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Show manufacture into lumber. These large sizes are not required to meet the increasing demands for pulp-wood and kindred products, for which shorter rotation periods and younger trees are more suitable. These changes in the demand for wood products should be reflected in allowable cut determinations. We have also noted that the demand for wood products tends to fluctuate with changes in the economic cycle, and the availability of construction credit. Since the existing allowable cut policies are designed to lead to approximately equal timber sale offerings each year, fluctuations in the demand for timber are not taken into account in any important sense. The restriction on sales offerings in any one year or period tends toward greater fluctuations in the cut of non-Federal timber and greater fluctuations in prices of all timber than would be the case if Federal policies were more flexible. Sales Procedures Recommendation 32: Timber sales procedures should be simplified wherever possible. At present, timber from the public lands is generally sold at market value, and the market itself usually determines the price through competitive processes. However, the Commission found that the process of selling timber is confusing in its complexity and ambiguity. Much of the confusion arises because of statutory requirements that timber be sold at not less than its appraised value. The Commission believes that the Federal Government should receive the same price for its timber as would be received by a private landowner. Therefore, the competitive market should serve as the guide for the price that is received by the Federal Government. In fact, it appears that in many cases, competition can be relied on to set prices without resort to costly appraisals. Appraisals should be viewed as a means of establishing a minimum price for timber wherever competition cannot be relied on to set a price that reflects the value of the timber. But in all cases, the pricing objective should be to obtain the competitive price. There must be flexibility in both the timing and the size of sales. Because of varying needs in different regions and at different times, we do not believe that detailed statutory directives can be devised. The land management agencies must recognize this and adjust their offerings accordingly. In particular, we note the problems caused by the very long-term commitments of public land timber in large sales in Alaska. These sales, some of which have committed national forest timber to a single 98 firm for 55 years, greatly limit the flexibility of the public land agencies in meeting changing conditions and changing timber values. Coupled with flexibility there should, nonetheless, be some degree of regularity. The assurance of regular sales would complement our earlier observation that the establishment of timber production units on an economic basis would promise the availability of a continued supply, by providing the vehicle to move that supply to the market. We agree with those who have urged that bidders show financial responsibility and, where applicable, a satisfactory past performance on timber sales operations. Among the reasons for this are: (1) the degradation of the environment that ensues from an incomplete job or from failure to clean up the site; and (2) extensions of time for completion of contracts, which also have the effect of withholding timber from the consumer. It follows, as a corollary, that land management agencies should carefully scrutinize any request for extensions of time, and grant such extensions only when specific conditions set forth in the regulations are met. Methods of Sale We recommend that, for both economic reasons and in the interests of conservation, the method of selling timber on the lump sum, or cruise, basis be adopted generally by the Federal land management agencies when selling timber. The Forest Service and Bureau of Land Management differ in the basis on which each sells timber. The Forest Service generally uses scale selling, in which payment is based on the measurement of the volume of each log removed from the forest. The Bureau of Land Management, on the other hand, uses a "cruise," or estimate of the total volume of timber in a sale, as the basis for a lump sum payment. The economics of logging is such that fewer logs and marginal trees are left in the woods under cruise, or lump sum, sales than under scale sales. The interests of the purchaser, once he has paid for all the timber in a lump sum sale, encourage him to utilize all of the timber that will pay the direct costs of logging. This leads to complete utilization with a minimum need for administrative surveillance. Not only does the better utilization leave the forest less susceptible to insect, disease, and fire, but the lack of a need to scale each log results in lower costs in administering timber sales. Lump sum sales encourage more thorough logging and, therefore, produce more favorable environmental conditions than scale sales. |