English for Economist and managers

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Sales of this type were extremely common in the past, and in the majority of cases the owner received considerably less than the true value of his timber. If an owner contracts to sell, under definite restrictions of species, size, manner of cutting, and other factors protecting his own interests, only those trees which he feels are mature and ready for removal, he then knows exactly what income he will receive and is free from all further details of logging or merchandising. Previous agreement can be made as to species and volumes that will be sold, and all details covered in advance by a written and signed contract.

By another method he contracts for sale all trees of certain species, above specified diameter limits. This method is far better than selling all timber in a wood but less satisfactory than that which permits the removal only of the trees marked in advance by the owner.

If the owner's interests are properly safeguarded, and if the forest's growing stock is maintained at a satisfactory level, then the direct sale of selected stumpage for even an entire wood may be a satisfactory method to use.

Sales of Logs, Piece Products and Sawed Lumber. Sometimes the owner cuts his own logs and sells them at a mill or some other central point. Logs of different sizes are usually graded, and proportionately higher prices are paid for the better grades of logs. Consequently, the seller should know in advance the specifications of the purchaser. The grade of a log is determined by its size (length and diameter) and the number and type of its defects.

The principal products from farm woodlands sold by the individual piece are railroad ties, poles, and piling. Piece products are bought upon the basis of specifications established by the purchaser. Therefore, prior to cutting, the specifications should be obtained, and the products manufactured in accordance with them.

Specifications for poles and piling are naturally entirely different from those for railroad ties. Nevertheless, they state the kinds and quality of wood, dimensions and grades of product acceptable, and methods of manufacture required. If a wood can supply the better grades of piece products, the manufacturing of them is simple and the sale problems are not difficult.

The sale of this products will frequently yield an excellent financial return. Basically the farmer is a producer and seldom a manufacturer. Besides, the selling of

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lumber requires a knowledge of markets, prices, and an ability to compete with agents experienced in the sales field.

It is advised that this method of sale be disregarded and every effort made to dispose of the products prior to their manufacture into lumber. It is possible for a seller to receive payment on the basis of the sawed contents of the delivered logs, but this is usually an unsatisfactory procedure.

Unit 13

Timber-Sale Contracts. Contracts covering the terms and conditions of sale, signed by both the buyer and seller, are essential if the transactions are to be carried out in accordance with good business policy. The main items to be covered in a contract follow:

1.Description and location of timber;

2.Prices and manner of payment;

3.Conditions of cutting and removal;

4.Titles and methods of settling disputes.

The drawing of a contract is a matter of law, and therefore the papers should be prepared by a lawyer. To illustrate the general way in which the items may be stated the following contract is presented.

Contract for Sale Standing Timber

Agreement between______ called the seller, and_____ called the purchaser. I.The seller agrees to sell to the purchaser upon the terms and conditions

hereinafter stated, all the living timber marked by the seller, estimated.

II.The purchaser agrees to pay the seller the sum of for____________________. III. The purchaser further agrees to cut and remove said timber in strict accordance with the following conditions___________________________________. IV. In case of dispute over the terms of this contract, final decision shall rest

with________________________________________________________________.

The sale of timber is a business transaction, and the owner should, through frequent inspections, see that his interests and property are protected. A complete understanding of all terms by both parties prior to the signing of the contract and starting of the work will prevent later misunderstanding and difficulties.

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Naturally the financial rating and the reputation for good practice on the part of the buyer count for as much in a sale of woodland products as in any other kind of sales transaction.

Cooperative Marketing. In theory the marketing of woodland products through cooperative effort seems to provide a solution to the sales problems of small owners. There is no reason why it should not work out equally well in practice. Forest cooperatives are common in Europe, but in spite of the recognized need for them, only limited progress has been made in developing them. The success of existing organizations will stimulate the formation of them in all woodland regions.

The problems in developing cooperatives are many. The exact form of organization, the program of financing, the relation of sales to control of woodland property, and the details of controlling and operating the cooperative are all involved. Yet the fact that special problems exist in dealing with woodland products must not prevent the establishment and successful operation of forest cooperatives.

Two basic principles are used in woodland cooperatives, namely, the one of engaging primarily in sales work only, and the second that of combining with the merchandising a control over the woods of each association member. Conceivably the cooperative can be a merchandising organization and nothing more and render great service to its members. But if there is no control of cutting policies, there is distinct danger of heavy over cutting and an interruption of a continuous supply of raw materials. Permanent operation of a cooperative requires that a steady and constant supply of raw products be furnished.

Whether the cooperative should sell raw products or process the material in its own plants is a moot point. Moreover, the type and extent of managing personnel, the volume of business, and the current plans of business procedure indicate the complex situation that the organizers of a cooperative association must face.

Forest cooperatives were organized with the principal objectives of increasing the annual income to members and marketing forest products. At the start these organizations handled pulpwood for pulp mills and had little investment in equipment. As they expanded into the marketing of lumber, processing equipment was added. To cover marketing and bookkeeping costs, 3 per cent of the sale price of all products at the final point of delivery were deducted.

Financial Principles of Woodland Management. The basis of handling any forest property in which continuous operations are taking place should be similar to

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that by which any current business is run. The gross income, less the costs of operating, yields the annual net income. This net income should be correlated with the property as a whole and not regarded as the income from a specific unit.

In dealing with the growing of timber, the elements of compound interest have frequently been introduced. Such a conception may be applied under certain conditions of forestry, but where sustained production takes place, the element of compound interest should be disregarded.

The principle of determining the net annual income and applying it to the property as a whole is in forestry called forest rent. Forest rent may be defined as the net income from a forest organized for sustained yield without interest charges on the forest capital.

The gross incomes include the items of stumpage values, costs, and profits. Since the owner did his own harvesting it probably would be impossible to separate with accuracy these three individual values.

It is recognized that an additional factor of values is not taken into account, namely, that factor which includes the value of the posts, fuel wood, and timber cut for the owner's use. An accurate determination of all costs and all incomes is essential for an accurate determination of capital value of property.

In terms of production of materials for use or sale, it is possible to determine the values in money and to make financial comparisons of the various methods of future management.

However, economic values exist where woodlands prevent soil from eroding; protect buildings and stock from excessive winds, intense heat, and cold; and provide cover and food for wild life, though such values would be difficult to appraise in dollars and cents.

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Edinburgh Gate, Harlow : Addison Wesley Longman Ltd, 1996. – 271 p.

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Елена Альбертовна Маклакова Анна Александровна Илунина Юлия Алексеевна Литвинова

ИНОСТРАННЫЙ ЯЗЫК

ENGLISH FOR ECONOMISTS AND MANAGERS

АНГЛИЙСКИЙ ЯЗЫК ДЛЯ ЭКОНОМИСТОВ И МЕНЕДЖЕРОВ

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