Economics of Horse Logging

[Gabe Ayers]

I am wondering if anyone would share how they get paid for their services as a modern animal powered forest products harvester? I am particularly interested in how they do that in England, if Simon would feel comfortable sharing that information. This seems to be a very important part of all of our mutual success in sustainable natural resource management.

I think I have described our sharecropping approach along with a sliding scale pay system and the benefits we see in that method. Does anyone else have a different system?

I certainly respect and understand anyone not wanting to tell details of their private arrangements. Just wondered if we could help each other make more money.

Jason Rutledge

[simon lenihan]

The following are methods of payment over here for felling and extraction using animal power. 1.. The most common method is to be paid by the tonne, lorrys that enter the mill go over a weigh bridge, a print out of that weight will be sent to the horse logger. 2..If the timber is of poor quality the horse logger would be looking to be paid by the hour or day. 3.. Some forest owners like to pay per piece, eg..£2.00 for 3.7m sawlog, 60p for a 3m length of chip. 4… If the timber is light and is only suitable for firewood it can be paid by the cubic meter. 5.. You can buy timber standing, pay the forest owner per tonne[ prior agreement ] and then market timber one self. As to how much one can make depends on so many factors, you have to walk the standing sale several times to get a proper feel for the terrain and only then will you have an idea how much you can fell and extract in a day and how much you can afford to pay forest owner [ seldom goes to plan anyway ]. I think softwood prices are somewhere similar in vermont / new hamshire as they are over here. The biggest hurdle recently is the expenses incurred during the month, traveling, horse feed, insurance, etc, its no wonder there are only a handfull working full time in the woods. Here are some of the prices we are paying at present[ take in to account that timber prices are similar and that £1.oo is worth nearly $2.00 ] 1 gallon of petrol just shy of £5.00, 1 small square bale of hay £3.50p, 20kg of rolled oats £6.50p, diesel is more expensive than petrol and the list goes on, prices will vary from place to place. the pleasure horse market has a big bearing on prices over here as it probably has every where. Alot of farmers have finished up farming and converted their farm into a livery, they said its great, a cheque at the end of each month for each horse they keep.
simon lenihan

[CRTreeDude]

Our model might be fairly unique. The primary use of our herd (12) of horses are to eat grass. We grow trees and after a couple of years, we use the horses to keep the grass down between the trees.

This makes for some fat horses I can tell you! So, we use the horses for hauling things. Water, plants, etc. It works very well.

Now that we are in wood production, we are starting to use the horses for moving logs, etc. to position for the sawmill.

The balance of cost is this: Speed of getting the job done compared to the cost of fuel (and repair!) if we were to use a tractor or ATV. We have no food costs with the horses (we can swap them out if they work too hard), and our people know how to put horseshoes on, etc. Vet bills are very cheap here as well.

Now, if I could figure out how to harness sheep too… Well, they serve a good purpose as food. 😀

[Rick Alger]

I usually pay stumpage. I bid on the standing timber and pay the landowner an agreed amount per mbf or cord based on mill scale. We are expected to utilize trees down to a three-inch top around here, so there is always a pulp figure and a log figure. My pay is what is left after trucking, stumpage, yard building, road maintenance, snow plowing etc. I generally bid 10 – 25 % lower than the going rate for machine operations. I’ve gotten about half the jobs I’ve bid on.

[Carl Russell]

In the early ’80’s I started logging with a high lead system that had been developed by Gerry Hawkes of VT, through a grant from the USDA Forest Service. We leased the machine from the Green Mountain National Forest and sold logs from several jobs that had been developed for that machine. It was quite an education about where costs are and how they play out in logging, and producing for the timber market. We were young professionals who studied intently the entire process. When it came to marketing we worked very hard to cut and sell exactly the product desired by each different mill. Boy things were different then. There were no concentration yards, and many more mills, and we could really gain from cutting for grade and sorting to different markets ourselves. We found that we completely controlled the monetary difference between stumpage and landing price by the development of skill and understanding. We also found that even as green-horns, by maximizing grade we were not cut off as quickly as other loggers, including the mills own crews.

From 1983-86 I worked in a log yard as scaler, then procurement forester. It was there that I really began to understand the ins and outs of logging economics. From that vantage point I got to see many different relationships between foresters, loggers, truckers, landowners, and mills. As I had alwaus intended to run my own small scale forestry & logging firm, I was serious about the opportunity to examine the process. This is when I clearly saw that speculation was the name of the game. Foresters were using the guise of their title to mark sales that seemed to address forestry, but were actually driven by commercial interests. They advertised the product to attract the most aggressive bidder, then tried to hold them at bay as they thrashed their way through as quickly as possible in an effort to recoup the ridiculously high price they agreed to pay. Landowners were convinced to look at the stumpage checks not at the residual forest, and at the sawmill we were forced to do battle with them all because quality was disregarded for quantity.

As I contemplated setting out on my own again, I began to develop a method that I felt would address many of these issues, including the possible conflict of interest that arises any time you mix consultant forester with logger. I have been operating under these terms since 1986.

As a forester I am committed to improving the wooded resource, no matter who owns it. This is my primary service. My primary product is the residual forest. If a landowner has no appreciation for this, there are many other options. Recognizing that machinery operations require acre after acre, it didn’t take me long to settle on a low-out-put system, draft animals.

I see no reason to leave low grade trees in the woods, especially when competing with crop trees, but I do not believe that it is the responsibility of the timber harvester to compromise their standard of living to charitably remove the low-grade component. Similarly, I don’t believe that it is entirely appropriate for the harvester to capitalize on the highest quality trees either.
Mix in the potential conflict of advising landowners during harvest and making income from the harvest at the same time, and things can get confusing.

By establishing a flate rate logging fee, ie. $150-200 / MBF, I focus on harvesting as a forest improvement service. This includes the ecology/silviculture and marketing of the harvested timber. If there is a lot of low-grade the landowner in essence invests in the future return on improved crop trees. If there is a lot of high-grade then the landowner can get a full market value for those products. At the end of the day I know that there is a certain income based on how well my skills play out. There are some times when my estimation of logging costs are inaccurate, but after 20+ years, I have a good idea. Also, the low overhead of draft animals, and the diversity of uses helps to weather those inconsistencies, and allows for other income streams, and homestead enterprises.

Happy New Year, Carl

[simon lenihan]

what would be considered a large horse logging contract across the pond, we are currently working on a 2000 tonne contract which has been our biggest contract to date, this size of contract gives us financial stability for a while but the downside is that we are out of circulation for a period of time and miss out on some contracts. I suppose its just a fact of life. I know vermont has alot of maple plantations but what about spruce and pine, what is the quality like, do horse loggers get the chance to work on the bigger stuff or are they priced out of it by harvesters/ skidders, etc.
simon lenihan

[Rick Alger]

Simon, I can’t speak for Vermont, but in my part of NH, that would have been a good contract – on the high end – back when small horse crews were common. But today timber companies and mills no longer give contracts based on volume to small operators. The large mechanized operators get the contracts along with slightly better prices and scale.

A lot of timber companies do offer cut-and-skid contracts for small loggers. These pay around $20 a ton for spruce/fir logs and $16 a ton for s/f pulp. The contracts are usually good for a logging season, but weather and other problems can shut a job down. I believe it’s the same in Vermont.

[Gabe Ayers]

This is a great sharing of information for anyone thinking about this from the business side and many other aspects. This forum is a great place for this community to share culture. The diversity of our culture as animal powered practitioners seems a natural strength we may explore.

To us – Social Capital means making people worth more money, which in turn will help stabilize rural communities.

There are many ways to go about paying for the services, but our Community based restorative forestry approach has usually guided us away from contract harvesting. Although contract harvesting may be exactly the right thing to do for many, in certain regions, economies communities. We generally are taking a slightly different strategy. Hopefully you will bear with me to explain.

There are several inherent problems with contract harvesting that we would like to avoid. The first would be valuing the services in such a simple way that they are easily pitted against someone else’s price in a competitive bidding situation. That system doesn’t work to achieve the best forestry because none of the bid sale systems account for the true quality of services that we all know animal powered methods provide. Often contract harvesting is part of a system that has an outside party mark the trees. This middle management insertion and cost, leads to further reduction of the value of the people actually doing the ground level work. Simple fee contracting lends itself, very easily, to the comparison to mechanized harvesting, by reducing the service to the simplest measure of volume removed. This marginalizes the value of the services and therefore often marginalizes the people that are working on that basis. That really comes home when someone bids to contract for less, in a “similar way” – that becomes a real reduction of value to both parties and usually to the overall health of the forest and the community that is directly dependent upon it.

Contract harvesting is often part of as system where the timber is bought on a competitive bid basis, where the party that pays the most for the described timber gets to cut it based on an estimate or maybe even individually marked trees. That method means that the people with the money up front buy the timber and the more they pay for it the cheaper they want the logging cost to be, as that is the first input cost added to the price of the timber, subtracting from their profit. So it is only natural that they would bid the harvesters against one another for who will do the work the cheapest.

In our area all the lump sum timber sales are bought by the sawmills. Often the very sawmills that you would have to sell the logs to if you out bid them to buy the stumpage. Doesn’t sound like a system that particularly cares about the harvesters. It seems like the classic divide and conquer approach to maintaining an economic caste system that keeps the poorer people from having any real connection with the natural resources.

Like Carl, I’m a forester and have been at this for a long time, (early 70’s) in many different capacities. Yet beyond the magic of working with the animals and enjoying the dignity of practicing true stewardship, this work remains intriguing, because I am still learning.

The difference between a high graded forest and one managed as an improvement harvest, crop tree management or the worst first single tree selection restorative forestry we (HHFF) promote is exponential or beyond measure in a normal accounting sense. These often unquantified values are more important than accounted for in conventional methods. Those values are what we want to use to pay for better or the best forestry. This could be the currency of “Ecological Capitalism”, where those who do the best work in the natural world get paid the most.

Our HHFF goals and objectives include many seemingly obscure statements that are translated into real world decisions in the choice of methods we promote.

One of those goals is: To perpetuate cultural traditions that reward practitioners of true forest stewardship.

Empowering ground level workers with the skills of how to do this work and the ethics of why is how we propose to perpetuate this culture.

One reason we call our practitioners Biological Woodsmen, is because we want them to more than just “loggers” or even horse or “animal powered loggers”. We define ourselves this way to avoid being reduced or marginalized by the definitions of others, particularly the power structure, dominant paradigm, status quo, conventional economy. Biological Woodsmen are essentially organic loggers that use biological power sources, biological principles to accomplish their work and biological science to inform their work.

At the beginning of this thread I mentioned that I had explained our sharecropping approach to getting paid for your services. I want to add to that explanation. Recently I was asked about our sharecropping method that uses a sliding scale pay system. I responded to that email and want to share that with the forum. It is from a private exchange with a fellow that is also a member of this forum. It is somewhat out of context from a larger exchange, but I think it will help explain what we do or prefer to do.

Again this is long and somewhat complex, but it is understandable from the perspective of being the president of an organization that works for the public good, although not the most profitable in the short term. This system requires long term relationships with the land. Any thoughts, questions or response will provide guidance. We certainly don’t have all the answers and appreciate any help.

This is how we pay for timber in a restorative forestry harvest with some brief overview.

To access natural resources with culture or the skills to do certain things that are obviously more gentle and sensitive to the environmental – as opposed to accessing natural resources with just money – is an empowerment of the ground level worker. It is anthropological culture = money. It also means that the common sense economics of restorative forestry actually making the most money over the long term is understandable to many landowners. That understanding includes preserving the landowner values of protecting the visual appearance of their forest, while extracting for immediate human needs. Now our job is to translate and educate how the aesthetically pleasing forest also is the most valuable at providing ecological services for the public good. Those services include the “Carbon Positive” forestry that results from “Ecological Capitalism”.

Sliding Scale Pay System

First – you are right you can’t do worst first single tree selection with horse logging and pay half to the landowner. What it comes down to is the average per thousand you get for your logs. High graders pay half or clear cutters, but they destroy the forest. When you take the worst first your average per thousand will be lower, but the best trees will grow faster and make more money for the landowner over the long term. So we pay on a sliding scale by not paying for any low value material at all. In other words we try to establish what we want as a logging cost or amount we make on a per thousand feet harvested and only start to pay a share after that amount is reached on an individual log basis. For us around here that ends up being about at least two hundred dollars per thousand. We sometimes start to pay at 250, it depends on how hard the extraction is and how valuable what we are taking out is. At 250 per thousand we pay thirty percent to the landowner. Then the sliding scale starts. At $400.00 per thousand we pay 40%, at $500.00 we pay 50% and this is what sells it to landowners that are stuck on 50/50 – at $600.00 we pay 60%, any prices above you can pay 60% and they make more money. This is best for you, because there will be so few logs in this value range that you will not have to pay for many. You can move this around all over the place, but the point is don’t pay for the junk at all, because that will represent 75% of your volume. Tell the landowner you actually pay more than 50/50, but just on the higher value logs. They will buy it usually, particularly if they are concerned about the future value of their forest or the appearance of it after the harvest.

Let me know what you think of all this. Sincerely, Jason Rutledge

http://healingharvestforestfoundation.org

[simon lenihan]

jason, I hope forest owners look at your organization as a means of harvesting their timber on a long term basis. I have seen so many horse loggers over the years working on large conifer plantations, removing crap timber with the promise of being able to come back for the second harvest, it seldom happened.
simon lenihan

[Carl Russell]

@Biological Woodsman 387 wrote:

……..
Sliding Scale Pay System

…… We sometimes start to pay at 250, …. At 250 per thousand we pay thirty percent to the landowner. Then the sliding scale starts. At $400.00 per thousand we pay 40%…..

Jason, are these percentages of mill price, or based on the landing price?

Carl

[Gabe Ayers]

Simon,
One method we use is to include a couple of clauses or sentences in the management agreement or contract that help with the long term issue.

The first is reads that as long as the landowner or their heirs own the land and this 501c3 public charity exist – that we agree to collaborate on future harvest. This would make it a perpetual harvesting agreement. This sometimes scares landowner’s because they are afraid to restrict their children’s options. So then we just put a sentence that reads that we have “the right of first refusal on any future harvest”.

We are not interested in controlling anyones land. In fact these clauses are probably not worth more than the paper they are written on unless you see them as “business” for lawyers. The point is that the long term approach is defined in the beginning, so the landowners know that is how we are thinking about it up front. The other point is that by doing excellent work the practitioners establishing themselves as the best at accomplishing the landowner’s objectives and this will become the method of choice. The idea is based upon re-culturing the rural world to have community “woodsmen” that are the best at taking care of the woods. So far we have some sites that I have harvested four times in my lifetime and I am sure they will be harvested by my sons again.

We also like to work on land that is in restricted future use conditions of conservation easements and family trust land. Tenure of ownership is important in order to institute long term management perspectives.

Carl,

Those prices are based upon prices for logs delivered to the mill. That would be an interesting thread to consider. The cultural differences between regions regarding delivery of goods. In this part of the country we don’t have a self loading truck available for hire in every village as you all do in New England. We have to load and haul our own logs. I hate that part of the work
and wish we could hire all the transport on a per thousand basis and just take it off the tally weekly. The worse case is to have the mill haul your logs, because then they set the price for the service and dictate pick up times and such and the practitioner loses independence of where to market. Our approach is to train woodsmen to work for the “man”, but for them to be the “man”.

Remember – the sliding scale can be moved or adjusted all over the price range to accommodate it being sustainable for the ground level workers that provide superior forestry services….meaning taking the best care of the forest ecologically and therefore most gainful economically. Brings home the meaning of eco being “house”. We only have one house and it is mother earth.

[Carl Russell]

Jason, So HHFF owns your own truck? So your cost/percentage goes to cover that as well?

I know that we all have to uphold our own level of honesty and intention, and that a person is only as good as their word, but for some reason when I got into this I was very sensitive to the appearance of conflict of interest. I realize the benefit, to both landowner and logger, of incentive to the harvester to produce the most valuable product for market. The reason I have never used a percentage is that I find it difficult to determine that place where the incentive to produce highly marketable saw-timber is different from the incentive to cut the best trees.

This is no reflection on the quality forestry delivered by HHFF, or many other firms, it is merely my own sense of comfort in describing my own services.

I like the straight line, flat rate approach because every cost is explainable in per thousand board feet. Black and white. This is only important because there has been for years, at least around here, a significant negative judgment about forester/loggers. I also find it to be an advantage because I have a completely different approach than other loggers and foresters, so I present myself in my own terms. No peers, no competition. Carl

[Jim Ostergard]

This is a great discussion! For us to stay in business we need to pay attention to the economics and it ain’t easy. I tend to follow somewhat Simon’s model. And each job is different. I use an hourly rate where I can which is $35/hour on smaller jobs. I also use a day rate on somewhat larger jobs ($180 day) based on a mim. of 6 hours a day. I have used this on a job this fall where I hauled in my camper and then hauled the horse in on Monday and worked the week before heading home which was 65 miles away. I gave the proceeds from the sale of the wood to the landowner is this case. It was very low grade pine pulp which I received $35/ton delivered in to the mill. This was a very slow job with the removal of very low grade wood. The landowner was however very committed to the improvement and long term health of the woodlot and was willing to cover the cost that exceded the wood sale by better than 100 %.

[Gabe Ayers]

These prices are for logs delivered to the mill, by our private small single axle trucks.

Jason

http://healinghavestforestfoundation.org
http://draftwood.com

[Jim Ostergard]

Jason,
It is important to share this discussion as much as possible. I get call all the time from folks wanting to know what to charge. I’m pretty sure each area is different, depending on markets on the one end and the kind of land-owners one is working with. Here in the mid-coast of Maine where there is 1) not a lot of real good wood, most of it having been cut heavily in the last 15 years, 2) lots of skidder and mechanical crew compition, 3) old style foresters who are looking for their 15% of the sale and lastly the low production with animals it presents a real challange.
I agree with Simon, each job is different. I have a little edge on pricing with pine pulp (which we have a lot of) as a certified master logger. The mills are giving us a premium. Other than that we really have to try and locate the land-owner who understands and wants to do something different and for the long haul.
I’m still at $35/hr for smaller job with timber sale proceeds after trucking being returned to the landowner. Larger jobs I try for a day rate of $180 (which barely cuts it at the end of the year), again returning sale proceeds to the landowner. Stumpage payment is the last resort for me, I have a hard time with competing with convential and mechanical loggers on this. I certainly ask for a minimum of stumpage. Won’t work with a forester who is taking a cut.
One of my goals is to be able to return each year to the same lot for more work.
Recently another logger and I teamed up for to help each other. We both currently work singles and he had a bunch of saw logs way to big for a single. With Simon’s help and advice we used his horse on the arch and mine up front in a tandem hitch. Nice way to go and it allows us to expand the service we can offer.
Hope this helps this discussion and would like to hear more.
Jim

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