Hardwood timber sales on state forests in Indiana: characteristics influencing costs and prices

Abstract

Timber sales conducted on State-owned forests in INdiana from 1982 to 1994 were analyzed to determine changes in costs and prices and the effect of sale conditions on costs and prices. The data set included 445 sales that ranged in size from less than 1 acre to more than 500 acres. Sales were predominantly partial cuts in mature hardwood timber. Marked timber volume was less than 5 Mbf (thousand board feet) per acre for most sales. Some sales included other methods, such as clearcutting or seedtree harvests, on some or all of the sale area. Direct costs for planning and conducting timber sales averaged $8.19 per Mbf, excluding overhead. This represented 3.9% of the high bid. Direct sale costs per Mbf increased only slightly from 1982 to 1994, about 0.1% faster than inflation over the period. Bid prices averaged $181 per Mbf over the time period and rose by 3.77% faster than inflation. Linear regression was used to identify sale characteristics that significantly affect costs and prices. Analysis showed that much of the variability in direct costs and bid prices per Mbf could be explained by available information for each sale. The r-square values were 0.74 for direct costs and 0.91 for high bid. Sale date, contract length, percent preferred species, total number of trees sold, and number of trees sold per acre all increased direct costs per Mbf for conducting sales. Total sale volume and volume per acre were negatively correlated with costs, indicating economies of scale. For stumpage prices, sale date, total sale volume, and percent preferred species were positively correlated. Size of sales in acres, number of culls, and number of trees in the sale reduced bid prices per Mbf. Although not a useful predictor of price, the number of bids was positively correlated with per unit price.

Citation

Vasievich, J. Michael; Mills, W. L., Jr.; Cherry, Heidi R. 1997. Hardwood timber sales on state forests in Indiana: characteristics influencing costs and prices. In: Pallardy, Stephen G.; Cecich, Robert A.; Garrett, H. Gene; Johnson, Paul S., eds. Proceedings of the 11th Central Hardwood Forest Conference; Gen. Tech. Rep. NC-188. St. Paul, MN: U.S. Department of Agriculture, Forest Service, North Central Forest Experiment Station: 118-128