsula flows through seven mills, with two firms consuming more than 100,000 cords each in 1959. Consumption of raw wood by individual sawmills does not compare favorably with any of the seven major pulp companieso The largest sampled sawmill showed an annual output of 2,900 M. b. f.; whereas, the smallest of the seven major pulp firms used an equivalent of 20,600 M. b. f. in PulPWood. Average output of the 86 sampled millsm-and mills of less than 100 M. b. f. were largely avoided when samplingnuequaled approximately 720 M. b. f. in 1960, or an equivalent of 1,h#0 cords. The low annual output per sawmill appears to limit effectiveness in attracting full=time PTOducers. Such suppliers want steady work and usually turn to sawlog production only when pulpwood quotas are limited. Sawlog producers who are partwtime farmers, or who do other partmtime work, find that sawlog Production supplements their incomes; pulpwood production also serves the 228 same objective, 1. e., increases income of part-time farmers and other workers. Principal Products Pulp mills concentrate on paper or paper board manufacture. No Lower Peninsula mill produces wood pulp for further manufacturing by another firm. Sawmills manufacture six general products, but pallet lumber and pallets—crates are emphasized; #3 percent of sampled mills listed either pallet lumber or pallets=crates as their principal product. The nearness of manufacturing industries which use wooden pallets and the large quantity of sawtimber which is suitable for pallet grade lumber account for the prominence of pallet manufacture in the study area. Wood Supply Areas If one considers water transportation of pulpwood, the radius of wood supply area is 1,200 miles. However, most of the pulpwood consumed in the Lower Peninsula comes by way of motor trucks from timbersheds within 175 to 200 miles of mills. One firm extends purchases as far as 250 miles and another to 350; these more distant purchases are shipped by rail. One can question the comparative advantage of locating a pulp mill 250 to 350 miles from raw material; however, further research is needed on mill location in relation to raw wood supply. Sawmill timbersheds are much more restricted and seldom exceed a radius of 75 miles; transportation is usually by truck. If sawmills use bolts, say for crate or pallet construction, such raw wood is normally 229 obtained within a shorter trucking distance than sawlogs. Approximately 20 percent of sawmills were reported as portable; such mills can relocate readily and maintain a small timbershed. Methods 9: Transportation Water transportation is used for pulpwood imported from Canada; about 12 percent of receipts came by water in 1959. Motor trucks are most important and accounted for 64 percent of shipments, with rail transportation showing 2h percent of volume. Trucks are used to deliver Pulpwood to rail shipping points; radii from such points seldom exceed 30 miles. Sawlogs are normally delivered to mills by trucks; only about Six percent of sawlog volume is skidded directly to mills. Highly portable mills--those which permit direct~to~mill skidding-—are not popular in the study area; this is indicated by the low percent of volume which is skidded directly to mill yards. Sawlogs in the study area are not transported by rail or water. Agent Sources 9: Raw Wood Probably not more than three percent of pulpwood in the study area is Produced by contractors working on company owned land or timber pur— chased by mills. Most (Bl to 8h percent) pulpwood comes from producers. Intermediate marketing agents account for 16 percent. The importance of Producers is evident. There are no dealers in the northern part of the Lower Peninsula who handle sawlogs° The most obvious reason for this is that the function 230 of a dealer is to concentrate a large volume of raw wood obtained from numerous producers; but since sawmills purchase relatively small quantities of logs, the services of a dealer are not needed. Other possible reasons for this situation are: (l) Margins above costs may be inadequate, (2) many mills do not buy logs throughout the year, (3) mills do not recognize dealers, (A) producers and mill employees are delivering logs at less cost than dealers would, and (5) alternative opportunities for dealers or potential dealers are greater in other enterprises. Sawmills obtain about five percent of their log supply from own lands, 32 percent more comes from purchased stumpage, custom sawing accounts for six percent, 53 percent is obtained from producers, and four percent is indefinite. Three of the nine pulp and related firms use the dealer system, at least in part. These dealers are "merchant middlemen," who buy raw Wood from producers then ship it to mills and resell it. No "agent middleman"u— one who handles wood for a commission without taking titleauwas found. Nulls also buy pulpwood from certain merchant middlemen, but do not recognize that they are dealers; no middleman"s bonus is paid to such selfoappointed persons. These nonurecognized dealers are in direct coma Petition with producers and their financial security is uncertain. How~ ever, such selfnappointed middlemen may be paid a bonus in recogniztion of large volumes handled. Pulp mills are not buying large areas of timberland in the Lower Peninsula. Apparently mill representatives are satisfied that wood supplies Will be more than adequate in the future. Sawmill owners are proceeding on the same course, but buy more standing timber (32 percent of receipts 231 in 1960) than pulp mills. Competition for Raw Wood There is limited competition between pulp mills and sawmills for aspen. Large diameter, better quality aspen is often cut into sawlogs rather than pulpwood. In general, however, species desired by pulp mills are not in demand by sawmills. This situation can change, as pulp mills are beginning to use larger quantities of denser hardwoods. Northern white cedar post and pole producers are not in competition with either sawmills or pulp mills, as they usually harvest limited amounts of pulpw wood or sawlogs at the same time they are cutting posts and poles; cedar is not prized for pulping or for sawlogs. In certain timbersheds sawmills may compete with veneer firms for soft maple, elm, basswood, and hard maple. Pulp mills control the flow of Wood to mill yards by use of contracts, agreements, and quotas. Genuine contracts are used for Canadian imports. Agreements and quotas are used domestically. An agreement is a written statement of intent to buy; it is subject to change on the part of the buyer and is not binding on the supplier. It contains details relative to kind, amount, and condition of wood to be purchased. It normally SPecifies that labor laws will be follOWed. Details differ among mills. A quota is a promise to purchase a certain amount of pulpwood and is Closely allied with or supplementary to an agreement. One firm uses the term "purchase order," which is equivalent to a quota. Quotes are 232 a constant source of concern to producers, and probably to dealers. There is great uncertainty as to whether a quota will be extended or be. large enough to provide full-time employment. A mill may use unre- stricted buying for a month or two in the spring, at which time quotas are ignored. This type of procurement stimulates a large number of part- time producers to begin cutting and delivering wood. Such producers may be without a quota for the remainder of the year. Full-time producers can not understand unrestricted buying; they would prefer to have increased quotas and restock depleted mill yards in a more orderly fashion. Pulpwood dealers in the study area do not use written agreements with producers. Agreements are oral, with the exception of two dealers out of 13 who reported they obtained wood in 1959 without prior commitment to buy. How these men purchased nearly 6,000 cords without a previous agreement is not clear. Oral agreements between mills and producers, or intermediate agents and producers, may be relatively uncertain-~depending on the understanding or interpretation of the parties concerned. Lack of prior agreements~~as between certain pulpwood dealers and producers, as just mentioned-mappear to burden producers even further. Dealers receive their agreements from mills prior to buying wood from or making commitments to producers and, thus, are taking little if any risk. As only slightly over four percent 0f producer volume comes from own land, pulpwood producers are dependent on other land owners for timber. Because of their dependency on other owners for stumpage and to insure adequate timber for future cutting, such Producers often purchase standing trees one to two years in advance of the time when they expect to harvest the wood. They make these advance pur= 233 chases before they have agreements or quotas with a mill or a dealer. Such a situation can lead to financial ruin, especially if a producer finally obtains a quota far below what he anticipated. One should recall, too, that yearly agreements are subject to change and quotas, which are applied toward filling an agreement, can vary weekly or monthly. New producers are warned not to invest in expensive machinery or equipment without first having some assurance of a substantial and coma tinuing quota. Even with a quota, the financial return per cord and annually may be far less than expected. Purchase agreements between sawmill operators and producers are informal~~usually oral. Procurement of standing timber from private landowners is also somewhat informal. Mills buy logs from producers and standing timber from landowners; about 32 percent of logs are purchased by mills as stumpage, i. e., standing timber. Restrictions pertaining to cutting are commonly limited to a minimum stump diameter and to species to be harvested. A time limit for removing trees may or may not enter an agreement. Only one private owner—~a corporationwmin the study area indi~ cated a program of sustained yield forest management, although a minimum stump diameter and the control of species harvested may be considered as beginning steps toward forestry. Landowners also restrict producers who buy stumpage in much the same way as they do mills who purchase standing timber. In purchasing timber from private owners, sawmills and producers use either the ”lump sum” procedure or pay a specified sum per thousand board feet harvested. Stumpage purchases from government agencies tend to be more restricted as to methods of harvesting; all transactions are carried 231+ out in writing; payments are made on the basis of bids per thousand board feet. Time limits are set for cutting and removing the wood. In buying logs from producers, saw mill operators consider species and minimum sizes. Grades are recognized by price differentials. Mills usualhy purchase by one of three log rules or by the standard cord. Such differences among mills in this regard are confusing. A standard rule is suggested for the state, as variations among log rules may not be under- stood by buyers and sellers and converting cord measure to board feet is subject to wide error. Further analysis concerning marginality of logs by species, quality, and size is suggested. Distance of hauling should be added, as well. Stumpage and logging costs would need to be considered. A beginning toward this is attempted under "Prices and Costs" in this analysis. Raw Wood Deliveries and Storage Fluctuations in pulpwood deliveries are common, but can be partially controlled by issuing quotas to well—mechanized, full-time producers and by increasing rail deliveries when weather conditions are severe or when highway weight restrictions are imposed. Prices per cord do not increase during times when inventories are low, nor do they decline in the summer when potential pulpwood supplies are high. Those mills which encourage unrestricted buying during the spring can expect wide fluctuations in inventories and to be faced with communications problems and maintenance 0f some degree of harmony with hundreds of small producers~~many of whom are anxious to obtain larger quotas, and credit, so they can achieve increasing economies of size. Fluctuations in pulpwood deliveries may . 2 i l 1 i i I Y i 235 also be reduced by purchasing from competent dealers who can organize producers and see that the wood is delivered on schedule. Sawlog deliveries and inventories are complicated by the intermit— tent operation of sawmills, wide differences in annual outputs among mills, adverse weather, highway weight restrictions during the early spring, number of species, and grades of logs. For those mills which operate all year, a buildmup in inventories can be expected during November or December through February. Yet, about 30 percent of larger mills receive logs throughout the year. Both pulp companies and sawmill firms face wood deterioration problems if materials are stored or carried over into the second summer. Storage facilities are not established in the study area or the Lower Peninsula for storing raw wood for long periods. Sewn mill operators do not use the quota system, as do pulp firms, to control inventories. Such controls as are used are oral and informal, for the most part. Sale of Products Sales of products from pulp and allied mills are more efficient than those from sawmills. The number of firms, specialized outputs, volume and value of sales, and trained sales personnelmnall contribute to a more favorable marketing position for pulp-paper and related products. Outputs are generally to fill previous orders and sales areas may be nationmwide and even extend to other countries. Sawmills are handicapped by being small, scattered, low on outputs, and handling bulky, heavy products of many sizes and grades. Larger mills often manufacture to fill previous orders, but smaller ones are less 236 likely to do 50. Sales areas are generally restricted in comparison to pulp-paper and related products and seldom exceed 200 to 225 miles. Pallet lumber is normally shipped less than 100 miles, but pallets are trucked as far as 225 miles. Building lumber is sold locally. Efficiency in sales appears to be correlated.with efficiency of production and economies of size. Landownership Sources 2: Raw Wood Landownership sources of pulpwood are clouded by the fact that two mills were unable to supply information regarding sources of their receipts. Also, pulp and allied firms who work through dealers, whether self- appointed or not, are separated from landowners by one stage in the marketing process and, thus, may lose the identity of the wood grower. Despite these deficiencies in data, pulp mills can be credited with receiving about 50 percent of their wood from private landowners; only about 1 percent of the 50, however, comes from lands owned by pulp mills. Thirty-three percent comes from government agencies and about 17 percent is unknown. Thus, pulp mills are highly dependent on other landowners for raw wood supplies. Sawmill data relative to landownership sources of log supply are clearer than for pulpwood; no unknown figure is present. Nearly 73 percent 0f logs comes from private sources, with 5 percent of the 73 from own lands. Public sources account for El percent and custom sawing for approximately 6 percent. Thus, sawmills are also highly dependent on other landowners for their logs. Public land is not supplying its share of sawlogs in proportion to 237 amount of land owned. However, this situation is likely to change as public forests become more mature and sawtimber sales are increased. Prices and Costs Major price and cost items are considered in this analysis and cover the two principal products, namely pulpwood and sawlogs. Prices Prices are determined by cost of production--in the long run, by the bargaining powers of buyer and seller, species and amount of wood available, competition among agents and firms involved in marketing, condition of the wood, and technology. Cost of production is not considered to be important when determining price in a market demand-supply situation nor in the short run; therefore, it is not stressed in this analysis. As for bargaining power, those who sell raw wood in the study area have little control over what they will receive, although sawmills are not as effective in bargaining with sellers as are pulp mills. Sawmills are small, scattered, numerous, low on capital and equipment, and compete with one another more than pulp mills do among themselves. Suggested reasons for the limited bargaining power of raw wood sellers, especially landowners and producers, are as follows: (1) Volumes of wood are plentiful and are increasing, except Possibly for better veneer logs and factory grade sawlogs. (2) The great number of producers and potential producers pre— eludes bargaining for higher prices. Despite the competition among sellers, 238 a forest cooperative composed of pulpwood producers is handling large volumes of wood for its patrons. Organization and development of other similar cooperatives is not expected. (3) Only National Forests and State Forests are able to pre- determine minimum prices for standing timber. Other landowners are not organized to ask for higher stumpage prices. (4) The condition of raw wood, such as peeled or unpeeled and grade, help to determine price. Peeled aspen brings about $h.80 more per original cord than unpeeled wood of that species. No. l factory grade hard maple logs can be expected to be priced far above No. # hard maple and similarly above aspen. (5) Changes in technology have made possible the pulping of the denser hardwoods. Whereas only limited competition exists so far betWeen pulp mills and sawmills for different species, it is likely to increase. Workmen“s Compensation Insurance Perhaps the competition and disorganization among producers, the amount of timber resources, lack of bargaining power on the part of producers, and resulting price controls by buyers have contributed to the . . . re aVoldance of workmen's compensation insurance for woods workers The are other contributing factors, such as family and partnership labor groupings Which produce raw wood without employees as such, use of mini» - ' ' urance mum size woods crews which permit non—coverage, high rates for ins WhiCh discourage payment of premiums, and uncertainty as to employer- . ~ ed employee relationships. Workmen's compensation laws, if strictly enforc 239 in the Lower Peninsula, would likely cause a severe disequilibrium effect on primary wood-using mills; the price of raw wood would probably advance and the price of stumpage would fall to total the approximate amount of the insurance coverage. Insurance payments drop over time if safety education and enforcement and further use of labor—saving machines reduce the number and severity of injuries. By rough estimate, only 12 percent of pulpwood delivered to Lower Peninsula mills in 1959 came from producers who carried workmen's compensation insurance on their employees. Basic Prices Paid Basic prices for pulpwood are dependent on species, point of delivery, and whether peeled or rough. Basic prices do not include bonuses for dealers nor for handling large volumes; neither do they include extra Payments for longer truck hauling. Prices for truck~to~mill pulpwood range from $12 for rough aspen and mixed hardwoods to $32 for spruce. Basic prices for sawlogs are determined for truck deliveries at mill yards, Prices are correlated with species and grades. Highest prices are Paid for No. 1 hard maple-~as much as $130 per M. h. f. International. Black cherry and basswood are also relatively high priced. Aspen and elm rank at the bottOm of the price scale. No bonuses are paid to truckers or Producers for more distant hauling of sawlogs. Price comparisons for pulpwood and sawlogs are largely restricted to W006 which is hauled by trucks directly to mills, as sawlogs do not flow to mills by rail shipments. In like manner, water transportation receives a minor place in this analysis; such transportation applies particularly to spruce-balsam and only to Canadian imports and not to wood grown and 2&0 harvested in the study area. Prices paid for pulpwood of like species show relatively little variation among mills. There is not intense competition for species as far as mills are concerned. As peeling aspen results in an increase in price, producers are advised to analyze carefully whether they can remove the bark of this species for less than the amount of price increase. Prices for sawlogs are complicated by log rule differences. Just why some prices are lower, say by Scribner than by International, can not be resolved without further research. There are significant differences in amounts received among log rules for hard maple, mixed hardwoods, and basswood, i. e., prices received do not reflect probable lumber yields which can be expected. Veneer firms sometimes compete for high quality maple, basswood, soft maple, and elm, which tends to keep the better grades of sawlogs at a higher price level than without such competition. Costs As the raw wood producer has very little control over the price he receives for his product, the amount he earns is dependent on the differ— ence between his cost of production and his selling price, as well as the volume of wood which he handles. log- Costs are determined by three major factors, namely stumpage, sing, and transportation. Mas Stumpage costs are somewhat controlled by producers. Public timber Sales Specify minimum bids but private sales do not. Competition among 2&1 producers for particular timber tracts tends to increase stumpage costs. Pulpwood stumpage for aspen and mixed hardwoods may be as low as $1 per cord. Jack pine usually costs about $3.h6; spruce is most costly with an average of $h.69. Balsam fir is approximately $1 below spruce. Sawlog stumpage is complicated by species, grades, and log rules. One can hypothesize that differences in log rules are not well understood by buyers and sellers, as there are examples of sales by International rule at a higher price than by Doyle or Scribner. Differences in overrun suggest that stumpage, logging, and hauling would be more costly by using the Doyle rule than the International, unless logs were 26 to 3h inches top diameter-~which seems improbable. When all species were treated as a group, significant differences were found for stumpage among log rules; this substantiates the hypothesis that log rules are not well understood. If overrun were considered, buyers (largely producers) would not pay more by International than by Doyle or Scribner. By all three log rules, better grades of hard maple rate highest; black cherry and basswood are also shown to be valuable per M. b. f. Aspen is lowest, perhaps in part because it is often purchased for pulp- wood at a low price. Scribner rule gives some erratic figures which need further research, e. g., all Scribner stumpage prices except those for elm and aspen appear somewhat unreasonable. A larger sample of pro— ducers who use the Scribner log rule might change the results somewhat. leasing Logging costs are less likely to vary than stumpage, despite differ- ences in topography and size of trees. aha Aspen is the least costly of the principal pulpwood species to log. Balsam fir and spruce are highest; these species are difficult to harvest and the weather is likely to be severe during the winter months when logging is done. Mixed hardwoods are heavy and prdbable merchantable length is less than jack pine; average logging costs for mixed hardwoods is $0.87 per cord above that for jack pine. Sawlog logging is complicated again by species, specifications or grades, log rules, stand characteristics, topography, and perhaps other factors. When considering logging by International scale alone, costs range from an average of $10.80 per M. b. f. for aspen to $16.12 for hard maple. One would expect aspen to be in dense stands, light in weight per h. f. or cubic foot, and easy to log; maple is likely to be scattered, heavy, and more difficult to cut and skid. Other species fall within the range given. When tested by analysis of variance technique, no signi- ficant differences were found among species relative to log rules except for hard maple; with this species costs by International % rule were greater than Doyle and Scribner. All species together showed no signi- ficant differences pertaining to log rules. Also, no important differ- ences were attributed to species when log rules were ignored. Hauling Data relative to truck hauling direct—to=mill yards are presented for PUlpwood and sawlogs and comparisons are made between these major products. Pulpwood is also transported to mills in the Lower Peninsula by Water and rail but sawlogs are not. Total cost of truck transportation is correlated with loading and 2A3 unloading, distance, load per trip and number of trips per time period, log rule used, peeled or rough as applied to aspen pulpwood, condition of roads, highway restrictions, labor inputs, and probably other factors. Producers may not understand fixed and variable costs, unless they subcontract their hauling or until their trucks wear out and have to be replaced. About 20 percent of sawlog producers lose money on at least one species handled, but whether this comes from excessive payments for hauling or whether stumpage or logging costs are too high can not be determined without further research. Pulpwood hauling costs are estimated for mileage zones by negotiation and formula and again by producer estimates. The negotiation-formula rates are used in making deductions to obtain margins. Sawlog hauling costs are derived by weighted averages of volumes handled from data given by producers. No mileage zones are recognized. Log rule differences are highly important relative to hauling, i. e., log rule characteristics are not well understood by producers who truck logs to sawmills or else such producers are unable to bargain for changes toward equity of rules. The range in hauling costs by the International log rule is an average of $9.69 per M. b. f. for aspen to $11.10 for elm. Variations among species are not wide. Returns After considering mill prices for raw wood, then subtracting major cost items of stumpage, logging, and hauling, the remainder is margin° Then by dividing margin by price received and multiplying by 100, one obtains profit ratio. This percentage figure shows something of the 21m profitability of the enterprise. In pulpwood, rough aspen is of questionable profitability but the mixed hardwoods group is marginal to submarginal. Producers who are below average in efficiency or who are paying maximum prices for stumpage are prdbably making little, if any, margin on unpeeled aspen; mixed hardwoods are even less rewarding. For the average producer, rough aspen appears to make a nominal return up to 100 or 120 miles from the mill. Peeled aspen gives a somewhat higher profit ratio than rough wood of that species. If pro- ducers have a large enough quota to justify purchasing a portable debarker, they should do so. If not, perhaps debarking can be contracted. Returns to jack pine are fairly high also. Spruce and balsam fir pulpwood are not fully analyzed for truck-to- mill hauling, as most spruce-balsam is imported by Water from Canada or comes from the Upper Peninsula by rail. Returns to sawlogs are again complicated by log rules and somewhat by species and grades. However, by using average prices received and subtracting average costs, profit margins are estimated. All species appear profitable except elm, but comparisons with alternatives other than pulpwood can not be made in this analysis. Elm is marginal to sub~ marginal by all log rules. The statistical analysis of profit ratio of sawlogs shows differences in this ratio among species as pertaining to log rules are not significant. Also, there are no significant differences among log rules relative to Profit ratio when species are grouped. Differences in profit ratios are largely caused by factors other than species and log rules--which are H error" and are not tested. 21+ 5 The big question which a producer faces in handling sawlogs is whether he can deliver logs all the year, not intermittently. Producers want full-time work. A combination of pulpwood and sawlog production appears--from the producer's viewpoint—-the best combination of inputs for attaining maximum income until such time as sawmills operate more effi- cienthy, i. e., with higher outputs per man hour and per dollar invest- ment, and at least 40 hours per week and 50 weeks per year. Sawmills are operating at far less than maximum capacity. Further investigation is needed pertaining to sawmill inputs—outputs; gross inefficiencies probably exist. Such an investigation is suggested as the next step in seeking to improve the marketing of raw wood and strengthening the wood industry in the Lower Peninsula. Deficiencies in the Marketing System So far this analysis has dealt largely with the functioning and description of the marketing system for pulpwood and sawlogs in the study area, and has shown contrasts between these two major products. An occasional conclusion has been reached and suggestions made pertaining to deficiencies or problems which were discovered. Average costs and returns under the present system of marketing have been analyzed. However, a broad view or interpretation of weaknesses in the marketing system will now be attempted and answers will be sought relative to the first objective of this investigation, namely to evaluate the efficiency with which the present marketing practices reflect wooduuse demand backwards to forest landowners and timber producers, and producers' supplies forward to con» centrators and primary manufacturers. 2h6’ Evaluations or interpretations may be influenced or biased by the point of view of the analyst, e. g., a person employed by a pulp-paper company in the Lower Peninsula of Michigan may present data to show his employer that the agreementnquota (contract) system of obtaining raw wood from hundreds of small producers is the most efficient method of procurement. On the other hand, a producer who trucks small quantities of pulpwood under quote to the same company may conclude that the market- ing system is highly inefficient. Even this interpretation may be criti- cized as favoring one group of marketing agents or mills over another. Such favoritism is not intended. An examination of deficiencies in the pulpwood marketing system will be given first. This will be followed by a similar examination for saw— logs, and contrasts will be made between pulpwood and sawlog marketing. One must admit, however, that despite these deficiencies, marketing is being carried out and the pulp-paper industry, at least, appears to be economically strong. one can even say that from the viewpoint of pulp mills, the marketing system is operating efficiently, with minor exceptions. Also, those sawmills which manufacture pallets, crates, and boxes are doing fairly well financially, but their products are manufactured some- what beyond the primary stage, i. e., some remanufacture is carried out. Nearness to industrial and agricultural markets and availability of large quantities of low-priced timber contribute to the success of pallet— crate-box mills; however, marketing is competitive. Pulpwood The pulpwood marketing system has certain inefficiencies which are 247 evident to a researcher or close observer. First, all mills in the Lower Peninsula use the agreement-quota method of passing demand backwards to J/ suppliers. This method of procurement does not reflect changes in demand or price for pulp and paper products. Landowners and producers do not share in the profits or losses of pulp-paper companies. The small number and large size of pulp mills, which are operating in vast timbersheds and in areas where timber supplies are increasing and labor is abundant, make an ideal situation from the viewpoint of mill representatives for dappsonistic practices, i. e., control of prices which will be paid for pulpwood. This does not imply collusion and price fixing. Suppliers, other than the National and State Forests, are given little or no opportunity to bargain on equal terms. On government and private forests, timber is sold to producers, with some financial help from pulp companies or dealers. Credit for stumpage purchases and "advance" payments for out wood are common and are necessary to maintain the flow of pulpwood to primary mills. Second, pulp companies establish basic prices per cord and by species and condition of wood at mill yards or rail heads. Bonuses are paid by mileage zones for trucking; distances from mills appear excessive. Further research would probably reveal that the breakueven point between truck hauling and railroad transportation is approximately 150 miles. AnMalay, railroads should be used for more distant pulpwood hauling, unless water transportation is available. Those pulp companies which are paying bonuses for truck-to~mill deliveries for distances of 200 to 220 miles need to examine their timberlands and suppliers closer to mill yards. If ample amounts of timber are available within 100 to 150 miles, the extra 2&8 expense of long-distance trucking can not be justified. Mill expansion plans, position of competitive companies, or other reasons, may dominate policy decisions and take precedence over increased cost of procurement beyond 150 miles. To insure adequate timber supplies within smaller timbersheds, pulp companies might stimulate more interest in improved forest management. Third, because of the long distances from major wood supply areas, one may question whether certain mills are most advantageously located. This is subject to further investigation; a pulp-paper mill is not moved readily. Fourth, the prices paid for pulpwood are "sticky"; in recession and prosperity there is little change in price. The demand curve is horizontal (perfectly elastic), i. e., price is constant for all amounts sold. However, quantities purchased are determined by quotas. Certain dealers and producers report an increase in basic pulpwood price of $0.50 per cord in 10 years, which shows the reluctance of pulp companies to change amounts paid for raw wood and illustrates their ohgopsonistic position in marketing. Producers, especially, complain bitterly about increasing costs of labor and machinery, while pricEs they receive for raw wood remain fixed. Couple this situation with low and uncertain quotas~-so low that incomes are inadequate by present standards for health and family welfare--and producers, and perhaps landowners, may be forced into group action. However, the great number of woodlot owners and small size of private holdings, plus absenteeism and city employment, probably Preclude cooperative action on the part of landowners. Producers are numerous also, but are local citizens who have a direct interest in 2M9 improving their incomes. Group action among producers is not impossible, but the great number of producers and potential producers reduces the probability of group action to counterbalance(fligopsonistic control by mills. Yet, one of the most successful cooperatives of its kind in the United States is located in the study area and is functioning as a pulp- wood dealer. Fifth, from the viewpoint of the producer and, possibly, the private landowner—~who really appears passive in the marketing process--there is little reflection of consumer demand backwards to the stumpage and raw wood stages of the marketing chain. The forest owner and the producer do not share the profits of pulp—paper companies. Also, a producer is taking excessive risks of injuries to himself and his employees and is not likely to be protected by workmen's compensation insurance. Costs of injuries may be transferred to society. However, a producer who is able to mechanize increases the safety of his woods work and is able to handle large volumes of 2,000 cords or more per year; he is more content with his work and is making a ”living." Such a producer performs many of the functions of‘a dealer—~and without a dealer‘s bonus-”and operates on a year-round basis with a relatively stable crew of laborers. In addition to large producers and dealers, there is the self- appointed dealer. Such a person is subject to severe competition for Quotes and stays in business by purchasing wood from small producers who do not have quotas and means of transporting their pulpwood. He may supply credit to small producers, which helps to insure that he, the creditor, will buy the wood. However, a selfuappointed dealer is always subject to a reduction in quota and his future is uncertain in the marketing process. 25.0 A large producer often buys cut pulpwood from small producers also, but is not dependent on such purchases as are dealers and self-appointed dealers. Sixth, the pulpwood producer is faced with the necessity of purchasing timber two to three years in advance of harvesting time. He purchases such timber with the hope of finding a buyer; he may‘have no commitment from a mill or a dealer. A dealer does not issue a quota until he has an agreement or quota with a mill; thus, he is taking little risk. A mill seldom makes commitments or agreements to purchase for more than a year in advance; even these agreements are subject to control by monthly or weekly quotas. In fact, agreements and quotas in general may be terminated by buyers at any time and are not binding on suppliers. Genuine contracts are worked out with Canadian suppliers; similar arrangements might increase the stability and security of suppliers within the study area. Finally, mill policy determines whether dealers, large producers, or small producers will be favored in purchasing pulpwood. Those mills which purchase raw wood only from dealers or from large producers, or a combin~ ation of both, are firmly convinced that seasonal buying from hundreds of small producers is uneconomical and engenders administrative problems. The use of large numbers of small producers in meeting mill needs for Palpwood results in excessive overhead, wide fluctations in inventories, and untold requests (or begging) for increased quotas and credit in order t0 buy labor-saving and safer equipment and so as to increase deliveries 0f wood and, thus, income. A mill which purchases from large numbers of small producers is likely to develop a "public image" of a company which is exploiting "poor" pro- 251 ducers. Such a view, if held by the general public, may cause pulp companies to face increased taxation and other restraints. Producers are local citizens who have votes and influence; whereas, landowners are often absentee and normally vote where they reside. One can conclude that woodland owners and producers are not sharing in the expanding pulp-paper market. For the small, private forest owner, there is little expectation that he can become an active participant in the marketing process. HOWever, the producer may be able to resort to group action to improve his position. In the area of workmen's compensa- tion, the state has a responsibility. For example, a clearer definition of an employer and an employee would help in determining the application of the workmen's compensation law. Also, the law may need to be ammended and administration improved. Sawiogs Sawmill operators are generally faced with limited competition from other sawmills; thus, oligopsonistic tendencies are curtailed. When lumber is selling for a high price, stumpage increases somewhat and the price Paid for delivered logs goes up. When lumber prices decline, the reverse is true. Such fluctuations contrast with the almost constant price for Pulpwood delivered at mill yards or rail shipping points. Sawmill firms are small, numerous, generally low on capital, and lack specialized personnel. Such mills can not begin to attain the bargaining Power of pulp companies without consolidation and more efficient machinery. Pallet-crate-box mills, which further manufacture lumber, appear to be more financially secure than those firms which limit production to rough 252 lumber; therefore, for these latter mills limited vertical integration is suggested, 1. e., pallet lumber can be converted readily into pallets. However, without consolidation, further processing of factory grade lumber-~such as kiln drying-~15 not recommended. The percent of high quality, factory grade logs which present mills obtain is relatively low. If these mills owned dry kilns, they could not be used at capacity; in addition, volume of sales would be too low and intermittent to command the prevailing market price. Volumes of logs purchased by sawmills are low and fluctuating in comparison with pulp mill purchases. Thus, dealers do not handle sawlogs, but are anxious to obtain large pulpwood quotas, relay their quotas to producers, and organize shipments to pulp mills. Producers‘are also dependent on pulpwood for a livelihood and usually only supplement their incomes by handling sawlogs. Sawmill owners are sometimes faced with empty log yards as a result of lack of deliveries by dealers and producers; therefore, about one-third of their logs are purchased as stumpage and harvesting is done by mill employees. Sawmill owners pay no bonuses to truckers to help compensate for long~distance hauling as is done by pulp firms; thus, sawmill timbersheds are small as compared with pulp mill procurement areas. Sawmills may soon be facing competition from pulp mills for denser hardwoods. If such competition becomes prevalent, less efficient sawmills may be forced to close. However, larger, better quality logs should continue to command a higher return for lumber than for paper; and low Quality timber is abundant in the study area and may be adequate for both Pulp mills and sawmills. 253 At present both pulp mills and sawmills are almost entirely dependent on government and other owners for timber. This is economically sound, unless competition for raw wood becomes much greater in the future. One can question whether either pulp mills or sawmills can grow needed raw wood at less cost than they can purchase it from others. In the first place, the price of land would probably be higher than could be justified for wood production alone. Also, the capital needed for land purchases would probably bring greater return in other investments, e. g., in expansion of mills. As has been suggested, gross inefficiencies in production and marketing probably prevail among sawmills in the study area. Such firms are not organized to carry out a self—analysis, nor are they financially able to do so. Therefore, in order to obtain a clearer view of their condition and potentiality, further public research funds are needed. BIBLIOGRAPHY Allen, Richard C. 1953. The DeWeese Tree Farm Family. Proceedings, National Farm Woodlot Conference, American Forest Products Industries, Inc., Washington, D. C., p. 76—78. Bakken, H. H. 1953. Theory of markets and marketing. Mimir Publishers, Madison, Wis., 362 pp. Carothers, J. Edwin. 1964. Workmen's compensation laws, their application to forest workers and potential influence on primary wood-using mills, Journal of Forestry, 62(3): 15h-160. Cope, J. A. 19hl. Farm woodland owners‘ cooperatives. Journal of Forestry, 39(2): 192—196. Cruikshank, James W. and Walter C. Anderson. 1955. Pine sawtimber stumpage prices in South Carolina, 19h8-l95h. Station Paper No. 57, Southeastern Forest Experiment Station, Forest Service, U. S. Depart- ment of Agriculture, Asheville, N. C., 1h pp. Demmon, E. L. l9h6. Lake States forests and the pulp and paper industry. Station Paper No. 5, Lake States Forest Experiment Station, Forest Service, U. S. Department of Agriculture, St. Paul, Minn., 10 pp. . 1948. Forestry situation in the Lake States. Station Paper No. 13, Lake States Forest Experiment Station, Forest Service, U. S. Department of Agriculture, St. Paul, Minn., 6 pp. Duerr, William A. l9h9. The economic problems of forestry in the Appala= chian Region. Harvard University Press, Cambridge, Mass., 317 pp. . 1960. Fundamentals of forestry economies. MbGraw-Hill, Inc., New York, N. Y., 579 pp. , John B. Roberts, and R. O. Gustafson. l9h6. Timber-products marketing in eastern Kentucky. Bulletin #88, Kentucky Agricultural Experiment Station, University of Kentucky, Lexington, Ky., 95 pp. Findell, Virgil E., Bay E. Pfiefer, Arthur G. Horn, and Carl E. Tubbs. 1960. Michigan's forest resources. Station Paper 82, Lake States Forest Experiment Station, Forest Service, U. S. Department of Agriw culture, St. Paul, Minn., #6 pp. FOX, Gordon D. 1962. Forest products co—op. shows sturdy growth. News for Farmer Cooperatives, 29(6): 9, 10, l6, l7. 255 Garrison, Charles B., Morris W. Gildemeister, and Wilburn J. Pratt. 1964. Technical and economic feasibility of establishing a hardwood pulp and paper mill in an eight-county area of western Kentucky. Spindetop Research Center, Lexington, Ky., 12 sections and 2 appendices. Gregory, G. Robinson. 1957. A reorientation of forest marketing research. JOurnal of Forestry, 55(6): 454-458. Guttenberg, Sam and Joe D. Perry. 1957. Pulpwooding with less manpower. Occasional Paper 154, Southern Forest Experiment Station, Forest Service, U. S. Department of Agriculture, New Orleans, La., 34 pp. Ehir, Dwight. 1963. The economic importance of timber in the United States. Miscellaneous Publication 941, Forest Service, U. S. Depart- ment of Agriculture, Washington, D. C., 91 pp. Hall, Albert G. 1964. Tree Farm progress. What's Happening in Forestry, 15(12): 3. Heidingsfield, Myron S. and Albert B. Blankenship. 1959. Marketing. College Outline Series. Barnes and Noble, N. Y., 270 pp. Holland, I. I. 1962. Timber products marketing in the claypan region. of Illinois. Bulletin 689, Illinois Agricultural Experiment Station, University of Illinois, Urbana, 111., 40 pp. Hosloe, Torkel. 1948. The cooperative approach to the private forestry problem. Journal of Forestry, 46(7): 511-513. Hughes, Jay M. and Lee M. James. 1963. The nation's income from timber Products. Journal of Forestry, 61(3): 185-189. Hutchison, 0. Keith and Robert K. Winters. 1951.. Marketing the farm forest products of southern Illinois. Technical Paper No. 123, Central States Forest Experiment Station, Forest SerVice, U. S. Department of Agriculture in cooperation with Southern IllinOis University, Carbondale, 111., 39 pp. Hutchison, S. Blair and John H. Wikstrom. 1952. Resource factors agfect- ing the feasibility of pulp mills in eastern Montana. .Station taper No. 34, Northern Rocky Mountain Forest and Range Experiment St: ion, Forest Service, U. S. Department of Agriculture, Missoula, Mon ., 35 pp. ' ' ‘ 1 Bulletin James Lee M. l . Marketing pulpwood in Michigan. SpeCia . - lill, Michigzg7Agricultural Experiment Station, Michigan State Univer sity, East Lansing, Mich., 67 PP~ 256 . 1960. Farm woodlands and the timber economy of Michigan. Quarterly Bulletin, Vol. 12, No. 3, Michigan Agricultural Experiment Station, Michigan State University, East Lansing, Mich., p. 563-583. and Gordon D. Lewis. 1960a. Michigan pulpwood production and markets. Quarterly Bulletin, Vol. 42, No. 4; Michigan Agricultural Experiment Station, Michigan State university, East Lansing, Mich;, P. 81h‘826a . 1960b. Transportation costs to pulpwood shippers in Lower Michigan. Quarterly Bulletin, Vol. 42, No. 3, Michigan Agricultural Experiment Station, Michigan State University, East Lansing, Mich., p. 444-469. Josephson, H. R. 1963. Cooperatives-~an appraisal of their place in forestry. Forest Farmer, 22(9): 6-8. Judson, George M. and George L. Switzer. 1952. Timber products market- ing in northeast Mississippi. Bulletin 494, NHSsissippi Agricultural Experiment Station, Mississippi State College, State College, Miss., PP» KOhls: R. L. 1956. Toward a more meaningful concept of marketing effi- ciency. Journal of Farm Economics, 38(1): 68-73. Koller, E. Fred. 1947. Cooperatives in a capitalistic economy. Journal of Farm Economics, 29(4): 1138—1144. Lewis, Gordon D. 1961. An analysis of pulpwood marketing in Michigan. Unpublished Ph. D. Thesis, Michigan State University Library, East Lansing, Mich., 276 pp. duction _ and Lee M. James. 1961. Cost and returns for pulpwood pro in Michigan. Quarterly Bulletin, Vol. 44, No. 2, Michigan Agriu cultural Experiment Station, Michigan State UniverSity, East Lansing, Mich. , p. 210—235. Louisiana Department of Agriculture and Immigration. 1964. Louisiana Timber Products--Quarter1y Market Report, Vol. 10, No. 1, Louisiana Department of Agriculture and Immigration cooperating With the Agricultural Marketing Service, U. S. Department of Agriculture, Baton Rouge, La., 2 pp. Nhlsberger, H. J. 1953. Services provided woodland owners by Southern Pulpwood Conservation Association. Proceedings, National Farm Woodlot Conference, American Forest Products Industries, Inc., Washington, D. C., p. 41-44. «___...» 1956. The pulp and paper industry in the South. Journal of Forestry, 54(10): 639-642. 257 . 1958. Harvesting and marketing pulpwood. Forest Farmer, 18(7): 101, 102. . 1962. Forestry assistance currently available to timberland owners--the wood-using industries. Forest Farmer, 22(1): 15. Nanthy, Robert S. 1962. Marketing posts, poles and piling in selected areas of the North Central Region. Unpublished M. S. Thesis, Michigan State University Library, East Lansing, Mich., 98 pp. . 1963. Marketing pulpwood in the North Central Region. Unpub— lished Ph. D. Thesis, Michigan State University Library, East Lansing, MiChv) 237 PP° and Lee M. James. 1962. Marketing posts, poles and piling in selected areas of the North Central Region. Technical Bulletin 290, Michigan Agricultural Experiment Station, Michigan State University, East Lansing, Mich., 63 pp. Massie, M. R. C. and Lee M. James. 1964. Marketing cooperage timber in selected areas of the North Central Region. Research Bulletin 3, Michigan Agricultural Experiment Station, Michigan State University, East Lansing, Mich., 39 pp. NbCauley, Orris D. 1960. Forest products prices in Ohio--1959. Technical Paper 170, Central States Forest Experiment Station, Forest Service, U. S. Department of Agriculture, Columbus, Ohio, 14 pp. Mehren, G. L. 1957. The changing structure of the food market. Journal of Farm Economics, 39(2): 339-353. Michigan Department of Conservation. 1962. Michigan sawmills--primary wood~using industries and producers and dealers in roundwood. Volumes 1, 2, 3, Forestry Division, Lansing, Mich., 129 pp. Mosebrook, Harry S. 1957. A marketing information primer for woodlot owners. American Forests, 63(5): 34-35. Perry, Joe D. and Sam Guttenberg. 1959. Southwest Arkansas' small wood- land owners. Occasional Paper No. 170, Southern Forest Experiment Station, Forest Service, U. S. Department of Agriculture, New Orleans, La., 14 pp. Pulpwood Production. 1958. Your workmen's compensation law. 6(5): 22u24. Quigley, Kenneth L. 1950- Marketing farm woodland products in the Missouri Ozarks. Technical Paper No. 116, Central States Forest Experiment Station, Forest Service, U. S. Department of Agriculture, Columbus, Ohio, 41 pp. 258 and James C. Ioho. 1957. Marketing timber from Iowa farm wood- lands. F 122, Iowa State College Cooperative Extension Service, Ames, Iowa, 8 pp. Rathmell, J. H. 1962. Basic fundamentals of marketing. Northeastern Logger, 10(8): 16, 34, 46, 47. Rettie, James C. and Frank A. Ineson. 1950. Otsego Forest Products Cooperative Association of Cooperstown, New York: an avaluation. Agriculture Information Bulletin No. 17, Forest Service, U. S. Department of Agriculture, Washington, D. C., 42 pp. Reynolds, Harris R. 1953. A new approach to the management of small forest holdings. Proceedings, National Farm Woodlot Conference, American Forest Products Industries, Inc., Washington, D. C., Po 38-h].- Robotka, Frank. 1953. Cooperatives in forestry. Research in the economics of forestry, W. A. Duerr and H. J. vaux, Editors, Pack Forestry Foundation, Washington, D. C., Pa 353-359. Roller, Harry M” Jr. 1953. Conservation foresters. Proceedings, Nat- ional Farm Woodlot Conference, American Forest Products Industries, Washington, D. C., p. 78-81. Schallau, Con H. 1964. Forest owners and timber management in Michigan. Research Paper LS-9, Lake States Forest Experiment Station, Forest Service, U. S. Department of Agriculture, St. Paul, Minn., 39 pp. Sherman, Dean. 1963. Lumberman take a hard look at the next 10 years. Forest Industries, 90(3): 38-40. Stoddard, Charles H. 1961. The small private forest in the U. 8. Resources for the Future, Washington, D. C., 170 pp. Sutherland, Charles E., Jr. and Carl E. Tubbs. 1959. Influence of owner- ship on forestry in small woodlands in central Wisconsin. Station Paper No. 77, Lake States Forest Experiment Station, Forest Service, U. S. Department of Agriculture, St. Paul, Minn., 21 pp. Telford, C. J. 1931. Partial list of wholesaling agencies handling the products of small sawmills. Bulletin R-929, Forest Products Labora- tory, U. S. Department of Agriculture, Madison, Wis., 65 pp. The Cooperation Committee. 1960. Cooperative organizations in Norwaymua general survey. The Royal Agricultural Society of Norway, Oslo, 69 pp. Thomsen, Frederick L. 1951. Agricultural marketing. McGraw-Hill, Inc., New York, N. Y., 474 PP» r" = E ’1 @9399 259 Turner, M. S. and G. H. Mitchell. 1950. Farm marketing of timber in eight southeastern Ohio counties. Agricultural Economics 316, Ohio Agricultural EXperiment Station, Ohio State University, Columbus, Ohio, 23 pp. U. S. Bureau of the Census. 1961. U. S. Census of Manufactures, 1958. Vol. II, Industry Statistics, Part 1, Major Groups 24, 26. U. S. Government Printing Office, washington, D. C. U. S. Department of Agriculture. 19MB. Cooperative management and marketing for the woodland owner. Farmers' Bulletin No. 1927, U. S. Department of Agriculture, washington, D. C., 16 pp. U. S. Forest Service. 1959. Feasibility of using Lake States hardwoods for newsprint and other pulp and paper products. U. S. Department of Agriculture, Washington, D. C., 84 pp. U. S. Forest Service. 1958. Timber Resources for America's Future. Forest Resource Report No. 14, U. S. Department of Agriculture, Washington, D. C., 713 pp. 1936. The controlled distri~ Waugh, F. V., E. L. Burtis, and A. F. Wolf. Quarterly Journal of bution of a crop among independent markets. Economics, 51: 1-h1. West Virginia Conservation Commission, U. S. Forest Service, et a1. 1958. Forest fortune—-an industrial prospect in central West Virginia. West Virginia Bankers'Association, Charleston, W. Va., 25 pp. , Agricultural Extension Service, and U. S. Forest Service. 1960. Southern West Virginia invites you to share in its woodland wealth. West Virginia Bankers'Association, Charleston, W. Va., 21 pp. Worrell, Albert C. 1959. Economics of American forestry. John Wiley and Sons, Inc., New York, N. Y., hhl pp. Wright, Paul W. 196M. Long term forest land agreements. Forest Farmer, 23(7): 56. Yoho, James G. 1962. How much forestry for the small owner? Forest Farmer, 22(1): 18, 19, 3M. Zirkle, John J., Jr. and Arthur s. Todd, Jr. 1949. Markets for forest products in southeast Georgia. Station Paper No. h, Southeastern Forest Experiment Station, Forest Service, U. S. Department of Agriculture, Asheville, N. C., 110 pp. Zivnuska, John A. 1963. The future of wood in a competitive market. Forest Industries, 90(11): 4o, 41, 101, 104-106. , and Ann Shideler. 1958. Is price reporting for standing timber ' feasible? Journal of Forestry, 56(6): 393—398. APPENDIX Schedules A Manufacturersl B Intermediate Marketing Agents C Producers2 lThe "Manufacturers‘" schedule given is the one used during the summer of 1960. except sawmills. It was used for all the woodeusing firms sampled The 1961 questionnaire was modified slightly and used for sawmills only. 2The "Producers‘" schedule given is the one used during the summer of 1960. It was used for all producers except for those who handled sawlogs. The 1961 questionnaire was modified slightly and used for sawlog producers only. PRIMARY MANUFACTURER SCHEDULE APPENDIX A. CONFIDENTIAL Date Recorder Form No. 1 State MGM-27 Project PRIMARY MANUFACTURER Name of firm Address A. General: Do you process logs or bolts in your mill? Yes No 1. 2. How many years has your firm been operating at this location? years. 3. Does your firm operate other wood—using mills? Yes No If YES, how many? If YES, how many in the study area? h. Is your firm engaged full time in the processing of timber products? Yes No If NO, what other business or occupation is your firm engaged in? (specify) If NO, what percentage of your firm"s gross revenues in 1959 Was realized from the sale of forest products? percent. 5. What were the principal products of your firm at this location in 1959? a. d. ’S b. an c. fo s 6. How many fulletime employees did you have at this location in 1959? 7. How many seasonal employees did you have at this location in l959? B. Quantities 2: wood receipts: (Volume by log rule.) What was the total volume of wood receipts at your mill in 1959? (List by species, raw product, peeled or unpeeled, and units of measure.) 1. 2. U'l o 2% What was the monthly pattern in volume of wood receipts at your mill in 1959? indicate peak-and low-use months and amounts.) (If monthly data are not available, Jan. July Feb. Aug. Mar. Sept. April Oct° May Nov° Dec. Do you consider the monthly pattern in volume of wood receipts at your mill in 1959 to be a typical pattern? Yes No If NO, why not? Do you prefer seasonal variations in the volume of wood Yes No receipts at your mill? If YES, what is your preferred pattern of receipts? How do you explain the seasonal variations in the typical pattern of wood receipts at your mill? Were any of your wood receipts in l959 resold in the same form Yes no in which they were received? If YES, what species and amounts? If YES, why was this wood not processed at your mill? What changes in the annual volume of wood receipts at your mill took place in the years l950~592 (List by species) F I I I LAN Year I species 1959 1958 195 7 1956 1955 l9§4 I I I I I I 7 I , J I I953 j T J I ~_. h\~_§ ‘4‘ fl~5\ I I I I I I I I NJJNQJQJJ I 11%,] I I‘m‘L‘ \‘_ 261; 8. 'Did your mill do any custom processing of timber products in 1959? h” . Yes , No If YES, what species, products, and amounts? If YES, did you receive as payment a portion of the wood processed? Yes No If YES, what percentage? percent. C. Inventories of raw wood: What was the monthly pattern in raw wood inventories on hand l. at your mill in 1959? (If monthly data are not available, indicate peak-and loweinventory months and amounts.) Jan. Juhy Feb° Aug. Mar. Sept. April Oct. May Nov. June Dec. 2. Do you consider the monthly pattern in raw wood inventories at your mill in 1959 to be a typical pattern? Yes No If NO, why not? 3. Do your prefer seasonal variations in the volume of raw Wood Yes No inventories on hand at your mill? If YES, what is your preferred pattern of inventories? If NO, do you have an objective of maintaining a fixed ratio in the volume of raw wood inventories to annual receipts? Ybs no If YES, what is this ratio? If NO, do you have an objective of maintaining a fixed ratio in the volume of raw wood inventories to annual manufactured product sales? Yes No If YES, what is this ratio? —" 4. Is there a physical limit to the volume of raw wood inventories that can be stored in yard economically? Yes No If YES, what is the nature of the limitation? If YES, what is the maximum volume? 265 5. Is there a technological limit to the volume of raw wood inventories that can be stored in yard because of insects, fungi, etc.? Yes - No If YES, what is the nature of the limitation? If YES, what is the maximum volume? D. Sources of wood receipts: I. Where is the 1959 wood supply area for your mill? (List counties or states if only a few are involved. Outline on attached county map, if possible. State radius of operations in miles.) a. Counties or states. ‘ b. Radius of operations. 2. Have there been any significant changes in the wood supply area for your mill over the period l950=l959? Yes No If YES, what were the changes? 3. What is the ownership of the forest land from which the 1959 wood supply was obtained? (Estimate volume of wood or perm centage of total volume obtained from each source.) Volume fl Volume g a. Own land* d. Nat. forest b. Farmer e. State forest c. Other private f. Other public * Include subsidiary company ownership 4. Have there been any significant changes in the wood supply obtained from different forest landownership sources over the period l950=59? Yes No If YES, what were the changes? If YES, what explanations can you give for these changes? 5. From which agent sources was your 1959 wood supply obtained? (Estimate volume of wood or percentage of total volume obtained from each source.) volume i a. Own employees: (I) From own lands (2) From other lands b. Producer 0. Dealer d. Other agent (specify) 266 6. Have there been any significant changes in the agent sources of your wood supply over the period l950~59? Yes No If YES, what were the changes? If YES, what explanations can you give for these changes? __ Wood procurement methods and policies: 1. What percentages of your firm's 1959 cut wood purchases were obtained under the following types of agreements? % a. written contract b. Oral contract c. No prior agreement QUESTIONS 2 TO 6 APPLY ONLY TO WRITTEN CONTRACTS FOR CUT WOOD PURCHASES. IF THERE WERE NO SUCH CONTRACTS, SKIP TO QUESTION 7. How far in advance of the beginning of wood deliveries are contracts usually negotiated? E0 2. What are the details of standard written contracts for out wood purchase? (Obtain printed copies where possible. Check the following items which are included in contract specifications; then describe as much as possible.) a. Kind of wood b. Amount of wood 0. Size of wood d. Quality of wood e. ___ Time or period of delivery f. “w Mathod of payment Time of payment g0 Are there any differences in the out wood purchase contracts made with different groups of agents? Yes No If YES, what are these differences? 5- Does the standard out wood purchase contract specify any conditions under which timber is to be harvested? No If YES, what are the conditions? v7" 'P " 'on-fi'fligrlq'rJi 267 6. How binding are the provisions of standard written contracts for cut wood purchases (i.e., how much leeway is given suppliers in completing terms of contract and how much leeway does your firm allow itself in terminating contracts)? QUESTIONS 7 TO 11 APPLY ONLY TO ORAL CONTRACTS FOR CUT WOOD PURCHASES. IF THERE WERE NO SUCH CONTRACTS, SKIP T0 QUESTION 12. 7. How far in advance of the beginning of wood deliveries are contracts usually negotiated? 8. What are the details of oral contracts for out wood purchases? (Check the following items which are included in agreements; then describe as much as possible.) a. Kind of wood b. Amount of wood 0. Size of wood d. Quality of wood e. Time or period of delivery f. Method of payment g. Time of payment 9. Are there any differences in the oral contracts for out wood purchases made[with different groups of agents? ‘ Yes No If YES, whatiare these differences? 10. Does the oral contract for out wood purchases specify any conditions under which timber is to be harvested? Yes No ‘ _—- If YES, what are the conditions? ll. How binding are the provisions of oral contracts for out wood purchases (i.e., how much leeway is given suppliers in ‘completing terms of contract and how much leeway does your firm allow itself in terminating contracts?) QUESTIONS 12 TO 16 APPLY ONLY TO STUMPAGE PURCHASES BY YOUR FIRM° IF NO STUMPAGE PURCHASES ARE MADE, SKIP TO QUESTION 17. 13. 1h; 15. l6. 268 What percentages of your firm's l959 stumpage purchases (in terms of volume) were obtained under the following types of agreements? a. Written contract with public landowners b. written contract with private landowners 0. Oral contract What are the details of your firm's standard contracts for stumpage purchases from private landowners? (Check the following items which are included in agreements; then describe as much as possible.) a. Species b. Amount of timber c. Size of timber 6. Quality of timber e. Time or period of harvest f. ‘ Method of payment g. Time and basis of measurement If the standard contract for stumpage purchases from private landowners is a written contract, and if oral contracts are also made, how does the oral contract differ in its provisions from the written contract? Are there any differences in the stumpage purchase contracts made with different groups of private landowners? Yes No If YES, what are these differences? Does the standard contract for stumpage purchases from private landowners specify any conditions under which timber is to be harvested? YES No If YES, to what percentage of your 1959 private purchases do these specifications apply? percent. If YES, what are the specifications? If NO, are there any harvest conditions your firm will accept in contracts for stumpage purchases upon a private landowner's insistence? Yes No If YES, what are the conditions? 269 17. What percentages of your 1959 wood purchases were obtained through negotiations initiated by your firm or initiated by sellers? % a. Mill b. Sellers c. Indefinite 18. When your firm takes the initiative in negotiating wood purchases, what are the methods you use in contacting poten- tial suppliers? 19. From how many different persons or agencies was your 1959 wood supply purchased? N0. N2. a. Nonproducer —— c. Dealer landowner d. Other agent b.fiwma (wwflfl Was 1959 a typical year? Yes No If NO, why not? 20. What quantities of your l959 raw wood receipts were purchased on the stump, roadside, and delivered? Quantity fi On the stump Roadside _ F.o.b. railroad Delivered to mill 21. Did the points of purchase of 1959 raw wood receipts vary by agent sources of wood? Yes ____No If YES, how did they differ? ‘ 22. To what degree does your firm perform the following functions in regard to wood procurement? a. Logging? b, Hauling? QUESTIONS 23 AND 2A APPLY ONLY TO CUT WOOD PURCHASES FROM PRODUCERS. 270 23. Are any producers offered payments (loans) in advance of time of payment specified in a standard contract? Yes No If YES, is this the usual procedure adopted by your firm? Yes No If YES, does the producer pay interest on such prepayments or loans? Yes No If YES, what is the size limitation on the prepayments or loans offered? 24. Are any producers offered other business aids by your firm? Yes No If YES, is this the usual procedure adopted by your firm? Yes No If YES, what are these business aids? QUESTIONS 25 AND 26 APPLY ONLY TO CUT WOOD PURCHASES FROM DEALERS OR EQUIVALENT AGENTS. 25. Are any dealers offered payments (loans) in advance of time of payment specified in standard contract? Yes No If YES, is this the usual procedure adopted by your firm? Yes No If YES, does the dealer pay interest on such prepayments or loans? Yes No If YES, what is the size limitation on the prepayments or loans offered? 26. Are any dealers offered other business aids by your firm? Yes No If YES, is this the usual procedure adopted by your firm? Yes No If YES, what are these business aids? 27. Do you assign exclusive procurement territories to your wood suppliers? Yes No If NO, what policy do you follow to minimize the overlapping of procurement territories by your wood suppliers? 271 28. Do you object to having your wood suppliers take contracts to supply wood to other firms using the same kind of timber? ' Yes ____ No ____ If YES, what action do you take? 29. Do you have any wood procurement policy designed to minimize wide fluctuations in the volume of wood called for in successive contracts made with suppliers? Yes No If YES, explain what this policy is. F. Prices: 1. What prices were paid per unit of volume (price scale at end of 1959) for wood purchases by your firm? (Fill in as many items as possible, by species, product, and quality classes.) 2. Are there any differences in the prices paid to different groups of landowners or agents? Yes No If YES, what are these differences (and which prices are quoted in item 1 above)? 3. Are there any differences in prices paid for delivered wood on basis of distance of haul? Yes No If YES, what are these differences by mode of transportation (and which distances do the prices quoted in Item 1 above refer to)? A. Are the prices you pay for wood raw material the result of: (Check the correct explanation below) a. your offered price? 0. negotiation? — b. the seller's price? d. other (specify) ? ”r.“ J . 272 5. Are the prices received for your principal products sold the result of: (Check the correct explanation below) a. _ your price? c. negotiation? b. the buyer's price? d. other (specify) ? 6. What prices per unit of volume were obtained by your firm at the end of 1959 for the processed products you sold? (List by principal products.) 7. How frequently have the prices you pay for wood raw material changed during the 3-year period 1957-59? times. 8. How frequently have the prices received for the principal products sold by your firm changed during the 3—year period 1957-59? __________times. G. Costs: 1. What logging costs (felling and bucking and skidding) per unit of volume applied to wood products delivered to your mill at the end of 1959? (Estimate prevailing contract rates, if logging costs were not paid for directly by your firm.) ___ 2. What truck hauling costs per unit of volume applied to wood products delivered to your mill at the end of 1959? (Esti- mate prevailing contract rates, if hauling costs were not paid for directly by your firm.) a. Hauling by truck direct to mill. (1) Average cost? (2) Min. cost? (3) Max. cost? (A) Cost by distance zones? b. Hauling by truck to railroad. (1) Average cost? (2) Min. cost? (3) Max. cost? (A) Cost by distance zones? 273 3. Do truck hauling costs above include the cost of loading? Yes No ____ If NO, what is the estimated loading cost per unit of volume? If NO, who pays the cost of loading? Do truck hauling costs direct to mill include the cost of ' N h. unloading? Yes 0 If NO, what is the estimated unloading cost per unit of volume? If N0, who pays the cost of unloading? Do truck hauling costs to railroad include the cost of No 5. unloading and loading onto railroad cars? Yes If N0, what is the estimated cost per unit of volume? If No, who pays this cost? 6. What railroad hauling costs per unit of volume applied to wood products delivered to your mill at the end of 1959? a° Average cost? b. Min. cost? c. Max. cost? d. Cost by distance zones? 7. What was your cost per unit of volume for wood purchasing activities in l959? H. Transportation: 1. What percentages of the volume of your raw wood receipts in 1959 were delivered to your mill by different methods of transportation? fl a. Truck b. Railroad c. Other (specify) What were the truckuhauling distances to your mill in 1959 in 2G direct~to~mill wood hauls? Miles a. Average distance b° Min. distance 0. Max. distance 1». 271+ What were the truck-hauling distances to railroad in 1959 if wood was,_delivered toyour mill by railroad? . Miles a. Average distance b. Min. distance c. Max. distance What were the railroad-hauling distances to your mill in 1959 if wood Was delivered to your mill by railroad? Miles ' a. Average distance b. Min. distance c. Max. distance What changes in the use of different methods of transportation for deliveries of raw wood to your mill have occurred over the period 1950-59? changes in the distances of haul for deliveries of raw What to your mill have occurred over the period 1950-59? wood a. Truck deliveries? b. Railroad deliveries? I. Sales 2: processed products: 1. What was the total volume of production at your mill in 1959? (List by products.) What percentage of mill capacity did your 1959 production represent? percent. What was the gross sales value of processed products at the mill in 1959? What was the monthly pattern of production at your mill 1n 1959 (in terms of volume)? (If monthly data are not available, indicate peak-and low-production months and amounts.) Jan. July Feb. Aug. Mar. Sept. April Oct. May Nov. Dec. June 5. 6. 7. 8. 9. 10. 275 Do you consider the monthly pattern of production at your mill in 1959 to be a typical pattern? Yes No If NO, why not? What was the monthly pattern in processed wood inventories on hand at your mill in 1959? (If monthly data are not available, indicate peak-and low-inventory months and amounts.) Jan. July Feb. Augo Mar. Sept. April Oct. May Nov. June Dec. Do you consider the monthly pattern in processed wood inven- tories at your mill in 1959 to be a typical pattern? Yes No If NO, why not? Do you prefer seasonal variations in the volume of processed product inventories on hand at your mill? Yes No If YES, what is your preferred pattern of inventories? If NO, do you have an objective of maintaining a fixed ratio in the volume of processed product inventories to product sales? Yes No If YES, what is this ratio? Is there a physical limit to the volume of processed product inventories that can be stored in yard economically? Yes No ? ___—___ If YES,‘what is the nature of the limitation If YES, what is the maximum volume? Is there a technological limit to the volume of processed product inventories that can be stored in yard because of insects, fungi, etc.? Yes No If YES, what is the nature of the limitation? If YES, what is the maXimum volume? 276 ll. What percentages of the volume of your principal products in 1959 were produced to fill previously obtained orders? 2? Product 80 be C. d. (List by What area did your sales territory cover in 1959? List counties or cities, or outermost 12. principal products. states or cities. State maximum distances.) 13. Have there been any significant changes in the product market areas for your firm over the period 1950-59? Yes No If YES, what were the changes? 14. To which types of buyers did sales of your principal products in 1959 go? (Estimate, by products, the volume or percent of total volume.) Volume Manufacturer 15. Have there been any significant changes in the volumes of products going to different types of buyers of your principal Yes No products over the period 1950~59? If YES, what were the changes? If YES, what explanations can you give for these changes? 277 16. How many different buyers of your products did you sell to in 1959? N_m_ a. Manufacturer d. Industrial user b. Wholesaler e. Other (specify) c. Retailer No. 17. Have there been any significant changes in the numbers of ,buyers of your principal products over the period 1950—59? Yes No If YES, what were the changes? ___— If YES, what explanations can you give for these changes? 18. What is the typical time interval between receipt of an order from a buyer and the filling of that order? (List separately by principal products, if time interval varies. ~...__—_~_ __-_. a. How much variation from the typical time interval occurs? b. What are the causes of variations from the typical time interval? J. ASent sources 2: raw wood products, 1959: Name Address . . m __.; ___N as...“ APPENDIX B. INTERMEDIATE MARKET AGENT INTERVIEW SCHEDULE CONFIDENTIAL Date Recorder Fbrm No. 2 State RCMP-27 Project INTERMEDIATE MARKET AGENT Name of agent or firm Address A. General: 1. Do you buy and sell or receive a commission for handling rough wood products? Yes No 2. How many years has your firm been operating at your present location? years. 3. What form of business organization does your firm have? a. Single owner c. Corporation b. Eartnership d. Cooperative 4. Is your firm engaged full time in the marketing of raw timber products? Yes No If NO, what other business or occupation is your firm ens gaged in? a. Sawmill operator 7d. Farmer b. Operator of other wood- e. Wage earner using mill (specify) f. Other (specify) c. Store operator If NO, what percentage of your gross revenues in 1959 was realized by sales of raw timber products? percent. 5. What were the principal raw timber products handled by your firm in l959? a. d. b. e. c. f. 6. Is your marketing of raw timber products typically a yearuround business? Yes No If NO, what are the typical months of operation? 7. How many full-time employees in your timber-marketing business did you have in 1959? employees. . . l t I i \ . 279 8. How many seasonal employees in your timber-marketing business did you have in 1959? employees. B. Quantities 9f wood purchases: (volume by log rule) 1. What was the total volume by product and unit of measure, of your raw timber purchases in 1959? (List only timber handled as part of your business as an intermediate market agent.) a. b. c. d. e. f. 2. What was the monthhrpattern in your raw timber purchases in 1959? (List separately by products) 0 If monthly data are not available, what were the: (List separately by products) a. Peak inventory months and amounts (aver.) b. Lowest inven- tory months and amounts (aver.) c. Other months and amounts (aver.) 280 3. Do you consider the monthly pattern in volume of your wood purchases in 1959 to be a typical pattern? Yes No If no, why not? A. How do you explain the seasonal variations in your typical pattern of wood purchases? 5. What changes in the annual volume of your wood purchases took place in the years 1950-59? (List by products.) Year All C. Inventories of raw wood: m.———————— 1. Did you assemble raw timber products at your own wood yard in 1959? Yes‘_‘___No IF YES ANSWER QUESTIONS 2 TO 6. IF NO,,SKIP TO SECTION D. SOURCES OF WOOD PURCHASES. 2. What raw timber products did you assemble at your own wood yard in l959? a. C. e. b. d. f. 3. Why do you assemble raw timber products? 281 h. What was the seasonal variation in the volume of raw timber inventories on hand at your yard in 1959? (List separately by products.) a. Peak inventory months and amounts (aver.) b. Lowest inven- tory months and amounts (aver.) c. Other months and amounts (aver.) 5. Do you consider the seasonal pattern in raw timber inventories at your yard in 1959 to be a typical pattern?‘ If NO, why not? 6. Do you have an objective of maintaining a fixed ratio in the volume of raw timber inventories to sales? Yes No If YES, what is this ratio? D. Sources 23 wood supply: 1. Where is your 1959 wood supply area located? (List counties or states if only a few are involved. Outline on attached county map, if possible. State radius of operations in miles.) a. Counties or states. b. Radius of operations. 2. Have there been any significant changes in your wood supply area over the period 1950» ~59? Ye es _NO ___. If YES, what were the changes? 282 3. What is the ownership of the forest land from which your 1959 wood supply was obtained? (Estimate % of total volume from each source.) a. Own land d. Nat. forest b. Farmer e. State forest 0. Other private f. Other public g. Don't know h. Have there been any significant changes in your wood supply from different forest landownership sources over the period 1950-59? yes No V If YES, what were the changes? If YES, what explanations can you give for these changes? 5. From which agent sources was your 1959 wood supply obtained? '(Estimate % of total volume obtained from each source.) 1 0 a. Own employees: b. Producer (1) From own lands c. Other agent (specify) (2) From other lands 6. Have there been any significant changes in the agent sources of your wood supply over the period 1950—59? Yes No If YES, what were the changes? If YES, what explanations can you give for these changes? E. Wood procurement methods and policies: 1. What percentages of your 1959 cut wood purchases were obtained under the following types of agreements? 0 a. Written contract b. Oral contract QUESTIONS 2 To 5 APPLY ONLY To WRITTEN CONTRACTS. IF THERE WERE NO WRITTEN CONTRACTS, SKIP To QUESTION 6. 2. How far in advance of the beginning of Wood deliveries are contracts usually negotiated? 283 3. What are the details of standard written contracts for out wood purchase? (Obtain printed copies where posSible. Check the following items which are included in contract specifi- cations; then describe as much as possible.) a. Kind of wood b. Amount of wood c. Size of wood d. Quality of wood e. ______ Time or period of delivery f. Method of payment g. Time of payment h. How binding are the provisions of standard written contracts for cut wood purchases (i.e., how much leeway is given suppliers in completing terms of contract and how much leeway does your firm allow itself in terminating contracts)? 5. Did you buy cut wood in 1959 only when you had a contract for its resale? Yes No If NO, explain your policy of purchases in advance of sales contracts. QUESTIONS 6 TO 9 APPLY ONLY TO ORAL CONTRACTS FOR CUT WOOD PURCHASES. IF THERE WERE NO SUCH CONTRACTS, SKIP TO QUESTION 10. 6. How far in advance of the beginning of wood deliveries are contracts usually negotiated? 7. What are the details of oral contracts for out wood purchases? (Check the following items which are included in agreements; then describe as much as possible.) a. Kind of wood b. Amount of wOod c. Size of wood 6. Quality of wood e. Time or period of delivery f. Method of payment g. Time of payment 284 8. How binding are the provisions of oral contracts for out wood purchases (i.e., how much leeway is given suppliers in completing terms of contract and how much leeway does your firm allow itself in terminating contracts?) 9. Did you buy out wood in 1959 only when you had a contract for its resale? Yes No If NO, explain your policy of purchases in advance of sales contracts. QUESTIONS 10 TO 13 APPLY ONLY TO STUMPAGE PURCHASES BY YOUR FIRM. IF NO STUMPAGE PURCHASES ARE MADE, SKIP TO QUESTION 1%. 10. What percentages of your firm‘s l959 stumpage purchases (in terms of volume) were obtained under the following types of agreements? a. Written contract with public landowners b. Written contract with private landowners c. Oral contract 11. What are the details of your firm's standard contracts for stumpage purchases from private landowners? (Check the following items which are included in agreements; then describe as much as possible.) a. Species b. Amount of timber c. Size of timber d. Quality of timber e. Time or period of harvest f. Mathod of payment g. Time and basis of measurement 12. 13. 14. 15. 16. 285 If the standard contract for stumpage purchases from private landowners is a written contract, and if oral contracts are also made, how does the oral contract differ in its provisions from the written contract? Does the standard contract for stumpage purchases from private landowners specify any conditions under which timber is to be harvested? Yes No If YES, to what percentage of the 1959 private purchases do these specifications apply? percent. If YES, what are the specifications? If NO, are there any harvest conditions your firm will accept in contracts for stumpage purchases upon a private landowner's insistence? Yes No If YES, what are the conditions? What percentages of your 1959 wood purchases were obtained through negotiations initiated by your own firm or initiated by sellers? fl a. Own firm b. Sellers .___ c. Indefinite When your firm takes the initiative in negotiating wood purchases, what are the methods you use in contacting potential suppliers? From how many different persons or agencies was your 1959 wood supply purchased? . N0. N0. a. Nonproducer c. Other agent landowner (specify) b. Producer Was 1959 a typical year? Yes No If NO, why not? 286 17. What qpantities of your 1959 raw wood receipts were purchased on the stump, roadside, and delivered? Quantity fl On the stump Roadside F.o.b. railroad Delivered to mill 18. Did the points of purchase of 1959 raw wood receipts vary by agent sources of wood? Yes If YES, how did they differ? 19. To what degree does your firm perform the following functions in regard to wood procurement? a. Logging? b. Hauling? 20. Are any wood suppliers offered payments (loans) in advanée of time of payment specified in a standard contract? Yes No If YES, is this the usual procedure adopted by your firm? Yes No , If YES, does the producer pay interest on such prepayments or loans? Yes No If YES, what is the size limitation on the prepayments or loans offered? 21. Are any wood suppliers offered other business aids by your firm? Yes No If YES, is this the usual procedure adopted by your firm? Yes No If YES, what are these business aids? 287 22. Do you assign exclusive procurement territories to your wood suppliers? Yes No If NO, what policy do you follow to minimize the overlapping of procurement territories by your wood suppliers? 23. Do you Object to having your wood suppliers take contracts to supply wood to other firms using the same kind of timber? Yes No If YES, what action do you take? 2h. Do you have any wood procurement policy designed to minimize wide fluctuations in the volume of wood called for in succes- sive contracts made with suppliers? Yes No If mas, explain what this policy is. F. Prices: 1. What standard delivered prices did your firm pay per unit of volume to your wood suppliers at the end of 1959? (Fill in as many items as possible, by products and/or species.) b. RI. to 288 2. Are there any differehées in the prices paid by your firm for . delivered wood on the basis of distance of haul? Yes No If YES, what are these differences by mode of transportation (and which distances do the prices quoted in Item 1 above refer to)? 3. What changes in prices paid for wood by your firm have occurred over the period 1950-59? A. Do you have any difficulty in Obtaining sufficient market price information as a basis for your business decisions? a. 0n products you have to buy? Yes No b. On products you have to sell? Yes :::: No If YES to a. or b., explain. G. Costs: 1. What stumpage costs per unit of volume applied to your wood purchases at the end of l959? (Estimate prevailing contract rates, if stumpage was not paid for directly by your own firm) 289 2. What logging costs (felling and bucking and skidding) per unit of volume applied to your wood purchases at the end of 1959? (Estimate prevailing contract rates, if logging costs were not paid for directly by your firm.) Average Minimum 3. What truck-hauling costs per unit of volume applied to your wood purchases at the end of 1959? (Estimate prevailing contract rates, if hauling costs were not paid for directly by your firm.) Truck to mill: 1 AAA/K VVVV 2 3 h distance zones Truck to rr. VV Vv 2 3 2+ AAAA H distance zones ___.— 290 Do truck-hauling costs to mill include the cost of loading? Yes No Do truck-hauling costs to mill include the cost of unloading? Yes No Do truck-hauling costs to railroad include the cost of un- loading and loading onto railroad cars? Yes No What railroad-hauling costs per unit of volume applied to wood products delivered to your markets at the end of 1959? Product Rr° to market: 1) (2) (3) (1+) distance zones What was the gross sales value of timber products sold by your firm in 1959? What was the total volume, by product and unit of measure, of your timber products sales in 1959? (List only timber handled as part of your business as an intermediate agent.) Product Volume 291 3. What changes in the annual volume of your timber products (List separately by sales took place in the years 1950-59? products.) All (List by List counties or cities, or outermost states or cities, State maximum distances.) h. What area did your sales territory cover in l959? principal products. Have there been any significant changes in the product market 5. areas for your firm over the period l950~59? Yes No If YES, what were the changes? 6. To which types of buyers did sales of your principal products in 1959 go? (Estimate, by products, the volume or percent of total volume.) 7. 10. 292 Have there been any significant changes in the volumes of products going to different types of buyers of your principal products over the period 1950—59? Yes No If YES, what were the changes? If YES, what explanations can you give for these changes? How many different buyers of your timber products did you sell to in 1959? No. No. a. Manufacturer d. Industrial user b. Wholesaler e. Other (specify) c° Retailer Have there been any significant changes in the number'of buyers of your principal products over the period 1950—59? Yes No If YES, what were the changes? If YES, what explanations can you give for these changes? What is the typical time interval between date of a purchase contract with a buyer and product delivery? (List separately by principal products, if time interval varies.) a. How much variation from the typical time interval occurs? b. What are the causes of variations from the typical time interval? 293 I. Agent sources of raw wood products, 1959: fl—a—‘m Name Address in... w 4 u'« Ems-59%;5gihrm APPENDIX C. PRODUCER INTERIVEW SCHEDULE CONFIDENTIAL Date Recorder Form No. 3 State Name of timber producer Address NCMA~27 Project TIMBER PRODUCER A. General: 1. 2. How many years have you been operating as a timber producer at your present location? years. Are you a full-time timber producer? Yes No If NO, what other business or occupation are you engaged in? a. Sawmill operator d. Farmer b. Operator of other e. Wage earner wood—using mill fo Other (specify) (specify) _____________ ___—— 0. Store operator If NO, what percentage of your gross revenues in 1959 was realized from your business as a timber producer? percent. What were the principal raw timber products you handled in l959? a. d. b. is. e. c. 7 f. Is your timberuproducing business typically a yearwround business? Yes No If NO, what are the typical months of operation? How many fullatime employees in your timber=producing business did you have in 1959? employees. How many are members of your family? employees. How many seasonal employees in your timber=producing business did you have in 1959? employees. How many are members of your family? employees. 295 (A B. Quantities 2: timber purchases: (volume by log rule) 1. Did you purchase any timber as a basis for your timber- producing business in 1959? Yes No If YES, what volume, by product and unit of measure, was purchased as stumpage in l959? Product Volume Product Volume a. d. b. e. c. f. Was 1959 a typical year? Yes No If NO, why not? If YES, what volume, by product and unit of measure, was purchased as cut wood in 1959? Product Volume Product Volume a. do ' b. e. c. f. Was 1959 a typical year? Yes No If NO, why not? mafia-vain...» a — IF NO, SKIP TO C. SOURCES OF WOOD SUPPLY. 2. What changes in the annual volume of your timber purchases took place in the years l950=592 (List by products) 296 C. Sources _o_1: wood supply: 1. Where is your 1959 Wood supply area located? (List counties if only a few are involved. State radius of operations in miles.) a. Counties b. Radius of operations 2. Have there been any significant changes in your wood supply area over the period 1950-59? Yes No If YES, what were the changes? 3. What is the ownership of the forest land from which your 1959 wood supply was obtained? (Estimate % of total volume from each source.) a P a. Own land d. Nat. Forest b. Farmer e. State Forest 0. Other private f. Other public 4. Have there been any significant changes in your wood supply from different forest landownership sources over the period 1950-59? Yes No If YES, what were the changes? If YES, what explanations can you give for these changes? 5. From what agent sources was your 1959 wood supply obtained? (Estimate % of total volu?e obtained from each source.) 0 0 a. Own employees: _— b. Other producer (1) From own 6. Other agent lands (specify) (2) From other lands 6. Have there been any significant changes in the agent sources of your wood supply over the period 1950-59? Yes No If YES, what were the changes? If YES, what explanations can you give for these changes? 297 D. Wood procurement methods and policies: “MM—_— 1. What percentages of your 1959 wood supply were obtained by the following stumpage acquisition methods? a. Stumpage from own lands b. Stumpage purchased by producer c. Stumpage purchased in producer's name by product buyer d. Stumpage provided by product buyer QUESTIONS 2 TO 15 APPLY ONLY TO STUMPAGE PURCHASES BY PRODUCER. IF NO STUMPAGE PURCHASES WERE MADE, SKIP TO QUESTION 16. 2. What percentages of your 1959 stumpage purchases (in terms of volume) were obtained under the following types of agreements? a. Written contract with public landowners b. Written contract with private landowners c. Oral contract 3. What are the details of your standard contracts for stumpage purchases from private landowners? (Check the following items which are included in agreements; then describe as much as possible.) a. Species Amount of timber Size of timber d. Quality of timber e. Time or period of harvest f. Mathod of payment g. Time and basis of measurement A. If the standard contract for stumpage purchases from private landowners is a written contract, and if oral contracts are also made, how does the oral contract differ in its provisions from the written contract? 298 5. Does your standard contract for stumpage purchases from private landowners specify any conditions under which timber is to be harvested? _ Yes No If YES, to what percentage of your 1959 purchases do these specifications apply? ________ percent. If YES, what are the specifications? If NO, are there any harvest conditions your firm will accept in contracts for stumpage purchase upon a private landowner's insistence? Yes No If YES, what are the conditions? 6. How binding are your contracts for stumpage purchase (i.e., how much leeway do you allow yourself in terminating contracts)? 7. How far in advance of the beginning of harvest operations are stumpage purchase contracts usually negotiated? 8. Do you buy stumpage only when you hold a contract for the sale of products? Yes No If NO, eXplain your policy of stumpage purchases in advance of contracts for the sale of products. 10. ll. 12. 13. 11+. 15. 299 What percentages of your 1959 stumpage purchases were obtained through negotiations initiated by you or initiated by land— owners? % a. Producer b. Landowner c. Indefinite When you take the initiative in negotiating stumpage purchases, what are the methods you use in contacting potential suppliers? How many stumpage purchase contracts did you make in 1959? contracts. Was 1959 a typical year? Yes No If NO, why not? From how many different persons or agencies did you obtain your stumpage purchases in 1959? persons or agencies. Was 1959 a typical year? Yes No If NO, why not? Is there a minimum volume per acre below which you will not consider stumpage purchase? Yes No If YES, what is this minimum? Is there a minimum volume per tract below which you will not consider stumpage purchase? Yes No If YES, what is this minimum? Is there a minimum value of timber per tract below which you will not consider stumpage purchase? Yes No If YES, what is this minimum? ‘1 300 16. Did you receive funds from any of your product buyers for stumpage purchases in l959? Yes No If YES, which buyers? If YES, what portion of your total stumpage purchases in 1959 did these funds cover? 17. Did you subcontract some or all of the logging operations in your timber-producing business in 1959? Yes No If YES, what percentage of the volume handled was subconn tracted? percent. If YES, did subcontracting apply to a. Felling and bucking? Yes No b. Skidding? Yes No If YES, why didn't you handle all the logging operations yourself? (Check. If more than 1 reason, number in order of importance.) (a) Lacked necessary equipment (b) Lacked logging experience (c) Inadequate family or hired labor available (d) Believed subcontracting to be the cheaper method (e) Producer's time more valuable for other purposes (f) Other demands on producer's time (g) Other (specify) 18. Did you subcontract some or all of the hauling operations in your timber-producing business in 1959? Yes No If YES, what percentage of the volume handled was subcontracted? percent. If YES, why didn't you handle all of the hauling operations yourself? (Check. If more than 1 reason, number in order of importance.) (a) Lacked necessary equipment (b)'___" Lacked hauling experience (c) -—-—' Inadequate family or hired labor available (d) _—__— Believed subcontracting to be the cheaper method (e) Producer's time more valuable for other purposes (f) Other (specify) 19. Did you receive in l959 funds from any product buyers in advance of time of payment specified in a standard contract to facilitate your logging or hauling responsibilities? Yes No If YES, which buyers? "" If YES, for what purposes? 301 20. Did you receive in 1959 any other business aids from any product buyers to facilitate your logging or hauling respon~ sibilities? Yes No If YES, which buyers? If YES, what aids? E. Prices Received: 1. What prices did you receive per unit of volume for wood products you sold in 1959? (Fill in as many items as possible, by products and/or species.) 2. To which agents did you sell the products and/or species listed above? (Check appropriate cells.) 3. Did you have any difficulty in Obtaining sufficient market price information as a basis for your business decisions? a. On the products you have to buy? Yes No b. On the products you have to sell? Yes No If YES to a. or b., explain. 1; Irv"! "V . v' 302 F. Costs: 1. What stumpage costs per unit of volume applied to the wood products you handled in 1959? (Estimate cost imputed by you if you used your own stumpage.) Purchased 2. What logging costs (felling and bucking and skidding) per unit of volume applied to the wood products you handled in 1959? (Estimate cost imputed by you if you performed your own logging.) 3. What truck‘hauling costs per unit of volume applied to the wood products you handled in 1959? (Estimate cost imputed by you if you performed your own hauling.) Own hauling logging 303 G. Sales 2: timber product : 1. What was the gross sales value of timber products sold by You in 1959? 2. What was the total volume, by product and unit of measure, of your timber products sales in 1959? (List only timber handled as part of your business as a timber producer.) 3. What were the seasonal variations by product, in your timber products deliveries in l959? and amounts aver and amounts aver. Ca and amounts aver. h. Do you consider the timing in your timber products deliveries in 1959 to be a typical pattern? Yes No _____ If NO, why not? 5. Was the timing in your timber products deliveries in 1959 required by your product buyers? Yes No If YES, would you have preferred a different timing of deliveries? Yes No If YES, what is your preferred timing of deliveries? If NO, how do you explain the timing of your deliveries? 6. 7. 30% What changes in the annual volume of your timber products sales took place in the years 1950-59? (List separately by products.) Year] All What explanations can you give for annual fluctuations in your timber product sales? To which types of buyers did sales of your principal products in 1959 go? (Estimate by % of total volume.) o % a. Manufacturer Z d. Other interme— h b. Concentration diate agent (specify) yard c. Dealer e. Other (specify) Have there been any significant changes in.the volumes of your products going to different types of buyers over the period 1950—59? Yes No If YES, what were the changes? If YES, what explanations can you give for these changes? 305 10. How many different buyers of your timber products did you sell to in l959? £0.- E: a. Manufacturer d. Other intermediate b. Concentration agent (specify) yard 0. Dealer e. Other (specify) ll. Have there been any significant changes in the numbers of buyers of your principal products over the period 1950—59? Yes No If YES, what were the changes? If YES, what explanations can you give for these changes? 12. Did you have a contract(s) to sell prior to your harvesting of wood in 1959? Yes No 13. What is the typical time interval between date of a purchase contract with a buyer and product delivery? a. How much variation from the typical time interval occurs? b. What are the causes of variations from the typical time intervals? B. Other producers of raw wood products, 1959: Name Address Willi”? 340