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revenues to Sitka and other timber dependent connnunities such as 

 Ketchikcin. APC has recently worked out contract changes with the U.S. 

 Forest Service which could, and probably will, increase its stumpage rates. 



The second reason why those advocating passage of the Wirth bill 

 for economic reasons are wrong is purely a social/ jobs reason. The 

 existing primary manufacture policy sacrifices federal revenue in order to 

 create jobs. Here is how it works: Since the inception of the timber 

 program in the Tongass National Forest, the rule has been that round logs 

 cannot be exported. Value must be added in the form of primary 

 manufacture before a timber product can leave the Tongass National 

 Forest. The private landowner is under no such constraint. Corporate 

 reports for many private land owners show positive profit levels and 

 substantial cash flow. By the same token, the purchase of national forest 

 timber lost money in the 1980 's under this program. (I know for example, 

 that Alaska Pulp Corporation, which runs the pulp mill in Sitka, has had 

 severe losses over the last several years, although since markets have 

 picked up, it may be making money now.) 



When one compares the money being made by round log export versus 

 the losses suffered as a result of primary manufacture, it becomes quite 

 clear that the federal government could make a lot more money on stumpage 

 if round logs from the national forest were exported. The only loser 

 would be the workers and the communities which depend upon the primary 

 manufacturing facilities for jobs they provide. Those jobs would be 

 exported from Alaska to the Pacific rim. 



So, as we see it, those who cite concerns about below cost sales 

 as a reason for passing the Tongass Timber Reform Act must have one of two 

 things in mind: 



(1) Killing the timber industry altogether, which they say they 

 do not want to do; OR 



(2) Exporting the timber in the round so it will make money. 



Written Testimony 

 April 25, 1988 

 Page 8 



