The average forest landowner in Wisconsin owns fewer than 30 acres, and in 2014, landowners with as few as 10 acres of forestland were eligible to enroll in a tax program that required periodic timber harvests. These factors point to a need for loggers capable of profitably harvesting small parcels of timber. A series of in-person interviews were conducted with representatives of 15 Wisconsin logging firms previously identified as successful at harvesting small parcels of timber. Ninety-two percent of mechanized loggers had harvested parcels of 10 acres and smaller within the past year. Eighty-five percent of mechanized loggers were willing to harvest parcels as small as 5 acres assuming that only a short move (<5 mi) was required between timber sales. The average direct moving cost for mechanized loggers was $406 per move, versus an estimated$778 when the costs of idle employees and equipment are included. Seventy-seven percent of the participants in this study purchased at least half of the timber that they harvested, and 85 percent performed services other than timber harvesting, such as establishing food plots, as a procurement tool. This study demonstrates that properly equipped Wisconsin loggers are profitably harvesting small parcels of timber; however, loggers and other timber buyers must recognize the additional costs associated with these harvests and adjust stumpage rates to compensate for these costs.

Parcelization is the process by which relatively large forest ownerships are divided into smaller ownerships (Rickenbach and Gobster 2003). There are a number of factors that drive parcelization in the United States, such as a growing population, intergenerational transfers of forestland, and the divestment of forestland by the forest industry. In 2006, the average family forest landowner in the United States owned only 25 acres (Butler 2008). Land ownership trends in Wisconsin are similar to those for the United States as a whole. In 2009, the average family forest landowner owned just 26 acres (Perry et al. 2012).

Parcelization can have negative impacts on forest management and the forest resource. It is well documented that owners of small parcels of forestland are less likely to invest in forest management than landowners with large parcels (Straka et al. 1984, Romm et al. 1987) and the likelihood of commercial forestry taking place is inversely proportional to population density (Wear et al. 1999). For these and other reasons, the 2010 Resources Planning Act Assessment lists the combination of urbanization and low-density development as one of seven major challenges to sustainably managing the forest resource (US Department of Agriculture Forest Service 2012).

Harvesting costs are typically higher on small parcels of timber than on large ones because fixed costs, such as moving costs, are spread across small harvest volumes (Row 1978, Cubbage 1983, Rickenbach et al. 2005). Cubbage (1983) suggested that costs increase rapidly on parcels smaller than 50 acres and may become prohibitive on parcels smaller than 20 acres. Rickenbach et al. (2005) advised that, in Wisconsin, a timber sale may need to be at least 20 acres to attract the attention of most harvesting firms.

Research in South Carolina found that the percentage of timber harvests conducted on parcels smaller than 40 acres increased from approximately 40 percent in 1998 to nearly 65 percent in 2008 and was projected to increase further (Moldenhauer and Bolding 2009). A similar trend was reported by consulting foresters across the southern United States (Conrad et al. 2010). In response to parcelization, many South Carolina loggers reduced the size of their workforce and/or sold some of their equipment (Moldenhauer and Bolding 2009).

Wisconsin loggers may be better positioned to adapt to parcelization than their counterparts in the South. The most common harvesting system in much of the US South is the feller-buncher/skidder system (Baker and Greene 2008, Moldenhauer and Bolding 2009), which often requires five or more pieces of equipment and four or more workers per crew (Bolding et al. 2010). In contrast, the cut-to-length system is the most common system in Wisconsin (Rickenbach et al. 2005, Traver et al. 2013), and this system requires only two machines and two operators, which results in lower moving costs than feller-buncher/skidder systems. Furthermore, approximately one-third of Wisconsin loggers use chainsaw systems, and past research indicates that these loggers are more likely to harvest small private woodlands (Rickenbach and Steele 2005) and are better equipped than fully mechanized loggers to profitably harvest parcels smaller than 20 acres (Allred et al. 2011).

Wisconsin's Managed Forest Law (MFL) program was open to landowners with at least 10 contiguous acres that are 80 percent forested at the time of this writing (Wisconsin Department of Natural Resources [WDNR] 2013). The MFL program reduces tax rates for enrolled landowners from a statewide average of $42.70/acre to either$10.68/acre for land closed to the public or $2.14/acre for land open to the public. The MFL program requires landowners to have a management plan and conduct active management, including timber harvesting. The relatively small minimum acreage required for enrollment in this program may create difficulty if loggers cannot profitably harvest parcels that are 10 acres and smaller because landowners may be penalized with a noncompliance fee of$250, loss of MFL designation, as well as withdrawal taxes and fees if planned harvests are not performed.

Clearly, there is a need for logging firms that are willing and able to harvest small parcels of timber. Urbanization and parcelization will continue, and landowners enrolled in the MFL program need to have their timber harvested to comply with the law. Therefore, the purpose of this study was to identify the characteristics of and strategies used by Wisconsin logging firms that profitably harvest small parcels of timber.

### Logger interviews

For the purposes of this study, a successful small-parcel logging firm was defined as a logging firm that regularly and successfully harvests parcels of timber smaller than 40 acres and is capable of successfully harvesting parcels smaller than 20 acres. The 40-acre threshold was identified as a breaking point between firms that specialize in harvesting small parcels on family forest land versus those firms that specialize in harvesting larger parcels on state, county, and industrial/corporate forestland (Rickenbach and Steele 2006).

Successful small-parcel loggers were identified by contacting 48 mills and forest industry experts by phone and e-mail. Mill contacts were targeted toward procurement foresters when these entities could be identified; however, when this was not possible, inquiries were directed to mill managers or other responsible officials. Wisconsin mills were identified using Wisconsin's Wood Using Industry Online Database (University of Wisconsin–Madison et al. 2006). Mills purchasing more than 3 million board feet of timber annually were contacted and asked to provide the name and contact information for loggers who successfully harvest small parcels of timber. The 3 million board feet cutoff was chosen to eliminate secondary mills, hobby mills, and small mills that deal with few or no loggers. These contacts yielded a total of 80 unique loggers from across Wisconsin, which represents approximately 10 to 15 percent of Wisconsin loggers based on past studies (Rickenbach and Steele 2005, Rickenbach et al. 2005, Traver et al. 2013). From the list of 80 loggers, 19 were selected for further study. Loggers were selected based on the frequency with which their firm was mentioned by mills and forest industry experts, the type of harvesting system used, and geographic distribution. Logging firms that were mentioned by multiple entities were automatically included in the study because this was considered strong evidence that the logger was actually successful on small parcels. Additionally, if a logger was said to have a unique or innovative logging system, that logger was included in the study. Finally, Wisconsin was divided into four quadrants using US Highway 51 as the east/west divider and Wisconsin State Highway 29 as the north/south divider, and at least one logger was selected from each quadrant. Forest type, population density, and topography vary considerably across Wisconsin, and therefore receiving input from loggers from each region was considered beneficial.

After the 19 loggers were selected, each logger was contacted by phone to request an on-site interview. Fifteen loggers agreed to participate in the study, while the remaining four either chose not to participate or did not return telephone calls. This participation rate is comparable to the one reported by Stone et al. (2011) in a similar study. Interviews were conducted during the summer and early fall of 2013 at active harvesting sites or another location chosen by the logger. In most cases, the interview was conducted with the owner of the logging firm, but in three cases the interview was conducted with another individual familiar with the logging firm's structure and operations, such as a staff forester or timber buyer. During the interviews, data were collected relating to the size of parcels harvested, moving costs, harvesting equipment, timber procurement, type of timber harvested, profitability, and experience.

### Three harvesting systems

Loggers in this study used three systems to harvest small parcels: cut-to-length (13), chainsaw and skidder (1), and specialized small-scale equipment (1). Of the 13 loggers that used cut-to-length equipment, 7 used rubber-tired harvesters and 6 used tracked harvesters (Table 1). The ability of mechanized loggers to harvest small parcels of timber is encouraging because the majority of Wisconsin loggers use mechanized systems (Traver et al. 2013). Small parcels of timber are often located near the landowner's residence, which makes timber utilization and aesthetics more important than on secluded harvests. Loggers C, F, and J suggested that cut-to-length equipment improves utilization and leaves a more aesthetically pleasing site after harvest than other systems.

Table 1.

Profile of 13 cut-to-length loggers that were identified as successful at harvesting small parcels in Wisconsin.a

One logger in southwestern Wisconsin harvested timber with a chainsaw and cable skidder. In the steep terrain of southwestern Wisconsin, it is common for loggers to construct bladed skid trails and use cable skidders to winch logs to the skid trails. Chainsaw systems typically require lower capital investments than cut-to-length systems, which reduces overhead costs and may allow chainsaw-based loggers to be competitive with mechanized loggers on small sales. This logger invested only $51,000 in equipment, whereas the smallest capital investment by fully mechanized loggers was$115,000 by Logger E (Table 1). While $51,000 appears low, the median investment by chainsaw loggers was just$60,000 in 2010 (Traver et al. 2013).

There are several disadvantages to harvesting small parcels of timber with chainsaws. First, in Wisconsin, the average chainsaw crew produced only one-third of the annual volume produced by the average cut-to-length crew in 2010 (Traver et al. 2013). In this study, the chainsaw and cable skidder system produced approximately 8,250 tons/y, while cut-to-length loggers' annual production ranged from 6,045 tons (Logger M) to 30,875 tons (Logger H). Second, worker's compensation insurance rates in Wisconsin at the time of this study were $39.78 per$100 worth of payroll for chainsaw loggers versus only $10.95 per$100 of payroll for fully mechanized loggers (Wisconsin Compensation Ratings Bureau 2013). Finally, probably because of the danger and strenuous nature of the work, it can be difficult to find employees willing to work on chainsaw crews. Several loggers in this study that had once operated chainsaw crews had shifted to cut-to-length logging in part because they had difficulty staffing chainsaw crews.

One logger used specialized small-scale equipment to harvest timber. He used a Kioti Forester DK35SE tractor, a Metavic forwarder trailer pulled and powered by the tractor, a Metavic Wheeler for transporting logs to the mill and moving equipment, and chainsaws for felling. This logger typically harvests between 500 and 800 tons per y. This system required an initial investment of approximately $128,000 for new equipment, including the cost of a pickup. While this is higher than the median investment of$60,000 by non-mechanized firms in Wisconsin (Traver et al. 2013), this system does allow the logger to perform all harvesting functions from felling trees to delivering wood to the mill and moving equipment between harvest sites, whereas many loggers contract with outside entities for hauling timber and moving equipment. This logger has used this system for approximately 12 years, but has yet to make a profit. He is retired from another occupation and logging is considered an “expensive hobby.” He takes satisfaction in his work and considers it his contribution to good land stewardship.

While past research indicates that chainsaw loggers can be competitive on small sales (Rickenbach and Steele 2005, Allred et al. 2011), the trend toward greater mechanization in the logging industry is continuing (Traver et al. 2013). For this reason and because this study included only two chainsaw loggers, the remainder of the results will focus on participants using mechanized systems.

The average moving distance for mechanized loggers in this study was just 30 miles. The average reported moving cost was also fairly modest at $406 per move for cut-to-length systems. However, once the costs of idle equipment and the wages paid to idle employees are included, the average moving cost increases to$778 per move. By comparison, Greene et al. (1997) assumed moving costs of approximately $1,500 (adjusted to 2014 dollars) for cut-to-length and whole-tree systems, and Abbas et al. (2013) calculated moving costs well in excess of$1,000 per move for cut-to-length systems. It is important to note that if loggers moved outside of normal operating hours they could reduce their moving costs to approximately $406 because the costs of idle equipment and idle employees would not apply. However, the vast majority of loggers in this study moved during normal operating hours. Several loggers reduced their moving costs by driving rubber-tired equipment on public highways between sales. This strategy allows the logger to move at his convenience and allows the harvester and forwarder to move between sites at different times. For these reasons, Logger H stated that he was willing to drive his equipment on public roads for up to 10 miles between harvest sites. On average, cut-to-length loggers required a minimum volume of 242 tons to justify moving a typical distance to a new harvest site (Table 2). Assuming a move costs a total of$778 and the harvest generates 242 tons of timber, the logger would incur moving costs of $3.21/ton. Assuming that mills are not willing to pay extra for timber harvested from small parcels, this cost must be recovered from reduced stumpage prices. ### Simulated harvest In order to demonstrate the impact of reduced parcel size on harvesting costs, a simulated thinning of a 50-year-old red pine stand was conducted. The harvest generated approximately 47 tons/acre (Table 4). Seven of the 13 mechanized loggers in this study harvested at least one-quarter of their annual volume from red pine stands, and 10 of the loggers stated that they harvested at least as much volume from thinnings as regeneration harvests (Table 3). Therefore, this simulated harvest can be considered representative of what the loggers in this study harvest. Table 4. Logging costs for a hypothetical thinning of a 50-year-old red pine stand (Pinus resinosa Ait.) with a cut-to-length harvesting system illustrating the impact of harvest size on delivered cost. On a 40-acre parcel, the delivered cost of timber was$33.10/ton (Table 4). This is lower than the costs reported for cut-to-length systems in Michigan (Abbas et al. 2013), but is similar costs reported for cut-to-length systems in Georgia after adjusting for inflation (Greene et al. 1997). With a parcel size of 40 acres, the logger could break even if he paid stumpage prices of approximately $8,$19, and $23 for pulpwood, saw bolts, and sawtimber, respectively, at recent delivered prices (Prentiss and Carlisle 2012). As parcel size is reduced, moving costs per ton increase, which necessitates lower stumpage prices if the logger is to remain profitable. In this scenario, the delivered cost of timber does not exceed the delivered price of pulpwood until parcel size reaches 1 acre (Fig. 1). It is important to note that sale preparation and administration costs are not included in this simulation because these costs will vary considerably between sites, between organizations, and may be paid for by the landowner directly. Figure 1. Delivered cost and delivered prices (Prentiss and Carlisle 2012) for a hypothetical thinning of a red pine (Pinus resinosa Ait.) stand that removes 47 tons/acre assuming hauling costs of$8.08/ton and one-way moving costs of $778. Figure 1. Delivered cost and delivered prices (Prentiss and Carlisle 2012) for a hypothetical thinning of a red pine (Pinus resinosa Ait.) stand that removes 47 tons/acre assuming hauling costs of$8.08/ton and one-way moving costs of $778. Close modal Clearly, small landowners should not expect to receive the same stumpage prices per unit on a 5-acre parcel as they would receive on a 40-acre parcel. On the other hand, loggers should be cognizant of paying competitive stumpage rates. When purchasing timber from small landowners, the power of reputation and word-of-mouth is significant. If a logger earned a reputation for paying below market rates for stumpage, the logger might find it difficult to purchase timber from landowners in the future. Logger A noted that 30 years of experience and a good reputation allowed him to purchase timber from small landowners and also remain profitable in each of the past 10 years. Logger C noted that he had several years' worth of timber lined up to harvest because landowners request him to harvest their timber because of his stellar reputation. Mechanized loggers in this study are currently harvesting parcels that are 10 acres and smaller, and these loggers are willing to harvest parcels with as few as five truckloads of timber available. This is encouraging because of increasing mechanization in the logging industry and the ongoing parcelization of family forestland. All participants in this study were willing to harvest 10-acre parcels, which is the minimum parcel size that can be enrolled in the MFL program (WDNR 2013). This is important because enrolled landowners can face taxes, fees, and loss of MFL designation if planned harvests are not conducted. Loggers in this study were generally pleased with the MFL program, and they suggested that progress had been made in ensuring that planned harvests are operationally feasible. Loggers in this study used a variety of strategies to remain profitable. First, loggers attempted to keep fixed costs down. Many loggers in this study operated somewhat old equipment, and while it is likely that this equipment is less productive than new equipment, for loggers harvesting small parcels, accepting lower productivity in exchange for reduced fixed costs may be a worthwhile trade. Mechanized loggers in this study reported direct moving costs of just$406 per move and \$778 when the costs of idle equipment and employees are included, which is lower than previously published estimates (Greene et al. 1997, Abbas et al. 2013). Second, most loggers in this study purchased their own stumpage, which allows them flexibility in the parcels that they choose to harvest and allows them to use strategies such as grouping small sales together and performing customized services such as establishing food plots in exchange for reduced stumpage rates. Third, loggers in this study were able to successfully manage their business relationships. Each logger in this study reported a positive relationship with local mills, and many suggested that their longevity in the business and strong reputation allowed them to purchase timber from family forest landowners at prices that were agreeable to both parties.

Finally, it is important to recognize that when deciding whether to harvest a particular parcel, timber volume and harvest logistics are generally more important to loggers than the number of acres available. However, in terms of policy and long-term wood supply, parcel size matters. Parcel size is used to determine eligibility for programs such as the MFL, and property taxes on forestland are generally levied based on the number of acres owned. Finally, the volume and quality of timber available at rotation age is dependent in part on early-rotation and midrotation silvicultural treatments, which may not be economically feasible on small parcels because of the low per-acre volumes produced. Therefore, it is important that loggers continue to adapt to reduced parcel size to ensure the continued competitiveness of Wisconsin's wood supply chain.

The author gratefully acknowledges the cooperation of Wisconsin loggers that made this study possible. This project was funded by the University of Wisconsin–Stevens Point (UWSP) University Personnel Development Committee. The use of brand or model names is for reader convenience only and does not constitute an endorsement by the author or UWSP.

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