Methodologies for setting timber harvesting rates.
Timber harvesting has always been a major business cost component for forest owners and or forest management companies. One major development in improving harvesting efficiency was the recognition that using independent contractors captured both the innovation skills as well as the motivation to improve productive effectiveness for those managing operations. Since the 1960’s most developed countries extensively use a contractual based harvesting workforce. What combines the forest manager and the harvesting contractor financially, through a contract, is the logging rate. In an idealized open market system the logging rate would be determined by supply and demand of services. However, a true open market system is rarely used to set harvesting rates. This paper discusses what constitutes a harvesting rate and reviews three different methodologies that can be used to develop them. Information was captured through interviews with company representatives in the USA and New Zealand, as well as reviewing relevant literature.