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Author Topic: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales  (Read 4308 times)

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Offline Gary_C

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There are two issues that bring this subject up for me. First is that the last two state sales I have cut were badily cruised. The first was a SOAV that was over estimated by a factor of two on some species. Well actually worse than that as some red pine was included but nothing marked was found. The second was a scaled sale that was not set up very well and there is uncertanity about some volumes. But technically there is no harm because I only have to pay for what is cut.

And then to add to the question, many of the state jobs have been coming up short of wood based on estimates. And add to that the general feeling among some state legislators that the state is giving away it's resources when SOAV sales are overestimated by any even small per cent. So apparently the DNR was ordered to do a study of appraised volumes vs. actual cut volumes. And I happened across this report to the legislature while searching for something else.

Optimal State Timber Sales Scaling Methods

There is a chart on page 14 that shows the scatter in the data and this analysis is under the chart.

Of the 846 completed scaled sales, 521 sales (62%) were within the established scaled sale
standard of 20% volume estimate error. Some 213 sales (25%) cut out greater than
120% of appraised volume (overrun) and 112 sales (13% cut out less than 80% of
appraised volume (under-run).


The DNR primarily looks at sampling methods for the variations and loggers have some different views.  ::)  But the state admits that when the buyers lose confidence in the estimates, as they have without a doubt, there is trouble and lower bids are a result for sold as appraised because of the added risk.

Apparently the reason for the study was to tell if it would be more profitable for the DNR to sell more sales on a SOAV basis but their conclusion was that it would take too much manpower to do that. The loggers take would be that it would take more training and less of a "let the buyer beware" or "we need the money"  attitude on the part of government.

So take a look at the study if you have time and let us know what you think.
Never take life seriously. Nobody gets out alive anyway.

Offline Ron Wenrich

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #1 on: May 26, 2011, 04:05:10 PM »
Pay as cut should give a higher yield than a cruised sale.  The reason is that you are using log scale vs tree scale.  There should be an overrun from tree to log to sawn volumes. 

Another factor is how the computer handles some of the volumes.  I went on a state sale a number of years ago and asked to see the 12" birch that had 1 Mbf of scaled footage.  The forester laughed, and I pointed out that his sale prospectus had one listed.  He looked at it (apparently the first time he really looked at one), and said he didn't know how that could be.

Turns out that the state computers don't round down to zero.  If you have one tree of a species in one block, the result would be rounded up.  The state prospectus gave volume data to the closest Mbf.  If the sale has lots of cutting blocks, and lots of differing species, the volume could be drastically changed.  The same forester went and looked at a sale he had marked with lots of blocks.  The sale was off 20 Mbf on an 80 Mbf sale.  They have since changed the computers. 

I've also seen some pretty shoddy cruising practices by foresters.  They count limbs as logs, they measure dbh at mid-slope, they don't measure accurate dbh, etc.  One of my first jobs as a procurement forester was to go with a consultant who had a miserable volume underrun on his cruise.  I followed him around as he scaled more timber to be cut.  He had an assistant to write down the numbers, so I could hear what his figures were.  He used a Biltmore stick instead of a d-tape.  He was consistently off 1-2 diameter classes high.  I told him to burn his stick.

Scaling accuracy has a lot to do with the crew doing the cruise, whether its a plot cruise or a 100% sample. 
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Offline Gary_C

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #2 on: May 26, 2011, 05:48:30 PM »
Ron, keep in mind most of these sales are pulpwood sales and the major volumes are sold to the pulp mills on a per ton basis and converted back to cords. On the hardwood sales the scaling is probably done by a state forester at the landing so the feedback on those is in log scale.
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Offline SwampDonkey

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #3 on: May 26, 2011, 08:17:23 PM »
I've seen some interesting cruising to. Like 4-5" trees, 25 feet tall, 1000 trees to the acre (thinned 10 years prior by spacing saw), apparently 38 cords/acre.  Forest company cruiser I assume.

0.041 m3/tree @5" dbh total merchantable. So 1000 of'm is 41 m3/acre or 17 cords/acre.  And that's on the high side of the diameter distribution because the average is not 5". So down to earth it is more like 12 cords/acre. I also ran this by a fellow that has cut and processed a lot of wood in this region and he agreed as well with my numbers.

Well, a 3 year old thinning on my land only showed 2.5 cords/acre and I have some spots in the plantation with fir over 6" dbh scattered in through it. The volume increment doesn't achieve it's full potential on an even aged stand until it gets near 8". Increment width is certainly at it's full potential, but don't forget a larger tree puts down more wood with same ring width as a much smaller one. ;) In northern softwood, don't expect it to kick in full bore until 25 years after free to grow (after PCT work at year 10-13). And better be prepared for a second thinning because it began slowing down from the first thinning. Northern hardwood takes about 60 years and spruce/fir about 40 years to get to 8" and that's if managed with spacing interventions.

Pre-commercial thinning pays off. :)

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Offline Ron Wenrich

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #4 on: May 26, 2011, 09:31:59 PM »
I haven't had a lot of experience with pulpwood.  There was a pickup in interest when the firewood craze started back in the late '70s, but most guys don't cut pulp in this area.  My experience is mainly with sawtimber, and my cruises are within 10%.  Some of the consultants will scale their timber low so their $/Mbf appear to be higher than their competition.  When I was a procurement forester, if my cruises were off, my job was gone.  State foresters don't have the same skin in the game. 

What kind of cost factor is there to put forester on the landing?  There must be a pretty good daily volume to be able to afford to do that. 

As long as there is some good checks on the logger, than pay-as-you-go is probably more cost effective.  You could do away with the much of the cruise data, and just give a synopsis of the timber and a crude estimate on the volume.  It seems that's all you're getting right now.  Sampling errors have a way of compounding, especially if you have a consistent bias put in by a poor cruiser. 
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Offline timbuck2

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #5 on: May 27, 2011, 08:32:37 AM »
I personally like the way the Fed. Gov't. does it on National Forest.  They assign an individual forester to accompany each tree from the stump to the mill.  That way they can even measure the sawdust, (by the gram of course).

Offline Clark

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #6 on: May 27, 2011, 10:08:00 AM »
Interesting topic Gary, especially in a state like MN where the majority of the wood is pulp but then there are some pockets of higher value hardwoods. 

Part of what may be causing the perceived problem is a recent change in cruising methods.  There has been a push within the DNR to use a slightly different method (with a 20 BAF prism compared to the "old" 10 BAF method) for cruising and inventory purposes.  This shouldn't cause any problems with reported volumes unless a number of foresters tried it for the first time in the same year and only gave it a half-hearted effort.  Giving the institutional setting that the DNR can be, this could well be the problem.

Otherwise table 4 on page 7 shows a small sample of SOAV sales.  For pulpwood the rule here has always been 1.5 or more plots per acre to get an accurate cruise.  All of the SOAV sales meet that criteria and the cruised volume should be accurate.  Of course, someone having a bad day or being two weeks from retirement could greatly affect their accuracy.

Moving down to table 5 on page 9 gives more light to what the writers of the paper found.  They estimate that 2.5-3 plots/acre would normally be needed to get an accurate estimate of volume in SOAV sales.  One sale they estimate would need 184 plots (in 50 acres!) to have a reasonably accurate cruise. 

Looking at the stats of that sale more closely we see that the total volume/acre was only 14.7 cords (pretty thin, even by MN standards) with a standard deviation of 11.8!  That timber sale went from areas of basically no timber (using very rough statistical methods here: 14.7-11.8=2.9 cords/acre) to areas of good timber (14.7+11.8=26.5 cords/acre).  Either the stands within that timber sale should have been more closely delineated or the sampling should have been stratified.  Quite possibly the forester brought that judgment down upon himself!

For those that didn't look at the study, this was the recommendation:

Quote
"Summary recommendation: NO ARBITRARY INCREASE IN SOAV paid-as-cut.  Allow DNR to continue to use the full range of timber sale, bid, scale, and payment options available, at the discretion of the Commissioner, in order to provide the most efficient and effective combination of methods to protect the fiduciary interests of the state."

The good thing about this study is that the gov't hasn't forced some blanket policy onto it's workers.  I rarely see anything great coming out of blanket policies and allowing the DNR to conduct it's sales in the most financially feasible manner is probably better for everyone.

Quite possibly the solution for loggers is to have the cruising accuracy standards tightened up, especially on the SOAV sales.  As Ron states, maybe the state foresters need to have something more on the line when they sign their name to a cruise.

Ron, I think the majority of the time the state relies on the mill's scaled volume for determining total volume.  While there are exceptions to that if the logger is sending the pulp to a mill the state (from what I recall) will rely on the mill's scale.

Clark
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Offline Gary_C

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #7 on: May 27, 2011, 11:25:47 AM »
As I look at this data more, I am even more troubled by what I see. There is a new auction coming up in the Sandstone area where I am working and there are 28 tracts listed just on the intermediate part of the sale. So what this data tells me is that I had better look very close at all of those sales with my own poor abilities to cruise the sales and lack of time or I have a 33 % chance (20 % plus 13 % below the estimates) of getting screwed again. To me, that is simply unacceptable.

The problem is when I look at any sale, I have to add up all my costs for buying the stumpage, moving into and out of the sale, doing site prep work like fixing or plowing roads and landings, and cutting and hauling the wood. Then I have to look at the total gross value to me of the wood and subtract off the expenses of the sale to see if I can make any money from the sale. So if I end up short of wood, I lose that percentage of my gross sales for the job. And the only difference between the SOAV and pay as cut sales is an equal percentage reduction in the stumpage costs only on the pay as cut sales.

And the only way to recover any losses is not legal.  :)

This problem is going to just get worse with rising bid prices of stumpage that already is happening. On a recent DNR sale, a large sawmill bid up some Norway Pine stumpage to $100.60 per cord and that is more than they are paying for pine logs delivered to the mill. We are heading back to the days when a few large loggers and the mills they deliver to are bidding for stumpage at levels beyond what the others can pay. I can understand how the mills themselves can bid that high, but cannot understand how the large loggers can bid against them at those high levels.

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Offline Texas Ranger

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #8 on: May 27, 2011, 11:56:50 AM »
Timber sales, or cruises, vary according to experience and who hires the crew.  On my sales, logs and pulp, we tried to give the buyer 5% over the actual cruise volume, we did this with the last half log, and we usually came close.  Pluse or minus 20 percent is the gov't for you, they arn't working for their pay, they get it regardless.

Private sales and company sales are usually much more accurate than that, with honest foresters.  There are some of the other variety of forester out there, and they usually get lost in the end.

We 100% marked and tallied, that may be the difference here, Forester4 on this forum sometimes, has commented that when marking for the feds it was not unusual to not tally 100% or mark 100%.  Lots of room for error there.

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Offline Gary_C

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #9 on: May 27, 2011, 03:48:53 PM »
I am sure you can not blame the foresters for all this problem.

It may be more of an institutional thing with the DNR and the state. For one thing, there have been reductions in staffing levels and many of the older foresters have taken early retirements. For another thing, all the cruise data is taken back to the office and plugged into the computer program and out comes the appraised volumes. And of course the state is always pushing to make more money to spend from timber sales.

You do have to consider the purpose of requesting the study by the legislature was to see if there were ways for the state to make more money from timber sales. And what I see is they are making too much in some cases.
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Offline northwoods1

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #10 on: May 27, 2011, 08:09:49 PM »

You expect a government timber sale to produce the amount of wood they have estimated?  :D  Why? It is not their responsibility at all to cruise the sale for you to be able to figure it to the penny volume wise. I have worked on federal, state and county land for 25 years now, and have NEVER worked on a sale or block of timber that produced the amount of wood that is estimated on the timber sale stats. Well, actually it did happen once and that was during salvage work after a tornado on federal land and they needed the wood cleaned up in a bad way.
If you can't walk a timber sale and look at the wood and be able to estimate in yourself... or bid conservatively enough and be able to produce in a way that leaves you room for error $$ wise, you are doomed as a logger. That is just the way it is. You got to remember, everyone else bidding these sales is working with the same figures, and if they know the game better than you then you loose.  8)

Offline Tillaway

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #11 on: May 27, 2011, 10:06:12 PM »
Numbers as far off as the DNR regarding any Government cruise is more the norm than the exception.  Some reasons have already been mentioned regarding cruiser skill and motivation.  One thing not mentioned so far is why they do the things they do.  Many times the cruise volumes are applied to yearly targets for the management units regardless of the accuracy.  Putting your "thumb on the scale" helps meet targets that are operationally out of reach for that unit.  It helps with the managers performance ratings around review time.  If the managers performance is judged on actual cut out then you will not see this too often.  An example is the USFS uses volume of timber offered for sale to meet unit targets.  Oregon Department of Forestry used cut out volume reported from the scaling bureas as the final volume sold unless it is a cash sale which they do only in special circumstances.  USFS volumes in this location start at 120% (scaling rule difference) of actual scaled if there is 0 defect in the stand and a perfect cruise was done.  High defect stands and an anomoly within the USFS cruise complier compounds the problem up to about 150% of actual scaled volume.  ODF uses the same cruise complier and log grading as  most of industry in this area and it was my experience that cruise to cut out was well within 10% usually within 3% of actual cut out.  The difference is that industry calls up ODF and asks for specific cruise reports or even data bases to seemlessly plug into their cruise compiler and does a quick  look see windshield cruise.  USFS you start by subtracting 20% of the volume and take a very careful look around.  The big mills cruise it all their way, they do not trust the numbers.

If you often buy Government sales it would be a good idea to find out the name of the cruiser or crew that did the cruise.  Track your cut outs to thier cruise volumes, adjust your bid by cruiser or crew.  They should be consistent... hopefully.   
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Offline Gary_C

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #12 on: May 27, 2011, 10:31:47 PM »
  USFS volumes in this location start at 120% (scaling rule difference) of actual scaled if there is 0 defect in the stand and a perfect cruise was done.  High defect stands and an anomoly within the USFS cruise complier compounds the problem up to about 150% of actual scaled volume. 

If you often buy Government sales it would be a good idea to find out the name of the cruiser or crew that did the cruise.  Track your cut outs to thier cruise volumes, adjust your bid by cruiser or crew.  They should be consistent... hopefully.   

Tillaway can you explain that first paragraph a little more? Are you saying the sales volume is set at 120 % over actual scaled? And if I understand these sales correctly, are these sales sold on a pay as cut basis?

As far as knowing the cruiser, that is now standard on all state sales. Problem is they have pushed out the older guys and they have so many new guys and just so many in any one area, it's difficult to keep track of all of them. It would be nice if the state published performance ratings on these foresters but that isn't going to happen. Or the loggers could share their experiences but that would be giving away info on how to bid on these jobs and that ain't going to happen either.
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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #13 on: May 27, 2011, 10:42:59 PM »
I would not trust the State or Fed #'s on any cruise.  Those results in the study would be unacceptable to any procurement team.  If I were you, I would find a way to do a good cruise on the SOAV sales.
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Offline Tillaway

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #14 on: May 27, 2011, 11:28:56 PM »
No, the way the USFS compiles the cruise and the way they cruise it results in the volume being overstated by about 20% on average for this locality.  USFS uses short log scribner rules when industry in Western Oregon and Washington uses long log scribner per the local log scaling and grading rules.  This accounts for the volumes being seemingly overstated.  The way the USFS National cruise program compiles defect and models the log segments, it tends to "glue" a bunch of short leftover segments into ghost logs that do not exist.  This can add a bit to the volume.  The cruise programs used in industry does not have this little problem.  The USFS cruising rules, programs and such are to a national and regional standard and may not reflect the areas accepted practice.  The USFS cruise volumes are not completly ignored by timber sale buyers here, they know to subtract 20% of the volume and it might be in the ball park.
The scaled volume is not used in meeting USFS targets the cruised volume is.

The USFS prefers to sell (tree measurement) or SOAV however where I work it is scaled (pay as cut) mostly.  We are required to offer at least one tree measurement per year for some reason.  Timber sale purchasers here do thier own complete timber cruise on pretty much every sale.  Buying a tree measurement sale without doing one is a short road to financial disaster.  Also USFS cruises here usually do not grade logs or have usable data regarding log size mix so doing your own cruising is required to get good data on this.  Basically the volume number published is only good for internal USFS use. 
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Offline SwampDonkey

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #15 on: May 28, 2011, 08:22:28 AM »
If it were my money, I would be cruising the tract. I've seen enough bad numbers that I know a good many get done from the windshield. In fact I know a guy that admitted in doing it for a forest company he worked for. He was a technician. The mill has been bankrupt now for 10 years. What does that say? 

In fact a DNR tract came up for sale, land and all. The new owner had a cruise done before purchase and he got a hold of a DNR cruise after the sale. The volumes were the exactly the same, only thing was one guy called the maple, sugar maple and the other said red maple. The two guys were in cahoots and one of'm was the guy I mentioned above. It eventually comes out in the wash water. :D

I did a complete recruise and wrote a plan, the first time it was actually cruised in my opinion. :D

Pre-commercial thinning pays off. :)

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Offline Ron Scott

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #16 on: May 28, 2011, 12:05:01 PM »
Timber buyers and/or procurement foresters should always make their own estimates of the specific timber tract they are purchasing or bidding on. There are just too many variables between timber cruisers and timber producers as to the initial sold volumes and the final cut volumes, though they should be reasonably close if appropriate cruising standards have been used and proper utilization as been made in the harvest. 

It is always best to get to know how the timber was cruised and by whom, but the buyer should always do their own field work on the volume determination for their specific harvest methods, products, markets, etc. before the purchase. Windshield cruises can lead to some unfavorable surprises. ;)

 
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Offline northwoods1

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #17 on: May 28, 2011, 12:30:12 PM »
I have cut many blocks on federal land that cruised out the to be less than 1/2 the actual volume of pulpwood :) :), but that is the federal governments prerogative to cruise that way. Why bother wondering why the sales come up short on volume it does you no good :D

They are not obligated to provide you with accurate volume cruises this is just the simple fact of it. Get used it to it, complaining will get you no where :D It is likely that all the other bidders on these sale know what the real deal is, but you seem to be oblivious to it.
Personally, I can walk into a block of wood and tell without any deliberate measurements if the volume cruise is near the estimate, but it comes from experience.

I think complaining about volume estimates for a timber sale clearly shows inexperience by the buyer :D :D :D

And I would also add that it has nothing to do with the foresters lack of wanting to make an accurate cruise of the volume! Think about why it is advantageous for them to do it and figure it out! This is what your competitors have to do. Your way out of line whining about it though... it just shows you have miscalculated on the amount of wood standing on you sales... that is solely your mistake if you bid on them.
 

Offline Gary_C

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #18 on: May 28, 2011, 01:32:25 PM »
Northwoods1, I ignored your first post with it's bit of worthless wisdom, but I will not ignore this one.

They are not obligated to provide you with accurate volume cruises this is just the simple fact of it.


That is simply not true and though you may have worked on some sales, I doubt you ever had the financial responsibility for the outcomes.

I know the MN DNR has a goal of having 80 % of all sales with the actual volumes within + or - 15 % of the appraised volumes. But their own data shows they are far short of their goal and it is completely unacceptable to everyone involved.

From March thru June of this year, there have been or will be close to 40 separate auctions in different areas of MN and one of the sales that I normally look at is coming up in June with 41 separate tracts that cover over 2000 acres. To expect every logger to re cruise every tract is simply not an acceptable solution. Yes, it would be prudient to at least see the location and a brief walk thru, but a full cruise is simply out of the question. And with a walk thru, you can get a sense of the quality and volumes present, but it never will be accurate enough to bet your financial future on.

So at least here in MN, it is absolutely essential to whine and complain if necessary to get the DNR to do a better job than they are presently doing.
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Offline Norm

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Re: Sold as Appraised (SOAV) vs. Pay as Cut (Scaled) Timber Sales
« Reply #19 on: May 29, 2011, 08:55:38 AM »
I'm always reminded if you can't say anything nice or helpful....

Northwoods that post is uncalled for.


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Last post December 04, 2017, 04:19:48 PM
by Ron Scott
xx
Mapping timber sales

Started by Good Feller on Ask The Forester

7 Replies
1969 Views
Last post July 03, 2008, 10:52:53 PM
by Phorester
 


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