2409.22_45
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FOREST SERVICE HANDBOOK
PACIFIC SOUTHWEST REGION (R5)
VALLEJO, CA
FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
CHAPTER 45 - MINIMUM AND BASE RATES
Amendment No.: 2409.22-2011-04
Effective Date: June 1, 2011
Duration: This amendment expires 5 years from the effective date unless superseded or
removed earlier.
Approved: RANDY MOORE
Regional Forester
Date Approved: 6/1/2011
Posting Instructions: Amendments are numbered consecutively by Handbook number and
calendar year. Post by document name. Remove entire document and replace with this
amendment. Retain this transmittal as the first page(s) of this document. The last amendment to
this Handbook was 2409.22-2011-03 to 2409.22_41.2c.
New Document
2409.22_2011-04-Ch 45
5 Pages
Superseded Document(s) by
Issuance Number and
Effective Date
2409.22-2008-06 dated 8/6/2008
5 Pages
Digest:
45.10 - Corrects reference of the National minimum rates to 2431.31b. Adds text on where the
Regional minimum rates can be found.
45.11 - Deletes Regional minimum rates as they are now listed as a R5 Supplement to FSM
2431.31b. Adds text on how to calculate the base rates by hand.
R5 AMENDMENT 2409.22-2011-04
EFFECTIVE DATE: 6/1/2011
DURATION: This amendment expires 5 years from the effective date unless superseded or removed earlier
2409.22_45
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FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
CHAPTER 45 - MINIMUM AND BASE RATES
45.04 - Responsibility
Only the Regional Forester may authorize rates lower than the Regional minimum rates, and
those rates must not be lower than the national minimum rates. (See FSM 2431.04a, para. 4, and
2431.31b)
45.05 - Definitions
Regional Minimum Rates - The minimum acceptable values for wood products as established by
the Regional Forester.
45.10 - Regional Minimum Rates
The National Minimum Rate for sawtimber is found in FSM 2431.31b. The National Minimum
Charge for Small Sales, for commercial or personal use is found in FSM 2431.31c.
Regional minimum rates can be found in the R5 Supplement to FSM 2431.31b.
45.11 - Calculating Base Rates by Hand
The present version of the R5 TEA spreadsheet calculates the base rates for a sale using the
relative values between the species. This section provides information on how to calculate the
base rates by hand. These examples are in MBF and refer to the old Appraisal Summary side of
the 2400-17. This information is still valid and worth knowing though it is done in MBF and the
line number do not match the present 2400-17.
Base rates are equal to $0.50/MBF (which is deposited in the National Forest Fund (NFF) or the
Salvage Sale Fund (SSF), if applicable) plus the cost of essential reforestation. If base rates
produce a total sale value which is less than the total value of the minimum rates, then the
minimum rates become the base rates for appraisal and contract purposes.
If base rates produce a total sale value which is greater than the total value of the Indicated
Advertised Rates (Line 40 total, 2400-17), the minimum rates for each species group in the sale
will normally be increased by an equal amount per M board feet to cover base rates.
However, if the Indicated Advertised Rates (Line 40, 2400-17) for some species are well above
and others are below minimum rates, this equal adjustment procedure is not appropriate because
it results in the loss of the relative values of the different species groups. Instead the amount of
increase above minimum rates for the lower-value species may be eliminated and offset by a
compensating larger increase over minimum rates for the higher-value species. This method
should be used for all sales where the relative value between the species is lost when minimum
rates are increased by an equal amount per M board feet to cover base rates.
R5 AMENDMENT 2409.22-2011-04
EFFECTIVE DATE: 6/1/2011
DURATION: This amendment expires 5 years from the effective date unless superseded or removed earlier
2409.22_45
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FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
CHAPTER 45 - MINIMUM AND BASE RATES
Several benefits are derived from distributing the sale value in the second manner. First, the
relative value between the species established on Line 40 is maintained. Second, by applying
more of the sale value to the high-value species, a more equitable basis is established for bidding
individual species and for distributing the bid in weighted-average bidding. Also, by collecting
much of the essential reforestation costs from the high-value species, a more economically
attractive resale of remaining lower-value species can be offered in the case of a defaulted timber
sale.
The following example illustrates the establishing of base rates as presented above:
2400-17
Line
2. Species
5. Volume (MBF)
40. Indicated
Advertised Rates
Minimum Rates
PP
230
72.65
20.00
SP
WF
DF
IC
AVG TOTAL
500
3840
1840
220
6,630
133.90
-35.02
48.29
34.21
6.87 45,563
20.00
10.00
20.00
10.00
13.88
92,000
Base rates (Regeneration + $0.50/M) = $161,245.00
Minimum rates
= $ 92,000.00
Difference
= $ 69,245.00
$69,245.00/6630 MBF = $10.44/MBF (added to minimum rates)
41. Base Rates
30.44
30.44
20.44
30.44
20.44
24.32 161,218
White fir: 3840 MBF x $20.44/MBF = $78,489.60
Minimum rates ($10.00 x 3840 MBF) = $38,400.00
Difference
= $40,089.60 to apply to the base rates of the
higher value species (PP, SP,
and DF)
41. Base Rates
(REVISED)
30.44
110.62
10.00
30.44
20.44
24.32 161,218
In the first part of this example, the relative value between sugar pine ($133.90/MBF) and white
fir ($-35.02/MBF) is lost when regeneration costs are applied evenly to the minimum rates in all
species groups. In the second part of this example, the amount above minimum rates that was
originally applied to WF is redistributed to the PP, SP, and DF thereby restoring the relative
value between the species. This was done by calculating the amount available from the low
value species (WF: $40,089.60) and applying it to the high value species in the order of their
relative value (SP, then PP, then DF) until the amount available was totally distributed. In cases
such as this, base rates could be as high as the Indicated Advertised Rate for the high-value
species groups and as low as the Regional minimum rates for the deficit or low-value species
groups.
R5 AMENDMENT 2409.22-2011-04
EFFECTIVE DATE: 6/1/2011
DURATION: This amendment expires 5 years from the effective date unless superseded or removed earlier
2409.22_45
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FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
CHAPTER 45 - MINIMUM AND BASE RATES
Adjustments to Base Rates (Line 42, 2400-17)
When the Indicated Advertised Rate (Line 40, 2400-17) for any species is less than the base rate
for the species, the resulting deficit must be distributed to those species whose indicated net
stumpage rates are above base rates. This must be done to the extent possible without reducing
the higher-valued species below their base rates.
For example:
2400-17
Line
2. Species
5. Volume (MBF)
40. Indicated
Advertised Rates
41. Base Rates /1/
Stumpage Above
Base Rates
Stumpage Below
Base Rates
PP
SP
WF
DF
IC
AVG TOTAL
200 Nominal
400
300
100
1000
72.65
133.90 -35.02
48.29
40.21 19.03 19,030
20.00
52.65
20.00
113.90
20.00
28.29
10.00
30.21
15.00
45.02
Amount of Deficit
=
Vol. of Species Above Base
Adjustment to
42. Base Rates
43. Advertised Rates
10.00
18,008
$18,008 = $30.01 per M adjustment
600M
-30.01
42.64
15,000
22,038
133.90
45.02
-30.01
-30.01
10.00
18.28
10.20
0
19.03
19,032
/1/ In this example, the Regional minimum rates for each species were used as the base rates;
therefore, it is assumed that the calculated base rates were less than or equal to the minimum
rates for each species.
Advertised rates are determined by subtracting the Adjustments to Base Rates from the Indicated
Advertised Rates. If the Stumpage Below Base Rates is equal to or greater than the Stumpage
Above Base Rates, all appraisal rates will be at base rates and no further calculation is necessary.
Note that in the above example, the Advertised Rate for the species sold in Nominal quantities is
the Indicated Advertised Rate for that species. A species sold in "Nominal" or "Unestimated"
quantities will be advertised at its Indicated Advertised Rate or Base rate, whichever is the
highest value.
R5 AMENDMENT 2409.22-2011-04
EFFECTIVE DATE: 6/1/2011
DURATION: This amendment expires 5 years from the effective date unless superseded or removed earlier
2409.22_45
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FSH 2409.22 - TIMBER APPRAISAL HANDBOOK
CHAPTER 45 - MINIMUM AND BASE RATES
Continuing the example given in the section on establishing base rates one step further:
2400-17
Line
2. Species
PP
SP
WF
DF
IC
AVG
5. Volume (MBF)
230
500
3840
1840
220
40. Indicated Advertised 72.65 133.90 -35.02 48.29 34.21
6.87
Rates
41. Base Rates
30.44 110.62 10.00 30.44 20.44 24.32
Stumpage Above
42.21
23.28
17.85 13.77
Base Rates
Stumpage Below
45.02
Base Rates
42. Adjustment to Base
-42.21 -23.28 -45.02 -17.85 -13.77 17.44
Rates
43. Advertised Rates
30.44 110.62 10.00 30.44 20.44 24.32
TOTAL
6,630
45,563.00
161,218.00
57,222.00
172,876.80
115,655.00
161,218.00
In this example, the stumpage below base rates is greater than the stumpage above base rates. As
a result, all advertised rates will be at the base rates. The Adjustments to Base Rates are simply
the difference between the Base Rates and the Indicated Advertised Rates for each species group.