Top Utilization

[Gary_C]

Most of the timber sales I deal with are MN DNR sales. In the harvest specifications they always specify the rules for each sale for slash disposal and diameter utilization. The DNR has now come up with a new computerized timber apprasial report that has this standard specification.

Top Diameter Utilization: Unless otherwise specified, each species product must be utilized down to a minimum merchantable top diameter outside bark (dob) as follows: 3 inches for cordwood material (all species); 6 inches for conifers, aspen, balm of Gilead, and birch sawtimber; and 10 inches for other hardwoods sawtimber.

Now while I have never heard of diameter outside bark (dob) term before, I guess it is clear what they are saying. However how does this affect the volume estimates that were determined from diameter at breast height and height determined at the timber cruise? Do the volume tables for species also reflect using dob rather than dib? Plus they have now changed from a 4 inch top diameter (no inside or outside specified) to 3 inch dob.

My concern is this just another factor the state is using to overestimate the volume of wood on a sale and to extract more money for the state. While it does not make much difference on scaled sales, it does make a difference on sold as appraised sales.

The DNR is changing the rules on utilizing the remainder of the tree above the top diameter limit so that you now are supposed to pay if you cut up those tops of hardwoods for firewood or chip the slash. They now specify the sales where biomass chipping is allowed and an Added Timber Agreement is required. I also know the sales where the loggers just knock down those 10 inch tops and leave them, the DNR has had very little sucess selling those tops to firewood guys, yet now if the logger wants to cut up those tops, he has to pay something like $4 or $5 per cord for the tops.  And on some sales they just estimate the volume of tops and include them in the sale volume as pulp wood so you pay for them regardless of utilization.

[WDH]

From what I have seen, most volume equations use diameter outside bark for top diameter limits since a timber cruisier cannot see inside bark.

Are the DNR top diameter limits in-sync with the mills for the various species?

[Gary_C]

I do recall the limits were usually 4 inch minimum but the pulp mills minimum top diameter has been mostly ignored because they never say anything about smaller diameters mixed in loads. I have even seen some very small diameter poles of maybe two inch stuff brought in, but that is probably with prior permission only.

The small sticks are a real pain to handle as the grapples do not grip small diameters and those small sticks can even slide out of a bundle of large diameter sticks.

However the problem I see is a policy in the DNR that was started by the former commisioner (an accountant previously) to more "accurately" scale the wood sold so the state could make more money on these sales. It is all about the money, you know. In the past you could usually assume there would be 10 to 15 per cent more wood than was scaled and now they seem to be attempting to change that to 10 to 15 per cent less so the state does not "give away" wood. Plus with the new chain of custody rules the state is able to better track the actual totals of pulp from these sales and hold the foresters accountable for the accuracy of their estimates. The DNR will even go over a sale after it is closed and estimate the volume of tops that were not utilized and charge you for that wood on a scaled sale.

[Tom]

Accountants don't read their own books.   Don't these guys realize that there is a "cost of doing business"?

When you run your equipment, you don't send them a bill for a grease rag.  I know, the auto dealer do now, but that rag is considered the cost of doing business.  So is your fuel, in a normal price structure.  The light bulbs on your truck, the paint that got scratched on the fender, the tires that you wore out on the way to work, those are all the cost of doing business.

The tops of those trees, to the landowner, are the cost of doing business.  You can't get every drop out of the land.  Some things have to be left, they aren't economically marketable.

Perhaps that is where another company, with different equipment, could come in and chip everything for fuel, or something like that, but the DNR needs to get off of their duff and start sellling those kinds of operations.  

Lots of tops are left in the woods because they are conifers and "everybody" knows you can't use conifers for firewood.  Bull!  You can't use conifers for firewood only because someone said so.   The Government will even give you pamphlets saying that you shouldn't use it when you can get hardwood.  What's wrong with these people.  They want to skim every penny off of the table and, out of the otherside of their mouth, downplay the worth of tops or softwoods.

An entire industry was destroyed in the South because it was "more economical" for the pulp mills to buy tree length wood.  You don't see shortwood pulp wood operators anymore.  Now there is no market for urban wood or tops from a plantation.  These guys used to be the scavengers of the industry.   The accountants ran them out of business.

Sorry, I don't belong in here.

I got to shut up.  My curmudgeoness is showing again. 

[Ron Wenrich]

So, how do you tell if a top is from a cordwood tree or a sawtimber tree?  Who's actually going to check?

As for a difference in scale, it will just show up as a difference in price somewhere down the line.  $100 worth of wood is still worth $100, no matter how you scale it. 

The way our state sells stumpage is that they offer them for sale.  The highest bidder has to follow certain guidelines, but he has bought the tree.  If he wants to take all of it, OK, if not, then after the contract is over, it reverts back to the landowner. 

[Gary_C]

The MN DNR sells mostly pulpwood sales, at least in the north half of the state. I have been involved in the few hardwood thinning sales in the north, but on all the sales, the harvesting rules and volumes are fixed and the sales are sold at auction starting at the appraised value.

The reason for this question is that accountant/DNR Commissioner who was given the job to "clean up the problems" at the DNR, which translated means get more money from those timber sales for the state to spend, made many changes in the rules.  I know those DNR foresters were threatened and told they would do this his way or be fired. He is no longer commissioner but his rules are still there. So normal logging practices have been pushed aside in order for the state to extract the maximun dollars from the forest resource they manage. I am just trying to determine how much some of these new rules will affect me when looking at a prospective sale.

The highest bidder has to follow certain guidelines, but he has bought the tree.  If he wants to take all of it, OK, if not, then after the contract is over, it reverts back to the landowner. 

That may have been true previously, but not any more. If you want the top for any use like firewood or chipping for biomass, you have to pay extra. Plus, if you do not utilize up to your minimum top diameter, you will pay for it anyway and then pay again for biomass. The private landowners are all for this change as it will mean more money for them.

Another area of concern is that all foresters and timber sales will be monitored with a follow up assement of the actual volume of wood from each sale. This is now possible because of the new chain of custody rules we have to follow. So there is now a tendency to overestimate the volumes on both a "sold as appraised" sale and a "scaled" sale. The reason this is a problem on a scaled sale is because they will overestimate the volume of the valuable pulp species like Aspen and underestimate the volumes of the lower priced pulp species. So even though you only pay for the volumes harvested, the total dollars realized on a sale will be less than expected.   

[Ron Wenrich]

Here's what I'm saying.  If I let something lay in the woods and lose $1, its a whole lot better than taking it out and losing $2. 

Markets vary pretty much from area to area.  I don't know of too many guys making a living cutting pulpwood.  I do know of mills that won't cut a single stick of pulpwood.  Make them pay for it, and they'll still let it lay.  It just isn't worth the time or effort.  I think that is what you get into in the topwood issue.

Another side of thinking is that if I'm cutting low grade topwood and making $1, is it better than cutting a better quality and making more dollars for effort expended?  Maximum dollars and maximum volume are not necessarily equal.  Bean counters don't know that.  They have to learn how to count the beans on the other side of the aisle.

In my area, foresters have been marking like you're talking about for a long time.  They overscale the good stuff and underscale the low grade.  I know of guys that will cull the low grade just to massage their scale.  Eventually, loggers get to figure it out and bid accordingly.

[SwampDonkey]

Yes cruised volumes are based on DOB as WDH said. They use the bark here as hog fuel. Most sawlog sized hardwood and aspen volume (70-90 %) is pulp and 30 - 40% of sawlog sized softwood volume is pulp. The rates for each product are broken down, nothing is free, but the licensees are getting a very good deal. The loggers always suffer because the licensees have bean counters who are always adjusting the cutting rates. The licensee has no investment in the logging equipment. Most loggers I cruised for have told me the volume was good enough that they were confident in bidding based on the numbers. They have said the harvested volume was very close and usually a bit of an over run. The hardwood sawlogs are hard to estimate on a standing tree and most loggers understand that. Around here no one buys hardwood sawlogs based on cruised volumes. They have to be cut and laid out to be scaled according to a recognized scale rule and graded to a mill spec sheet. The more in demand the hardwood logs are, the looser the scale specs. 

I don't think your DNR is using you loggers fair if after you bid on a wood sale, then have them come around and charge extra for tops you might chip. Doesn't sound too legal. How do DNR right up a contract for that kind of shotty business? Who would sign it? Here you cut for a timber licensee and you are paid a pre-determined rate on volume utilized. The licensee pays DNR royalties on the volume based on a 5 year market average. Of course the licensee has been known to adjust cutting rates during the harvest season. I guess if I were bidding, I would factor in the price I'm paying for my saw logs and pulp, a 10 % reduction for tops I might use and have to pay extra for.

[SwampDonkey]

Gary are they doing some type of residue and waste survey on the fresh harvested sites? How is the waste determined? Getting back to a volume cruise, it is only an estimate. Surely, they don't use the numbers as 'bang on shoot a target on the moon' type stuff.

[Gary_C]

This residue harvesting started on the pulp jobs where the loggers were using feller bunchers and grapple skidders and dragging huge bunches back to the landings for a slasher. Most loggers would grab bunches of slash and scatter it on the return trip with the grapple skidders. Then some of the larger operators would buy a chipper or grinder and pile the slash for later use. After the job was done, they brought in the grinder and ground up the residue for boiler fuel. They did not make much money, but at least it was something.

When the big push for biomass harvesting started, the state decided to regulate the slash harvesting and charge extra for the residue. So now each pulp sale will have rules for biomass harvesting. The latest one of mine has this rule under Slash Disposal:

Biomass chipping not allowed on this permit. Where allowed, an Added Timber Agreement is required.

So the logger does have an option to elect to chip the biomass and he will have to pay so much per ton for what is sold based on the consumer scale. I do not know what the charge is as I am not interested.

[SwampDonkey]

Looks like they are trying to find a way to, in effect, take their share of biomass just as if it was oil. I like the idea of regulating the biomass harvest, because of concerns of soil depletion. Most of the good nutrients are in the tops. But, it almost sounds like the policy is discouraging any notion of biomass harvesting. I know the one fellow locally doing biomass is only netting about $3 a ton. It's off private woodlots and no regulations that I'm aware off for what can be utilized. It's not a big concern yet because of volumes and number of folks in the business. Most likely that lot being chipped now will never see a chipper ever again because of the acreage we have and the demand or market. Could be a concern if it develops like the pulp industry did, but we don't have the infrastructure yet and might never get there. I believe in value added, but that doesn't mean taking a perfectly good sawlog and turning it into chips either.