The Radical Sawmill

Sunrise

Sawlogs take a long time to grow! Decades long!!

So if you are a sawmiller looking to secure your resource/business beyond next week or next year, you need to be aggressive in the market place.

Selling sawn timber is fine but if there are no sawlogs coming in, then its game over.

Under the unique resource conditions of the forest industry it could be argued that for a sawmiller, buying sawlogs is actually more important than selling timber!

So here is one sawmiller from Ashville, North Carolina, USA who is very aggressive and up front about securing their future.

http://sunrisesawmill.com/

This sawmill provides a current table of prices they are prepared to pay forest growers for logs delivered to their mill, by species and log grade.

I have never seen a sawmiller in Australia who actively seeks to buy sawlogs in the open market like this.

This is one Radical Sawmiller!

http://sunrisesawmill.com/log-prices/

Converting these prices into something that Australian/New Zealand readers can understand is problematic because:

  • Americans trade logs using board feet (12” x 1” x 1”) as a volume measure; and
  • They confuse the log pricing issue even more by then applying a sawn recovery scaling factor so that the board foot volume changes depending upon the small end diameter of the log. Sunrise use the Doyle Log scaling factor.

The use of a log scaling factor makes the job of the forest grower even more difficult than it already is!

The job of the forest grower should be to grow quality and size/volume. It should be the responsibility of the log buyer to then recover the best value from the logs via markets and/or technology.

The Doyle Log scaling factor uses the log small end diameter (under bark) and log length. There is no allowance for log taper.

So I took the Doyle Table provided by Sunrise Sawmills and did a bit of maths to produce the following chart. As a straight forward conversion there are 424 board feet (BF) in a cubic metre (CUM). With the Doyle Log Scaling factor the number of board feet per cubic metre in a log increases as the diameter increases as the chart shows. This is to account for the fact that sawn recovery increases as log diameter increases. So in the USA log buyers only buy based on a notional “recovery”. The grower pays for wastage. In Australia and New Zealand logs are traded based on total log volume, with the buyers then responsible for maximising the value from the log.

I also did some calculations to see what effect a 2% log taper would have. Obvious it means that the grower is paying for even more waste (less recovery).

BF_CUMratio

On the positive side you could say that using the Doyle Scaling factor encourages/rewards growers for growing bigger trees, with larger logs getting three times the price of smaller logs.

But my feeling is that using this method for trading logs just confuses the issues.

With this chart in mind it is interesting to note the price difference at Sunrise between the veneer vs the prime sawlog. With veneer logs it is possible to get over 95% recovery. So in terms of volume recovered, the veneer and prime sawlogs are essentially the same price! But appearance grade veneer sells for much more by volume than sawn timber. These prices don’t quite add up.

These guys even have their own Facebook page:

https://www.facebook.com/Sunrise-Sawmill-193257651998/

It is good to see a sawmiller who understands the importance of aggressive transparent marketing in buying sawlogs and securing their future.

The question remains outstanding; does this aggressive marketing and log prices translate into a prosperous community of forest growers in North Carolina?

For Australian readers it needs to be understood that the eastern USA forest industry is entirely dominated by private forest owners. There is no logging of public native forest in the eastern USA. No subsidised sawlogs. If you are a sawmiller in the eastern USA you need to be low cost, efficient and aggressive in the marketplace. It’s all business; no politics! Just like in New Zealand there is no such thing as “resource security” in the forest industry in the USA. Such a concept doesn’t exist!

Oh how I wish this would happen in Australia.

The only basis for a successful forest industry is profitable tree growing (and radical sawmillers).

PS. A target blackwood plantation sawlog (60cm dbh pruned 6m) has approx 360 board feet by the Doyle Scaling factor. At $US1,000 per 1000 MF (Sunrise price for Black Walnut) that equates to $US360 per log. At the current exchange rate of $AU0.80 to $US1.00 that equates to $AU450 per log mill door. In my books that is a pretty acceptable price…….for a premium sawlog. For a premium veneer log I’d be expecting much, much more.

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8 responses to “The Radical Sawmill

  1. Sawmills should be/could be the environmentalists’ biggest ally.
    The sawmillers need a good supply of consistent logs. Just supplying the inconsistent results of native forest logging doesn’t help. Not to mention the loss of an ecosystem. The sawmillers should be lobbying for consistent supply from private forests, not the difficult stuff from native forests.

    I cannot believe that Tasmania is so stupid to not actually understand that growing trees is just a business like any other and must be treated as such. Politicians have seized upon the divisive nature of the history of this industry and are ensuring the division remains and will not change as long as it works for them.

    Until we get politicians out of the industry, we are doomed to repeating the nonsense for years to come, meanwhile losing massive amounts of native forests, causing huge division in the community and removing any possibility of a real forest industry based on private forests.

    • Hi Nick,
      The only way to get politicians out of the industry is to stop logging public native forest.

      As for our sawmillers they are stuffed. After 100 years of subsidised public native forest logs they can no longer compete in the marketplace without increasing subsidies. They have said so publicly.

      And the most stupid thing is that private forest growers for the most part fully support this nonsense. The TFGA (as the only voice of the private forest grower) is usually 100% behind Government policy.

      So Tasmania is trapped!

      Unless the community rises up in protest, this nonsense and waste will continue for generations.

      Sad but true.

      Gordon

  2. NZ log buyers and to a lesser extent here in Aust buyers have been paying according to log size (sed) for years. Nothing confusing or hard for growers at all.

    • So where are the publicly available data in Australia on what the sawmillers will pay for farm forester grown logs of various species and grades? For a market to work efficiently pricing information is essential. The current situation has a massive information asymmetry in favour of the processors. This doesn’t encourage folks contemplating farm forestry.

  3. I’m guessing the main reason why there is no ‘publicly available’ prices paid for farm grown logs is simple. There is no real farm forestry culture here in Aust and the volumes of wood available for processors from private growers is sfa. NZ has massive volumes sourced from private growers and it is in the processors interest to advertise prices due to the competitive nature of the industry over there. Put simply, for the most part farm grown timber here is small blocks, often poorly located and poorly managed. There are exceptions and I’ve seen many plantations well managed by landowners who have taken the time to learn what it takes but unfortunately too many don’t. If you want to know prices paid then talk to as many forestry management companies and gov departments as you can.

    • It’s unrealistic to expect potential farm foresters to spend substantial amounts of time talking to “forestry management companies and gov departments” to determine prices paid. Imagine how many people would farm sheep if they had to go through this tortuous process instead of using reliable, publicly available, markets data.

      If you have this information for sawlog prices relevant to farm forestry, Stu, perhaps you could post it.

      • One things for sure. Government departments don’t know what forest market prices are. As a forest department employee I wasn’t allowed to know what prices our customers paid.

        I remember as a kid going to the local livestock market with my father to see what the current markets and prices were doing. For a kid, watching a livestock auction was pretty interesting.

        Nothing like that in the forest industry.

        Cheers

        Gordon

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