Timber Production Cost and Profit Functions for Community Forests in Mexico

Abstract

Tropical forestry has few studies of economics, but this chapter reviews one detailed case in Mexico of 30 community forestry enterprises (CFEs) throughout Mexico that provide an excellent example of natural forest management. The CFEs were surveyed in 2012 to determine their production, cost, and return information for timber growing, harvesting, and lumber production at sawmills. Factors influencing costs such as the type of CFE, size of the forest, region of the country, forest certification status, use of computer equipment, and planning and monitoring systems were examined. All of the 30 CFEs except 1 made profits in forest management and timber growing. For timber harvesting, 22 of 30 CFEs made profits, but the losses were small for the other CFEs. For the 23 CFEs with sawmills, 18 made profits and 5 had losses. The greatest total returns for the CFEs accrued to those with sawmills for lumber production. Very few of the factors hypothesized to influence CFE costs were statistically different, but this may be due to the large variation in costs. Regressions found that timber harvesting costs per unit were inversely related to timber sales volume per ha; profits increased with sales volume per ha. Sawmilling costs were inversely related with lumber production, and profits increased with lumber production volume. The CFEs also offered substantial employment opportunities, at an average of 110 employees per CFE. While most CFEs made positive returns on their operations, their costs for every phase of the production supply chain were relatively high and apt to make them vulnerable to competition from imports, especially if their large natural forest inventories declined in the future.