VARDAMAN VIRTUAL FORESTRY COMPANY

The Most Direct Link to Knowledge Workers in the Southeast Forest Economy

HOW TO USE THE INTERNET TO GET EXTRA PROFIT FROM OUR SELECTIVE THINNINGS

Skillful use of the Internet produces extra profit in all businesses in two ways: 1) exposing a product to a huge market with little expense and 2) reducing transaction costs. Since any timber seller can list his tract without charge on www.se-timbersales.com as long as he chooses and since 400-500 persons visit that site each week, he can easily see how the Internet performs the first function. By examination of our tracking report at www.se-timbersales.com/report/, he can even see how many of them look at his offering.

Understanding how our selective thinnings reduce transaction costs requires study of the process as explained in detail at www.vardaman.com/greensheets/corthin3.php. Each plantation in SE U.S. is unique, and variation between them is very large. Consequently, measurement of an adequate sample is essential at the outset; no one can identify which trees to remove and which to keep by inspection alone. We analyze the sample data with PTAEDA2V to designate trees to be removed, but all data needed to manage the "keepers" for a long time are also gathered in the measurement. Since the landowner has already paid us for the measurement and analysis, the additional data are free.

One landowner is Jim Vardaman, who personally owns the PPIC LA87040MMB that we've thinned, fertilized, and written about in the recent past. He used these additional data to predict the remaining stand as of 10/31/00, when growth ended last year, and offered it for sale by negotiation. Vardaman also offered for sale the PPIC itself, so he has predicted and attached to the offering the predicted per-acre stands on 10/31 of each year* until the planned clearcutting at age 22. If the contract itself doesn't sell, he will change the volumes in the timber sale each year. He posted these offerings on www.se-timbersales.com, and you can examine them by clicking on www.se-timbersales.com/Tract.asp?TractID=26. Estimated per-acre stands at each yearend appear on four sheets in the attachments at the bottom of the page. (To be sure that later printouts would be completely legible, we did not optimize them, so each takes 50 seconds to load.)

Present value of these trees is relatively low, but each is suitable for sawtimber and standing on a site that can be logged in very wet weather, such as might come with the return of El Nino. Vardaman's status as a principal and the detailed knowledge that he furnishes about his trees have advantages for all buyers near his tract. No manufacturer owns enough land to grow the timber needed for his mill; all must buy some portion by the uncertain process of competitive bidding. Vardaman's permanent, detailed offer to sell and ability to close the sale in 24 hours may be an expensive alternative, but it beats shutting down the mill for lack of timber.

All data for this later offering was free. Furthermore, they converted him into a principal and eliminated the future cost of a selling agent, which may have been JMV&CO. His detailed presentation of all sale data surely reduced appraisal costs of the ultimate consumer. This is what we mean by reducing transaction costs. Principals usually win in Internet trades.

*When these high-quality trees are fertilized and given room to grow, they are powerful producers of value. If you apply our stumpage prices reported monthly at Hattiesburg, MS to these volumes, you see why Vardaman said about his plantations, "I'd almost give away the pulpwood thinning just to turn the main stand loose."