Log prices, stumpages and royalties
The price paid for a standing tree is called
the "stumpage" or "royalty". Stumpages
are based on the value of the product at the mill door minus
the cost of harvesting and transport.
Stumpage price = Mill door price - Harvesting
costs - Transport costs
As a guide timber harvesting costs are commonly
between $20 and $40 per cubic metre depending on the type
of machinery used, the type of the logs and the site conditions.
Harvesting costs are generally lower for large plantations
of large diameter logs on easy accessible country. Where manual
methods (chainsaws) are used for felling and preparing the
log, costs can be very high when working in heavily stocked,
small diameter unpruned plantations.
Transport costs are commonly in the order of
10c/km/tonne. If this were the case then the grower would
receive $10 less per cubic metre of logs for every 100 km.
The stumpage received will also reflect the
ability of the grower to negotiate a favourable deal. As the
native forest timber industry becomes more sophisticated and
the quality of logs from native forests declines, the price
differential between logs of high and low value appears to
be increasing. Plantation softwood logs of similar wood characteristics
have traditionally been sold on the basis of diameter, with
larger logs receiving higher prices. In some cases there are
minimum specifications that, if not met, mean the logs have
For small growers, the differential between
high and low value logs is expected to be greater than suggested
by the stumpages received by industrial growers or government
agencies, because of their lack of market power. It is common
for farmers to say they "can not give away" their
lower value timber, whereas if they had large diameter logs
with special qualities, they could attract higher prices than
the larger growers by carefully targeting premium markets.
Figure 1: The price gradient for quality
in Victoria. Based on government royalties in 1995.
Back to top