# Harvesting cost model

**Model description:** The harvesting cost model was developed in 1998 for an FAO Project in Suriname. The model calculates the delivered roundwood production cost for harvesting in the natural forest, using standard cost formulae (for further details see: FAO, 1977, Planning forest roads and harvesting systems, FAO Forestry Paper 2). The model is contained in one Excel Workbook, comprising six separate spreadsheets (summary, miscellaneous data, productivity, labour, consumables and capital). The model contains data collected in Suriname in 1998, but it would be easy to replace this with data from another country. The model is suitable for any country with small-scale forest harvesting operations.

The capital spreadsheet contains the following information: the price of each machine used in the harvesting operation; the average current age of each machine and its expected life; repair and insurance costs; and the proportion of capital expenditure financed by loans. The consumables spreadsheet contains information about the cost of fuel and lubricants (per litre) and their consumption (per working hour), plus information about the cost of filters, tracks, tyres and minor spare parts (per working hour) and other consumables (per year). The labour spreadsheet contains information about the number of operators required for each machine and their cost. The cost information in each of these spreadsheets is input by the user and is used to calculate the total per-cubic-metre cost of capital, consumables and labour for each machine used in the production process.

The miscellaneous data and productivity spreadsheets contain all of the other information required to convert the raw cost data into per-cubic-metre costs. The productivity spreadsheet calculates the available and effective working hours per year for each machine, based on parameters specified by the user. The output rate for each machine is also entered into this spreadsheet in order to calculate the annual production per machine and, from this, the number of machines that will be required. The miscellaneous data spreadsheet contains information about total production from the forest (cubic metres per year), the haulage distance, haulage speeds, forest road and skid trail density and the speed of skidding and road construction. It also contains general parameters that are used in the calculations, such as the exchange rate, required level of profit and interest rate.

The total delivered roundwood production cost is displayed in the summary spreadsheet in Suriname Guilders (Sf) and US$ per cubic metre. This spreadsheet also shows the breakdown of costs by operation (felling, skidding, loading, hauling, etc.) and by type of expenditure (capital, labour, consumables and allowance for profit). The conventional way of incorporating profit into such calculations is to include an amount for "return on capital" but current practice in Suriname is to add a "mark-up" onto current expenditure instead, so the total cost (including an allowance for profit) is shown using both of these methodologies.

The workbook can be protected, so that the user can only enter data into the appropriate cells. It also contains notes and comments attached to many of the cells to describe what should be entered into the cell or to explain the result shown in the cell.

**Download: **The model can be downloaded as an Excel Workbook (103 KB: click here). or as a Zip file (32 KB: click here). Full documentation for the model and additional information about use of the model is presented in the following reports:

**Whiteman, A,** (1999a), A roundwood production cost model for Suriname, Project report from FAO Project: GCP/SUR/001/NET, Paramaribo, Suriname. (Click here for HTML or PDF).

**Whiteman, A, **(1999b), Economic rent from forest operations in Suriname and a proposal for revising Surinam's forest revenue system, Project report from FAO Project: GCP/SUR/001/NET, Paramaribo, Suriname. (Click here for HTML or PDF).