Premiums on Certified Lumber

Samuel J. Radcliffe SamR at GBandCO.com
Fri Sep 17 17:39:53 EST 1999


The chain starts with the consumer willing to pay a premium. Then the
lumber people have to decide based on that premium and the extra
handling, marketing, etc. costs they incur, how much they can pay the
sawmill for the lumber. Then the mill has to decide how much it can pay
for stumpage based on what it gets for the lumber less any extra
handling, marketing, etc. costs. Then the logger has to decide what he
can pay for stumpage knowing what the mill will pay for delivered logs
and knowing what his extra logging and handling costs will be. Then the
landowner has to decide if that extra stumpage (if there is any left
over) is enough to justify your management fee. You are stuck with
making an investment decision based on analysis of this very uncertain
chain of costs and prices and the size of the market. It's the classic
residual cost value of stumpage. Although it doesn't exactly happen
linearly, all of these factors sort themselves out in the long run.

My advice: don't be the first, be the best.

...Sam


Karl Davies wrote:
> 
> Well, I guess the reason for worrying about it is economic.  If I'm going to
> plunk down $5,000 to $10,000 to get certified as a forest manager, then I'd
> want to see a reasonable chance of getting a return on that investment.  I'm
> altruistic, but not THAT altruistic. <G>
> 
> And if it looked like the landowners and the mills were going to walk off with
> all the profits from certification, why should I even bother thinking about
> it?  Especially when it's me and the loggers who are the ones who are making
> most of the effort, IMO.
> 
> --
> Karl Davies, Silviculturist
> http://www.daviesand.com
> 
> Northeastern Forestry Reformation List Server
> http://www.daviesand.com/Connections/NEFR_List/

-- 
Samuel J. Radcliffe
George Banzhaf & Company
225 East Michigan Street, Suite 210
Milwaukee, WI 53202
--
Voice:   414-276-2062        
Fax:     414-276-5206     
E-Mail:  SamR at GBandCO.com                  
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