Does co-operation among small forest operators lead to economic benefits? A Saskatchewan case study

摘要

Independent operators (IOs) in Saskatchewan are small forest business owners with timber allocation volumes under 20 000 m(3). The group is characterized by above-average industry wood procurement and transaction costs that in the past were compensated by above-average market prices in conjunction with limited competition. Recently, increased competition confounded by low demand, low prices, and increasing operating costs have made it necessary for IOs to restructure to remain competitive. This research investigates the effects of restructuring IO business using a new generation cooperative model (NGC). We use a comparative analysis of a business-as-usual fibre procurement cost model and an NGC fibre procurement cost model to determine the economic effects of co-operating. Data were obtained from the IOs to generate fibre procurement cost models. The results of this analysis reveal that the co-operative model has the potential to provide significant economic benefits to IOs through the creation of economies of scope in harvesting costs, but has little effect on other costs. The analysis also reveals that so long as the NGC consists of IOs that require both large and small diameter fibre, the IO NGC has the potential to provide significant economies of scope in fibre utilization.