Economic Analysis of Timber Production by Mobile Sawmillers SUMMARY Forests in Malawi provide goods such as timber and services

such as soil conservation and ecotourism to generate substantial revenues for the country. The major timber producers in Malawi are the portable sawmillers (such as mobile sawmillers) and fixed bandsaw or circular sawmillers. An economic analysis study of timber production by mobile sawmillers will be done in Nthungwa forest plantation. In this plantation, mobile sawmilling is highly taking place such that large amounts of timber are produced weekly. However, there is no clear information on the costs involved in timber production by the mobile sawmillers available in the plantation. Mobile sawmilling involves the production, processing and trading of timber either domestically or internationally. In Nthungwa forest plantation, there is a high value of costs involved in the timber production in mobile sawmilling than the benefits obtained by sawmillers due to inefficiency when allocating costs throughout the timber production process. In this study, at least seven mobile sawmillers and a random sampling intensity will be used when collecting data. The research will reveal the real value of the costs and revenues associated with the production of timber by the mobile sawmillers available in the plantation. This will involve an assessment of the costs in timber production from stumpage up to when the timber is ready for sale. The specific objectives of the research are to determine the costs involved in timber production in the mobile sawmilling taking place in the study area, to determine the revenues associated with mobile sawmilling taking place in the study area and to analyse the costs and revenues associated with timber production in mobile sawmilling.The research will use primary data (qualitative and quantitative data to provide costs and revenue as well as benefits respectively) collected using questionnaires and structured interviews. The quantitative data will be analyzed using Chi-square test and Cost-Benefit Ratio. Microsoft Excel and Statistical Package for Social Scientists (SPSS) will be used.

Economic Analysis of Timber Production by Mobile Sawmillers 1.0. INTRODUCTION 1.1 Study Area Nthungwa forest plantation is among the major forest areas in Viphya plantations. Currently, mobile sawmilling is highly taking place in this plantation such that different mobile sawmillers produce large amounts of timber weekly. This involves the production, processing and trading of timber either domestically or internationally. These sawmillers buy logging licenses from the Forestry Department to harvest timber from the plantations available in Viphya. Viphya plantations which include Nthungwa forest plantation were established in the 1950s with 53 000 hectares with the plan of supplying a craft and pulp mill soon after independence in 1964. The Viphya plantations have an estimated average mean annual increment (MAI) of 17 cubic metres per hectare and are along the Malawi road 1 (M1) from Mzuzu city to Lilongwe. The primary objective was to create a pulpwood resource to supply a bleached craft mill that was to be located on the shores of Lake Malawi. However, the objective changed to timber production upon looking at other factors such transportation as Malawi is landlocked country as the waste disposal to be made. Apart from supplying timber, Nthungwa forest plantation as one of the plantations in Viphya helps in soil conservation, acts as a habitat for wildlife and protects watersheds. In this case, it provides both direct and indirect benefits to the people. The dominant timber species in this plantation are Pinus patula and Pinus kesiya. As reported by Luhanga (2009) there is currently a very lucrative export trade of timber from the Viphya plantations because of the shortage and high prices of timber being experienced in neighbouring countries. This led to an increase in the number of mobile sawmillers operating in individual plantations in Viphya and Nthungwa is not an exceptional. 1.2. Statement of the Problem Sawmilling in Viphya plantations started some 20 years ago (Luhanga, 2009). However, there is no clear information on the costs involved in this industry more especially in the mobile sawmilling, which is highly taking place in Nthungwa forest plantation. This implies that there are no real values of the costs involved when producing timber in the mobile sawmilling industry from stumpage to the point the timber is ready for sale. This is due to inefficiency in allocating the costs throughout the timber production process. In this case, the mobile sawmillers interest is in producing large quantities of timber to get large benefits rather than the costs involved in the production process.

Economic Analysis of Timber Production by Mobile Sawmillers 2.0. OBJECTIVES OF THE STUDY 2.1. General Objective The overall objective will be to assess the costs involved in timber production by the mobile sawmillers available in Nthungwa forest plantation in Mzimba district. 2.2. Specific Objectives The specific objectives of the research will be to: i. Determine the costs involved in timber production in the mobile sawmilling taking place in the study area. ii. iii. Determine the revenues associated with mobile sawmilling taking place in the study area. Analyse the costs and revenues associated with timber production in mobile sawmilling.

2.3. Hypothesis There is a high value of costs involved for the production of timber in mobile sawmilling taking place in Nthungwa forest plantation than the benefits such as revenues obtained due to inefficiency when allocating costs throughout the stages in the timber production process. This is because there are no valuations put in place for the costs spent in each stage that can help to maximize productivity. 3.0. SIGNIFICANCE OF THE STUDY The research will reveal the real values of the costs and revenues associated with the production of timber by the mobile sawmillers available in the plantation. These values will help the mobile sawmillers to take into account all the costs spent in their operations in order to maximize their productivity and to determine the exact costs incurred mobile sawmilling hence helping them in making decisions. The study will also help the Government of Malawi through the Forest

Department to know the exact costs involved in the mobile sawmilling industry available in Nthungwa and to extrapolate the results to the mobile sawmilling taking place in other plantations in Viphya. The government will also be able to consider the costs and revenues of timber production when making policies in the forestry sector especially those policies involving timber production and trade.

Economic Analysis of Timber Production by Mobile Sawmillers 4.0. LITERATURE REVIEW Forests provide goods such as timber, firewood, medicines, and fruits, which are sold in markets, (Bekele, 2001). Forests in Malawi could also provide services such as soil conservation and ecotourism to generate substantial revenues for the country. Economic activities and population growth are the main determinants of demand for forests goods and services. The major timber producers in Malawi as pointed out by Luhanga (2009) are the portable sawmillers and fixed bandsaw or circular sawmillers. Pine forms a major part of timber production in Malawi. In timber production, the hardwood and softwood logs are converted to timber with an aim of maximizing output on a financial rather than a volume basis ( Desch and Dinwoodie, 1996). Timber production or sawmilling is the process of sawing and/or chipping logs to form rectangular pieces of wood for buildings, packaging, furniture and other value added applications (Wagner, 2004). Timber production can be based in forest plantations, native forests, or a combination of both. This is a primary commercial objective of tree plantations; however, other plantations may be planted as carbon sinks, for environmental remediation or to compliment for spatial environmental outcomes. Timber production involves removing trees to be processed for timber and other products. The process may include: felling, snigging ( transporting logs from where they were cut to where they can be loaded on to transport for processing), road construction, stream crossing, and treatment for regeneration. As explained by Wagner (2004) the facilities for timber production (sawmills) range from those with one or two slow-simple machines powered by electric motors or internal combustion engines such as mobile sawmills to those with many high-speed computerized machines powered by electric motors and hydraulic pumps such as fixed bandsaws and circular saws A mobile sawmill as defined by Eldred (2000) is a machine that can be taken on-site to process timber. This means that mobile sawmills are used for on-site or on-farm conversion of logs into timber. On-site conversion is cutting felled timber into useful products within the wood (Eldred, 2000). This prevents road transport costs to and from a commercial sawmill. Mobile sawmills are either mobile bandsaws with a fast cutting speed, a narrow saw cut and low energy demands or mobile circular saws which are generally very compact to transport and can process timber quickly. Mobile sawmills are used for small forest plantations or woodlands. There are many different models on the market from small, portable saws to trailer mounted saws with different efficiencies when producing timber. These are useful for cutting round timber over 25cm in diameter and 2m in length. Power can be from the mills own engine, or from a tractor power take-off. Some of the
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Economic Analysis of Timber Production by Mobile Sawmillers sophisticated versions use a hydraulic system to load the timber and turn it to meet the saw. Most mobile sawmills require one operator although a second person can help with the loading and unloading of the logs and timber products. Mobile processing technology is one option to reduce transportation costs. This allows for flexibility where the availability of resource supply is inconsistent, unreliable, or where the cost of transporting logs to a stationary mill is cost prohibitive. Integrating mobile processing operations with quality products as pointed out by Becker (2004) can potentially offset the associated costs of harvesting, processing, and handling products made from small-diameter logs. It also has the potential to address the growing need to economically remove an abundance of small-diameter trees from plantations thereby reducing the risk of catastrophic wildfire. The efficiency of mobile sawmilling when converting logs to timber as Desch and Dinwoodie (1996) reported varies widely depending on log shape, market requirements, the age of the equipment as well as the skill of the sawyer. In addition, Fonseca (2005) said that milling

efficiency depends on the saw, which varies by machine centre and type of saw and target sizing and size control. Target sizing and size control is a mills ability to produce uniformly sized products as a key component setting the target size and shape sawing optimization. The principal measures of sawmill performance are lumber (a sawn wood of at least 5mm thick such as timber) production and lumber recovery. In terms of economics, there are financial and indirect costs for different operations done when producing timber. However, it is very difficult to put prices to the costs of converting timber because there are so many variables. In this case, the factors like quantity and quality of timber, the sawing costs, use of other machinery, the health of the timber market, the skill of the sawyer and the distance to transport the products will all determine the final cost (Eldred, 2000). Activities which can be costed are felling, snedding, crosscutting, extracting, sawing, seasoning and delivery/haulage (if not for own use). Profitability of a mobile sawmill is closely related to lumber production. Because some costs at a mobile sawmill are fixed, higher lumber production results in lower fixed cost per unit of lumber. The cost of the milling operation is an important element in the overall cost structure of mobile sawmillers. It is useful to differentiate milling costs from costs such as log acquisition, felling, snigging and haulage, as well as from other value-adding activities such as drying, timber treatment and processing into mouldings (Smorfitt et al, 2003). Utilising trees for milling opens up areas within the forest thus letting in more light for both ground flora and naturally-regenerating trees. By-products are generated like sawdust which can be used as a
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Economic Analysis of Timber Production by Mobile Sawmillers fertiliser or pet bedding material if clean and bagged (Eldred, 2000). Timber production has shortterm impacts which include: visual, aesthetic, environmental, water values, fauna habitat and offforest impacts. 4.0. RESEARCH METHODOLOGY 4.1. Sampling and setting This study will be done in Nthungwa forest plantation, which is among the plantations in Viphya in Mzimba district. A sample of thirty-five (35) mobile sawmillers will be used. These sawmillers will be categorized into two or three groups according to models and/or types of their machines. This considers that different models and/or types of mobile sawmills have difference efficiencies in terms of timber production. A random sampling intensity will be used to avoid biasness. 4.2. Data collection The research will use primary data collected from the mobile sawmillers available in the study area through the administration of questionnaires and structured interviews. Two types of questionnaires : one for Manager of Nthungwa Forest Plantation and the other for the mobile Sawmillers. During the interviews, a checklist will be used. Internal data from the reports and files of Nthungwa forest office will also be used. The research will involve quantitative and qualitative data to provide the costs and revenues of producing timber. Three variables will be used for when collecting the quantitative data. These are the quantity of timber produced, costs (fixed and operational) and time spent for producing timber. These variables will be for the stumpage up to when the timber is ready for sale. The data will be collected from the following stages in the timber production process: felling, snedding, crosscutting, extracting, sawing, seasoning and delivery or haulage. When conducting the semi-structured interviews, the mobile sawmillers will be personally interviewed at the site of the sawmilling operation. This approach is chosen to overcome the reluctance of mobile sawmillers to provide information about their operations. In addition, the visits will help to assess the range and condition of the milling equipment, which will help in determining efficiency of the machines. 4.3. Data Analysis The quantitative data will be analyzed using the profitability analysis in which the Chi-square test and Benefit-Cost Ratio (BCR) will be applied. The BCR will help to relate the costs and revenues obtained after selling timber by all the mobile sawmillers available in the study area. The Chi6

Economic Analysis of Timber Production by Mobile Sawmillers square will help to determine the variations existing among the groups of different models and/or types of the mobile sawmills. The qualitative data will analyzed by describing the benefits and other indirect costs of timber production in terms of environmental damage caused and impact on biodiversity. Microsoft Excel and Statistical Package for Social Scientists (SPSS) will be used.

Economic Analysis of Timber Production by Mobile Sawmillers REFERENCES Adamowicz, W.L., Boxall, P., Luckert, M.K., Phillips, W.E. and White, W.A., (1996). Forestry, Economics and the Environment. CAB International. Wallingford. United Kingdom. Becker, D.R., Hjerpe, E.E. and Lowell, E.C. (2004). Economic assessment of using a mobile Micromill for processing small-diameter ponderosa pine. General Technical Report. PNW-GTR-623. Portland Bekele, M., (2001). FAO: Country Report-Malawi. Forest Outlook Studies in Africa. Malawi. Desch, H.E. and Dinwoodie, J.M., (1996). Timber: Structure, Properties, Conversion and Use. 7th Ed. The Macmillan Press. London. Eldred, L., (2000). On-Site Sawmilling and Timber Conversion: Information Pack. Chiltern Woodlands Project. Trans-national Woodland Industries Group. United Kingdom. Fonseca, M.A., (2005). The Measurement of Roundwood: Methodologies and Conversion ratios. CABI Publishing. Wallingford. United Kingdom. Luhanga, J., (2009). The Timber Trade in Malawi. Southern Africa Research Watch. Johannesburg. South Africa. Smorfitt, D.B., Harrison S.R. and Herbohn, J.L., (2003). Portable Sawmills in a High-value Rainforest Cabinet Timber Industry in North Queensland. Small-scale Forest Economics, Management and Policy, 2(1): 21-36 Vincent, J.R., (1992). The Tropical Timber and Sustainable Development. Harvard Institute for International Development. Cambridge. United Kingdom. Wagner, F.G., (2004). Lumber Production, Properties and Uses. In Ecyclopedia of FOREST SCIENCES. Vol. 3. (Edited by Burley J. and Evans J.). Elsevier Ltd. Oxford. United Kingdom.