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represents a 32-fold increase from the rates set by the Forest 

 Service effective March 1, 1984. With continuing quarterly 

 market improvements. Forest Service Appraisal Handbook 

 Directive #57 issued on December 28, 1988 indicates an average 

 stumpage rate in the range of $75 to $90 per MBF. The Forest 

 Service is using Appraisal Handbook Directive #57 in 

 reappraising KPC's stumpage rates effective March 1, 1989. 



Only in Alaska does the Forest Service collect and use 

 end-product pulp selling values in the appraisal process and 

 setting of stumpage rates. This means the Forest Service is 

 able to use actual product values and the entire economic 

 equation of Southeast Alaska forest products operations in 

 managing the forest and determining stumpage rates. 



We have all heard environmental claims that the price for 

 cutting a giant old-growth spruce tree is equated with the 

 price of a "Big Mac". In fact, the KPC stumpage rate recently 

 redetermined by the Forest Service for saw volume spruce is 

 $230 per MBF, meaning the stumpage price for an individual 

 eight foot dbh (diameter at breast height) spruce tree is 

 $5,000 or more. In the same Forest Service stumpage 

 redetermination for KPC, the average stumpage rate for Alaska 

 Yellow Cedar is $580 per MBF. 



This clearly indicates that the "Below Cost Issue" should 

 no longer be an issue. The bottom line of forest harvest, 

 development of integration, and free enterprise practice by KPC 

 is enhancement of economics and stumpage values. 



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