A preliminary study of the economic feasibility of marketing processed hardwood residue products in Illinois Public Deposited

http://ir.library.oregonstate.edu/concern/graduate_thesis_or_dissertations/fn107312g

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  • The purpose of this study was to examine the feasibility of processing and marketing the hardwood bark and finewood residue materials generated by the primary wood using industries located within the project study area (an area encompassing all of Illinois and area fifty miles wide surrounding Illinois). The study (1970 through 1973) involved three separate phases of work. The first phase developed information regarding the sources of residue materials both with regard to the geographic distribution of the mills generating the residues and with regard to the quantities produced by the various types of mills within the project area. The data developed indicated that 71 of the saw mills considered to be large enough to justify debarker installations and the six pulp mills operating in the study area could have generated an estimated 1,125,000 cubic yards and finewood residue materials in 1970 if all the round wood processed had been debarked. The mills with debarkers Installed in 1970 generated about 528,000 cubic yards of residue bark and an additional 335,800 cubic yards of finewood residues (sawdust and shavings). The remaining indicated potential supply of residue materials (261,200 cubic yards) is the residue materials that could have been produced by those larger mills that had not installed debarking equipment at the time the study was made. The second phase of the project or marketing study developed information regarding the market project area when used only as mulches, soil conditioners, bedding, litter and for other closely related type uses. The eleven user-groups contacted in the marketing survey represented approximately 7,300 potential marketing outlets for these materials. This figure excludes the livestock producers. The eleven user-groups surveyed used and/or sold approximately 2,902,000 cubic yards of all types of mulching materiasl in 1971. It was estimated the twelfth user-group considered (all Commercial livestock producers) uses an additional 26,000,000 cubic yards of bedding and litter materials annually. By applying estimated replacement ratios of wood residue products for the various other types of materials now used and/or sold by these various user-groups, it appears a market potential of approximately 1,979,000 cubic yards of wood residue products could be developed in the marketing area. This indicates that potential markets in excess of the quantities of bark and wood residue generated by the primary wood using industries can be developed over the next five to seven years. The third phase of the study examined, through operational analysis procedures, the economic aspects of processing and distributing residue products from eight assumed processing sites to nine major marketing points within Illinois. The MPS/360 linear programming routine (6), a basic cost minimization procedure, was modified to develop a profit maximization model. The purpose was to determine what the optimum flow of the various types of residue products would be from the eight assumed processing points (including external sources) to the nine marketing points selected in the study area. Various spacial analyses were made wherein the objective functional elements of the matrix (production costs, transportation costs and product selling prices) as well as flow constraints were varied to demonstrate the sensitivity of optimum flow solutions to these variable cost and price elements. Spacial Analysis IV indicates all residue materials in the project area could be dispersed profitably if the average delivered prices of $11.88 per cubic yard for bagged mulches, $6.72 per cubic yard for bulk processed bark and $3.25 per cubic yard for bedding and litter prevail. Returns of approximately $5,500,000 would accrue to the primary wood processing firms participating in the production and distribution of these residue products, 34 percent of which would derive from sources outside the project area.
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