Cost structures for portable sawmill used in milling mixed species in North Queensland, Australia

Smorfitt, David B., Harrison, Steve R., and Herbohn, John L. (2004) Cost structures for portable sawmill used in milling mixed species in North Queensland, Australia. In: Proceedings of International Symposium in the Black Forest 2002. pp. 367-383. From: International Symposium on Contributions of Family-Farm Enterprises to Sustainable Rural Development, 28 July -1 August 2002, Freiburg, Germany.

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The sawmilling industry within North Queensland, Australia has traditionally processed a diverse range of high quality rainforest cabinet timbers from locally occurring tropical rainforests. Over 100 species are suitable for milling, many of which produce highly prized timber for cabinet work and flooring. The sawmilling industry contracted dramatically with the World Heritage listing in 1988 and associated logging bans on Crown and some private land. Sawmilling is currently restricted to a small number of fixed-site and portable mills which source timber from privately owned native forests. The low stumpage prices paid by these mills relative to the final sawn timber prices is a source of contention, with landholders believing that the mills are profiteering from an oligopsony situation. There has been increased use of portable sawmills in recent years by full-time and part-time millers. While portable sawmills do compete with traditional fixed-site sawmills on the local market, they are not seen as a major threat to the future of traditional fixed-site sawmills. Anecdotal evidence suggests that portable sawmillers do not account for all costs relevant to their milling activities but rather work on a cash flow basis. For portable sawmillers, labour is the major cost element, especially if associated costs such as workers compensation and superannuation are included. This paper examines cost structures of portable sawmills in North Queensland. The various sources of cost data and the limitations of these data are discussed. Short-run cost curves are derived and sensitivity analysis undertaken with respect to a number of key cost parameters. An attempt is also made to develop a timber milling long-run average cost curve. Results of this analysis are used to shed light on the accusations of rent capture by fixed-site sawmillers and to examine the potential role of portable sawmills.

Item ID: 7662
Item Type: Conference Item (Research - E1)
ISSN: 1436-1566
Keywords: cost curves; cost structures; mobile sawmills; portable sawmills; Queensland
Date Deposited: 12 Jul 2010 23:30
FoR Codes: 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1501 Accounting, Auditing and Accountability > 150103 Financial Accounting @ 100%
SEO Codes: 82 PLANT PRODUCTION AND PLANT PRIMARY PRODUCTS > 8201 Forestry > 820102 Harvesting and Transport of Forest Products @ 100%
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