WVFA Mountain State Forestry Fall 2020

I N D U S T R Y N E W S 14 West Virginia Forestry Association Mountain State Forestry  | Fall 2020 www.wvfa.org process across all production level classes. More small mills than expected responded they did not purchase gatewood and fewer than expected large mills responded they did not purchase gatewood. To further understand the level at which mills consume gate wood, responding mills were asked to detail how much of their total annual raw material supply is acquired through the purchase of gate wood. From the results, 44 of 100 (44%) primary wood product producers reported they consume 0–25% of their annual raw material supply in gate wood, while 56 of the 100 mills consume between 25% and 100% of their annual raw material supply in gate wood. Mills were asked if they grade logs harvested from their own stumpage tracts. The results showed that 64 of the 108 (59.3%) mills did grade logs from their stumpage tracts, while 44 or 40.7% indicated they did not. In some cases, saw mills desire to control the merchandising of logs, so they will purchase raw material as tree length stems. In this type of procurement action, the logs are hauled as tree length pieces (usually to a top diameter that reflects the minimum diameter accepted by the mill for sawing) and then bucked and merchandised at the mill. Of the mills responding, 89 of 108 (82.4%) indicated they did not purchase tree length stems. Furthermore, of the 19 mills that reported the purchase of tree length stems, a total of 13 were from PA, OH, and VA. Six surveyed mills in PA purchased tree length stems. Four responding mills from VA and three mills surveyed in Ohio also purchased tree length stems. Twelve of the 19 mills reported purchasing less than 50% of their raw material in tree length stems, while the remaining 7 purchased 50% or more, with 2 mills purchasing 100% of their supply as tree length material. When mills were asked if they had difficulty getting longer length logs, of the 107 responding mills, 82 (76.6%) reported having no issues getting logs 14 feet to 16 feet in length, whereas 25 (23.4%) did have issues. The respondents were also asked to indicate if they were paying any premium for longer length logs. Of the 78 responding mills, 48 (61.5%) indicated that no premiums were being paid for long length logs, while 30 (38.5%) mills reported that they did pay premiums for longer length logs. Straight through pricing is a purchasing strategy used by mills providing a set price per thousand board feet of logs delivered to the mill, based on a minimum scaling diameter and a minimum number of clear faces. For instance, the mill would pay the same price per MBF for logs 12-inches DIB and up and having at least two clear faces. The mills were asked to indicate if they offer straight through pricing to loggers and, of the 107 responding mills, 57 (53.3%) indicated they did not, while 50 (46.7%) did provide straight through pricing. As the price of raw material has risen, it has become more important to understand the real cost to operate sawmills. When respondents were asked if they knew the cost to operate their mill per hour, 79 (75.2%) of the 105 responding mills reported they did. Respondents were then asked if they knew the sawing cost per MBF by species. Of the 103 responding mills, 67 (65%) responded they did know the sawing cost per MBF by species. Interestingly, 22 mills (more than 20% of those responding) did not know either their hourly costs or their cost per mbf by species. One must assume that these mills at least know their overall cost per MBF, since that should be readily calculated from total annual mill costs and total annual production. Not knowing cost per hour and cost per mbf by species places a mill at a competitive disadvantage with mills Based on the survey results, sawmills recognize that a standardized hardwood log grading system is needed, with 66% of the respondents interested in supporting some type of standardized system.