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University Microfilms International 300 North Zeeb Road Ann Arbor, Michigan 48106 USA St. John's Road, Tyler's Green High Wycombe, Bucks, England HP10 0HR 7^00757 VODAK, MARK CHARLES AN EVALUATION OF THE MICHIGAN STATE FOREST CULTIVATION PROGRAM, MICHIGAN STATE UNIVERSITY# University Microfilms Internationa] m o n z e e b r o a d , a n n a h b o r , m i 4 8 toe P H , 0 # # 1978 AN EVALUATION OF THE MICHIGAN STATE FOREST CULTIVATION PROGRAM By Mark C. Vodak A DISSERTATION Submitted to Michigan S tate U niversity in p a rtia l fu lfillm e n t o f the requirements fo r the degree o f DOCTOR OF PHILOSOPHY Department o f Forestry 1978 ABSTRACT AN EVALUATION OF THE MICHIGAN STATE FOREST CULTIVATION PROGRAM By Mark C. Vodak F ifty -th re e percent of Michigan's to ta l land area is forested and constitutes one of its greatest and most valuable resources. The Forest C ultivation Program was in itia te d in 1973 prim arily to increase the revenue-producing potential of state forest lands through more intensive s ilv ic u ltu re and management. In th is way the Michigan taxpayers were to be eventually benefitted through increased employment and income to the state. From an in it ia l allocation o f $300,000 fo r the program's f i r s t year, funding for the Forest C ultivation Program in ­ creased to $1 m illio n fo r 1978. The program is concerned prim arily with northern hardwood stand improvement, pruning and release of red and white pine, regeneration of jack pine, and aspen regeneration. Funds are also being used fo r f e r ­ t iliz a t io n studies, s ite conversion to hybrid aspen, road construction, and forest inventory. In four years the Forest C ultivation Program has accomplished 36,000 acres of northern hardwood stand improvement, 8,700 acres of jack pine regeneration, 2,800 acres o f red and white pine release, 4,200 acres of aspen regeneration, 95 acres o f s ite conversion to hybrid aspen, and 44 miles of roads constructed. Mark C. Vodak In view of the Forest Cultivation Program's objectives, its level of funding, accomplishments, and continuation, this study sought to analyze the decision process Involved in investment of the allocated funds. A survey of a ll Forestry Division personnel was made to id en tify the decision-making procedures used and factors considered in making investment choices. These data were viewed in relation to acceptable applicable economic analyses, with the overall objective as increasing the program's efficiency. The survey was also used to obtain information about the program's administration and the administering personnel's impressions of the program. I t was found that the Forest Cultivation Program has not been operated or administered e ffic ie n tly . No economic c rite ria exist for guiding investment choice, and, s im ila rly , other than the pre-established northern hardwood p rio rity set by the program, no investment p rio ritie s or alte rn ative rankings have been made. The procedures fo r gathering and analyzing information fo r making investment choices varied somewhat from area to area, ju st as did the procedures and considerations for stand selection for each timber type involved. Sim ilarly, the allocation procedure was found to be evolving but s t i l l variable. Current planning and inventory procedures and accomplishments are also not adequate to serve the program needs. Teams of technicians were created fo r the program, specializing in selection and marking of northern hardwood stands. The Forestry Division's personnel agreed on the administrative roles of the area forester and the team in administering the program. However, while recognizing the advantages of a specialized team for hardwood treatments, there tended to be more o f a focus on the negative aspects of the team Mark C. Vodak system. The Division personnel also indicated th a t to them the Forest C u ltiv a tio n Program's objectives were worthwhile, were being achieved, and th a t the program should be continued. Regional planning is recommended fo r the Forestry Division to determine those regions and areas o f the highest potential fo r program investment. A ltern a tiv es such as possible fib e r and fuelwood production should be included in the planning and evaluation e f fo r t. Such planning w ill re s u lt in a llo c a tin g funds more e f f ic ie n t ly and in providing more program d ire c tio n . A fte r comparison o f several possible p r o f it a b ilit y measures, the in tern al ra te o f return is recommended as the c rite rio n fo r evaluating and ranking a lte rn a tiv e s fo r investments under the Forest C u ltivatio n Program. Such economic ranking should serve as a guideline to aid investment choice and e ffic ie n c y . techniques are recommended. To aid fu rth e r, cap ital budgeting But the importance and influence o f non-economic factors on program decisions are pointed out as w e ll. As fo r uncertainty in the program's investment process, i t can be ignored. From previous studies, expected rates of return from investment in Forest C u ltiv a tio n a lte rn a tiv e s are discussed. These studies ind icate th a t an average ra te of return from 6.0 to 7 .0 percent can be expected from investment in northern hardwood stand improvement, 3.4 to 6.6 percent from investment in jack pine regeneration, 10.0 to 12.0 percent from investment in red and white pine release, 6.0 to 8 .0 percent from investment in pruning red pine, and an average ra te o f return o f 4 .0 percent from investment in aspen lib e ra tio n . Mark C. Vodak Disagreement exists as to the v a lid ity o f managing northern hardwood by uneven-aged methods. Therefore, the Forestry Division should re-examine its objective o f managing northern hardwood by uneven-aged methods. Expansion of investments in red pine under the program is recommended. Planting of red pine on good s ite s , and more emphasis on red pine release and pruning w ill resu lt in good return on investment as well as help provide q uality timber in the future. On the other hand, further study of lib eratio n treatments in aspen is recommended before increasing or even maintaining the current level of investment. While such investment is expected to average a rate of return in the 4.0 percent range, previous studies have shown aspen lib e ra tio n investments to return as l i t t l e as 1.2 percent. Updating and completing inventories on a ll state forest lands is recommended. And, also, i t is recommended that a cost effectiveness study be undertaken by eith er the Forestry Division or by an outside party, possibly as another research study, to analyze and evaluate representative program investments to date and determine whether projected benefits warrant fu rth er sim ilar investments. ACKNOWLEDGMENTS The author extends sincere appreciation to both Michigan State University for providing the financial support necessary for this research e ffo rt and to the Forestry Division, Michigan Department of Natural Resources, fo r providing its support of this project—the friendliness and cooperation of its personnel was quite impressive. The author expresses further appreciation to Dr. Donald I . Dickmann, Dr. Leslie W. Gysel, and Dr. Robert S. Manthy for th e ir participation on his guidance committee, manuscript review, and for th e ir constructive suggestions. Dr. Victor J. Rudolph, his major professor, is deserving of special appreciation for time, guidance, counsel, and advice, throughout the research e ffo rt and for editing and suggestions in the review process. Deserving special recognition is Jerri Zemper, who consented to type the manuscript, even a fte r having worked with the author throughout his en tire stay at Michigan State University. Her patience, cooperation, and good nature complimented her typing s k ills and knowledge, making the whole process much easier. For her time and editing, the author would also lik e to thank P atricia Stokowski. F in a lly , the author is grateful to his family: his parents for th e ir continual support and encouragement; and his sis ter Molly fo r the donotion of part of her vacation time fo r typing sections of the in it ia l d ra ft of the manuscript. ii TABLE OF CONTENTS Chapter Page INTRODUCTION ............................................................................................. 1 LITERATURE REVIEW ................................................................................ 5 THE FOREST CULTIVATION PROGRAM ........................................................ 18 Establishment .................................................................................... Components and Guidelines ............................................................ 18 21 Northern hardwood stand improvement .................................... Northern hardwood f e r t iliz a t io n ............................................ Jack pine re g e n e ra tio n ................................................................ Aspen re g e n e ra tio n ........................................................................ S ite conversion to hybrid aspen ............................................ Stand improvement in red and white p i n e ............................ Access roads ..................................................................................... Inventory and analysis ................................................................ 21 24 25 26 27 28 28 29 Administration ..................................................................................... Accomplishments ................................................................................. 29 30 1973-1974 1974-1975 1975-1976 1976-1977 1977-1978 Sum m ary............................................................................................. 30 34 39 43 47 48 IV. STUDY METHODS......................................................................................... 50 V. SURVEY RESULTS......................................................................................... 53 Stand Treatment Selection Procedures ........................................ Factors Considered in Stand Selection .................................... Other Factors Influencing Program Investments .................... Assignment o f Managerial P rio ritie s ........................................ Program Administration ..................................................................... Planning and Inventory ..................................................................... Impressions of the Program............................................................ Summary o f Treatment Decision Procedures ................................. 53 56 60 65 66 71 72 74 I. II. III. Chapter Page VI. DISCUSSION V II. . ................................................................................ 78 Current Administration ........................................................... Treatment Rankings by the Internal Rate of Return . . . 83 86 SUMMARY AND RECOMMENDATIONS ....................................................... 90 APPENDICES Appendix A. Forestry Division Organization .................................................... 102 B. Survey Questionnaire ....................................................................... 105 C. Discussion of P ro fita b ility Measures ........................................ 107 LITERATURE CITED ...................................................................................... iv LIST OF TABLES Table 1. 2. 3. Page Accomplishments and costs of treatments applied to northern hardwood stands in 1973-1974 ....................................... 33 Goals and accomplishments fo r the Forest C u ltivation Program in 1974-1975 ....................................................... 36 Accomplshments and costs o f treatments applied to northern hardwood stands in 1974-1975 ....................................... 37 4. Goals and accomplishments fo r the Forest C u lti­ vation Program in 1975-1976 5. Goals and accomplishments fo r the Forest C u ltivation Progam in 1976-1977 6. Proposed treatment goals fo r the Forest C u ltivatio n Program in 1977-1978 ....................................................... 48 Four-year summary o f accomplishments under the Forest C u ltiv atio n Program ................................................................... 49 7. v LIST OF FIGURES Figure A -l. A-2. A-3 Page Forestry Division organization, s ta ff, existing organization .................................................................. 102 Forestry Division organization, existing regions and d is tric ts (Region I ) ........................................... 103 Forestry Division organization, existing organization (D is tric t 3) ........................................................... 104 vi CHAPTER I INTRODUCTION1 Michigan's fo re s t lands co n stitu te one o f its greatest and most valuable resources. In the s ta te o f Michigan, 19,373,400 acres are forested, representing 53 percent o f the s ta te 's to ta l land area. Of th is fo re s t land, approximately 20 percent, or 3,819,960 acres are state-owned and are administered by the Forestry Division of the Department o f Natural Resources. Some 12,457,800 acres, or approximately 66 percent, are owned by p riva te and in d u s tria l in te re s ts , with the re ­ maining 13 percent in other public ownership (Haskin, 1975). The State Forestry Division also gives professional and technical assistance to owners o f these lands. Michigan's fo re s t land is in essence the foundation fo r the timber and recreation in d u s tries , two quite important industries w ithin the s ta te , p a rtic u la rly in the north. Due p rim a rily to the proximity of Michigan state forests to urban population centers, recreation and w ild ­ l i f e w ill probably continue to receive emphasis in the management o f these lands. However, more a tte n tio n is beginning to be given to greater timber production, both as to quantity and q u a lity . 1Sources fo r much o f the information in th is section were short papers, reports, memos, and in te r -o f fic e communiques on f i l e in the Lansing s t a f f o ffic e o f the Michigan State Forestry D ivision. 1 2 The present system of th irty -th re e state forests evolved slowly from 1903, when the f i r s t professional fo rester was employed. In the la te 1800's, Michigan's forests were devastated by the early "timber barons" and th e ir "c u t-o u t and get out" policies. The present state forest system is prim arily the reversion of tax-delinquent land, formerly p rivately owned, that had been cut-over, burned-over, p artly farmed in many cases, and abandoned. Through development, management, and protection, increasing forest growing stock has been established, with timber sales and harvest in 1975 having increased nearly 100 times over those of 1940, when sales were p ra c tic a lly non-existent. Hardwoods predominate on Michigan's state forest lands, although softwood volume has been increasing at a more rapid rate (James, et a l . , 1974). In 1972, approximately 479,500 acres, or 12.7 percent o f the state-owned forest lands were in the northern hardwood cover type. Of the to tal northern hardwood acreage, i t is estimated that approximately 8 percent is seedling-sapling size; 74 percent is pole size; and 18 percent is sawtimber size (Haskin, 1973). These hardwood stands are rapidly increasing in size and q u a lity , with growth at about .65 cords or approximately four square fe e t of basal area per acre annually. The Forestry Division's management objectives fo r northern hardwood are to practice all-aged management on medium and b etter s ite s , with q u ality sawtimber and/or veneer logs as principal products, and aesthetics as a highly desirable by-product. Presently, approximately 18 percent of the northern hardwood type 1s stocked in such a manner th at 1t is believed th at all-aged management can e ith er be practiced a t this time or within the immediate fu tu re. More and more of these 3 stands can be managed through commercial timber sales. I t 1s believed that the remaining inmature stands, mostly even-aged or two-aged, con­ sisting of scattered old remnants over-topping th r if ty poles, can benefit from pre-commercial stand improvement. Since a good market for hardwood pulpwood has not developed, timber stand improvement (TSI) funds are being directed towards these stands that cannot be Improved economically through commercial cuttings. Thinning to produce pulpwood is not an objective, nor w ill non-commercial improvements be made in stands that can provide commercial opportunities within 10 years. With the objective of accelerating tree growth, thinning is the major treatment applied. Therefore, the Division desires to obtain better quality growth and a reduction in the time required to produce quality products with minimum labor cost and no volume loss. A 10-year cutting cycle leaving 70 to 90 square feet of basal area as growing stock w ill be implemented in uneven-aged hardwood management. In striving towards its management objectives fo r northern hardwood, the Forestry Division believes that resulting w ild life benefits w ill be sig nificant. I t is also expected that in some cases the need for stand conversion eith er to or from northern hardwood w ill arise. The Forest Cultivation Program resulted from th is recognized need fo r more intensive management of northern hardwoods. However, the program is not lim ited to only northern hardwood investments, but also includes red pine, jack pine, and aspen alternatives. Therefore, a decision process is involved to determine how the program funds should be invested. Thus, the present analysis was proposed to examine the decision process involved in administering the Forest Cultivation Program. Both stand selection and investment choice procedures were examined. 4 In view of its objectives and level of funding, the administration of the program was examined at a ll levels of the Forestry Division to determine how i t was operating. Procedures being used for investment alternative analysis and decision-making, as revealed through interviews, are evaluated and related to recognized major economic analysis procedures. The program's need for increased efficiency is discussed and recom­ mendations are made for increasing its efficiency and effectiveness, as well as by providing direction. The objectives of this study are: 1) To identify the decision-making procedures used and the factors considered in making investment choices through the Forest Cultivation Program. 2) To analyze the degree to which these procedures result in investment choices which are in basic agreement with choices made on the basis of accepted major economic analyses. 3) To determine what additional information is needed, and make recommendations for increasing the efficiency of the decision process. This study is based on a survey taken from a ll areas of the Michigan Department of Natural Resources State Forest System adminis­ tering the Forest Cultivation Program. Forest Division personnel were interviewed primarily in Regions I and I I . Personnel involved with administering the Program were interviewed at the Regional, D is tric t, and Area levels of the organization. CHAPTER I I LITERATURE REVIEW The Michigan Forest C u ltivatio n Program deals d ire c tly with the allocatio n and investment o f funds in s ilv ic u ltu ra l treatments on state forest lands. As northern hardwood constitutes a major forest type on state lands, both economically and in area, the program focuses on investments in northern harwood stand improvement. Other primary investments considered through the program are pruning and release of red and white pine, regeneration of jack pine by s ite s c a rific a tio n and necessary seeding or planting, and aspen betterment ( i . e . a fte r-s a le timber stand improvement and cleanup). Obviously the investment decision process must consider s ilv ic u ltu r a l and physical factors in allo catin g funds, but i t must also include analysis of economic factors. Over the past 20 to 30 years, many studies have evaluated various forest investment opportunities, p r o f it a b ilit y measures, and managerial guidelines fo r investment selection. Young and Eyre (1931) found th a t diameter growth o f red pine was almost d ire c tly proportional to the degree of release from competing vegetation. They concluded th a t release cuttings in mixed stands o f aspen and red pine were worthwhile c u ltu ra l operations. This conclusion was supported by Roe (1957), who reported th a t yield s from pine plantations were improved by release from aspen early in the ro ta tio n . Ralston (1953) even found th at red pine suppressed fo r 40 years 5 6 responded well to release. He also found that the response of the released pine was in d irect proportion to the amount of overstory removed. Pine release can be carried out by both mechanical (removal and girdling) and chemical (foliage sprays and tree injection) means. While most studies and economic projections of red pine release u tiliz e d mechanical means, Arend and Roe (1961) reported costs for chemical release of pines. For competing vegetation that was as t a ll or only a l i t t l e ta lle r than the pines, foliage spraying with ground equipment was $5.00 or more per acre. The equipment used and the kind and amount of herbicide applied were the determining factors. Where the competition was much larger than the pine and completely over­ topping i t , three or four man-hours per 1,000 inches of tree diameter treated were needed fo r f r i l li n g and chemical spraying. The chemical solution cost ranged from 25 to 50 cents per 1,000 inches of tree diameter, and was d ire c tly proportional to the solution strength. When faced with the altern ative of releasing pine, estimates of resulting returns certainly assist in the decision process. Lundgren (1963) evaluated three red pine release experiments and demonstrated that not only could release of sapling pine stands be e ffe c tiv e , but that under some conditions i t could be highly p ro fitable. He deter­ mined the differences in the discounted net returns, using a variation of the Faustmann formula, a fte r projecting stand yields with and without the release. He concluded that releasing young pines from less valuable hardwoods should be given high p rio rity in forest management. Gunter and Rudolph (1968) estimated returns from release of red pine that had been planted under an oak overstory. Full release from 7 competing vegetation and intensive management were economically more feasib le than no release and extensive management. As wood q u a lity becomes more important, pruning red and white pine is rapidly becoming recognized as both a feasib le and a p ro fita b le investment. Shaw and Staebler (1950 and 1952) studied the economic and financial aspects o f pruning investments in several western conifer species. In th e ir f i r s t study, they id e n tifie d costs, p ro fits , and factors affe ctin g growth o f clear wood. They constructed tables th a t, given certain conditions and assumptions, could be used in many situations to find the cost per thousand board fe e t of clear wood produced a t a given number o f years a fte r pruning, the period a t which cost per thousand board fe e t is minimized, and the margin o f p r o fit or loss of any p a rtic u la r tre e. In th e ir second study, they illu s tra te d th at clear lumber was re ta ilin g fo r two to fiv e times as much as knotty timber. Labor accounted fo r most o f the i n i t i a l pruning costs and there were large variations in cost per tre e . Cost o f pruning to a height of 18 fe e t averaged 40 cents per tre e , but ranged from 15 cents to $1.00. Diameter growth was the most important fac to r in determining returns; pruning a tree with a diameter growth ra te o f less than 1.5 inches per decade (15 rings per inch) was not lik e ly to be p ro fita b le . In a pruning time study in red pine plantatio n s, Ralston (1953) recommended pruning more crop trees to a height o f 12.5 fe e t rather than fewer crop trees to 17 fe e t. He believed th is might prove a b etter investment because the average cost per lin e a l foot fo r pruning the bole section between 12.5 fe e t and 17 fe e t was 70 to 80 percent greater than fo r the f i r s t 12.5 fe e t. Ralston and Lemmien (1955) 8 determined when pruning should be in itia te d in young pine plantations, by comparing pruning times fo r red, white and Scotch pines. pruning techniques were also evaluated. Three They found that the most clear wood could be expected by a three-step pruning procedure in itia te d by pruning young pines 8.5 to 10 fee t when 16 to 20 fee t t a l l and continuing with two la te r prunings to 17 fe e t. They projected between three to eight percent rates of return on the investment over a 60-year ro tatio n . In pruning white pine in New England, Allen (1964a and 1964b) projected a p ro fit maximization by pruning in two steps: prune i n i t i a l l y to 19 fee t a t age 20, followed by pruning an additional 18 fee t at age 35. He concluded that a tree with only the butt log pruned is worth tw o-thirds, and an unpruned tree one-tenth, o f the value o f such a high pruned tre e. He also found that a tree with a diameter growth of four rings per inch would yield a return of 16.4 percent when pruned to a height o f 19 fe e t, as compared to 8.7 percent fo r a tree s im ila rly pruned with a diameter growth o f only eight rings per inch. In poorly stocked stands o f white pine, butt logs should be pruned at an early age or stand conversion considered. On the other hand, Horton (1966) reported that pruning 16-foot butt logs on white pine up to 80 years o f age was both e ffic ie n t and economically ju s tifia b le . Pruning costs decreased with increasing stand age and growth was f a i r l y uniform between the ages of 40 and 120 years, so he recommended a growth period o f 40 years between pruning and harvesting. In another study o f white pine pruning, Brace and Calvert (1969) found pruning increased lumber value by $9.50 per thousand board fe e t, and yielded a 14.2 percent investment return. Hocker (1974) also estimated increased lumber values 9 of pruning white pine under various conditions and assumptions. He found that stumpage prices should be increased $18.47 to $45.55 per thousand board feet for trees pruned at eight inches dbh and retained for 20 to 30 years u ntil 14 to 16 inches in dbh. Northern hardwood has increasingly gained attention as a valuable timber type over the past 25 to 30 years. Management and investment in thinning and timber stand improvement (TSI) of northern hardwood is of considerable potential value. After analyzing taxes, land value, logging cost, growth, m ortality, defect and grade, Z i l l g i t t (1948) recommended a stocking of approximately 5,500 board feet or 60 square feet of basal area per acre with a 15-year cutting cycle to provide good growth and a satisfactory investment return. In a comprehensive study of northern hardwoods by Eyre and Z i l l g i t t (1953), managerial, s ilv ic u ltu ra l, marking, and TSI aspects were discussed and guides suggested. Although the p o ssib ility of even-aged management on a long rotation with repeated thinnings was considered, they recommended that more research was necessary to determine whether second-growth northern hardwoods should be managed by all-aged or even-aged s ilv i­ culture. A time study of fe llin g cull trees by Gabriel and Nissen (1971) in northern hardwood in New York, showed that for an average cull tree 17.5 inches dbh, on an average slope of eight percent with medium underbrush and no snow, the fe llin g time was 2.88 minutes. would need to be increased fo r unusual ground conditions. The time 10 Trimble (1971) reported release operations for 7- to 9-year-old Appalachian hardwood stands averaged 11.7 man-hours per acre fo r a 2-man operation, and 3.6 man-hours fo r a 1-man operation. An average o f 111 crop trees per acre were released. Good and Books (1971) determined the influence of stand density on stem q uality in pole-size northern hardwood. From plots thinned to d iffe re n t densities, they recommended a residual basal area of 85 square fee t per acre fo r northern hardwood management, which was believed to be a reasonable compromise between log q uality and growth rate. McCauley and Marquis (1972) evaluated returns from investment in pre-commercial thinning of northern hardwood using three thinning levels. Returns 20 years a fte r the treatment indicated that pre-commercial thinning investments would most lik e ly be ju s tifie d where a high value product is the goal and where short rotations or early returns are not required. Martin and Rudolph (1975) evaluated TSI opportunities speci­ f ic a lly to establish guidelines and management p rio ritie s fo r TSI practices in small p riva tely owned northern hardwood stands in northern Lower Michigan. Internal rate of return was used and factors Influencing financial returns were also analyzed to rank various altern atives as to financial d e s ira b ility . Their results support the d e s ira b ility of northern hardwood TSI investments under various conditions. Several studies over the past several years have emphasized the necessity of using appropriate methods to evaluate forest investment a lte rn ative s. In these studies, procedures and guidelines fo r evaluating investment opportunities are illu s tra te d and recommended fo r the forest manager. Webster (1960) evaluated investment opportunities 11 In planting conifers, hardwood cleanup and release, and thinning in both cove and northern hardwood stands. A fter finding that thinning in pole-size hardwood stands was the best timber management investment op­ portunity, he outlined a detailed procedure for analyzing investment opportunities using the present net worth method. In a case study of managerial opportunities confronting the Pennsylvania Department of Forestry, Webster (1963) addressed the questions of which stands offered the best opportunities for stand improvement and where benefits would be large in relation to costs. The results were used to evaluate existing opportunities and formulate budgets and make investments accordingly. Manthy, Rannard, and Rudolph (1964) evaluated the p ro fita b ility of red pine plantations using m odificiation of the Faustmann formula to obtain present worth. Their results indicated that rates earned were low compared to earnings from other capital investments. Sim ilarly, Lundgren (1965) used land expectation values to evaluate red pine thinning investments. He did not, however, set forth procedures and guidelines to the same extent as most other studies. Later, Lundgren (1966) prepared a much more procedurally oriented report in analyzing returns from growing red pine. Two p r o fita b ility measures—expectation value and rate of return—were used to compare alternatives and the two p r o fita b ility measures themselves. Marty and Fedkiw (1966) outlined a guide for evaluating reforestation and stand improvement projects in timber management planning on the National Forests. They discussed value as a common denominator, compound in terest as a preferred measure of rate of value growth, and capital budgeting as a system fo r fund allocation. 12 Marty and Newman (1969) ranked 60 timberland classes by the internal rate o f return in a study o f the economic e ffic ie n c y o f possible management in te n s ific a tio n on national forests. Rates o f return from three to 14 percent were estimated fo r 72 of the 96 m illio n acres of unreserved commercial forest land within the national fo rest system. S im ila rly , in analyzing cooperative forest management in Pennsylvania, Manthy (1970) attempted to provide project administrators with sound investment guides fo r monitoring effic ie n c y o f program a c tiv itie s . Rate of return was used to rank investments, and evaluation procedures were e x p lic itly outlined. Lundgren (1971) suggests a closer look at investments ranked by rate o f retu rn , because present techniques fo r making a lte rn a tiv e investments do not allo cate capital e ffic ie n tly among projects fo r which the rate o f return varies with the amount invested. Derivation o f a capital demand schedule is suggested fo r more e ffic ie n t capital a llo c a tio n . He also notes the d if f ic u ltie s s t i l l remaining with cap ital budgeting theory. As a re s u lt, he recommends another method fo r evaluating timber growing alte rn ative s (1973). Cost-price, the production cost per u n it of timber output, is suggested as a p o s s ib ility . By c a l­ culating fu tu re net worth fo r an a lte rn a tiv e and then solving fo r expected p rice, th is method determines how much could be Invested per acre on a given s ite to obtain a given ra te of return. In view of the increasing concern with fo rest valuation, the expanding ro le o f computers and th e ir potential as tools fo r analyzing forest Investment alte rn ative s should not be overlooked. Hall (1962) and Row (1963) were leaders 1n applying computer techniques fo r fo res try investment evaluations. Schweitzer, Lundgren, and Wambach (1967) 13 followed with a s lig h tly more capable computer program fo r Investment analysis (NCRETURN). Schweitzer (1968), derived a program to evaluate timber production investments under uncertainty. Forster (1968) in tro ­ duced the interval-halving technique to increase computer efficiency in calculating internal rates of return fo r fo restry investment altern atives. Chappelle (1969) presented a computer program (IVST) capable of evaluating forest opportunities under three investment c r ite r ia . Lundgren and Schweitzer (1971) updated th e ir previous e ffo rts (Schweitzer, Lundgren, and Wambach, 1967) to include calculation o f more p ro fit c r ite r ia and other useful data fo r evaluating investment altern atives. Two major studies involving the determination o f Lake States timber investment p rio ritie s have been made by Meadows, et a l . (1975), and Whaley (1969). Whaley realized that public land management agencies needed guidelines fo r ranking investment opportunities in forest management. Michigan's state forests have a wide variety of timber types, stand conditions and s ite q u a litie s , resulting in an extremely large number of investment opportunities. fiv e broad treatment classes: Whaley narrowed investment choices to planting red pine, releasing red pine, conversion of oak on poor s ite s , aspen lib e ra tio n , and crop-tree release and cull removal in northern hardwoods. Specific information fo r each treatment class was necessary for investment analysis. Site q u a litie s , rotation lengths and management practices, y ie ld s , and expected products were determined or assumed fo r each class. For planting red pine, Whaley divided costs into d ire c t and in d irect costs. Simple regression analysis was used to determine planting costs which are a major component of the d ire c t costs. 14 Assumptions concerning growth response and yields were made for releasing red pine, and simple regression analysis was used to determine total cost per acre comparing total costs to the number of trees removed. For oak conversion, Whaley used the previous red pine planting and yield data. S im ilarly, the same regression equation oak removal costs. Total costs, then, were removal, chemical stump treatments, and pine planting. removal costs. was used for The same practice was used for oak Total costs, then, were removal, chemical stump treatments, and pine planting. aspen liberation treatments. The same practice was used for evaluating The responses of overstory removal on aspen growth and yield were estimated. The mechanics of removing the overstory were identical to those of the pine release treatments. With certain managerial, y ie ld , and quality assumptions and estimates, Whaley also evaluated northern hardwood improvement treatments. A separate equation for tree removal costs was derived by simple re­ gression. Total costs included administration, marking, and materials costs. Whaley wrote a computer program to rank these alternatives ac­ cording to the internal rate of return. This program can calculate rates of return for three variations in s ite quality from a single treatment. Present net worth per acre is determined for a stand with and without the given treatment for twenty-five d iffe ren t interest rates from zero to 20 percent. The difference in present net worth with and without treatment is given as an indication of the amount of money per acre that can be invested in that treatment for a given rate of return. 15 Expected y ie ld s , costs, and fin a l product prices constitute the primary data inputs into his program. Also necessary are the number of alte rn a tiv e s , investment length, number of d iffe re n t products in any a lte rn a tiv e , number of periodic costs in any a lte rn a tiv e , number of sets of annual costs and number of sets o f product fin a l prices. Future yields o f up to three products, prices fo r each product, anticipated changes in annual costs, and the value o f the remaining stand a t the end o f the analysis period are considered. By varying stand conditions and s ite q u a litie s , Whaley provided a ranking of 45 specific investment altern atives from the origin al fiv e broad treatment classes to illu s tr a te his investment analysis system. His rankings showed that 16 of the 18 red pine release treatments ranked ahead o f a ll other treatments. but one earned b etter than nine percent. All The northern hardwood treatments followed next, with a ll but one earning more than seven percent. Whaley's calculations found investments in conversion o f oak stands on poor sites to rank low in p r io r ity , as well as aspen lib e ra tio n , which generally ranked near the bottom. Meadows et a l . (1975), provide useful economic guides for allocating resources to timber management a c tiv itie s in the Lake States in terms o f re la tiv e p r o f ita b ilit y . They also used rate o f return as the major c rite rio n fo r guidelines. Stand conditions and timber management practices were used in analyzing timber management investment opportunities. Major Lake States forest types included white pine, red pine, jack pine, northern hardwoods, oak, aspen, and sp ru ce-fir. These types, along with s ite p roductivity, stand size classes, and stand density, constituted the primary stand conditions considered. From the 16 large variety of timber management practices applicable to the d iffe re n t stands, a standard management scheme was developed for each stand condition. Thus, they developed a ranking of the p ro fita b ility of more than 300 d iffe re n t management alternatives based on species, rotation age, s ite index, stocking, and management scheme. The rates of return fo r these management alternatives ranged from zero to more than 30 percent. Of the 36 alternatives with rates of return of nine percent or more, two were in northern hardwood stands, two in oak stands, and three in aspen stands; the remaining were investments in white pine, red pine and jack pine. Management schemes involving planting and thinning on pulpwood rotations in northern hardwoods, oak, sp ru ce-fir, and red and white pine constituted the majority of those alternatives ranking at the bottom. The procedure used by Meadows et a l . (1975) p arallels that of Whaley and includes id en tificatio n of the timber management opportunities, development of cost relationships fo r estimating the costs fo r each of these opportunities, development of physical response relationships for estimating additional yield generated by each opportunity, estimation of probable future values of the various classes of timber provided by each opportunity, and synthesis of the data. Cost relationships, yield s, and future prices were determined by regression analysis. The timber management practices analyzed were grouped from a cost standpoint into groups involving essentially the same operations. Primary cost deter­ minants were then determined fo r each group and used in the equations with labor or equipment costs. This procedure was also reported by H illik e r , Webster, and Tritch (1969). 17 Physical response relationships in the form o f m ultiple re­ gression equations were developed fo r each forest type. Volume, q u a lity , timing o f y ie ld , stand conditions and management practice were a ll considered in developing the system o f equations. Projections o f future values were made separately fo r the principal sawtimber species and the principal pulpwood species. In developing equations fo r future value projections, past history and future prospects o f timber industries both on the national and regional levels were f i r s t analyzed. Then, the equations were determined by using tim e-series data on stumpage prices fo r each major species and analyzing the possible influence o f demand and supply factors on future price trends. Thus, by calculating costs, y ie ld s , and incomes from "raw" data and the equations, rates o f return were computed, e ith e r by using in te re s t tables or computer programs. The study by Meadows et a l . also pointed out th at the three primary variables affectin g re la tiv e p r o f it a b ilit y are the productivity of the s it e , the fo res t type receiving treatm ent, and the length o f the investment period fo r p a rtic u la r management practices. Returns from higher sites tend to be several times greater than those on lower s ite s . S im ila rly , d iffe re n t fo rest types y ie ld d iffe re n t returns, often due to variations in responsiveness of the fo res t types to sp ecific management treatments. Also, the time a t which investments are made, and thus the length o f time they are c a rrie d , d ire c tly a ffe c t the ra te o f return. Thus, " ...tim b e r management programs over large areas can and should be designed to focus on the most productive s ite s , on the most responsibe and valuable types, and on the shorter and more re s u lt-s p e c ific investment periods" (Meadows, et a l . , 1975). CHAPTER I I I THE FOREST CULTIVATION PROGRAM Establishment Michigan has long been famous as a source of northern hardwood lumber, furnishing nearly one-half of a ll the maple lumber produced in the United States. I t is also the leader in the combined production of elm, yellow birch, ash and basswood. Shortages of quality hardwood timber, because of past heavy cutting and past and current fa ilu re to manage hardwood forest lands for continuous production, have resulted in reducing the sawmill industry in Michigan, p a rtic u la rly in the Upper Peninsula. In 1954 there were 2,100 sawmills in Michigan; now there are less than 400 (Anon., MDNR-For. D iv .). Much of the cut-over land, though, p a rtic u la rly those that are state forests have regenerated to desirable species with f a ir ly uniform age and stocking, but the trees are s t i l l small. However, these stands are often too dense for rapid growth, and there are many trees of low q u a lity, poor form and undesirable species in competition with the desirable trees. Rapid growth of desirable trees could be obtained in these stands through thinning and removal of undesirable trees. These and other proper forest management procedures could help a lle v ia te hardwood timber shortages now and in the future. Funding fo r such treatment 1s an important facto r, as such s ilv ic u ltu ra l applications often are pre-commercial. 18 19 In the past there has been l i t t l e timber stand improvement. Act 265 o f the 1945 Michigan le g is la tu re set up the fo rest Management Fund, whereby the funds from the sale of timber were to be used for reforestation in the counties where the sales were made. This was la te r changed to the use of timber sale funds throughout the state fo r refo restatio n . The Act was f in a lly amended in 1962 to enable the use o f timber sale funds fo r a ll timber management a c tiv itie s . State Repre­ sentative Russell Heilman had been tryin g fo r increased forest management funding by the state le g is la tu re since 1965, while at the same time some Forestry Division administrators had been trying to make divisional program changes (Auble, 1976). Major in te re s t centered on provision of forest products fo r anticipated future markets and the desire to see th at the state fo res t lands contribute th e ir f u ll potential to the s ta te 's economic growth. On March 9, 1972, Representative Heilman introduced House Resolution No. 374 c a llin g fo r a special committee to study the state forests r e la tiv e to the wood industry. The resolution cited Michigan's past "wealth and fame" resulting from its fo rest resources, the current low p roductivity o f the state fo rest lands, and the need fo r more intense and b etter s ilv ic u ltu re and management. passed the resolution March 24, 1972. The House o f Representatives Thus, the special committee con­ sistin g o f three members of the House was appointed by the Speaker, with Heilman as chairman. Its duties were "to appraise and study the conditions o f the state forests with regard to the q u a lity , the management, the facets o f present use, the future potential economic purpose and rewards and th e ir d ire c t influence to the woods industry so th at we may be assured th at our state woodlands w ill be properly managed and controlled fo r future g en eratio n s..." 20 Hearings were held by the committee between the 1972 and the 1973 le g is la tiv e sessions. In one such hearing on May 5, 1972, the problem was id e n tifie d as the need to "accelerate and improve the management o f state forests to meet present and future needs fo r goods and services, and protect and improve the natural environment" (Anon., 1972). The acceleration of fo rest management planning, expansion of the commercial harvest le v e l, and acceleration o f cu ltural treatments on forest lands were viewed in the hearing as possible a lte rn a tiv e solutions. Attention was also given to some aspects o f management on fo rest lands in private ownership. The Forestry Division was not represented at these hearings. Trips fo r observation were also made by the committee. One such t r ip was to Crossett, Arkansas from November 27 to December 1, 1972 (Heilman, 1972). R.6. Auble, Section Head, Cooperative Forestry in the Department o f Natural Resources was included. The purpose o f the t r ip was to observe actual intensive s ilv ic u ltu r a l and managerial techniques practiced by Georgia P a c ific 's Crossett D ivision. I t was believed th at s im ila ritie s could be drawn between Michigan and Arkansas as to the overall problem o f developing fo rest lands into a p ro fita b le , economic endeavor. In Representative Heilman's committee report to the House December 14, 1972, he concluded that intensive fo res t management and fo re s t u tiliz a tio n were p ro fita b le and that programs used 1n Arkansas could be used on Michigan's state forest lands. He fu rth e r concluded th a t Michigan hardwoods could return m illio ns o f d ollars to the s ta te 's General Fund in a short time, as "good intensive fo rest management w ill very quickly rejuvenate and make.. .marketable and p ro fita b le " the state fo rest lands despite th e ir current low grade. 21 A request to the Michigan legislature was made in the 1973-74 Forestry Division budget fo r specific funding to in itia te an accelerated program fo r increasing the economic value and production of state forest lands. The c r ite r ia fo r allocation of such funds had p rio ritie s estab­ lished as follows: 1) Need and potential for future u tiliz a tio n 2) Job needs and a v a ila b ility of local labor 3) Organizational a b ility to implement projects most e ffic ie n tly 4) Site quality 5) Stand condition (need) Supported by the findings of Representative Heilman's special study committee, Public Act No. I l l appropriated $300,000 in 1973 to the Department of Natural Resources fo r forest cu ltivatio n and management under the Economic Growth and Development Program. Thus, the Forest Cultivation Program was established. Components and Guidelines For its f i r s t fisc al year, 1973-74, the program was geared toward fiv e main components: northern hardwoods, jack pine regeneration, hybrid aspen s ite conversion, and forest inventory and analysis. Northern hardwood stand improvement I n i t i a l l y , cultural treatments in the northern hardwood type were to receive emphasis in the program. The management objective fo r th is type is to establish an all-aged stand structure for the production of sawtimber and/or veneer logs on medium and better sites (Anon., MDNRFor. D iv .). I t was estimated that two to three percent of this type, 22 aggregating between 9,000 to 15,000 acres, should receive treatments annually, and that the program should be continued at least 20 years {Haskln, 1974). A sim ilar annual acreage was projected for harvesting. When the type was eventually brought under fu ll regulation through improvement cuts and harvesting, approximately 40,000 acres would receive harvest cuts annually (Daw, 1973). For improvement treatments, stands of 10 acres and larger were to be selected i f the basal area of trees fiv e inches in diameter at breast height (dbh) and larger exceeded 120 square feet per acre. Commercial timber sales, defined as sales returning net incomes to the state, were to be given f ir s t p rio rity for treatment. Where there was a need for cultural work in addition to the removal of merchantable products, the sale price was to be reduced to offset the cost of the required cultural work. Only where the cost of cultural work was greater than 10 percent of the appraised stumpage value, where there was sub-merchantable timber suitable for the market (the value of the timber was less than the cost of doing the required cultural work), where there was no significant merchantable timber or where the cost of removing the merchantable material equaled or exceeded timber value, were any sales or contracts to be considered as being within the Forest Cultivation Program (Haskin, 1973). For situations where the estimated cost of cultural work exceeded the value of the merchantable timber, subsidized stumpage sales were to be made, but these were second in p rio rity . Department projects where commercial or subsidized sales were not feasible constituted the third p rio rity . 23 Timber management guides fo r the northern hardwood type in national forests published by the North Central Forest Experiment Station, U.S. Forest Service, were to be used by a ll the Division's fie ld o ffic es . The following are the Division's specific guides to the selection and treatment of northern hardwood stands: 1) Stands with trees that are generally seven inches and larger d.b.h. w ill be managed by basal area control, and w ill be thinned to not less than 70 square fee t of basal area per acre in trees fiv e inches and larger. 2) Small pole and sapling stands w ill normally be l e f t to grow to large pole size or given second p rio rity fo r treatment. When treated, i t w ill be on the basis of releasing 30 to 100 crop trees per acre by removal or deadening of a ll trees seriously competing with or causing mechanical in ju ry to the selected crop trees. 3) Treatment may include f e llin g , g ird lin g , and/or use of si 1vieides. The method to be used w ill be based on factors o f cost and effectiveness fo r the p a rtic u la r stand. a. Felling provides the most positive control o f unwanted trees and is therefore the preferred method. b. G irdling , p a rtic u la rly o f larger trees, is generally most economical. I t can be used on species susceptible to th is treatment and when fe llin g w ill cause damage to crop trees. G irdling without use o f s ilvicid es w ill involve a continuous axe cut or double saw cut completely around the tree and extending to the heartwood. 24 c. Silvicides approved for use by the Department Pesticide Committee may be applied in f r i l l s or with a hypohatchet, tree in jector, or by basal spray for trees of small diameter. 4) All cultural operations w ill be recommended and approved through processing forest treatment proposal forms, and the work w ill be carried out in conformance with policies for multiple-use management and the protection of envi­ ronmental and aesthetic enhancement. Northern hardwood fe r tiliz a tio n Although subject to some controversy, i t is believed that the use of fe r tiliz e r s on northern hardwoods could prove to be a highly beneficial cultivation treatment. In i t i a l ly , an annual allocation of $6,000 was suggested for fe r tiliz in g 300 to 400 acres annually to study responses (Daw, 1973). However, costs for fe r tiliz a tio n in each of the two years that i t has been done have exceeded the in itia l estimate. The fe r tiliz a tio n studies have been contracted with The Ford Forestry Center of Michigan Technological University (MTU). Both a single f e r t iliz e r application study for sugar maple and a f e r t iliz e r plan for northern hardwoods were proposed. The following are general procedures involved in the hardwood fe r tiliz a tio n study (Anon., 1973): 1) All sites should be of uniform soil texture and landform, facing either east to southeast or southwest to northwest, with good access. 25 2) Trees between 9 and 16 inches d .b.h. should be given top p r io r ity , and selected on the following basis: a) potential crop tree at next cut; b) potential q u a lity of tree. All fe r tiliz e d trees should be marked, numbered and a ll pertinent data recorded. 3) The f e r t i l i z e r is to be 10 pounds per tree o f a 15-20-30 commercial blend, or 5 pounds per tree each of ammonium n itr a te , t r ip le super phosphate and muriate of potash. 4) Placement of the f e r t i l i z e r should be around the base of the tree not to exceed a radius o f four fe e t. May and June applications were recommended. 5) Data as to growth response, longevity o f f e r t i l i z e r response, and diameter classes with the best responses to f e r t iliz a t io n w ill be obtained through remeasurement of treated trees each year a t the same time fo r 5 years. Jack pine regeneration For the next 15 years, jack pine harvests are expected to amount to about 10,000 acres annually, as age classes are being adjusted to give a uniform flow of products from a regulated forest in the future. Eventually, the desirable annual cut w ill be approximately 7,000 acres. There are problems in regenerating jack pine, and estimates indicate a need to do approximately 5,700 acres of jack pine regeneration treatment annually (Daw, 1973a). Two John Deere 740 rubber-tired four-wheel-drive skidders are used to pull a w a te r-fille d , ro llin g chopper in tandem with an 26 anchor chain for s ite scarification on jack pine sites. Each machine should be able to do approximately 100 acres in a fu ll work week. Seed from the slash or broadcast seeding w ill then be u tiliz e d for regeneration. Occasionally planting or furrowing seeding w ill be used where applicable. Some prescribed burning w ill also be used. On a ll areas designated for jack pine management, a continuing goal is the prompt and satisfactory regeneration of jack pine. Aspen regeneration This portion of the Forest Cultivation Program is primarily concerned with approximately 750,000 acres of aspen on s ite index 51 or above that is capable of growing over 30 cubic feet (.38 cord) per acre per year. Presently, some 23,000 acres are being harvested annually, which is approximately 6,000 acres above the projected desirable annual cut for a fu lly regulated aspen forest of 750,000 acres; but this rate of cutting is temporarily necessary to obtain adjustments in age class distribution to attain regulation (Daw, 1973). The unmerchantable residual trees le f t a fte r harvesting can cause severe competition for aspen regenertion. This residual over­ story should be reduced to no more than 15 square feet of basal area per acre where aspen is to be perpetuated as a desirable timber crop. The W ild life Division desires 35 percent of the forest cover to be in aspen in areas of high w ild life production. Since the W ild life Division is responsible for about 50 percent of the aspen in high d e e r-k ill areas that are given further treatment a fte r a timber sale, i t is estimated that the Forest Cultivation Program should include some 5,000 to 10,000 acres of "aspen betterment" (Haskin,1974). 27 S ite conversion to hybrid aspen Sites are often occupied by species that are not the best timber producers fo r those s ite s , such as poor q u a lity hardwrods on natural red and white pine s ite s , or sites b etter suited to aspen. Where d esirab le, cutting can convert such sites to aspen. On the Pere Marquette State Forest, conversion of low q u a lity oak to aspen on s ite index 50 or b etter sites fo r aspen appears desirable from both timber and w ild lif e standpoints. On lower s ite s , jack pine should be favored, not only fo r timber, but fo r w ild lif e where additional coniferous cover is desired. Although red and white pine are often even more productive than jack pine in such cases, there are various objections by w ild lif e managers to the conversion o f these sites to red or white pine. Conversion on poor hardwood sites under the Forest C u ltivatio n Program p rim a rily involves planting hybrid aspen developed by Dean Einspar a t the In s titu te o f Paper Chemistry in Wisconsin. Of p a rtic u la r in te re s t is a cross between Camescens big-tooth aspen (from Europe) and the Lake States big-tooth aspen, which has shown a d a p ta b ility to the sandy so ils o f the Lake States. There are approximately 200,000 acres o f poor q u a lity hardwood sites th at could possibly be converted. I n i t i a l l y , 20 to 40 acres o f these site s are projected as annual goals fo r conversion to hybrid aspen. Planting stock and advisory assistance are to be provided by the In s titu te of Paper Chemistry. Conversion costs and growth results w ill be checked c a re fu lly before any larg er scale operations are undertaken. 28 Stand improvement and pruning in red and white pine Red and white pine are the most productive timber types on a large proportion of Michigan so ils. thinning, and pruning. Both respond well to release, Presently on many s ite s , especially those well suited to growing pine, poor q u ality hardwood is over-topping or providing severe competition to the pine. included in the Forest Cultivation Program. These areas should be Where the competing hardwood is unmerchantable, i t has been suggested that timber stand improvement and release of seedling-sapling stands o f red and white pine be in itia te d wherever: 1) pine is the best species fo r the s ite ; 2) timber production is a principal objective o f management; and 3) patches o f 10 or more acres can be developed. An approximate estimate of 3,000 acres annually fo r red and white pine timber stand improvement and release has been projected (Daw, 1973a). The d e s ira b ility of pruning pine is s t i l l somewhat contro­ v e rs ia l, and has therefore been given a low p rio r ity . I t has been projected that approximately 3,400 acres o f red and white pine should be pruned annually. Pruning would be to a height o f about 17 fe e t. Access roads The lack of adequate access roads in the State Forest system is considered an important problem. Obviously, good timber management necessitates good access roads, not only because suitable timber often is not harvested due to lack of access, but also because temporary p o o rly-b u ilt roads often resu lt in reduced stumpage sales and prices. Therefore, i t has been projected that approximately 60 miles of access roads be constructed annually with Forest C ultivation Program funds 29 (Daw, 1973a). Most of the work w ill be contracted, and a maintenance schedule developed. Although these roads w ill not be high standard roads, they w ill be of value for recreation as well as for timber management. Inventory and Analysis The state of Michigan established a continuous forest inventory (CFI) system during 1950-1957. plots were established. Some 7,863 one-fifth -acre Due to changes 1n forest and d is tr ic t boundaries since the plots were established, the data obtained are considered to be accurate only on a regional basis. The diagnostic inventory designed in 1968, based upon photo interpreted type maps, 1s intended to eliminate the need fo r CFI on a small unit basis and answer specific needs of individual forests. Until i t is fu lly implemented and regulation is achieved by changing from volume to area control, CFI w ill be continued at the regional le v e l. Michigan Technological University has a contract to remeasure the plots and process the CFI data from the Baraga and Michwabic State Forests. The University w ill also establish and monitor plots on areas treated under the Forest Cultivation Program, including fe r tiliz e d areas, to check growth response. I t is hoped th at such monitoring can be expanded to a ll state forests and include a ll timber types treated under the Forest Cultivation Program. Administration In discussing the administration of the Forest C ultivation Program, reference w ill be made to the organizational charts in 30 Appendix A, depicting the present organization o f the Forestry Division a t the s ta te , regional and d is t r ic t lev els. Administration is centered in the Lansing s t a f f o ffic e . The Forest C u ltiv a tio n is t and S ilv ic u ltu r is t works with the Forest Management Planner in administering the program. The Forest C u ltiv a tio n is t and S ilv ic u ltu r is t is responsible fo r a ll aspects of the program except those pertaining to future planning, fo r which the Forest Management Planner is responsible. Both in turn report to the Forest Management Supervisor, who reviews and evaluates the reports and proposals pertaining to the program and he in turn submits recommendations concerning the program to the Forestry Division Chief. Based upon inventory data from the f i e l d , decisions on project proposals are made a t the s ta f f le v e l. A f ie ld order is then issued to the Regional Forest Supervisor, who d irects i t to the D is tr ic t Forest Supervisor, who then d irects i t to the Forest C u ltivation Team Leader. This is the formal chain o f command; in fo rm ally, the Forest C u ltiv a tio n is t and S ilv ic u ltu r is t ro u tin ely works d ir e c tly with the D is tr ic t Forest Supervisor and the Team Leader administering the program. Accomplishments 1973-1974 For the fis c a l year 1973-1974, the Forestry Division requested $260,000, p rim arily to tre a t stands in the northern hardwood type. Through inventory and programmed budget planning in a n ticip a tio n o f the appropriation, 1t was determined th a t some 31,000 acres of state fo res t lands would need timber stand improvement annually, and 14,000 31 acres would need a fte r-s a le treatment annually. Of the to ta l 45,000 acres, from 9,000 to 15,000 acres o f northern hardwood would need timber stand Improvement annually. The actual appropriation for the Forest Cultivation Program fo r 1973-1974 was $300,000. 1. The funds were allocated as follows: Northern Hardwood Stand Improvement: Region I Region I I $161,100 57,900 2. Northern Hardwood F e rtiliz a tio n 3. Jack Pine Regeneration 4. S ite Conversion to Hybrid Aspen 5. Inventory and Analysis 3,500 44,000 3,500 30,000 $300,000 The Lansing o ffic e was allocated $43,000 and expended $47,500. Total expenditures in Region I were $202,343, with an in it ia l allocation of $199,600. In Region I I , $50,699 was actually spent with a $57,400 i n i t i a l allo catio n . The major portion o f the to ta l expen­ ditures constituted salaries and contract treatment costs, with some expenditures fo r equipment. The program also funded seven additional fu ll-tim e personnel assigned as follows: 1 1 2 1 1 1 Assistant Area Forester Forest Technician Forest Technicians Forest Technician Forest Technician Assistant Area Forester - Mlshwabic State Forest Iron Range State Forest Ford River State Forest Escanaba River State Forest Jordan River State Forest Jordan River State Forest 32 The addition of these positions was an important provision of the program, because they were needed fo r Its implementation. Four two-day training sessions were held in June and July, 1973, on northern hardwood management to update a ll personnel involved in the program. Carl Tubbs, U.S. Forest Service, North Central Forest Experiment Station, presented the program (Daw, 1973b). In 1973-1974, 15 state forests, a ll but one in Region I , received program funds for treatment application. Northern hardwood areas proposed for timber stand improvement to ta lle d 7,500 acres in Region I and 2,500 acres in Region I I . In Region I there were also 400 acres of northern hardwood stands proposed fo r f e r t iliz a tio n , 1,176 acres for jack pine regeneration, and 120,000 acres to be inventoried and the data analyzed. In Region I I , 40 acres were proposed for s ite conversion to hybrid aspen. Northern hardwood stand improvement. —During the year, 26,828 acres of northern hardwood were examined to determine q u a lific a tio n s for stand improvement under the program, treatment proposals for 14,944 acres were submitted, and 7,555 acres actually received treatment. Table 1 lis ts the various procedures used, the areas treated, and average costs per acre. 33 Table 1 .— Accomplishments and costs o f treatments applied to northern hardwood stands In 1973-1974. Procedure Area treated , acres Costs per acrea Reduced stumpage timber sale 291 $14.18 Subsidized timber sale 172 17.63 Pre-commercial TSI contracts 3,748 15.35 Hired crews fo r TSI 3,344 16.58 Total 7,555 aCost of examination, tree-m arking, and supervision by regular personnel not included. Jack pine regeneration.--One thousand fiv e hundred twenty-eight acres of jack pine were examined to determine the need fo r treatment under the program, and 1,904 acres were proposed fo r treatment. In the Upper Peninsula state fo rests, 890 acres were s c arifie d fo r jack pine seed bed preparation a t a d ire c t cost of $12.55 per acre, using a ro llin g chopper in tandem with an assembled anchor chain drag. An average cost o f $25 per acre was incurred in planting 150 acres o f jack pine. In Region I I , only 50 acres were s c a rifie d , and 291 acres o f jack pine were seeded on land prepared by s c a rific a tio n or prescribed burning. S ite conversion to hybrid aspen. — Hybrid aspen was planted on 23.5 acres in Manistee County and on eight acres in Benzie County. Good 34 growth was obtained, and in a portion of the plantings l e f t unprotected to determine the e ffe c t of deer browsing, some browsing was apparent, despite the fact that the area did not have a p artic u larly high deer population. Hardwood f e r t iliz a t io n . —Because f e r t il i z e r was not available, the hardwood fe r tiliz a tio n project was delayed u n til the following year. Inventory and analysis. —Michigan Technological University remeasured and analyzed 131,585 acres on the Baraga and Mishwabic State Forests. Upon review of the inventory data, i t was considered not useful on a forest or d is tr ic t basis, but that i t should be maintained on a regional basis, at least u ntil the diagnostic inventory was completed and forest regulation achieved. The areas on which plots were established to monitor growth responses following treatment to talled 120 acres. 1974-1975 For the fiscal year 1974-1975, the Forestry Division requested and received an additional $450,000 for the program, so that the to tal appropriation was $750,000. The reasons fo r the increased funding were based upon the present condition of state forest lands, and the increasing shortage of raw materials for lumber products fo r which demand was increasing, as well as an emphasized need fo r access roads. The following is the recommendation summary (Anon., 1974): 35 Accelerate treatment o f sta te fo re s t timber lands to 20,000 acres annually. Treatment w ill include th in nin g, weeding, and f e r t il i z a t i o n o f hardwood stands, s c a rific a tio n and direct-seeding o f harvested jack pine areas, a fte r harvest treatment o f aspen stands to secure optimum vegetative regeneration, lim ite d planting including the introduction o f g e n e tic a lly superior trees on selected areas, and thinning and pruning o f red and white pine stands. I n i t i a t e a ten-year program in Upper Peninsula State Forests to construct and improve 300 to 400 miles of low speed service roads in selected areas fo r the purpose o f providing logging and management access. An annual program fo r completion o f 30 miles o f such r o a d s ..., work (to ) be done by contracting with loggers and others fo r in s ta lla tio n o f roads, c u lv e rts , and b rid g e s .. . (w ith ) construction c o s ts .. .estimated a t $4,000 to $5,000 per m ile. Lessening the s u s c e p tib ility o f fo re s t stands to insect and pathogen In fe s ta tio n by improvement o f vigor through treatm ents, subsequent so il s ta b iliz a tio n , aesthetics maintenance, use o f in s ta lle d timber roads fo r f i r e control and hunter access, and the boost to local economies through construction contracting and logging a c t iv it y , were arguments used in gaining fu rth e r support fo r the program. Between July 1, 1974 and June 30, 1975, 18,739 acres o f state fo re s t lands were tre a te d , 24 miles o f access roads were constructed, 360 permanent sample plots were established on the Iron Range S tate Forest, and 3,200 bushels of jack pine cones were purchased from northern Michigan residents fo r use in d ire c t seeding. A summary o f the goals set fo r the fis c a l year and actual treatments accomplished are lis te d in Table 2. 36 Table 2 .—Goals and accomplishments fo r the Forest C ultivation Program in 1974-1975. A c tiv ity Goals, acres Accompl 1shments, acres Improvement of existing stands 12,500 13,998® Jack pine regeneration 3,400 2,194 Aspen regeneration 1,200 1,782 400 403 S ite conversion 30 23 Red pine planting - Hardwood f e r t iliz a tio n Totals 339 17,530 18,739 aA ll northern hardwood except 2,931 acres Northern hardwood stand improvement. —The emphasis of the program again was upon timber stand improvement in the northern hardwood type, where 11,461 acres were marked fo r treatment, and 11,068 acres were actually treated (Table 3 ). Average d ire c t costs amounted to $19.60 per acre, or 68tf per square foot of basal area removed. basal area removed averaged 29 square fee t per acre. The Total costs, including d ire c t costs and overhead costs o f examination, marking, supervision, and adm inistration, averaged $31 per acre. 37 Table 3 .—Accomplishments and costs of treatments applied to northern hardwood stands 1n 1974-1975. Procedure Area treated, acres Costs per acre Reduced stumpage timber sale 608 $ 5.97 Subsidized timber sale 798 18.88 Pre-commercial TSI contracts 7,167 18.88 Hired crews 2,495 20.71 11,068 $19.60 Totals The Forest Forestry Center of Michigan Technological University was allocated $5,000 from the 1974-1975 program budget to complete in s ta lla tio n o f permanent plots to monitor northern hardwood response to treatment. Plots have been established in fiv e state forests. Hardwood f e r t i 1i zation. —Mi chi gan Technological University fe r tiliz e d 403 acres on seven d iffe re n t sites in the northern hardwood type. Monitoring plots were established on these areas to measure responses to f e r t iliz a t io n , soil characterization, and tre e-s o il nutrient status. Eight or nine potential high quality sugar maple crop trees per acre received ten pounds of f e r t il i z e r each a t a cost of ju s t over $15 per acre fo r f e r t i l i z e r and labor. 38 Jack pine regeneration. —Scarification on 2,194 acres of cutover jack pine stands was accomplished with equipment purchased through program funds. Cost averaged $15 per acre, including labor, super­ vision, supplies and equipment depreciation. On 983 acres of the scarified area, direct seeding was done by helicopter at an average cost of $14.10 per acre. The seeding attachment used on the helicopter was p a rtia lly funded from the program. For jack pine direct seeding, 5,200 bushels of cones picked from areas selected by the Area Foresters were purchased at a cost of $22,000. Aspen regeneration. —Where good aspen sites had unmerchantable aspen and/or low quality northern hardwoods l e f t afte r a commercial clearcut, and improving deer habitat was not important, the residual trees were cut to fa c ilita te regeneration of quality aspen. An average of 25 square feet of basal area per acre was removed on 1,787 acres at a direct cost of $12.25 per acre. Site conversion to hybrid aspen.- - In cooperation with the In s titu te of Paper Chemistry, 8,000 trees representing three d ifferen t hybrid crosses were test planted on 23 acres where yields of oak and hardwood had been very low. Costs of preparing the site totalled $5,600. A weather station borrowed from the U.S. Forest Service was installed to obtain a continuous record of pertinent weather information for better evaluation of the test planting. Red and white pine. —On 1,614 acres of natural and planted red and white pine, release from overtopping hardwoods was completed. On 1,317 acres of red and white pine, from 100 to 200 crop trees per acre 39 were pruned to a height of 17 fe e t. Comprehensive Employment Training Act labor was used fo r most of th is work, with only saws, other small equipment and some hand labor charged to the Forest C ultivation Program. On The Kalkaska State Forest, 339 acres were planted with approximately 200,000 red pine seedlings. Contract planting and p artial cost of the planting stock supplied by the U.S. Forest Service totaled $7,280. Road construction. —Local contractors b u ilt 21 miles o f road for timber access with an additional three miles completed the next year, a t a to ta l cost of $49,800. Inventory and analysis.--Michigan Technological University remeasured 360 permanent sample plots on the Iron Range State Forest at a cost of $39,000. area. This averaged 49