Vincent wrote:Less than $2 per tree? Then why do I pay $3 per 2X4?
Who speaks for the trees?
Great question, Vincent!
Explanation: stumpage price (landowner's revenue) + logging costs + profit, milling costs + profit, kiln and other finishing costs + profit, distributor costs + profit, retailer costs + profit, end use cost + profit, and all the transportation and costs + profit associated with each individual supply chain stage = contributing economic factor.
This is what the "economic multiplier factor" is about - there is no real-world way to estimate the factor (and it is dynamic) accurately - since there are so many markets for a given species, but one rule of thumb that seems reasonable to me is 1:12, which means for every $1 for stumpage (in terms of the price of the standing log which is currently going for somewhere around $35/cord for red pine timber), $12 is effectively obtained throughout the supply chain into the economy (which in effect means $420/cord for the red pine lumber).
420. Love it. Ha ha.
One conversion is that 1 cord = 500 board feet, so that means finished red pine lumber should cost 84 cents a board foot at the retailer if the 1:12 conversion is correct.
In (1) 2x4x8' there is 5 1/3 board feet. Using 84 cents a board foot gives us $4.48, so the 1:12 ratio seems a little high for this product...However, when you consider the final additional costs and profit associated with whatever you are making with that 2x4, after you use it (and you must consider ALL costs: [example of such a cost would be % of car insurance payment/oil change/maintenance you spent during the time of transportation en route to and fro the lumberyard] , the numbers might meet the factor or at least be quite close.
I love economics! ;-)
The funny thing is that while Red pine is a species that can be used as production in 2x4s (the grade would be SPFe - the "e" being the important factor there), it is hardly ever sold this way on the retail market (SPF -without the "e" or fir/larch -which is a shittier grade- is more typically what you will see on the stamp where you are located - these are made with different groups of conifer species). Red pine is more often sold as treated material (4x4 posts for exterior decking applications, etc.). It won't span what some of the Western and Southern species will as joist and header material, but it doesn't bow as much either - which makes it preferable as 5/4 decking boards - Ponderosa and Red pine are the best for this application.
So the question for you, Vincent is - if your costs are $0.25 per 2x4, what do you plan on doing with the $1.23 you just made? :-)
Life is short. Eat, Drink & Be Merry!