Premiums on Certified Lumber

Karl Davies karl at daviesand.com
Tue Sep 21 18:32:36 EST 1999



Mike Hagen wrote:

> I presume you're talking about the Smartwood certification process.
> Locally it has become almost invisible after some initial PR.  It seems
> to lend itself to the non-timber forest product market pretty well but
> becomes frustrating when there are only a few, very large log buyers in
> the area. This may not be the case for you.

We only have one SW certified sawmill in the area, Lashway Lumber, and only one SW
certified landowner, the MDC Quabbin Watershed (Boston).  Trouble is, the Quabbin is
too far from this certified mill.  So the mill ends up sawing very little certified
timber, and the Quabbin ends up selling nearly all its timber to uncertified mills.

The mill owner is trying to get some of us consultants closer to his mill to get
certified as managers so he can get more certified timber.  But we're having
problems with the big fees for certification, and the question of who gets that
extra 15% on the lumber.

Last year my average price for timber was just about $125 per Mbf with a
LOT of low-grade hemlock and red maple included.  I think the Quabbin's average was
around $150.  So figure about $140 for stumpage, $130 for logging and trucking, and
$130 for milling for a total of about $400 for lumber.  All those numbers may be a
little on the high side.

Most consultants sell timber on a percentage basis.  So if the bids on stumpage go
up 15% to $161 per Mbf average, and you get 15% of that increase, then you get 15%
of $21, or $3.15 per Mbf more.  Meanwhile somebody else is getting the other $56.85
per Mbf on the extra value of the lumber.  Not much of an incentive.

Maybe we need to think about charging per Mbf fees for handling certified timber
sales, and bumping them up some.  Actually, that's the way I do it now.  But my per
Mbf rates are keyed to the competition's 15%, so I don't have a lot of leeway.

BTW, the demand for the certified lumber is apparently coming from processors all
over the country and all over the world.  Apparently there's a regional pallet
manufacturer who's really hot for certified pallet lumber!  Interesting, yes?

--
Karl Davies, Silviculturist
http://www.daviesand.com

Northeastern Forestry Reformation List Server
http://www.daviesand.com/Connections/NEFR_List/





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