BULLETIN 23 APRIL 1972

Price $1.50

TIMBER SALES CONTRACTS

FOR

LATIN AMERICA

SEYMOUR I. SOMBERG

SCHOOL OF FORESTRY

STEPHEN F. AUSTIN STATE UNIVERSITY

NACOGDOCHES, TEXAS

75961

STEPHEN F. AUSTIN STATE UNIVERSITYSCHOOL OF FORESTRY FACULTY

Laurence C. Walker, Ph.D Dean of School andProfessor of Forestry

Harry V. Wiant, Jr., Ph. D Assistant to the Dean forAcademic Affairs and Professor of Forestry

Seymour I. Somberg, D.F. . . . Director of Forestry Research andProfessor of Forestry

Robert D. Baker, Ph.D Professor of ForestryM. Victor Bilan, Ph.D Professor of ForestryDavid V. Smith, Ph.D Professor of ForestryLeonard F. Burkart, Ph.D Associate Professor of ForestryHershel Reeves, Ph.D Associate Professor of ForestryKenneth G. Watterston, Ph.D. . . Associate Professor of ForestryJack E. Coster, Ph.D Assistant Professor of ForestryEugene F. Hastings, Ph.D Assistant Professor of ForestryRay R. Hicks, Jr., Ph.D Assistant Professor of ForestryEllis V. Hunt, Jr., M.S Assistant Professor of ForestryJ. David Lenhart, Ph.D Assistant Professor of ForestryJ. Robert Singer, Sc.D Assistant Professor of Forestry

INSTRUCTOR-GRADE FACULTY

Alan F. Button, M.S Instructor of ForestryJames W. Martin, M.A Instructor of ForestryKent B. Smith, M.S Instructor of ForestryGarnet H. Weaver, M.Sc Instructor of ForestryR. Larry Willett, M.F Instructor of Forestry

PART-TIME FACULTY

Billy J. Barley, B.F LecturerE. A. Golden, M.F LecturerLowell K. Halls, M.S LecturerJohn J. Stransky, M.F Lecturer

ASSOCIATE FACULTY

Gerald Loyd Collier, Ph.D Professor of Forest GeographyBen E. Dickerson, Ph.D. . Associate Professor of Rural SociologyPhilD. Gocdrum, M.S Wildlife Research Biologist

Robert S. Maxwell, Ph.D Professor of Forest HistoryRobert S. Blair, M.S Research EcologistDaniel Lay, M.S Wildlife Research Biologist

ADMINISTRATION

The Board of Regents

Mr. Walter C. Todd 1977 DallasMr. Robert C. Gray 1977 AustinMr. Douglas Bergman 1977 DallasMr. Roy Maness 1973 BeaumontMrs. Lera Thomas 1973 HoustonMr. Sam Tanner 1973 LongviewMr. R. E. McGee 1975 HoustonMr. James I. Perkins 1975 RuskMr. Joe Bob Golden 1975 Jasper

Officers of General Administration

Ralph W. Steen, Ph.D PresidentJohn T. Lewis III, PhD Vice President for Academic AffairsCharles G. Haas, B.B.A ComptrollerGordon Beasley, Ed.D Dean of Student LifeEugene R. Barbin, M.Ed RegistrarClyde L. Iglinsky, Ph.D Director of Admissions

CONTENTS

Introduction 2

Latin American World Trade in Forest Products 4

Contributions Available from Forest Resources 6

Guides from Past Experience 9

Some Defects of Most Timber Cutting Concessions 9

Timber Sales Agreements in U.S.A 10

Considerations of Stability 14

Proposals for Timber Sale Contracts 17

Essential Contract Provisions 21

Principals to Agreement, and its Duration 21

Timber and Other Value Conveyed 22

Location of Area 23

Conditions of Contract 24

Measurement and Payments 26

Obligations of the Government 27

Execution and Recording of Contract 29

Forms of Contract 30

Hypothetical Timber Cutting Contract 31

ACKNOWLEDGEMENTThe author wishes to acknowledge the contributions made to

this bulletin by Mr. George K. Stephenson, Editor of ForestryPublications, and by Mr. Kent Smith, Instructor and graduatestudent, in the School of Forestry, Stephen F. Austin StateUniversity.

Thanks are also due to Mr. Pratts Llaurado, FAO/UN, Rome,for getting me started on this project, and to the following personswho, at one time or another reviewed one or more drafts of themanuscript; Ing. Carlos Flinta, FAO/UN, Rome, Dr. SixtoPericchi, Director, Probosques, CA, Caracas, Ing. Flavio Bazan,O.A.S. Washington, D.C., Mr. Gordon Fox (retired), Mr. T. A.Harrington, Mr. Clark E. Holsher, U.S. Forest Service, and membersof the Forest Management Division, U.S. Forest Service,Washington, D.C.

To my secretary, Mrs. Sherry Greer, for much retyping of themanuscript, I want to express my grateful appreciation.

I am certain this is a better publication because of thesuggestions and criticisms made by all of the above. Any mistakes orerrors are those of the author.

S.I.S.Nacogdoches, TexasFebruary 25, 1972

INTRODUCTIONFew Latin American nations are making optimum use of their

forest resources as a basis for industrial development. At the sametime, many of these nations are in need of such development toprovide wages, salaries and business opportunities for their people,as well as products for use at home and for sale abroad. Forests areamong those unique resources which are renewable and, if properlymanaged, especially desirable because industries founded on themcan be assured a perpetual supply of raw material.

Better use of forest resources involves many factors, includingmarkets, transportation, trained foresters, and the establishment ofmanufacturing plants to produce finished products for sale abroad orfor use locally. When timber is sold as logs to be manufacturedoverseas, local benefits are limited to the payments for stumpage,the wages paid wood workers, and perhaps some transportationcharges on a low value product. If this wood can be manufacturedlocally, the country of origin not only receives these benefits, but alsothe much greater benefits from wages and salaries paid for themanufacturing, as well as the many subsidiary benefits from such anexpansion of the economy. In the State of Texas, U.S.A., it isestimated that for every $1000 worth of stumpage harvested,products worth at least $25,000 are produced.

All nations with adequate forest resources, or suitable land onwhich forests can be produced, can add to their economic activity bydeveloping wood manufacturing enterprises. Such developmentscould be particularly helpful to nations whose per capita income islow and dependent mainly upon a single agricultural commodity.Hardships which result when such a crop fails, or when world pricesare low, will be less severe if many people earn their living from aforest industry. Other benefits, including a broader tax base, reducedneed to spend money abroad to import manufactured wood products,and added foreign exchange from sale of wood products abroad, alltend to increase prosperity and raise the local standard of living.

In the past many nations have had little information about theirforest resources and have lacked the necessary professional forestersto inventory and manage this resource. Much timber has beenexported as logs with little benefit to the nations where the treeswere grown. Capital has rarely been available for building thetransportation systems and manufacturing plants needed to bestserve the national economy.

As Latin American nations acquire better inventories of theirforest resources, and professional organizations to protect andmanage them, sound financial investments in wood manufacturingindustries will be beneficial in many ways to the national economies.This publication considers the nature of sales agreements withprospective timber purchasers and some aspects of long-term salescontracts which can help make developments mutually beneficial tothe purchaser and to the national economy.

Sawn lumber imported to Latin America cost $78,799,000 (U.S.)in 1969. The value received from exported logs is relatively low.

Exports of forest products amounted to $109,496,000 (U.S.), morethan 70 percent of which was produced in Brazil. Exclusive of Brazil,Latin Amercia had a trade deficit in forest products of more than $46million (U.S.). Latin American nations can ill afford high tradedeficits for products that could be manufactured in their owncountries. Timber sales which involve local manufacturing canreduce this deficit in the balance of payments for forest products.

Price is one of the controlling factors in exporting forestproducts. In the field of international trade, it is the nation with acomparative advantage in a particular product that will be theexporter of that product. Many Latin American nations would nothave to shift workers from other forms of production to forestproduction. Thus they would attain a comparative advantage bygiving work to the unemployed and underemployed, especially thoseengaged in subsistance agriculture.

LATIN AMERICAN WORLD TRADEIN FOREST PRODUCTS

Latin America, as a whole, is presently a net importer of forestproducts. In 1959, Latin America produced 11,698,000 M3of sawnlumber but consumed 13,560,000 M , or a deficit of more than 2million cubic meters.1 This situation will continue until domesticproduction of forest products is increased to a point where internaldemand for these products can be satisfied.

During the last decade both the importation and exportation ofsawn lumber and logs have risen. From Table 1 it can be seen thatLatin America, exclusive of Mexico, was a net exporter of sawnlumber and logs. South America was a net exporter of both logs andsawn lumber while Central America was a net importer of sawnlumber and a net exporter of logs. It should be pointed out that oneSouth American nation, Brazil, accounted for 60 percent of all sawnlumber exported from the entire Latin American area and 81 percentof all sawn lumber exported from South American countries. Basedon data presented by FAO, Brazil is a net exporter of sawn lumber.Latin America, excluding Brazil, is a net importer of sawn lumber(551,000 M^) and a net exporter of logs.

1Latin American Timber Trends and Prospects. FAO/UN/LAFC-62/S, 1963.

LATIN AMERICAN WORLD TRADEIN FOREST PRODUCTS

Latin America, as a whole, is presently a net importer of forestproducts. In 1959, Latin America produced 11,698,000 M of sawnlumber but consumed 13,560,000 M , or a deficit of more than 2million cubic meters.1 This situation will continue until domesticproduction of forest products is increased to a point where internaldemand for these products can be satisfied.

During the last decade both the importation and exportation ofsawn lumber and logs have risen. From Table 1 it can be seen thatLatin America, exclusive of Mexico, was a net exporter of sawnlumber and logs. South America was a net exporter of both logs andsawn lumber while Central America was a net importer of sawnlumber and a net exporter of logs. It should be pointed out that oneSouth American nation, Brazil, accounted for 60 percent of all sawnlumber exported from the entire Latin American area and 81 percentof all sawn lumber exported from South American countries. Basedon data presented by FAO, Brazil is a net exporter of sawn lumber.Latin America, excluding Brazil, is a net importer of sawn lumber(551,000 M^) and a net exporter of logs.

American Timber Trends and Prospects. FAO/UN/LAFC-62/S, 1963.

Table 1. Volumes of Forest products, Latin America excluding Mexico, 1959-19681

Year

Production of SawnwoodCentral AmericaSouth AmericaTotal

Exportation of Sawnwood

Central AmericaSouth AmericaTotal

Importation of Sawnwood

Central AmericaSouth AmericaTotal

Exportation of Logs

Central AmericaSouth AmericaTotal

Importation of Logs

Central AmericaSouth AmericaTotal

1959

2,1839,288

11,471

3821,0481,430

494700

1,194

89264353

29327356

1960

2,2138,984

11,197

3671,0931,460

388728

1,116

77275352

29329358

1961

2,0769,261

11,337

3111,2951,606

3991,0181,417

88310398

9334343

1962

1000 M3

2,1379,772

11,909

2921,0401,332

454714

1.168

78272350

12266278

1963

2,5278,788

11,315

2821,0001,282

444640

1,084

49271320

3232235

1964

2,9319,512

12,443

3391,3591,698

531815

1,346

59401460

8252260

1965

2,9149,679

12,593

3411,4581,799

554930

1,484

48526574

15367382

1 jjDD

3,03610,42013,456

4761,4961,972

645941

1,585

49533582

30334364

1967

3,14210,52613,668

5121,3371,849

627800

1,427

26401427

27291318

1968

3,15210,90014,052

5801,6862,226

660798

1,458

29400429

8278286

Source: Yearbook of Forest Products • FAO/UN 1968

Sawn products quantities are net sawn volumes; quantities for logs are round wood measure.

CONTRIBUTIONS AVAILABLEFROM FOREST RESOURCES

A timber cutting contract, well planned and well managed, canbe beneficial to a nation in at least three important ways. Theseinclude direct payments for stumpage and taxes, improvement in thenational balance of trade, and enhancement of the national economicbase. In addition, the development of transportation routes and theorganization of the forests for growth of the more valuable timberspecies may further build up the capacity of the forests to contributeto the national welfare.

Direct income will be partly in the form of stumpage payments,area payments and/or royalties received by the granting nation.These are "fixed" incomes and can be counted on when thegovernment prepares its budget. In addition, depending upon localsituations and terms of the agreement, the government oftenreceives various additional revenues, such as personal income taxes,and import and export duties. Furthermore, a forest productsindustry tends indirectly to increase the sources of governmentalincome. Once the primary industry is established, supporting andservice industries will follow. These new and additionalestablishments afford additional sources from which the governmentwill receive benefits in the form of business or property taxes.

The benefits from direct payments to a national government areobvious. Such payments may be used directly by the government topay parts of the costs of the services and improvements it providesfor its people; they are available either to reduce taxes paid byinhabitants or to provide increased services or facilities withoutincreasing the costs to the people.

Less apparent, but sometimes much more important, are thetotal effects of a forest products manufacturing enterprise on thenation's balance of trade. People of every nation have needs forproducts which they can best purchase from foreign sources. Theypay for these products in money, usually their local currency. Thenation would soon deplete its supply of money, however, if it did notexport some of its own products to other countries. Internationaltrade involves many individuals and companies in many countries;essentially, however, everything a nation imports must be paid forby the export of an equal value in goods or services.

The value of a forest products enterprise to a nation is notlimited to direct payments to the national government for stumpageor cutting rights. Much more important is the net value of theproducts sold in the international trade, because the nation's abilityto buy goods from abroad is increased by this amount. In otherwords, except for the profit retained by the manufacturer and costspaid outside the granting nation, the entire value of the output froman exporting enterprise becomes foreign exchange, and contributesto the improvement of the nation's balance of trade.

Thus the direct payments made to the government for standingtrees may be $7 (U.S.) per cubic meter; if this timber is manufacturedlocally- into plywood, however, its value in international trade may

be perhaps $100. If profit and investment repayments amount to$20, the increase in the nation's ability to trade abroad is not $7 but$80. This is money that the contracting company has spent forsalaries, wages, materials and other services to raise the value of itsproduct from the stumpage value of standing trees to the value offinished plywood. While most of this money is spent for locallyproduced food, materials, and services, in the course of trade it helpsemploy other people who work only within the local economy, andeventually balances their necessary purchases of foreign goods.

These relationships make it highly desirable that a nation'swood be manufactured within the nation, to the most refined andvaluable products that may be feasible. In this way the sale of timbermakes an optimum contribution to the nation's trade balance at thesame time it affords wages and salaries to persons who otherwisewould have fewer opportunities for employment, or perhaps none atall.

Forest industries differ in their contribution to the foreignexchange and the national economy. Industries which employ largenumbers of people generally contribute more than those wheremanufacturing is largely automatic. In highly automated industriesa high proportion of manufacturing cost is often required for theamortization of capital, which does not contribute to the localeconomy, if the capital came from abroad. Industries should haveefficient machinery to be competitive in international trade, butthose which also employ moderately large numbers of people areusually most beneficial.

Industries producing finished products may also benefit anation by making available products that otherwise would have to beimported. Such products, sold within the nation, do not add toforeign exchange, but are as useful to the nation's trade balancebecause they reduce the need for foreign exchange to pay for importsof forest products. Thus a sawmill which can produce finished lumberat a lower price than imported lumber of equal quality reduces thecost of lumber to local users, provides employment for nationalcitizens, and at the same time improves the national balance of tradeby reducing imports.

Beyond all these benefits, a forestry industry, like any newindustry, adds to the national economy not only directly by the valueadded in the manufacturing of raw materials, and in wages andbenefits to workers, but also indirectly by stimulating current retailand service industries needed to supply the new workers. In addition,new businesses will be established to provide goods and services tothis new industry, in the form of parts, machinery, repairs, chemicalsand sundry supplies. Further benefits accrue to the nation in theform of new roads and better transportation for the products of thenew industry and indirectly for use by all the people and commerce ofthe country. In the case of forest industries, this new and improvedtransportation would open previously inaccessible areas for all. Inthe end the effect of any new industry would provide employment forworkers of that industry and employment for many others who

would now be in a position to purchase products produced by theindustry as well as other products produced in that nation.

Labor-intensive industries, such as those in many phases offorest production, give employment to a large number of people,placing money into the income stream that filters throughout theentire economy. This multiple effect of wages paid workers,especially in developing economies, is widely recognized. Equitablecontracts provide for fair and adequate wage schedules, includingwage increases as workers increase their productivity. Goodcontracts also require training programs to make it possible for theworker to elevate himself from jobs of common labor to responsiblepositions, thus raising his standard of living, increasing his dignityand adding to the economy of his country.

GUIDES FROM PAST EXPERIENCEMost Latin American nations have attempted, in the past, to

exploit the resources of their forest lands through the granting ofconcessions. Few of these attempts have been successful. In manycases, no timber was ever harvested, the concession being used onlyfor speculation. In others, only a few choice species were removed,the nation received only a small part of the value harvested, theprofits went to other countries, and necessary good forestry practiceswere neglected. Usually the operation was temporary, little or nomanufacturing was done locally, no permanent industry wasestablished, and benefits to either the national government or thelocal economy were minimal.

Some Defects of Most Timber Cutting ConcessionsPerhaps the most basic problem with traditional concessions is

overemphasis on immediate payment and inadequate considerationor provision for long-term benefits. Although perhaps sometimesjustified by the need for immediate revenue, and the lack of adequateinformation about the forest rsources, such concessions were ofteninitiated by speculators for resale at higher prices; where timberactually was harvested, it often developed that the government hadreceived only a fraction of the true worth of a valuable resource. Mostoften, however, the concessionnaires knew little about forestproducts, used their concessions for speculation, cut no timber, andpaid little to the government. In either case, the nation receivedlittle for its resource and failed to achieve any of the benefits whichresult from stable manufacturing industries.

In the past, few nations in Latin America have had adequateprofessional forestry organizations in charge of their forestresources. This made it difficult or impossible to obtain adequateinventories of forest resources. Concessions were thus granted whereneither the government nor the concessionnaire knew much aboutthe volumes or value of timber involved. Lack of inventories, and ofprofessional forestry services, often resulted in seriousunderestimates of values and inadequate payments to thegovernment. Lack of forestry knowledge and disregard of long-termvalues resulted in inadequate provisions for forestry practices toperpetuate the resource and/or for development of transportationand manufacturing facilities. Similarly, without an organizedforestry agency, supervision of the operations and enforcement of theprovisions of the concession were rarely adequate or were handled bypoorly trained men.

Viewed in another way, a major fault with most concessions isthe fact that concessionnaries were rarely responsible forest productsmanufacturers, with skills, experience, management ability andfinancing necessary for the development of a new industry. Indealing with speculative investors who, at best, could only hope toconsummate the concession by transferring it to a capable operator,governments rarely benefited fully from timber cut and often lostcontrol of the resource with very little compensation. Only when thesales agreement is reached directly with the person or company

which will conduct the operation can necessary details be worked outso that the government's objectives can be met. And only by dealingdirectly can the government insist on contract provisions which willinsure local manufacturing and other features desirable for the localeconomy.

Finally, some agreements have failed for lack of realism in theconditions imposed upon the purchaser. The government mustrealize that its benefits depend upon the continued operation of theagreement; the purchaser can continue to operate only if he can makea profit. Operators can and should accept terms necessary to insurefair benefits to the local people and the national economy, but cannotearn the profits necessary to continue operation if requirements areexcessively harsh and costly.

Timber Sales Agreements in U.S.A.Not all experiences with timber cutting contracts have been bad.

For example, in the United States of America there are more than 60governmental agencies which sell timber from publicly ownedforests. These include the Forest Service, the Bureau of LandManagement, the Department of the Navy, the Department of theArmy, the Bureau of Indian Affairs, and many smaller agencies. Inaddition, sales of timber from private forests are common. Alsomany of the 50 sovereign states have their own timber lands,operated by state forest services, and these too sell timber undershort or long-term contracts. Some municipalities, too, have forestsfrom which timber is sold.

The United States Forest Service, under the Department ofAgriculture, handles more sales contracts, and sells more timber,than any other agency in the nation. This is so because the ForestService, subject to existing legislation, is charged with themanagement and care of all the lands in the country which have beenset aside as national forests.

The negotiation of forest cutting contracts by the U.S. ForestService is a big business. The income from sales on national forests ispaid to the federal government. In 1905 the total income from salesof stumpage on national forests amounted to a little more than (U.S.)$73,000. This value has risen steadily and in 1968 the income fromstumpage amounted to $205.6 million. This represented an incomefor the federal government from national forests alone, and doss notinclude revenue from any of the other governmental agencies whichadminister sales of timber.

The individual states have various methods of selling timber.With few exceptions, however, all sales are made to the highestbidder, under the terms and specifications set forth in an "invitationto bid." The U. S. Forest Service likewise requires bids on mostoccasions, although non-competitive sales can be made in somecircumstances. Sales contracts usually allow from one to three yearsfor completion, but sales involving very large volumes may extendfor 20 years or more. Such long-term sales provide for periodic priceadjustments.

10

Types of Timber Sale AgreementsDuring the years the United States Forest Service has

developed several types of sales agreements to fit the different needsof the purchaser and requirements of the Forest Service. A few of thedifferent types of sales agreements are described below.

Commercial Sales Less than [U.S.] $2,000. In making salesamounting to less than $2,000 the Forest Service has two methodsavailable to it. These methods differ considerably from the regularprocedure in that sales of this nature may be made by directnegotiation without the required 30-day bidding requirement.However, if more than one person or company is interested in thissale, then there must be a 30-day bidding period. This type of sale isprimarily for the small operator or farmer with very limitedresources, and is widely used to permit salvage of small quantities ofdead timber resulting from windthrow or endemic insect attack. Anindividual may purchase no more than $2,000 worth of stumpage peryear under this type of sale.

Unadvertized small sales are made in the form of a permit (Fig.1), which does not require signature of the purchaser. Payment for allor a portion of the timber is made in advance, and additionalpayments are required to insure that no timber is cut which has notbeen paid for.

FOREST PRODUCTS SALE PERMIT

Figure 1. United States Forest Service form for sales of smallquantities of timber to local people. Widely used for salvage of deadtrees, this form accounts for more .than half the sales from thenational forests, but only a small fraction of total volume of timbercut. Similar sales may become common on developed forests in LatinAmerica.

Competitive Sales. Almost all commercial timber on thenational forests, having an appraised value in excess of $2,000, is

i11

sold through competitive bidding. If the volume can be harvested inthree years or less, this is considered a short-term timber cuttingcontract. Occasionally, the term may be extended to five years andstill be considered as short-term. Most of the sales in accessibleregions are of a short-term nature.

Two standard contract forms are used for sales which areadvertized for competitive bidding. A short form (2400-3) is used formost such sales involving less than $2,000, and for larger sales inareas where requirements are standardized and well understood bythe purchaser. The front side of this contract form, which covers thespecific contract agreements, is shown in Figure 2; the reverse sidecovers standard requirements. Where necessary, special clauses maybe added to this form, on additional sheets.

TIMBER SALE CONTRACTNATIONAL FOREST DISTRICT

SALE IDENTIFICATION

NAME OF PURCHASER

CONTRACT NUMBER DATE

Agriculture, hereinafter railed the Forest Service, and

hereinafter called the purchaser.

marked or designated for rai l ing by the For ) be designated by

3. The purchaier shall j>a> to the Forthe sum of (| I,' man

t Service, USDA,_

which includes deposits for sale area betterment (Act ofjune 9, 1930, 46 Stat. 527, |(j U.S.I.:. 576b), and for require,! slash dismal deposit,(Ai t of April L'4, I9,r)0, M Sial. 04, 16 U.S.C. 490), in advance payments of at h-ast S cat h when called for by iheForest Service, provided that just before completion of ihe sale such amount may be reduced by ihe Foresl S<-r \ ic t -

4 The purchaser shall cut and remove said timber in Uriel accordance with the following, and with all conditions and requin

mber sales prescribed by the Secretary of Agriculture.

6. All logs are merchantable which are not leu than . - feet long, at leasl inches in diameter iniide bark atthe small end and contain a net of __ _ percent of their gross scale; provided that no log scaling less than —_ . bd ft.shall bf considr-red merchantable; "all are merchantable which"

UNITED STATES OF AMERICA

Figure 2. Simple 1-page form used for smallest contract sales,mostly under $2,000, on national forests of the United States. Thereverse side consists of 13 standard clauses relating to such mattersas payments, measurement, construction and utilization standards.This type contract is suitable for simple advertized sales wheremarkets are developed and most sales requirements are familiar topurchasers and their employees.

12

Most major sales, both of normal (up to 3 years) and long-termduration, are made on the Standard Timber Sale Contract, form2400-5. This is a 20 page form, parts of which are illustrated in Figure3, providing spaces for listing numerous timber species andproducts, and 11 pages of standard requirements and alternative

TIMBER SALE CONTRACT

1 "°'°"»...„.

CONTHAC 1 NO.

The parties to this contract are The United States of America, acting through the Forest Service. United States Depart-ment of Agriculture, hereinafter called Forest Service, and

here inaf te r called the purchase HP_ hete inafter contained, Fo'est Sem"r^sss^*-^-^"^

A5 - Timber Payment Rol«», applicable to B3.1 and B4.0

A7 - Scheduled Rote Rerjererminotion, applicable to B.I.33

Dates for scheduled rate redetermination areredeterminations shall c

TS Signature and Acl«no"llc''-Rm.enl^

IN \\1TNFSS WHEREOF, the parlies 'UNITED STATES OF AMERICA

Figure 3. Parts of the standard contract used for sales of nationalforest timber in the United States. The contract form [2400-5]includes 8 pages of specific conditions plus 11 pages of standardprovisions. Major timber sales contracts in Latin America shouldinclude a comparable degree of detail.

13

clauses to cover contingencies frequently encountered in the UnitedStates.

Copies of these various sales forms are available from the UnitedStates Forest Service, Washington, B.C. The many provisions inForm 2400-5 and its companion form 2400-5T (for tree measurementsales) will afford useful suggestions for anyone developing a majortimber sale contract in Latin America.

Long-term Timber Cutting Contracts. In the past there weremany remote areas of the national forests of the United States which,like those in Latin America, lacked competitive timber marketsbecause transportation and manufacturing facilities had not beendeveloped. In such areas, contracts extending over periods of 10 to50 years are executed to initiate harvesting and forest management.Assurance of long-term supply of timber justifies the purchaser inmaking the large investments in manufacturing and transportationfacilities required.

Agreements of this kind are made after careful appraisal of thetimber, preparation of a management and development plan,advertising of the conditions of sale, and competitive bidding,though in some cases there has been only one bidder. In the nationalforests of the United States, recent development of markets andtransportation facilities has almost eliminated the need for suchlongterm sales. For remote areas in Latin America, however, theyafford examples of successful development.

A major objective of contracts for timber cutting in remoteareas of the United States, as in Latin America, is the developmentof a permanent wood-using industry. The capacity and nature ofmanufacturing facilities, type of transportation system, adequacy ofpay, services and housing for employers are important factors uponwhich agreement must be reached. While there may be only oneprospective purchaser for a given timber unit, wherever possiblecompetitive bids are obtained. Contract is awarded to the bidderwhose offer is most advantageous to the public interest; usually, butnot always, this is also the offer affording the highest total stumpagepayments.Administration of Sales

Practically all U.S. Forest Service timber sale contracts areoriginated by that organization and not by a prospective purchaser.Timber sales are developed as needed to carry out plannedmanagement practices, and not because some party or firm happensto be interested in securing timber cutting rights. The Forest Serviceand other federal and state agencies are able to operate in thismanner because of their technically trained personnel, theiradvanced timber inventories and management plans, and because inmost regions there is an established forest industry. Even where anindustry is lacking, plans for development are initiated by the timbermanaging agency.

Considerations of StabilityThe primary reason for investing is to earn profits. Unless a

14

potential investor can anticipate a profit, he is not likely to invest.He will invest his capital in a forest products industry only if it iscapable of earning a rate, equal to or greater than, what this capitalcould earn if alternatively employed. Risk must also be taken intoaccount. If the risks of alternative enterprises are the same, capitaltends to be invested where profits will be highest. If risks areconsidered to be high, as is often true of new enterprises, higherprofits are necessary to attract capital.

It is to the advantage of the nation entering into a timbercutting contract that the purchaser receive a fair return on hisinvestment, since this is the best insurance of continued operation.The government should set realistic stumpage values, which is itsdirect income from the enterprise. It should not enter intopartnership with the investor, but should exert sufficient controlover the operation so that profits cannot be excessive. Directregulation is not always desirable, but through the manipulation ofcorporate and business taxes as well as import and export duties thegovernment can insure equitable distribution of income. This shouldbe done judiciously, for if it is done in a heavy-handed manner, thepurchaser may be forced out of business. In this event, thegovernment might be the greatest loser.

Sometimes the company can be helped at no cost to thegovernment. For example, it is known in the business world that afirm can sometimes be made to show, on its books, either a profit or aloss depending upon the rates allowed for depreciation andamortization. One inducement for new industry is the so-called "fastwrite-off," which allows a business firm to amortize equipment at arate faster than its normal depreciation. A fast write-off lowers paperprofits, thereby reducing taxes incurred by the investor. Forexample, if an item of equipment has a normal useful life of 10 years,an accepted method of depreciation is to deduct one-tenth of the cost,less salvage value, from gross income each year for 10 years. A fastwrite-off is the same procedure except, for example, one-fifth of thecost, less the salvage value, would be deducted annually over a5-year period. Thus, the net income is reduced. Although grossincome and real profits do not change, paper profits are reduced. Ifone of the incentives already offered to industry by the governmentgranting a timber cutting contract is freedom from or a reduction intaxes during the initial period, it would be advantageous to permitreasonably fast amortization of buildings and equipment since itwould not cost the granting government anything. On the otherhand, the purchaser might benefit if he is liable for taxes in his nativecountry.

The government should strive for stability of investments. Theformal agreement for a timber cutting contract should require certainminimum investment levels of the purchaser, and investmentsshould not be allowed to fall below the accepted levels. On the otherhand, the purchaser needs every possible assurance that hisinvestment, providing he fulfills the conditions of his agreement, willremain intact over the period of the contract.

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Because anticipation of profits is a major inducement toinvestment, the disposal of a portion of the profits should be at thediscretion of the investor. Large corporations and firms have to paydividends to their stockholders. To attract foreign capital, thegranting nation must assure investors that a reasonable portion oftheir earnings can be converted into any currency they choose, andthat this money may be taken out of the country. This means thatthe freedom to withdraw their portion of the profits from thecountry, and/or to convert it to any other currency should not betaxed or limited by legislation. This is a very important point ifresponsible foreign investors and their capital are to be attracted.

The purchaser should be reimbursed for constructing andstaffing such activities as schools and hospitals. This can beaccomplished through special legislation in the form of further taxrelief after the period of no taxes ends.

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PROPOSALS FOR TIMBER SALE CONTRACTSBecause management of forests for permanent production

requires the services of competent professional foresters, it would behazardous for any nation to embark on extensive forest utilizationprojects until it has developed a forestry agency, staffed by qualifiedprofessional foresters. In most countries such a staff would cost lessthan experts from other countries and would afford knowledge oflocal trees and their potential, familiarity with national objectives,and continuity of planning, inspection and management that foreignexperts could not provide. At the very least a cadre of competentforesters must be employed by the national agency to insureadequate planning, even if they must be supplemented by forestersfrom other nations.

A very necessary first step, therefore, for nations desiring tobest utilize their forest resources, is to develop a forestry agency forcontrol, protection and management of their forest lands.Fortunately, steps have been taken towards establishment of schoolsof forestry in Latin America which will educate future foresters fortropical forests.

Wherever possible, proposals for timber sale contracts should beinitiated by the national forestry agency. This is standard practice indeveloped nations with large public forests, such as the UnitedStates of America and Canada.

Where preliminary information for undeveloped regionsindicates possibilities for a manufacturing complex, tentativeboundaries should be determined and more detailed surveys made.These surveys should provide approximate information on the kindsand amounts of timber available, estimates of current growth andmortality, and rough approximations of costs, includingtransportation systems. If the results indicate that a developmentwould be feasible at present or projected costs and prices, a proposalis developed, and the proposed sale of timber is advertised for bids.Where development of a new industry is proposed, with very largevalues and long time periods, bids must be solicited internationally.In 1951 for example, a Japanese firm entered into a 50-year contractwith the U.S. Forest Service for 8.25 billion board feet of timber inthe Tongass National Forest in the State of Alaska. A second 50-yearcontract for 5.25 billion board feet was made in 1956.

There are obvious advantages in this procedure, as comparedwith proposals initiated by prospective purchasers. It insures thatthe national government will have sufficient information to evaluateproposals. It is more efficient because surveys are planned on thebasis of national needs, not on the demand of the purchaser. It alsopermits efficient location of afea boundaries and road systems sothat timber from all areas can be most economically marketed.Finally, a well developed proposal by a national forestry agency ismore likely to receive consideration by competing bidders; if thetimber is offered in response to a purchaser's proposal, he may be theonly bidder, and the price offered is likely to be low.

Whatever the origin of the proposal, the area considered for a

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timber cutting sale should be an economic unit, capable of sustaininga forest industrial complex. If the tentative area is too large or toosmall, or if it excludes timber best harvested with the proposed sale,boundaries should be relocated. The area under consideration shouldbe inventoried and a complete and adequately detailed managementplan should be made. The results of this work should then dictatetotal and annual cut, and the size and annual production of the mainmanufacturing plant. While the specific type of plant to be built, i.e.sawmill, pulpmill, veneer-plywood plant, may not be determined atthis time, the desired degree of remanufacture should be indicated,and the provision for bidding should consider factors such as numberof employees, wage rates, and unit value of products. Other terms ofthe sale, including transportation facilities and other requireddevelopments, provisions for regeneration of lands from whichtimber is harvested, fire protection and other requirements will bedeveloped at this time. With this information the invitation to bidmay follow.

The invitation to bid on a timber cutting contract should state,among other things, the total area covered by the sale, total volume,volume per hectare by types, minimum and maximum annual cut. Inaddition, the solicitation should state species to be cut, degree ofutilization, and in general terms, the type of industry and equipmentrequired, and all other requirements to be made by the government.

Usually the forestry agency should set a minimum priceacceptable for each species. The government should also require eachperson or firm submitting bids on the contract to post a substantial(predetermined) sum of money as a bid deposit. This will help to limitbidders to companies or individuals able and willing to carry out atimber cutting operation.

If a request for timber cutting contract is initiated by aprospective purchaser, it should be as detailed and complete aspossible, and should be addressed to the nation's forestry agency.The area being sought should be described in detail and outlined onthe best map available. It is not enough to ask for an area of landcontaining 50,000 hectares, more or less. The request should indicatethe desired duration of the contract as well as the species to be cut,proposed management plan, reforestation plan, and type ofequipment to be used. The person or firm requesting a timber cuttingcontract must become familiar with existing legislation regardingnational labor requirements, housing, schools, churches and othersocial matters. A financial statement showing the net worth of theapplicant, and a record of his experience in the industry should berequired. The forestry agency should specify deposit of a substantialsum of money as evidence of good faith. In addition, deposit of fundsto cover government cost of surveys and planning may also bedesirable. I

The forestry agency of the government, upon receiving such arequest, should first ascertain whether or not the area under petitionis available for sale. If it is not, the forestry agency should notify theapplicant and return his deposit. If the land is available, the forestryagency should then investigate the applicant, checking on such

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things as technical knowledge, past business experience, history ofoperations, and financial responsibility. If the applicant is notacceptable to the forestry agency, the deposit should be returned andthe request denied. If the applicant appears technically andfinancially acceptable, there should be a meeting or several meetingsof the applicant and the forestry agency for a complete discussion ofthe proposal. These meetings should produce a basic agreement inprinciple on contract provisions, including the subjects discussed inthe following chapter, and the applicant should receive an option fora specific period. A condition of the option would be the satisfactoryperformance and compliance with the previously mentionedstipulations. The meetings should also result in specific agreementsfor accomplishing the following:

(1.) Preparation of a forest inventory covering the proposedarea, to be made available to both parties. If the applicant hasalready made an inventory, then the forestry agency will makea check cruise to determine if the inventory is correct; otherwisethe inventory should preferably be made by the forestry agency.Financing of this inventory may be by the government, theapplicant, or both; the allocation of cost will be agreed upon atthis time.

(2.) Preparation of a detailed management plan for theeconomic unit by the forestry agency of the granting nationindicating annual cut, species to be cut, reforestation require-ments, intensity of utilization, etc.

(3.) Conduct of a feasibility study to be made either by thethe applicant or by the forestry agency or by a combination ofthe two. The decision as to who will make this study should liewith the forestry agency.

(4.) Preparation of projections of sales and profits to bemade by the applicant and furnished to the forestry agency.

(5.) Planning for lay-out of road systems, camp sites, andindustrial plants to be made by the forestry agency or by theapplicant, or jointly if the forestry agency so desires.

(6.) Conduct of other surveys and/or studies that theforestry agency may deem necessary to the success of the sale.These also should be made by the forestry agency or by theapplicant at the request of the forestry agency.

(7.) Agreement on use of nationals on the proposed project,initial wage and salary schedules, social, and culturalconsiderations.A reasonable length of time should be allowed for performance

of the work outlined above. Any studies, surveys, or inventories notmade by the forestry agency should be made by competentprofessional personnel. Proposed personnel for such work should beapproved, in advance, by the forestry agency.

Upon completion of the work to the satisfaction of both parties,the timber cutting contract will be executed, and the purchaser mayproceed in accordance with its provisions. The deposit paid to the

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government at the time the request was made will constitute the firstpayment of part or the first payment, as the case may be.

If for any reason whatsoever, the applicant unilaterally decidesnot to exercise or follow through on his option, then the entiredeposit should be retained by the government as liquidateddamages. All reports, surveys, and inventories then becomeexclusive property of the government.

If the option is not exercised by mutual agreement of bothparties, then the government should retain such part of the depositas is required to reimburse its costs for the investigations, studies,and surveys. Any balance remaining after the forestry agency hasbeen reimbursed, should be returned to the applicant. Copies ofsurveys, reports, and inventories should be retained by both parties.

If the applicant fails to comply or complete all the work assignedto him, in the form of surveys, reports, and inventories in the allottedtime, then the chief of the forestry agency, at his discretion, mayelect to extend the period for completion of this work if it is in thebest interests of the nation, or he may consider the optionunilaterally forfeited.

The terms of the timber sale option and of the agreement itself,should be realistic. The time allotted should be sufficient for surveys,reports, inventories, and other required work to be properly andefficiently performed. Quality should not suffer for lack of time. Onthe other hand, the time allotted should be short enough so that theapplicant cannot delay unnecessarily. Inasmuch as timber inventory,feasibility studies, and engineering for industrial plants, in allprobability will, and should be, conducted by different persons, theyshould be carried out simultaneously. The management plan ofcourse must wait for the results of the timber inventory.

Dealing with financially responsible and technically competentpersons or firms is essential to successful forest resourcedevelopment. The government should be interested primarily in thelong term benefits rather than the immediate deposit. Utilizing apotentially valuable asset should be the main objective. It canaccomplish this only by refusing to deal with speculators andmiddlemen. The government should deal with principals.

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ESSENTIAL CONTRACT PROVISIONSEach timber cutting contract must differ from all others in

many details, and should be written specifically for the particularsituation. There are, however, a number of subjects that must becovered in all timber cutting contracts; the success of the agreementoften depends upon the thought given these subjects.

The length and complexity of timber sale documents may varywidely. Sales of small amounts of stumpage to local nationals, wheresales requirements are well understood, and close supervision by theforest officer is feasible, may be covered by a short, simple document.Sales of considerable size can also be made on simple, standardizedforms where a timber industry exists, and purchasers are familiarwith requirements. Explicit documents, covering all phases of theagreement in some detail, are essential, however, for large, long-termcontracts involving mill and road construction and the establishmentof a forestry industry where such an industry has not previouslybeen developed.

In the succeeding sections of this chapter are presented some ofthe more important points that must be considered, agreed upon anddocumented in the timber cutting contract. Obviously, detailedcollaboration among the nation's administrative, legal and forestryrepresentatives is required. Only with the technical assistance ofcompetent foresters, familiar with forest management, logging andthe manufacture of forest products, and fully informed about thetimber sale area, can adequate and effective agreements be reached.

Principals to Agreement, and its DurationNames and Addresses. Obviously, the contract must identify

the agency of the government which is selling the timber, and theindividual or company purchasing it. Since most purchasers arecorporations, the title and address of the legal head of thecorporation, as well as that of the government agency should beshown.

For most important timber sales, it is very desirable todesignate, by title and address, the representative in charge for boththe purchaser and the selling agency and both these representativesshould be located as close to the field operations as feasible, so thatproblems can be discussed in person.

Financial Responsibility. Before proceeding to the developmentof a contract, the government will have investigated the financialresources of the applicant, and assured itself the applicant is bothtechnically and financially able to conduct the work satisfactorily.Provision may be made for updating of financial information prior toexecution of the contract.

For its own protection, the government should require thepurchaser to carry a stipulated minimum insurance coverage againstliability for personal injury and property damage. This will varyfrom country to country depending upon the national laws. Thiscoverage should serve both to indemnify the government for

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damages it might sustain and to prevent lawsuits against thegovernment.

Additionally, the government should require the purchaser topost a bond to insure compliance with contract terms. This may be inthe form of a cash bond placed in escrow or a surety bond issued byan organization acceptable to the government.

Dates. In addition to the date of execution, the timber saleagreement should contain an operational schedule. This should state,in detail, the time when each phase of a multiphase operation mustbegin. For example, it may state that a sawmill having a definitedaily capacity must be built and in operation by a certain date, orthat specified roads must be completed in so many months, or thatlogging operations will begin by a specific date. Provision should bemade for revoking the agreement if the purchaser fails to meet theagreed schedule. In practice, the government may accept somedeviation from such a schedule, especially where the purchaser hasacted in good faith, but has been delayed by circumstances beyondhis control. Definite schedules are needed, however, in the schedulingof operations by the government, such as timber marking. They arealso essential if it should become necessary to take action to insurecompliance with contract terms.

Duration of Agreement. The expiration date is important to thepurchaser in planning his overall operation, in scheduling approvedharvests and in completion of his contract. The document shouldprovide dates for other activities as appropriate. It may state, forexample, that the purchaser must release to the government certainportions of the land covered by the agreement by specific dates. Ifthe purchaser has the right under the terms of the agreement toremove buildings or equipment, it should be stated whether thismust be done during the term of the grant or if additional time will begranted. The forestry agency should have the authority to extendtermination dates when this would be to the advantage of thegovernment.

Timber and Other Value ConveyedSince timber to be harvested is the basic raw material which the

purchaser is to manufacture into finished products, it is essentialthat the contract specify in detail the timber being sold. It is neithersufficient, nor satisfactory, to use phrases such as "all timber," "allstanding timber," or "all merchantable timber." Such impressive orambiguous language is often a source of friction and sometimesresults in unsatisfactory cutting.

Species and Sizes. The contract should specify what species arerequired to be cut, and the species, if any, whose removal is optional.It should indicate whether trees to be cut are to be individuallyselected and marked by forestry agency personnel, or if some otherspecified method of selection is to be used. Minimum diameters, atspecified heights above ground, of trees whose removal will berequired should be specified. The method of measuring trees withbasal buttresses should be specified. Maximum permitted stumpheight for normal and buttressed trees should be designated.

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it also will determine the number of hectares involved.Boundaries. The contract should state who will be responsible

for marking and maintaining the boundaries of the sale area. Thisduty may be assumed by the government, or the purchaser, or beshared by both. It is to the advantage of those involved for theboundaries to be well defined. This not only protects the governmentand the purchaser but also puts everyone on notice that this land isunder contract to the purchaser.

Ingress and Egress. The purchaser, and his employees andagents, must be assured of the right to enter and leave the area underthe terms of the agreement. This must, of course, include themovement of vehicles and equipment necessary to the harvesting ofthe timber and any other operations authorized or required by thecontract.

Any restrictions to such ingress and egress must be clearlystated and defined. Examples of such restrictions might be exclusionof heavy trucks from certain roads during wet weather or exclusionof personnel from specific areas during periods of fire hazard, or froma game management area adjacent to the cutting area. If limitationson ingress or use of any part of the area are dependent upon season orweather, the contract should give the government the authority toplace such restrictions in effect, define the general situation duringwhich they may be applied, and specify the manner in which thepurchaser (or his representative) is to be notified.

Conditions of ContractIn addition to the clauses covering material being sold and the

payments to be made, timber sale contracts include various otherconditions reflecting the government's interest in the economic andsocial effects of the program, and in the perpetuation of the forest asa renewable natural resource. These conditions are especiallyimportant for large and long-term contracts because they mayinvolve important segments of a nation's forest resource. Much skilland judgment is required in stipulating these conditions, becausethey must often apply to new industries and to forests whosesilvicultural requirements are not well known. Policies and majorobjectives should be stated clearly; specific requirements are oftenset up in supplementary documents, such as working plans.Provision should be made for review of such requirements at statedintervals, and for changes that may be desirable.Kinds of Operation

The agreement should clearly state what types of operations arepermitted under the timber cutting contract and what types ofoperations the purchaser is obligated to perform. It is not enough tostate that a sawmill will be erected. The type of mill, circular or band,should be described and its rated daily capacity given. Suchaccessory items as dry kilns, planers, and resaws also should beclearly specified. It would be advisable to have a working plan ofeach mill complex attached to and made a part of the agreement.

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It should also be stated whether or not this is expected to be anintegrated operation. For example, if the complex is to have a woodpulp and paper mill, the design and daily capacity of each facilityshould be made a part of the agreement. Where there are integratedoperations, the pattern of resource utilization should be described;classes of material to be utilized in the various units of the complexshould be specified. Generally speaking, it would be to thedisadvantage of the government to have trees containing highquality lumber used in the pulp mill.Forest Management

Management Plans. A management plan or plans, includingmethods of regeneration, should be prepared in advance of the saleby the forestry agency, and attached to and made a part of the saleagreement. The contract section referring to it should provide forperiodic inspection and supervision by the forestry agency.

The management plan should be flexible and should be reviewedperiodically by both the purchaser and the forestry agency. It shouldoutline the program of cutting and regeneration schedules for at leastan initial 5-year period.

Removal of Timber. Such phrases as "the timber should be cutin the best possible way" or "in a professional manner" are usefulonly in indicating an intent. They must be supplemented by specificstipulations regarding sizes and species to be removed, avoidance ofwaste and damage to reserved trees and other specific matters.Types of logging equipment permitted and methods of regenerationrequired also should be clearly indicated.

Fire Protection. The instrument conveying a timber cuttingcontract should impose necessary restrictions upon the use of fire.The government should have the right to close down any and allphases of the operation if, because of clearly defined conditions, thereis excessive danger of fire if operations continue. There should be aprovision to extend the duration of the agreement if the forestryagency closes any phase of the operation for extended periods.

The contract should also provide that the purchaser willimmediately cease logging operatons should uncontrolled fire occur,and at his own expenses, place his personnel at the immediatedisposal of the forestry agency for suppression activities. It shouldspecify to what extent and under what circumstances the costs of firefighting will be borne by the purchaser, and that in other cases costswill be paid by the government.

Close Utilization. The contract should indicate that timbercutting and manufacture should be accomplished so as to avoidunnecessary waste of wood. Minimum required top diameters andmaximum permitted stump heights should be specified, withprovision for specified deviations for deformed or buttressed trees.Method of measuring stump height on steeply sloping ground shouldbe described. Penalty charges for excessive waste in logging ormanufacture should be provided.

While payment should be in most cases based on measurement

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of trees or logs, in those cases where it is based on lumbermeasurement, it is essential that a high standard of utilization beenforced.

Other Property. The contract should specify the purchaser'sresponsibility in the use of public or other property, especiallyexisting roads. If the purchaser uses public bridges or roads to asubstantial extent or exclusively, he could be assigned responsibilityfor either a part or all of the maintenance and repairs to thesefacilities. The same requirement could be made to apply to any othergovernment property or facilities such as buildings. Other propertyfor which special provision may be required includes wildlife, youngor non-merchantable timber, and utilities such as telephone or powerlines. Where responsibility is shared, the obligations on both trie-purchaser and the government should be specified.

Compliance with Laws. The laws of a country are dynamicthat is, they change from time to time. It is expected that thepurchaser will become familiar with the laws of the country in whichhe operates and that he will comply with them. It may be that thelaw of the land does not currently provide social benefits and socialsecurity. If the purchaser is expected to furnish social security andother benefits to his employees, this should be clearly described andmade a part of the agreement.

Measurement and PaymentsScaling or Measurement. If timber is to be measured as a basis

for payment, the log rule, if any, and all other pertinent details forscaling and tallying should be specified. It should be clearly statedwho will do the log scaling or lumber measurement, at whoseexpense, at what place, and to whom and when the reports will besubmitted.

Whether or not the purchaser makes special payments tofinance the cost of measurement, it is essential that this be done by acompetent, well paid and reliable representative of the government.Where sufficiently accurate estimates of timber volume are available,sale by area without measurement of products after cutting issometimes most satisfactory.

Price Basis. The contract must specify the price of each andevery product to be paid for under the contract. While stumpagevalues vary greatly with size, it is usually most practical to estimatean average value per unit of volume for each species. In some casesthe variation due to size is recognized by separate prices for sawlogsand the smaller material to be used for pulpwood. These values areapplied, either to the volumes of products scaled after cutting, or tothe quantities estimated to be conveyed on the basis of a standingtimber estimate.

On very large sales, stumpage values may differ considerablyfrom place to place because of differences in accessibility. In suchcases, separate price schedules should be applied to various blocks,as appropriate. This is necessary when both accessible andinaccessible units are to be operated during the initial period of the

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contract. Where only the more accessible timber is to be harvestedduring the first period, agreement in prices for the more remoteblocks may be deferred until a later appraisal period.

To insure that the interests of the government are protected, itis essential that all timber be paid for in advance of cutting. Ifpayment is based on the standing timber estimate, the total value ofeach block of timber is simply paid for before any cutting in thatblock. Where payment is based on measurement after cutting,payment for the estimated value of timber in a block is also madebefore any cutting in the block. In this case, however, actual scalevalues are charged against this payment. If the estimate was too low,and the cut approaches the amount paid, an additional payment isrequired. Any surplus deposited is applied to other blocks afteroperations in a given block are complete.

Where timber cutting contracts cover long periods of time, someprovision should be made to adjust the prices, either upward ordownward, in response to changes of conditions. In the UnitedStates of America such an "escalator" clause generally is tied to acommodity index, such as the wholesale price of No. 2 commonsouthern yellow pine boards. A rise in the index would raise thestumpage price proportionately and a reduction wouldproportionately lower stumpage. Re-evaluation may be accomplishedin many ways. One method would be to bring stumpage into linewith the commodity price index at stated periods. A second waymight be to adjust price each time the index rises or falls a specifiednumber of percentage points. Whatever method is adopted, it shouldbe described clearly in the agreement.

Because such adjustments sometimes do not fully reflect allfactors pertinent to stumpage evaluation, they should besupplemented by periodic re-negotiation of prices, usually at 5-yearintervals.

Method of Payment. The contract must specify how, when,where and in what amounts payments will be made. Generally it isadvisable that advance payments should at all times cover at leastthe normal value of two months' cut. Provision should be made forthe forestry agency to have the right to suspend operations or cancelthe contract should there be a serious default of payment.

Obligations of the GovernmentResponsibility of the Government. Inasmuch as all

governments change both policy and personnel over time andbecause timber cutting contracts usually span long periods, thepurchaser needs some form of legal security. An incominggovernment may not look upon timber cutting contracts in the samelight as the outgoing regime; radical changes could cause thepurchaser serious financial loss. The purchaser should be guaranteedindemnification for such losses in much the same manner that thegovernment is.

Benefits to the Purchaser. If the purchaser is to receive anybenefits in the form of a reduction or relief of taxes or import duties,

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these clearly should be defined. The time during which these benefitswill be in effect also should be stated. If there is a sliding scale ofbenefits over time, a schedule of these benefits should be attached toand made part of the agreement. The same would apply to protectivetariffs if these are a consideration under the terms of the contract.Similarly, any special provisions, such as accelerated amortization tominimize income taxes, will be provided for in the contract.

Timber Loss by Fire or Theft. Fires, hurricanes, theft, and otherunpredictable losses can and have materially reduced the volume andsometimes payment for a tract of timber during the life of anagreement. The contract should state clearly who will bear the loss,under what circumstances, during the duration of the contractperiod. Obviously the purchaser should assume or share losses due tohis negligence or that of his agents or due to failure to comply withcontract requirements. The contract should not attempt to collectpayment from the purchaser for timber which was not harvestedbecause of circumstances beyond the purchaser's control.

Arbitration. An arbitration body, acceptable to and binding onboth parties, should be established to settle disputes of a technicalnature. This body should be a disinterested organization or group.Customarily, one participant is selected by the purchaser, a secondby the government and a third person is jointly selected by thesetwo. The basis for paying the expenses of arbitration will be agreedupon, and clearly stated.

Renewal. The contract should provide for limited timeextensions, by mutual agreement, made necessary by uncontrollablefactors. It should also state whether or not formal renewal is to beconsidered and if so, what rights or options will then be available tothe purchaser. If a renewal option is provided, the considerations onbehalf of each party should be clearly specified.

Assignment of Contract. It should be at the discretion of thegovernment to stipulate whether or not the contract may be assignedto a third party. Unless this is specified, contracts are usuallyinterpreted as assignable. In the past this ambiguity has led to manymisunderstandings and failures to fulfill obligations of a timbercutting contract.

The contract should state specifically whether the contract mayor may not be assigned to another, either in whole or in part. Thegovernment may have no objection to assignment of one part of thecontract while having strong objections concerning another part.Even if the government permits reassignment of the contract inwhole or in part, this permission should be limited to firms orindividuals acceptable to the government.

The contract should also make clear whether the purchaserremains responsible for fulfillment of contract terms after anassignment, or if he is freed of responsibility if the contract isassumed by a third party; usually the purchaser should continue tobe responsible.

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Execution and Recording of ContractSignatures. Legal representatives of all parties must sign the

contract document, in the form and with such notarization asnational laws require.

Recording or Registration. Despite the importance of legaldocuments and the care of handling they deserve, they sometimesbecome lost, mutilated, or destroyed. They should be recorded in apublic registry at a place designated under the laws of the nationselling the timber.

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FORMS OF CONTRACT

After preliminary agreement on general terms of a cuttingcontract, and the execution of an option, the detailed contract termscan be worked out by individual or joint effort of the purchaser andthe government during the period required for surveys and thedevelopment of plans. Frequent meetings between representatives ofthe parties are desirable to insure that there is a thoroughunderstanding of all contract provisions, and to permit adjustmentsas needed to arrive at terms acceptable to both parties.

For the most part, the development of the contract terms shouldbe the responsibility of representatives of the purchaser and thegovernment's forestry agency, though each should have legalassistance as necessary.

The actual contract documents should be drawn up by thenation's legal agency, with the cooperation of the forestry agencyand the purchaser's representatives. A timber cutting contract isusually an important, long-term legal document, in many cases veryimportant to the nation's economic and social welfare. As such itmust be carefully prepared, explicit, as detailed as necessary to avoidmisunderstandings, and above all it must be legally enforceable.

Because no two timber sales can be identical, and since legalrequirements differ among nations, representative or samplecontracts can serve only as general guides and indications of theprovisions that have been incorporated in some successful contracts.In Figs.l, 2 and 3 of this publication are reproduced parts of thetimber sale contract forms used for sales by the United Sates ForestService. These contract forms are used in combination with standardand alternative clauses developed to meet special situations and localrequirements. Study of these should provide helpful suggestions foradministrative foresters contemplating large sales in Latin America.In some cases, copies of actual sales contracts for specific situationscan be obtained from the Chief, Forest Sevice, U.S. Dept. ofAgriculture, Washington, D.C.

To provide further suggestions applicable to timber cuttingcontracts for Latin America, the remainder of this chapter presents ahypothetical contract form that would be generally suitable for use inmany Latin American nations. Footnotes indicate the information tobe inserted in the many blank spaces which occur in the contractform.

While it is necessary that some logical format be used inpreparing a contract document, this is less important than the natureof the contract provisions, and the clarity with which they areexpressed. The understanding of the full potential of forest productsmanufacture in the nation's economy, the skill and judgment withwhich decisions have been made to achieve this potential through aviable forest industry, as well as the effectiveness of the measuresdevised for the per jetuation of the forest resource are the truemeasures of the success of a timber sales agreement.

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from the date of signing of this contract by both parties andto complete construction and initiate forest products manu-facture in accordance with Schedule A, which is attached andmade a part hereof.12

1 *3By the end of all manufacturing facilitieswill be in production to at least 14 of theirinstalled capacity. Should there be delays due to circum-stances beyond the control of the purchaser, the seller, at itsdiscretion, may grant additional time if it is in the bestinterest of the nation to do so. If the purchaser fails tocomplete the work specified in Schedule A within the agreedtime, or authorized extensions thereof, and if the seller doesnot allow an extension of time, then the seller may terminatethe contract for default, as specified in Article 23 hereof, andthe purchaser shall have 15 to remove his equip-ment and personal property. All physical improvements,including 16 shall become the property of theseller.

3. The purchaser agrees to operate the forest productsmanufacturing complex specified in Schedule A, Article 2 of thisagreement, at substantially the productive capacities indicatedtherein throughout the term of this contract. Except for reductionsin production due to causes beyond the purchaser's control,including war, natural calamity or inadequate markets, no majorchanges in production rates of manufacturing processes will be madeunless approved in advance and in writing by the chief of the federalforestry agency.

4. The timber conveyed by this cutting contract is located on aland area in , 17 more fully described in the plat andmetes and bounds description, Schedule B, which are attached andmade a part of this contract.

185. It shall be the duty of the to maintain the

surveyed boundary lines, keeping them open so that a man may walkthem and also to keep them marked by painted ,19 blazes

12Schedule A should show agreed time (in months after contract date) for initiationand completion of each item of construction required by the contract. Specific manu-facturing processes, types of products and normal production rates should bespecified for each manufacturing facility.

1SThis should be the time to the last completion date for manufacturing facilitiesshown in Schedule A.

State percentage.

State time, in months.

Enumerate kinds such as roads, pipe lines, power lines, buildings, etc., asapplicable.

17Province or other local subdivision.•I Q

State either purchaser or seller, as applicable.19State kind and color or paint.

32

Hypothetical Timber Cutting ContractThis contract entered into this date by ,

hereinafter called the seller and ,2 hereinaftercalled the purchaser,

Conveys, under the terms and conditions here set forth andagreed to by both parties, certain timber standing upon a tract ofland of which the seller is the legal owner, located , 3and containing 4 hectares, more or less.

1. The purchaser's principal headquarters is 5

The 6 shall be the legal agent for the purchaser. Theseller is represented in this agreement by its agency 7

which is responsible for custody and management of said land, and islegally empowered to act for the government of * inthe sale of timber from said land in accordance with 8

The legal agent for the seller shall be 9

The seller and purchaser shall each designate a localofficer-in-charge who shall receive copies of all correspondence andother documents transmitted between the principles regardingactivities relating to this contract. Each local officer-in-charge shallrepresent his principal in matters relating to this contract asauthorized by said principal.

2. This contract shall be for a period ofcommencing on the date of signing of this contract, subject to thefollowing conditions and limits of time:

The purchaser agrees to initiate construction of facilities formanufacture of forest products including roads and otherfacilities as agreed upon, on or before 11

The name of the nation selling the timber.The name of the purchaser.

oLocation of tract. This can be brief, since a detailed description is to be included in

Article 4.

4Area of Tract.

Legal address of purchaser.

Title and address of the corporate officer, such as vice-president for overseasoperations, empowered to act if the purchaser is a corporation.

Official name and address of the agency or government department entering intothe agreement.

Q

Identify specific legislation.Q

Title and official address of responsible officer, usually the chief of the forestryagency.

10State period, such as 20, 30, or 50 years.

State time in months.

31

from the date of signing of this contract by both parties andto complete construction and initiate forest products manu-facture in accordance with Schedule A, which is attached andmade a part hereof.12

i sBy the end of all manufacturing facilitieswill be in production to at least 14 of theirinstalled capacity. Should there be delays due to circum-stances beyond the control of the purchaser, the seller, at itsdiscretion, may grant additional time if it is in the bestinterest of the nation to do so. If the purchaser fails tocomplete the work specified in Schedule A within the agreedtime, or authorized extensions thereof, and if the seller doesnot allow an extension of time, then the seller may terminatethe contract for default, as specified in Article 23 hereof, andthe purchaser shall have 15 to remove his equip-ment and personal property. All physical improvements,including 16 shall become the property of theseller.

3. The purchaser agrees to operate the forest productsmanufacturing complex specified in Schedule A, Article 2 of thisagreement, at substantially the productive capacities indicatedtherein throughout the term of this contract. Except for reductionsin production due to causes beyond the purchaser's control,including war, natural calamity or inadequate markets, no majorchanges in production rates of manufacturing processes will be madeunless approved in advance and in writing by the chief of the federalforestry agency.

4. The timber conveyed by this cutting contract is located on aland area in , 17 more fully described in the plat andmetes and bounds description, Schedule B, which are attached andmade a part of this contract.

185. It shall be the duty of the to maintain the

surveyed boundary lines, keeping them open so that a man may walkthem and also to keep them marked by painted 19 blazes

12Schedule A should show agreed time (in months after contract date) for initiationand completion of each item of construction required by the contract. Specific manu-facturing processes, types of products and normal production rates should bespecified for each manufacturing facility.

T O

This should be the time to the last completion date for manufacturing facilitiesshown in Schedule A.

State percentage.

State time, in months.

Enumerate kinds such as roads, pipe lines, power lines, buildings, etc., asapplicable.

Province or other local subdivision.1 ftState either purchaser or seller, as applicable.1 Q

State kind and color or paint.

32

on trees or vines at intervals of not more than 10 meters. Themaintenance and painting of these lines shall be the expense of

6. The seller agrees to sell and the purchaser agrees topurchase:

Alternative Clause AAll timber marked for cutting and all timber to be markedfor cutting on the area covered by this contract, saidmarking to be substantially in accordance with samplemarking areas A, B, C and D, the descriptions of which, to-gether with inventories of trees to be cut and to be leftstanding, are included in Schedule C which is attachedhereto.

21Alternative Clause BAll timber designated for cutting as described in ScheduleC, which is attached and made a part hereof.

7. All timber must be cut and management and silviculturalpractices conducted in accordance with the management planprepared by 2? and approved by 23 on

^ which is appended to and is a part of this contractand identified as Schedule D.

No deviations from the stipulations of the management planmay be permitted except as may be provided by amendments theretorecommended by the officer in charge of the sale and approved by thechief of the federal forestry agency. At intervals of not more than

25 years the forestry agency shall formally review theprovisions of the management plan in the light of new technicalknowledge and experience on the cutting area, and shall make suchrevisions as may be feasible to improve the efficiency andeffectiveness of forest operations.

8. Payment for timber cut under this contract during the first26 years after it becomes effective shall be at the price

rates listed in Schedule E 27 which is attached and made parthereof.

90Purchaser or seller; if cost is shared, state proportions.21Alternate Clause A applies where timber to be cut is to be marked; Clause B

where timber to be cut is designated by species and dimensions. The inapplicableclause is to be deleted.

92Author of plan.23Name and title of official approving plan.

Date of approval.

State period, usually 5 years.

Insert length of period - usually 3 or 5.27Schedule E should list, in detail, the contract price rates to be paid for timber

sold.

33

26_During the second and subsequent -year periods

of operation, the schedule of prices shall be adjusted in proportion tothe average price index of 28 during the six monthsperiod beginning one year before the termination of the

, 6 -year period, so that the unit price of each size andspecies shall increase or decrease in the same proportion as thechange in said price index, provided that there shall be no change inprice if the said index has changed by less than 29

percent and further provided that further changes in prices may bemutually agreed upon at the beginning of any 26 -yearperiod if justified by changes in prices or manufacturing costs forspecific products or species, or by other economic factors.

9. Before cutting is started the purchaser shall deposit to theaccount of the seller in 30 the sum of 31 tocover payment for stumpage to be cut. The value of stumpage cutand removed, based on measured volume, is to be deducted from thisdeposit. At any time when the amount on deposit is less than

32 the forestry agency shall require an additionalpayment of not less than 33

The forestry agency may halt all cutting under the contract atany time when the balance in the stumpage fund is less than

, 34 and cutting may not be resumed until an additionalpayment of at least 33 has been deposited.

When the price of stumpage is adjusted in accordance withClause 8 of this agreement, the minimum deposits and specifiedbalances shall be adjusted in the same proportion.

10. The value of stumpage cut and removed shall be determinedin the following manner.

[The following clause applies to tree measurement sales; it isto be deleted if timber is measured after cutting.]

In advance of the date specified in the management plan forcutting in any specific timber cutting block, the forestryagency will mark or designate the trees to be cut within said

28State the commodity, as #2 common southern pine boards, or constructiongrade 3/8" Douglas fir plywood or other world standard. In some contracts prices areadjusted annually on the basis of a commodity index; additional negotiated changesshould not occur more frequently than once in 3 years.

29State minimum percent change, usually 5 percent or less.OQ

Name and address of bank or government agency.01

State sum, which should at least equal the value of two month's cut at fullcapacity operation.

onUsually the same as the total deposit required by the preceding sentence; should

never be less than the value of 1 month's cut.QO

State amount, which should be a round number equal to or greater than the valueof 1 month's cut.

Usually the equivalent of 1 month's cut.

34

block and will determine by appropriate tree measurement thenumbers and sizes of trees of each species to be removed, andtheir sound volume. The value of timber to be removed will bedetermined by applying the prices in Schedule E to thesevolumes. The total value of all trees to be removed is the valueto be paid for the timber in the block.

No cutting in a new block may be undertaken unless theamount of deposit in the stumpage fund, above amountsdeposited for other blocks, is sufficient to cover thedetermined value of the block, plus an amount not more than50 percent of the determined value, sufficient to coverestimated liquidated damages and costs of requiredregeneration, erosion control or other operations on the block.Unused funds held for liquidated damages and culturaloperations shall be returned to the purchaser uponsatisfactory completion of the work.[If timber is to be scaled after cutting, the preceding clauseshould be deleted and the following substituted.]

All timber cut and removed under this contract will bemeasured after cutting to determine its net sound volumeinside bark, in accordance with 35Measurementswill allow for unsound defect, and will reflect net soundvolume.

Measurements will be made by representatives of the sellerat points to be specified by the forest officer in charge of thesale. To facilitate measurement, purchaser's trucks or rail carsmay be required to stop for scaling at designated points oncutting areas, at the manufacturing plant, or elsewhere, orlogs at assembly points may be required to be arranged so asto be accessible for inspection and measurement. The selleragrees to provide sufficient sealers to avoid excessive delaysfor scaling.

The forest officer in charge will provide the purchasersummaries of volumes measured and values by species andsize classes at 3e intervals; he will requestadditional stumpage deposits well in advance of the depletionof available deposits, but failure to receive such requests shallnot absolve the purchaser of responsibility to maintain abalance in the amount required by Article 9 of this contract.

11. All trees marked for cutting or designated to be cut asspecified in Article 6 of this contract shall be cut and paid for; allmerchantable material in said trees shall be utilized in such a manneras to minimize waste. Where payment is determined bymeasurement of logs or bolts, material avoidably wasted shall be

Oc

State log rule, or other method of volume determination.OC

State period; monthly reports are usual, but bi-monthly or weekly statementsmay be desirable. Unless electronic computers are available, frequent reports may becostly, especially if there are many species.

35

paid for at the rates specified in Schedule 37 Indetermining avoidable waste, maximum allowable stump heightshall be , 38 minimum merchantable diameter at stumpheight shall be 39 outside bark and minimummerchantable top diameter shall be 40 inside bark.Limbs exceeding 40 inside bark shall be consideredmerchantable if sound and reasonably straight.

12. Trees of species or classes not specified for cutting inSchedule B, which are cut or damaged, and trees specified for cuttingand not cut, and material avoidable wasted as defined in Article 11 ofthis contract, if so specified, shall be paid for according to the pricesset forth in Schedule F, 41 which is attached and made part hereof.When paid for at the rates specified in Schedule F, such trees andmaterial shall become the property of the purchaser if removed andutilized.

13. The purchaser shall be responsible for the prevention andsuppression of forest or brush fires, within the limits of the timbercutting contract area described in Article 4 hereof. The purchasershall be responsible for payment to the seller for timber madeunuseable by fire, except for damages from lightning fires and fromfire originating outside the contract area, which entered the area inspite of due diligence on the part of the purchaser. Payment will notbe made for trees which become unuseable due to insect and/orfungus attack while standing. Any loss of trees cut, for any cause, isthe responsibility of the purchaser and he is liable for payment to theseller for such trees. If a fire starts from causes other than lightningwithin the area covered by this contract, the purchaser shall also beliable for damages to 42

The personnel of the purchaser are obligated to fight fire eitheron the lands described in Article 4 of this agreement or on landsadjacent to these lands when called upon by the seller through itsrepresentative 43

The , at his discretion, may shut down the woodsoperations of the purchaser if in his opinion it would create a seriousfire hazard to continue logging. If the shutdown is longer than

r\n

Show schedule applicable, usually the contract prices, but in some contracts itmay be the penalty rates, Schedule F.

OO

State allowable stump height, and allowance, if any, for buttressed butts.OQ

State diameter.

State diameter.

Schedule F will list prices to be paid for timber cut which was not marked ordesignated for cutting and for marked trees left standing, and in some contracts, formaterial avoidably wasted. The prices are usually at least twice the contract prices.

State items such as wild life, public utilities, damage to soil, etc. as agreed upon.

Usually chief of the forestry agency, or a local forest official.

Usually chief of the forestry agency.

36

, 45 then equal time shall be added to the term of thecontract. Requests to shut down must be confirmed in writing.

14. The seller grants to the purchaser and his designated agentsand employees the right of ingress and egress to the propertydescribed in Article 4 hereof, subject to the limitations set forth inSchedule G, 46 which is attached to and made a part of this contract.The purchaser shall be responsible for all acts of his employees whileengaged in activities related to this contract.

15. The purchaser shall be solely responsible for themaintenance in a good state of repair of the following existingtransportation facilities: 47 The 48 shalladvise the purchaser, in writing, when repair is needed. Failure torepair any of the listed transportation facilities within, a reasonabletime shall constitute a breach of this contract.

16. Upon termination of this timber cutting contract thepurchaser shall have an option to extend its term for an additional

49 years, upon notifying 50 at least51 but no more than 52 months before its

expiration, and subject to acceptance by the purchaser of a revisedworking plan to be prepared by 53 . Mutually acceptablechanges in contract terms may be incorporated in the extendedagreement.

17. If the purchaser does not desire to exercise his option toextend this contract, then at the termination of the contract periodhe shall have an additional 54 in which to remove any orall equipment, structures and other porperty to which he retainstitle. At the end of this period all items not removed shall become theproperty of the seller. All roads, bridges, utility lines and otherimprovements listed in Article 2 of this contract shall be transferredto the seller in good repair and operating condition.

State time in days or weeks.

Schedule G should specify (1) method of identifying designated employees,(2) specific limitations (if any) on their activities while on this land, (3) descriptionof any areas from which employees are debarred, (4) provision for exclusion ofemployees from all or parts of the area, except as fire fighters, during periods of fireemergency.

List and identify. If list is long, or a map is needed, incorporate in the agreementas a Schedule.

State agency responsible, as Federal Highway Department.

State number of years, usually less than original contract term.50State whom, usually the chief of the federal forestry agency.

State time in months, preferably at least 6.

52Usually 12 or 24 months.CO

Usually the federal forestry agency.

State a reasonable period of time, usually 100 to 300 days.

37

18. If there is a dispute between grantee and grantor, then anarbitration board shall be set up, acceptable to and binding uponboth parties. This board shall consist of a representative appointedby the purchaser, a representative appointed by the seller, and athird party selected by these two representatives.

If an arbitration board is formed, each party shall pay the costand expenses of its representative and the parties will equally sharethe cost and expenses of the third participant.

19. No part of this agreement may be assigned to any thirdparty without written permission of 55

20. In consideration of establishing the forest productsmanufaturing complex specified in Schedule A, Article 2 of thiscontract the purchaser shall be exempt from 56 for aperiod of 57 years from the date of this contract.

21. All activities of the purchaser and his agents in connectionwith the execution of this contract shall be conducted in accordancewith all applicable laws and regulations of , 5^ includingthose referring to social security, minimum wages, andhospitalization. The minimum wage rates and prescribed benefits foremployees in effect on the date of this agreement are shown inSchedule H attached hereto.

22. The 59 shall have the right and obligation tomake periodic inspections of all phases of cutting and manufacturingunder this contract, including production, extraction andmanagement. If these inspections reveal any differences betweenwhat the purchaser is obligated to do and what is actually beingdone, then 60 should notify the purchaser in writing.Failure to remedy such specific deviations from contract obligationswithin a reasonable time after such notification will constitutedefault on this contract.

23. At the time of the signing of this contract, the purchaser hasdeposited with 61 the sum of 62 as anescrow account. If the purchaser fails to fulfill each and every term ofthis contract, including the schedules attached, or otherwise defaultsin any way, the seller may terminate this contract and the escrowaccount may be retained, in whole or in part, by the government, as

State whom, usually the chief of the federal forestry agency.Cff

State which such as corporate taxes, personal income tax, import and exporttaxes, and specify amount of reduction.

57State period.

Name of nation.

State whom, usually federal forestry agency.fin

State whom, usually Chief Forester.

State where, usually the central bank.C.()

State amount, which should equal reasonably expected losses to the governmentfrom failure to complete the agreement.

38

liquidated damages. Should this occur, then the seller shall return tothe purchaser the sum remaining in the stumpage account, lesspayments due the seller for logs cut and delivered to the industrialcomplex plus payment for any volume cut and not removed from theforests.

In the event of any default or noncompliance with this contractthe seller, if it is in the best interest of the nation to do so, may givethe purchaser a fixed period of time to conform to contractrequirements and keep this contract intact, or he may permit one ormore phases of the operations under this contract to continue whileclosing down one or more other phases pending correction of contractviolations.

£O CA

24. This contract signed this ,

Purchaser

Seller

[Document to be notarized and recorded.]

63State date.64State locality.

39

PREVIOUS BULLETINS

1. References of value in studies of insects affecting the southern pines, anannotated list, by R. C. Thatcher, 1957. (Our of print.)

2. Directory of wood-using industries. (Out of print.)

3. Bibliography of forestry films and filmstrips. (Out of print.)

4. Root development of loblolly pine seedlings in modified environments, by M. V.Bilan, 1960.

5. Continuous forest inventory with punched card machines for a small property,by R. D. Baker and E. V. Hunt, Jr., 1960.

6. Point-sampling from two angles, by E. V. Hunt, Jr., R. D. Baker, and L. A.Biskamp, 1964. (Out of print.)

7. Films and filmstrips on forestry, by N. T. Samson, 1965. (Out of print.)

8. Soil moisture and soil temperature under a post oak-shortleaf pine stand, by G.Schneider and J. J. Stransky, 1966.

9. Silviculture of shortleaf pine, by L. C. Walker and H. V. Wiant, Jr., 1966.Price $1.

10. Texas pulpwood production, by N. T. Samson, 1966.

11. Silviculture of longleaf pine, by L. C. Walker and H. V. Wiant, Jr., 1966.Price $1.

12. Pine seedling survival and growth response to soils of the Texas Post Oak Belt,by M. V. Bilan arid J. J. Stransky, 1966.

13. Directory of wood-using industries. (Out of print.)

14. Practical point-sampling, by E. V. Hunt, Jr., and R. D. Baker, 1967. Price $1.

15. Silviculture of the minor southern conifers, by L. C. Walker, 1967. Price $1.

16. Silviculture of slash pine, by L. C. Walker and H. V. Wiant, Jr., 1968. Price $1.

17. Films and filmstrips on forestry, by N. T. Samson, 1969. Price $1.

18. Geography of the southern forest region, by L. C. Walker and G. L. Collier,1969. Price $1.

19. Directory of wood-using and related industries in East Texas, Rev. 1969, byN. T. Samson. Price $2.

20. A short history of forest conservation in Texas, by Robert S. Maxwell andJames W. Martin, 1970. Price $.50.

21. Diseases of forest trees and forest products, by A. F. Verrall, 1970. Price $2.

22. Silviculture of southern upland hardwoods, by L. C. Walker, 1972. Price $2.