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Species |
Percentage of Total Growing Stock Volume |
| White Pine (Pinus strobus) | 25% |
| Eastern Hemlock (Tsuga canadensis) | 10% |
| Other Softwoods | 3% |
| Red Maple (Acer rubrum) | 18% |
| Sugar Maple (Acer saccharum) | 4% |
| Birch (Betula papyrifera, B.lenta, B. alleghaniensis) | 7% |
| Beech (Fagus grandifolia) | 3% |
| Ash (Fraxinus Americana) | 4% |
| Black Cherry (Prunus serotina) | 3% |
| White Oak (Quercus alba) | 2% |
| Red Oak (Quercus rubra) | 17% |
| Other Hardwoods | 4% |
Berlik, Kittredge and Foster (2002) highlight the inconsistency of US consumers desire for global environmental protection and the reality of their current level of forest products consumption. Wood consumption in Massachusetts is estimated at over 13 million cubic meters annually but harvests from state timberland amounts to only 300,000 cubic meters. Massachusetts currently produces only 2% of the wood fiber that it consumes (Ibid. p. 13). This stems from a combination of increasing population and demand for wood products coupled with a shrinking sawmill industry (Damery and Boyce, 2003). The number of sawmills operating in the state has fallen by 55% from 1971 to 2001. Berlik et al. recommend reducing consumption and increasing harvest levels to improve the level of self-sufficiency. Current rates of forest growth exceed harvest rates by a significant margin. An argument can be made for higher levels of sustainable production of forest products within Massachusetts. Private landowners own almost 80% of the state’s forestland. Coordinating this diverse group through outreach and education activities presents a major challenge to achieving higher levels of sustainable production (Clawson, 1979).
LANDOWNER GOALS
Though we may recognize, from a policy perspective, a need for higher
levels of local production, the decision to actively manage
Massachusetts’ forests still lies with individual landowners. Apart from
the “macro” perspective on demand and supply, individual landowners have
varying perspectives and goals. Private forest landowners have many
values and ownership objectives beyond revenue from timber harvesting
(Young, Riechenbach, and Perkuhn, 1985).
To gain insight into the values of private forest landowners Damery
(2001) surveyed 232 western Massachusetts forest landowners who had
active forest management plans. When asked to rate their level of
interest in 8 different forest management goals, landowner income came
in fifth. Wildlife habitat, tree and plant quality, ecosystem health and
water quality all ranked higher. Rankings for all options are shown in
Table 2.
Table 2 – Landowner Rankings of Forest
Management Goals
(n=232, Source: Damery (2001))
| Issue | Percentage of Respondents who ranked issue as “Strong” or “Moderate” Interest |
| Wildlife Habitat | 58% |
| Tree and Plant Quality | 56% |
| Ecosystem Health | 52% |
| Water Quality | 38% |
| Landowner Income | 36% |
| Aesthetics | 16% |
| Recreational Opportunity | 14% |
| Local Economy | 10% |
Clearly, these landowners desire to maintain and improve their
forestlands. The results from this survey led to the adoption of forest
certification as a method of achieving recognized standards of
sustainable forest management. The survey also showed that timber
management is only one goal among many. Achieving the various landowner
goals is costly. Timber harvesting is often looked on as the means to
finance other activities. A confounding factor is the need to improve
the overall stand quality for long-term management. This often requires
thinning or selective harvests. Small diameter, crooked stem, or low
value species that might be targeted for removal, often bring little or
no value in the market place. This problem of finding markets for this
material has been identified as a key goal by the landowners of the MWC.
Traditional market factors also stand in the way of a solution regarding
the financing of thinning cuts. Local markets for small diameter wood
are thin (Clawson, 1979). That is, there may be few, or no buyers for
this material within an economically feasible trucking distance of the
property. This has sometimes led to the practice of high grading, where
the largest and best-formed trees are regularly harvested leaving an
inventory of poorer quality trees (Beattie, Thompson and Levine, 1993).
Recent outreach and forestry education activities are raising the
consciousness of both foresters and landowners and this is serving to
lower the level of high grading activity.
Landowners are sometimes unaware of the benefits they can gain by
obtaining professional assistance, such as that offered by consulting
foresters. Landowners who undertake harvest activities without
professional assistance have been shown to receive lower returns from
their sales and were less satisfied than those who contracted with a
consulting forester (Clark, Howard, and Parker, 1992). Owners of smaller
forest parcels are less likely to seek professional assistance and may
be at a competitive disadvantage in negotiating stumpage prices with
buyers (Clawson, 1979; Birch, Hodge, and Thompson, 1998). In summary,
the individual forest landowner is faced with both educational and
economic challenges in achieving their desired management goals.
COOPERATION AS A SOLUTION
A group of forest landowners in Western Massachusetts began meeting
in 1999 to share their experiences and address some of the issues
discussed above. Two needs emerged from the initial meetings; a desire
to improve their knowledge of sustainable forest management and the
desire to improve the economic return from their harvest activities.
Cooperation is one method with the potential to address these needs. The
potential benefits of cooperation can stem from both economies of scale
and from economies of scope (Baumol, Panzar, and Willig, 1982).
Economies of scale provide the potential to develop better markets for
the small diameter and lesser-valued materials. Coordinated harvest
activities can lower the unit costs of harvest. Costs are lowered
through more efficient use of consultants and loggers. By combining
their management efforts a group of landowners are able to offer a
steady stream of forest products, over time, from a much larger combined
forest area. Larger harvest volumes, and more reliable supply have the
potential to generate higher timber sales revenues (Clawson, 1979; Simon
and Scoville, 1982).
Economies of scope affect the number of different types of activities
that are enabled by coordinating efforts. The ability to achieve
landscape level ecosystem objectives is enhanced through cooperation (Belin
et al., 2005) Non-timber management activities including wildlife
habitat, ecosystem health and recreational activities were identified as
examples of these in the 2000 landowner survey (Damery, 2001). Other
examples of the potential benefits of cooperation include identifying
capabilities and quality of work histories of service providers such as
consultants and loggers.
THE COOPERATIVE FORMATION PROCESS
The mission of the cooperative contains three primary objectives. The
first is a desire to perform forest management in an environmentally
responsible fashion. The second is to coordinate value-added operations
in order to improve the financial returns to the landowner. The third is
the desire to conduct business operations with local partners in order
to foster local community economic development. The organizing process
leading to incorporation took 2 years. The Limited Liability Corporation
(LLC) form of organization was selected based on ease of formation and
operating flexibility. Though formed as an LLC the MWC operates as a
cooperative where each member has one vote, and profits are returned to
the members based on their share of the value of the wood that the
cooperative processes. In the case where profits are available to
distribute back to members, they are apportioned on the basis of the
stumpage value that each member contributed to the cooperatives
operations that year. The MWC is a for-profit organization and
membership is by invitation. In addition to the landowner founders, a
group of resource professionals was assembled to advise and inform the
membership regarding forestry and business operations. Professional
advice was sought from forest products producers, lawyers, accountants,
university faculty, state forestry professionals, consulting foresters,
and non-profit groups interested in cooperative formation and economic
development. The group of resource professionals provided specific
knowledge in the areas of sustainable forest management, incorporation,
business management, accounting, manufacturing, drying and marketing.
COST EFFECTIVE FOREST CERTIFICATION
MWC members have a strong desire to conduct forestry activities
consistent with the world’s highest standards. The FSC Northeastern US
Regional certification standard was chosen at the outset as a recognized
measure for achieving this goal. With the help of grant funding from the
US Department of Agriculture, Forest Service, the MWC developed a
protocol for certifying members forestlands. Working with the University
of Massachusetts-Amherst faculty and students, and state forestry
personnel an “umbrella” protocol for group certification was developed.
This was designed to provide a cost-effective way for small landowners
to have their forests certified as being sustainably managed. MWC’s
application for FSC group certification was approved in 2003.
One requirement for MWC’s group certification was that each member must
have an approved forest management plan that addresses the 9 guiding
principles of FSC. The majority of landowners joining MWC are already
covered under a forest management plan. Typically these plans are part
of a Massachusetts forest property tax reduction program known as
Chapter 61. This program requires a 10-year commitment to keep the land
in it’s forested state and to follow the management activities that are
described in the plan. Chapter 61 participants are eligible for a
property tax reduction of up to 95% of the assessed value of the
forestland. Penalties are applied for any early withdrawal from the
plan. The required forest management plan is comprehensive addressing
both timber and non-timber objectives. Landowners typically contract
with a consulting forester to survey their property and work with them
to identify specific landowner goals that are written into the plan.
Members with these types of plans need only slight modifications, at a
modest cost, in order to upgrade their Chapter 61 plans so that they
meet the broader FSC guidelines. The annual audit fee is approximately
$1,500 USD, which is covered by the cooperatives general operating
expenses. Apportioned across more than 40 members this represents
roughly $40 USD per member annually.
In order to keep audit costs to a minimum MWC acts as an internal
auditor to ensure compliance with FSC guidelines. Staff, members and
volunteers including forestry faculty from the University survey each
member’s property annually. Harvest activities performed on member
properties are reviewed by MWC staff. Smartwood, part of the Rainforest
Alliance, has been the FSC auditor. Having the internal review team
allows Smartwood to select a random sample of all member properties to
review during their annual audit. By selecting a sub-set of all member
properties, the time and expense of the outside auditor can be kept to a
reasonable minimum. Documentation of MWC’s internal audit team visits
are also reviewed as part of the annual outside audit. The process
developed provides a lower-cost method of forest certification, than
individual members could have achieved on their own.
OPERATIONS AND MARKETING
Three part-time staff, currently manages MWC operations. Two
co-Executive Directors manage membership, harvest activities,
value-added production, and sales and marketing. An office manager
handles day-to-day clerical operations for the cooperative. The
cooperative contracts a part-time bookkeeper and retains accounting and
legal help as needed.
Staff reports to a board of directors and the general membership. Staff
is presently funded through a major US Dept. of Agriculture, Rural
Business-Cooperative Services Grant. These funds, awarded in 2004, were
designed to provide start-up working capital that would enable the MWC
to be financially self-sustaining by 2007. Membership fees, and product
sales generate other income. An annual membership fee of $85 USD has
been assessed each member for each of the years 2004 and 2005. The MWC
business plan was developed using data from pilot projects where trees
were harvested from member properties and then managed through a variety
of value-added processing steps. The business plan included operating,
marketing and financial plans and projections. A break-even production
rate was estimated and is projected to be 1,200 cubic meters (350 MBF)
of processed timber annually. MWC staff coordinates steps in the
value-added process. Staff consults with landowner members and their
consulting foresters to purchase stumpage at above market rates. In
addition, staff contracts with independent loggers for harvesting,
sawmills for primary processing, dry kilns, and molders for secondary
processing into flooring and other products.
Manufactured products include: rough sawn lumber, finished
tongue-and-groove hardwood flooring, timbers and logs. These products
are marketed to local homeowners, building contractors, and architects
for inclusion in residential and commercial construction. Several
pilot-project case studies were conducted to produce hardwood flooring,
timbers, poles and lumber. Data was gathered from each of these projects
including; yields, costs, prices, and time involved. Data from the pilot
projects and the field experience gained were used to develop a business
plan.
Pilot projects included production of hardwood flooring, and the harvest
and production of black locust (Robinia pseudoacacia) for lumber, posts,
railings, and firewood. These projects required coordination of:
landowners, consulting foresters, loggers, trucking, sawmilling, drying,
and value-added processing (moulder). Higher than expected yields were
achieved, but at the added cost of additional labor time and management
expense (Campbell, 2004).
The flooring project involved processing 30 logs, mostly of black cherry
(Prunus serotina), that were left over from a harvest and lumber milling
project. This material was of relatively small diameter and low to
medium low in quality. This provided an opportunity to experiment with
the production of strip hardwood flooring. Strip flooring can be sold in
relatively narrow widths and short lengths. The material was trucked to
a local circular saw mill, owned by a cooperative landowner member where
it was milled and dried. The dried material was trucked to a custom
moulder for production of tongue and groove flooring in a variety of
widths. Costs were tracked throughout the process and the material was
marketed at a competitive price. Two factors should be noted in this
project. The first is that the species, black cherry, commanded a
premium price in the marketplace. Marketing the less popular species,
red maple, yielded lower margins. Secondly, the flooring material was
marketed locally as a “natural” or “character grade” flooring, and was
not separated into traditional grades of flooring. This “run of the log”
grading process requires education of the consumer in the market place.
A second pilot project involved the harvest of a small stand 0.4 hectare
(1 acre) of black locust located in close proximity to a cooperative
members home. As black locust is not a common species in the region,
this project involved finding a potential buyer for the harvest and
processed material prior to starting the project. One of the highest and
best uses of black locust is in exterior applications. Black locust is
considered to have very high decay resistance (Forest Products
Laboratory, 1999). A buyer was identified who specializes in the
production of outdoor walkways. MWC co-director Susan Campbell
coordinated the activities of the landowner, forester, logger (who also
purchased the end material), and sawmiller. Details of the particular
end-uses that the buyer was interested in were obtained. This
information was used by the logger and sawmiller to produce a much
greater volume of material than either the initial forester inventory,
or subsequent log-tally indicated. The overall sawlog volume recovery
was 2.2 times what was expected in a conventional harvest. The estimated
value of products recovered was even greater. Value at the log landing
was estimated at $3,547 USD under the cooperative managed scenario vs.
an estimated $1,158 USD that might have been received in a conventional
stumpage sale (Campbell, 2004).
MWC is developing value-added markets for traditionally under-valued and
smaller diameter wood. The production of red maple flooring is an
example. In recent decades Red maple has attracted lower stumpage prices
than many other species. One result has been rapidly growing volume of
this species. Comparing the two most recent forest inventory results,
1985 to 1998, growth of red maple has exceeded removals by a factor of
6.5 times (Alerich, 2000). Product markets like flooring can utilize
smaller diameter logs, and short cuttings. The pilot projects helped
establish the economic feasibility for this market. Further market
development may provide members with higher returns for red maple that
can lead to increased harvest activity.
If the cooperative is to succeed on an expanded level, markets must be
found to absorb a much higher level of production. Two primary markets
have been identified as holding the best potential. The western
Massachusetts region has a reputation for cultivating “buy-local”
markets. There is a minority, but significant, portion of the consuming
public that prefer to buy local material over, possibly less expensive,
products imported from outside of the state. On a more global scale,
mechanisms such as the Low-Energy and Environmental Design (LEED)
architectural standards promote the purchase of locally produced
materials. Marketing materials and promotion campaigns for MWC produced
products will promote this buy-local message.
The second major market opportunity is associated with sustainable
management and green certification. A different, but perhaps
overlapping, consuming public appreciates the notion of sustainable
forest management. To support the expansion of green certified forest
products, the MWC has embarked on a project to certify local forest
products businesses. A group “chain-of-custody” umbrella protocol has
been developed and several local businesses are in the process of
applying for certification. The “chain-of-custody” process ensures that
businesses can document their material purchases and manufacture of
products that utilize “green certified” wood. This provides the
end-consumer with an audited level of assurance that the product they
are purchasing can indeed be traced back to material that came from a
sustainably managed forest.
MEMBERSHIP GROWTH AND THE FUTURE
Growth of the MWC has been incremental. Conservative governance has
focused on developing partnerships with existing manufacturers rather
than purchasing new plant and equipment. This has helped to avoid large
capital investment, borrowing, and debt-load. Challenges remain in
expanding the membership to enable balancing the harvest activities of
the membership with the market demand for MWC value-added products.
Educating potential new members of the costs and benefits associated
with the cooperative is time consuming. Current members of MWC include
42 individuals, families and organizations with 1,900 hectares (4,600
acres) of forestland. The average property size is approximately 45
hectares (110 acres).
The economies of scale and scope provided by the cooperative are
dependent on the identification of higher value markets for these
less-valued materials. If successful, more timber stand improvement work
can be conducted on member properties. These management activities have
the potential to increase timber growth rates and stumpage values.
Non-timber management goals, such as recreation, wildlife habitat, and
ecosystem management, will also be less costly to achieve if higher
values are received from associated harvest activities.
If MWC can achieve its management and marketing goals, additional
revenues will be generated for the member landowners that should provide
an incentive to keep their property in forestry. Improved forestry
returns combined with practicing the highest recognized standards of
sustainable forestry would enable members to help preserve the forested
landscape of western Massachusetts for future generations.
MWC has worked continuously to broaden its own membership and to assist
other groups with similar goals. Publications, conference presentations,
and a recent grant aimed at promoting this sustainable forestry model to
farmers are some of the methods that have been used to disseminate the
knowledge that has been gained. MWC pilot projects are featured in the
book, Profiles from Working Woodlands by Susan M. Campbell (2004).
Various projects undertaken by MWC have been presented at forestry
related conferences in the United States, Canada, and Australia. The
United States Department of Agriculture, Sustainable Agriculture
Research and Education program awarded MWC a 2-year grant, begun in
2005, to encourage farmers with woodlots to adopt sustainable forestry
practices. As knowledge is gained and problems are solved, MWC will
continue to publish their findings with the goal of promoting
sustainable forestry practices worldwide.
CONCLUSIONS
MWC has shown that small private forest landowners can successfully collaborate to achieve sustainable forestry goals. They have developed a model for obtaining FSC land certification cost effectively. They are producing value-added products for “buy local” and “green certified” markets, and providing the landowner members with higher rates of return for their forest management activities. Recommendations for landowners in other regions who wish to achieve similar results are:
When landowners are able to cooperate, they may be able to achieve
recognized standards of sustainable forestry at a lower cost. Through
careful forest management and business planning they may be able to
increase returns from management activities and improve the level of
both public and private services from the world’s private forests.
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