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impact that this policy has on private owners seeking to operate profitable 

 sustained-yield tree farms. Forest Service timt>.*r sold at their Advertised 

 Price, generally has a certain loss. Even when there is bidding, there is no 

 assurance that agency costs will be recovered. 



This is significant because you will hear testimony from those who 

 secur-.' National Forest timber who do not want the sales curtailed. These are 

 the same people who have hammered on the Forest Service for decades to 

 maintain low Advertised Prices. I understand their point of view. None of us 

 like to pay more. The Forest Service asking price is typically a bargain. 

 Firms seldom bid more than they think the timber is worth to them, despite 

 their claims to the contrary. If a firm does, it made that decision at the 

 bidding table. If it does so constantly, it spells bankruptcy. The failure of 

 the Forest Service to price timber to cover agency costs does not concern 

 them. While .every operation loses money ofi some transactions, none succeed 

 when' it happens overall, year after year, after year. 



FINANCIAL LOSSES LOGGING 74,400 KERN PLATEAU ACRES - 1956 TO 1984. 



From 1956-1970 the cut from 9 sales that covered 33,000 acres on the 

 Kern Plateau totaled 178 million BF, a yield of 5,400 BF per acre. These 

 sales produced only S2.53/MBF after taking out purchaser road, reforestation 

 and county payment costs. The Forest Service could not cover its appropriated 

 timber costs with this paltry remainder. 



15 sales through 1979 logged 30,000 more acres, yielding 162 million BF, 

 5.800 BF per acre. The receipts after earmarking were a mere S7.73/MBF, still 

 not close to covering Fores't Service appropriated costs. 



The situation deteriorated on 9 sales cut in 1980-1984. These logged 

 11.400 acres, took 29 million BF, 2.600 BF/acre. The financial result was 

 - S2.90/MBF cash deficit after earmarking and before appropriated costs. 



These 33 sales generated receipts after earmarking at an average of only 

 S4.20/MBF, a mere S21 per acre. These sales failed to come close to covering 

 appropriated fund costs. One has only to realize that at an employee paid 

 S20.000 a year would eat up these per acre net receipts in 2 hours on the job 

 to understand the financial weakness of the timber program. 



The normal assumption is that when an area is first roaded for logging, 

 net receipts may be low, but they will improve with time. The Kern Plateau 

 financial record worsened as time marched on. 



The Sequoia shows has been heavily logged for 50 years. The record for 

 the past 11 years shows the same grim financial picture - LOSSES. The 

 Sierra's losses are severe, but not as large. 



FOR THE 11 YEARS, 1983-1993, THE SEQUOIA 

 SHOWS A -$2.67/'MBF NET AFTER EARMARKING, 

 BEFORE COUNTING TIMBER PROGRAM APPROPRIATIONS 



Forest-level timber receipt analyses have been run for the 11 years 



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