Tree Size and Sawmill Profits

A woodland in Tennessee Valley was studied to determine the relationship of tree diameter and sawmill profits. The stand is made up of second-growth hardwoods and includes all diameter classes up to 20 inches and larger, with a volume per acre varying from a few hundred feet to 20,000 feet. Less than 25 percent of the volume is pine. The timber is sold for $5,000 to the mill operator in lump-sum boundary sale. Two plans of harvest were studied. One plan was to cut everything down to a 14-inch stump (12-inch DBH) or lower in hardwood and an 8-inch stump in pine and got a maximum volume of 271,000 board feet. Stumpage would come to about $18.50 a thousand. Under the plan, 45 operating days would be required to work the boundary. Trees would average 16.8 inches in diameter and conversion costs would amount to $40 per thousand. The investment per thousand would total $58.50. The green lumber would bring about $67,500 FOB the mill. The profit per thousand would be $9 and the total profit for the boundary $2,430. Under this plan no growing stock over 12 inches in diameter would be left in the area. The other plan was cut no hardwoods under 15 inch DBH and no pines under 10 inches. This would yield 223,000 board feet at a stumpage price of about $22.50 a thousand. Under this plan, the boundary could be worked out in only 37 operating days. Trees would average 19-6 inches in diameter. Conversion costs would average $37 per thousand. The investment per thousand would total $59.50. The lumber would bring $70 or a net profit of $10.50 per thousand. Profit for the boundary would be $2,342. Forty-two percent of the trees and 18 percent of the volume would be left as growing stock. Under the first plan the mill operator would spend about 7 days,or 15 percent of his total operating time, processing marginal and submarginal trees. The lumber industry throughout the TVA region suffers from the production of lumber from marginal and submarginal trees. This kind of production accounts for much of the over-supply in the lower grades. The mill operators are forced to move the low-grade lumber at a loss, and the only means of recovering the loss is to boost the price of the relatively scarce high-grade material. The mill operators must learn to use tree and log grades if they are to realize maximum profits.

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