The Truth ISN'T Out There

KMorrisD kmorrisd at aol.com
Tue Aug 25 22:19:03 EST 1998


 bobndwoods at aol.com (BOBNDWOODS) wrote:

What we leave are the
>pulpwood and chip-n-saw trees that are closest to growing into the next
>product
>class. The emphasis is on leaving the fastest value growth in the woods.  The
>grade sawlogs are only increasing in volume.

Bob,

Sounds like you're doing good value growth management for your clients.  You
just need a way of documenting how good, so you can convince those guys who may
want to cut those nice crop trees.

If you have a 12" DBH chip-n-saw tree with 100 bf (Intnl) at $20/Mbf (I'm just
guessing at value), that tree is worth $2.  But if you grow it for 10 years
into a 16"DBH tree with 250 bf at $100/Mbf (guessing again, also on growth
rate), then it's worth $25.

Take out a table of interest rate multipliers, or use a financial
calculator--or the int function in a spreadsheet, and you find that tree has
been growing at 29% annual compound interest.  Pretty good.  

The rate of volume increase is about 10% per year.  The other 19% is all grade
value increase.  Then you add on market value increase of say 4% (guessing
again)  and you're up around 33%.  

You could work up some typical scenarios in a spreadsheet and show them to
those potential clients and ask them if they can do better in the stockmarket
with the difference between you and the high-grader.  You're creating that
value for them...well helping Mother Nature actually.  

INFORM and WINYIELD can do all these calculations on actual inventory data for
you real fast, plus subtract for carrying and management costs.  They're both
really slick programs, and the only ones I know of that do the grade value
part.  But could be all you need is a little spreadsheet program.   

Joe has volunteered to do something like this in JavaScript for his and my
website (in progress), so stay tuned! <G>  It should be pretty cool.

Karl





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