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A U.S. Forest Service 

Special Forest Products 

Appraisal System:

Background, Methods, and 

Assessment

Jerry Smith, Lisa K. Crone, and Susan J. Alexander

United States 

Department of 

Agriculture

Forest Service

Pacific Northwest 

Research Station

General Technical Report

PNW-GTR-822

July 2010

DEPAR TMENT OF AGRICULT URE
Authors

Jerry Smith is owner, Land Management Services, 53613 Bobwhite Court, La 

Pine, OR 97339; Lisa K. Crone is a research economist, U.S. Department of 

Agriculture, Forest Service, Pacific Northwest Research Station, Alaska Wood 

Utilization Research and Development Center, 204 Siginaka Way, Sitka, AK 99835; 

and Susan J. Alexander is a regional economist, U.S. Department of Agriculture, 

Forest Service, Alaska Region, P.O. Box 21268, Juneau, AK 99802.

The Forest Service of the U.S. Department of Agriculture is dedicated to the principle of 

multiple use management of the Nation’s forest resources for sustained yields of wood, 

water, forage, wildlife, and recreation. Through forestry research, cooperation with the 

States and private forest owners, and management of the National Forests and National 

Grasslands, it strives—as directed by Congress—to provide increasingly greater service 

to a growing Nation.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and 

activities on the basis of race, color, national origin, age, disability, and where applicable, 

sex, marital status, familial status, parental status, religion, sexual orientation, genetic 

information, political beliefs, reprisal, or because all or part of an individual’s income 

is derived from any public assistance program. (Not all prohibited bases apply to all 

programs.) Persons with disabilities who require alternative means for communication of 

program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET 

Center at (202) 720-2600 (voice and TDD). To file a complaint of discrimination, write 

USDA, Director, Office of Civil Rights, 1400 Independence Avenue, SW, Washington, DC 

20250-9410 or call (800) 795-3272 (voice) or (202) 720-6382 (TDD). USDA is an equal 

opportunity provider and employer.
Abstract

Smith, Jerry; Crone, Lisa K.; Alexander, Susan J. 2010. A U.S. Forest Service 

special forest products appraisal system: background, methods, and assessment. 

Gen. Tech. Rep. PNW-GTR-822. Portland, OR: U.S. Department of Agriculture, 

Forest Service, Pacific Northwest Research Station. 22 p.

Increasing concern over the management and harvest of special forest products 

(SFP) from national forest lands has led to the development of new Forest Service 

policy directives. In this paper, we present a brief history of SFPs in the Western 

United States, highlighting the issues that necessitated new management direction. 

The new policy directives that led to the development of a cost appraisal system 

for SFPs are discussed. The framework, components, and uses of this cost 

appraisal system are described in detail. An informal assessment of the impact, 

effectiveness, and value of the cost appraisal system is also included. 

Keywords: Nontimber forest products, special forest products, cost appraisal 

system.
Contents

1 Introduction

1 Industry, Harvests, and Markets for SFP From the Western

 United States

5 Events Leading to the Need for New Forest Service Management

 Direction for SFP

8 Section 339 and SFP Management

9 The Appraisal Process for SFP in R6

16 Assessment of the Cost Appraisal System for R6

18 Conclusions

19 Acknowledgments

20 Metric Equivalents

20 Literature Cited
1

A U.S. Forest Service Special Forest Products Appraisal System

Introduction

Trade in plants, lichens, and fungi from forests in the United States has been 

important for generations. Native Americans had well-established trade routes 

throughout the land for thousands of years. As other groups came to North America, trade in these products expanded to Asia and Europe. Internationally, these 

forest botanical products are referred to as nonwood or nontimber forest products 

(NTFP). The U.S. Department of Agriculture, Forest Service (FS) refers to these 

products as special forest products (SFP). These terms are used interchangeably in 

this paper.

Increasing concern about the impact of commercial harvest of these wild 

resources on their sustainability and on wildlife, questions of tribal and treaty 

rights, concerns raised by amateur science groups (McLain et al. 1998), as well 

as concerns over access and property rights have resulted in efforts by state and 

federal governments to exert more control over harvests and harvesters. A significant federal regulatory response to these concerns is Public Law 106-113, legislation passed by Congress in the 2000 Appropriations Act titled “Pilot Program of 

Charges and Fees for Harvest of Forest Botanical Products” for the National Forest 

System, commonly referred to as “section 339” (Department of the Interior Appropriations Act 2000). This law provided the impetus for the development of a cost 

appraisal system for SFP sold from FS lands.

Although the primary focus of this paper is the cost appraisal system, to 

provide context, we begin with a brief overview of industry structure, harvests, 

and major markets for SFP from the Western United States. We then examine 

some of the events that gave rise to the need for new FS direction in the management of SFP. Next, we discuss the specifics of section 339 and its implications for 

SFP management. We then present an overview of the development, framework, 

components, and uses of a cost appraisal system originally developed for use in the 

Pacific Northwest Region of the FS, which comprises the national forests in Oregon 

and Washington (the region is also known as Region 6 [R6] of the FS and will be 

referred to as such hereinafter). Next, we summarize the results of informal interviews we conducted to get feedback on the value, impact, and effectiveness of this 

cost appraisal system. Our conclusions round out the paper.

Industry, Harvests, and Markets for SFP From the 

Western United States

For the most part, commerce in wild-harvested medicinals, florals, and foods has 

operated at unknown scales, as trade in these products is not generally tracked 

separately from agriculturally produced items. In addition, businesses in NTFP 
2

GENERAL TECHNICAL REPORT PNW-GTR-822

industries have generally been small. Many small businesses operate at the margin 

of the formal and informal economies (Alexander et al. 2002). In 1998, the U.S. 

Census Bureau’s County Business Patterns data reported 1,381 employees and 221 

businesses, with an annual payroll of $45.9 million, in the relatively new industry 

code 1132, Forest Nurseries and Gathering of Forest Products. By 2007, this sector grew to 2,216 employees and 231 businesses, with an annual payroll of $75.5 

million (U.S. Census Bureau 2009). About 75 percent of these businesses employed 

fewer than 10 people. County Business Pattern data provide useful information 

about industry structure and characteristics, but likely represent only a fraction of 

the actual number of businesses in this highly heterogeneous industry, particularly 

in light of the Schlosser et al. (1991) survey of floral green businesses. They found 

that roughly 10,300 people were employed by 60 businesses in that one segment of 

the NTFP industry in western Oregon, Washington, and British Columbia alone. 

The primary message that can be derived from County Business Pattern data is 

the fact that most NTFP businesses are small, operating at the edge of the formalinformal economy interface. McLain et al. (2008: 3) stated “‘informal economy’ is 

one of many terms used to describe economic activities that are omitted from or 

only partially accounted for in macroeconomic analyses.” They also stated “much 

economic activity within the NTFP sector has historically taken place outside of or 

on the edges of the formal economy” (McLain et al. 2008: 2). The economic activity 

reported in the County Business Patterns data is only part of the total contribution 

of NTFP to communities. When both commercial harvest and personal use are 

considered, the contribution of forest botanicals to some local and regional economies is significant.

In the Western United States, three wild-harvested products stand out as 

significant commercial industries in the past century. These three products illustrate 

how wild-harvested products are subject to the same economic and social forces 

as any agricultural product, and in some cases, create unique issues owing to their 

special characteristics. Wild huckleberries (primarily Vaccinium membranaceum

Douglas ex Torr. in the Western United States), also harvested and sold in the East, 

have experienced boom and bust cycles since the 1920s (Richards and Alexander 

2006). Variations in the harvest of wild huckleberries illustrate the impacts of 

upswings and downturns in the national economy on open access forest resources. 

During downturns in regional or national economies, harvest of these products 

can increase significantly. The floral products (primarily salal [Gaultheria shallon

Pursh] and evergreen [or California] huckleberry [V. ovatum Pursh]) industry has 

evolved from many small businesses to a concentration of large businesses that rely 

on wild-harvested product and cheap labor (Spreyer 2004). This concentration has 

In the Western United 

States, three wildharvested products 

stand out as significant 

commercial industries 

in the past century.
3

A U.S. Forest Service Special Forest Products Appraisal System

led these businesses to yield some control over harvest levels and some influence 

over attempts at regulation, even though the products themselves are open-access 

resources. Commercial harvest of wild edible fungi, particularly American matsutake (Tricholoma magnivelare) saw a huge upswing in the late 1980s and early 

1990s, followed by a decline after the mid 1990s caused by the Japanese economic 

recession and increased competition from other countries. There are essentially two 

separate international markets for wild edible fungi: the European market and the 

Japanese market. 

Western huckleberries have been sold commercially at least since the beginning of the 20th century. With the development of preservation technologies such as 

canning, construction of roads creating access, and the stock market crash of 1928, 

huckleberries became a major crop in western forests. A.H. Abbott, a district ranger 

on what was formerly the Cabinet National Forest, noted rapid growth in commercial berry picking in 1933 (Abbott 1933). In the 1930s, the commercial huckleberry 

industry was probably the major national forest “free use” product (Richards and 

Alexander 2006). The commercialization of huckleberries changed the sociocultural interaction of Whites and Native Americans in the West (Fisher 1997). 

Although both groups sold berries commercially, the invasion of non-Native pickers 

created unprecedented competition for berries while also raising concerns that 

Native Americans’ relationship to huckleberries was not being respected (Fisher 

1997, Richards and Alexander 2006). Commercial harvest of wild huckleberries 

declined during WWII, owing to gas rationing and the replacement of wild fruit 

with frozen and fresh fruit. After the war, new jobs in the timber industry and dam 

projects offered better wages and benefits. Huckleberry pickers remained marginal 

participants in the formal economy. The industry saw yet another upswing in the 

1980s, as huckleberry products were marketed in the West as local cultural symbols 

and tourist souvenirs. This upswing has persisted. Although the market is relatively 

small, continued pressure on resources has raised concerns from tribes with rights 

to forest resources, from people concerned about wildlife (such as bears), and from 

concerns about resource sustainability (Richards and Alexander 2006). 

Markets and commodity chains for wild edible fungi harvested in the United 

States are primarily international, although there is a growing domestic market for 

wild fungi. Most wild edible fungi shipped overseas go out of the Seattle customs 

district, and much of the total volume harvested comes from public lands in the 

West. Many successful small businesses supply both domestic and international 

markets with fresh or lightly processed (dried or frozen) products, serving as 

peripheral nodes where the formal and informal economies meet (Alexander et al. 

2002). The history of commercial mushroom harvesting in the United States has 
4

GENERAL TECHNICAL REPORT PNW-GTR-822

been described by numerous authors (e.g., Alexander et al. 2002, McLain 2008, Pilz 

et al. 2007, Wurtz et al. 2005). Large-scale commercial harvesting of wild mushrooms surged in western North America in the 1980s. European demand for wild 

edible fungi, primarily morels (Morchella spp.) and chanterelles (Cantharellus spp.) 

from the United States expanded after the 1986 Chernobyl nuclear accident raised 

concerns about contamination of wild fungi from fallout (Kalač 2001). In addition, 

mushroom productivity in Europe was declining in the 1980s owing to nitrogen 

deposition from powerplant pollution (Arnolds 1995). An economic boom in Japan 

created sharp increases, and sometimes wild daily fluctuations, in prices and 

demand for American matsutake (Tricholoma magnivelare), a substitute for true 

matsutake from Asia (T. matsutake). The recession in Japan and the entry of suppliers from eastern European and Asian countries into various markets have caused 

prices to decline and stabilize somewhat. The opening of trade with eastern bloc 

countries gave the European Union a supply of wild mushrooms that are closer and 

have lower transportation and labor costs than U.S. fungi (Alexander et al. 2002). 

Many small U.S. businesses have used their marketing skills and supply chains 

to develop domestic markets for wild edible fungi that did not exist even a decade 

ago. Concerns about commercial harvest of wild edible fungi have been raised by 

amateur science associations (McLain et al. 1998), land managers, and law enforcement groups. Many of the concerns raised have been expressed as ecological issues, 

but underlying much of the debate are issues regarding who has the rights to forest 

resources, and how regulation affects various groups (McLain 2008, McLain et al. 

2008).

Floral greens markets, like those for wild edible fungi, are strongly international. Floral greens are sometimes harvested for personal use, but impacts from 

harvesting are due primarily to commercial demand. The harvest of commercial 

floral greens exhibits some of the same cycles as huckleberries. During the 1930s 

Depression, many people in the West depended on NTFP for income, including 

floral greens (Heckman 1951, Howell 1991, Lynch and McLain 2003). In the postWWII era, as jobs in the formal economy became more available, NTFP harvest 

became a background issue for land managers. It emerged as a public policy issue 

in the late 1980s and early 1990s owing to a variety of factors, including regional 

declines in timber employment, increases in favorable habitat for floral greens 

owing to silvicultural conditions, immigration that led to large pools of laborers with limited work opportunities, and increasing demand for wild-harvested 

products worldwide (Lynch and McLain 2003). In the 1970s, the floral industry in 

the Pacific Northwest consisted of a network of small businesses. The industry has 

grown to become a significant player in many areas of the U.S. Pacific Northwest 
5

A U.S. Forest Service Special Forest Products Appraisal System

and the Canadian province of British Columbia. The industry is particularly important in the economy of the Olympic Peninsula in northwest Washington, where the 

market is dominated by a few wholesalers. The main floral green harvested in the 

region is salal, which comes from land not owned or controlled by either the buyers 

or the harvesters, except through loosely managed leases and permits (Spreyer 

2004). Concern about resource sustainability led to studies examining the impacts 

of harvesting on floral green species (e.g., Ballard and Huntsinger 2006, Cocksedge 

and Titus 2006, Kerns et al. 2004). The results from several studies suggest that 

NTFP management will only be fully successful if it includes the involvement of all 

stakeholders in management decisions and regulation (e.g, Ballard and Huntsinger 

2006, Charnley et al. 2007, Jones and Lynch 2007).

Events Leading to the Need for New Forest Service 

Management Direction for SFP1

Through the end of the 1980s, the U.S. Department of the Interior, Bureau of Land 

Management (BLM) and the FS sold permits and contracts for NTFPs, but the 

programs were not allotted a great deal of administrative time or money. Federal 

funding for these programs came out of the wood products or timber management 

allocated budgets. Special forest products programs literally had to compete for 

management dollars with timber programs. This was during the peak time for large 

timber harvest programs on national forest lands. Funding for SFP took a back seat 

owing to the “invisible nature” of the business and the small amount of money generated from permit sales. In addition, all funds generated from sales of SFP went 

to the Treasury and the FS did not get any back. Part of the income generated from 

timber sales is retained by the FS in the form of Knutson-Vandenberg (K-V) funds, 

named after the Knutson-Vandenberg Act of 1930 (as amended).2 The majority of 

1 Much of the text in this section draws on the experiential knowledge of the senior author, 

who was a key player in developing FS approaches to SFP management in the 1980s 

through the early 2000s.

2 The Knutson-Vandenberg Act (K-V) of June 9, 1930 (16 U.S.C. 576-576b; 46 Stat. 527), as 

amended by the National Forest Management Act of October 22, 1976 (16 U.S.C. 1600 et 

seq.) (FSM 1011), is the authority for requiring purchasers of national forest timber to make 

deposits to finance sale area improvement activities needed to protect and improve the 

future productivity of the renewable resources of forest lands on timber sale areas. Activities include sale area improvement operations; maintenance and construction; reforestation; timber stand improvement; range, wildlife, and fish habitat; soil and watershed; and 

recreation. Public Law 109-54 of August 2, 2005, further amended the K-V Act to allow 

the collection and use of K-V funds for watershed restoration; wildlife habitat improvement; control of insects, disease, and noxious weeds; community protection activities; and 

the maintenance of forest roads within the FS region in which the timber sale occurred: 

Provided that such activities may be performed through the use of contracts, forest product 

sales, and cooperative agreements. (WO AMENDMENT FSH 2409.19-2008-1, March 24, 

2008).
6

GENERAL TECHNICAL REPORT PNW-GTR-822

timber funding was used for planning activities for future timber sales, on-theground harvest administration, tree planting and thinning, and other related activities. The SFP program remained an underfunded and little-recognized program.

This changed from the mid to late 1980s through the 1990s, owing in large part 

to interest generated by American matsutake mushroom harvest activities in the 

Pacific Northwest. The harvest in the Pacific Northwest occurred primarily in British Columbia prior to 1989. In 1989, British Columbia did not have a commercially 

viable crop of American matsutake. In August of that year, harvesters and scouts 

traveled south down the Cascade Mountain range in search of suitable habitat and 

commercial quantities of the mushroom. Scouts traveled south through Washington 

and continued into central Oregon to the Crescent Lake Junction and Chemult 

areas. There they found the right habitat and an abundance of American matsutake 

growing, and importantly, very little competition for them.

A large proportion of good American matsutake habitat in the area was on FS 

land. At the time, the FS had no set fee structure for permits. The FS had little to 

no information on sustainability, proper harvest procedures, market structure, user 

groups and their needs, or the science of the American matsutake and how to care 

for it.

Within a few weeks of discovery, several hundred people had arrived in the 

central Oregon area inquiring about permits, fees, areas to harvest, and where to 

camp. The sheer magnitude of this user population necessitated the development 

of new program guidelines by local national forests. Market research needed to 

be conducted to establish fair permit fees. The agency needed to understand the 

harvest techniques used and how those techniques factored into marketing the 

product. For instance, other Pacific Northwest wild-harvested fungi such as morels 

and chanterelles are cut off at the base when harvested. The fruiting body of the 

American matsutake is harvested whole in order for it to be marketable in Japan.

The customer base was very different than what the agency was accustomed 

to in central Oregon. A high percentage of customers inquiring about the program 

were of Southeast Asian descent. There were language and custom barriers between 

the agency and the customers. The harvesters and buyers did not know the rules 

and regulations the agency expected them to follow because the agency was unable 

to effectively communicate with many of them. Although most FS employees were 

well trained in natural resource management, many were initially unprepared to 

provide adequate services to these new customers. Owing to the language barriers 

and a lack of experienced translators, the SFP program managers had to first figure 

out where to find the information to better understand their customers’ backgrounds, customs, and needs. Once gathered, this information was used to develop 
7

A U.S. Forest Service Special Forest Products Appraisal System

programs to assist their customers in understanding what the FS regulations were 

and in explaining why they were necessary to ensure good stewardship of the land 

and resources. The SFP program in the Pacific Northwest had entered a totally new 

era with many new challenges and opportunities.

The common perception within the agency of this new phenomenon was that 

the FS was involved in a major biological issue with minor social overtones. The 

FS would soon find out how wrong that assumption was. Forest Service managers 

in the West were entering a time in which federal land management agencies were 

involved in tremendous social challenges with lesser biological issues. This situation was reminiscent of the huckleberry picking rush of the 1930s.

The sheer number of people coming to FS offices in the northern Klamath and 

southern Deschutes counties in central Oregon was staggering. Within a matter of 

hours on the first day the mushroom harvesters swept into central Oregon, employees on both the Winema and Deschutes National Forests were on the phone asking 

what others were doing in regards to permit fees, harvest regulations, camping, and 

communication and education efforts. Special forest products managers discussed 

the need for developing consistent programs across forest and district boundaries. 

What they did not know was how far that philosophy was going to be extended in 

the future, not only for American matsutake but for all SFP.

What was happening in central Oregon would alter cultural barriers, education 

processes, customer service philosophies, and communication efforts and would 

increase the need to understand the agency’s “new” customers. Not only was there 

a need to better understand the new customers, the FS also needed a process to 

help these customers understand the agency’s processes and requirements. The FS 

needed to catch up with the times in order to become better human and natural 

resource managers.

According to Pilz et al. (1999), from the time they first issued permits for matsutake in 1989, the Deschutes and Winema National Forests in Oregon collaborated 

to develop biological studies, explore the needs of harvesters, and assess potential 

effects on local communities. The two forests designed a short training program, 

which harvesters seeking mushroom permits were required to take. The training 

included harvesting techniques and an explanation of the rules and laws governing 

harvesting, camping, and firearms on the national forests. Both permit sales and 

compliance with FS regulations increased dramatically as a result of this education 

program (Pilz et al. 1999). The forests also provided fee-based camping areas with 

amenities such as outhouses and picnic tables for commercial harvesters. Various 

national forests began communicating with each other regarding permit fees and 

structure and cooperating to issue multiforest permits for NTFP harvesting. Over 

Not only was there 

a need to better 

understand the new 

customers, the FS also 

needed a process to 

help these customers 

understand the 

agency’s processes 

and requirements.
8

GENERAL TECHNICAL REPORT PNW-GTR-822

the years, state, FS, and BLM agency personnel communicated with each other 

and with the public in various efforts to make permits as consistent as possible in 

each location, given the funding and staffing limitations, and regulatory and legal 

constraints of each agency. The BLM had a widely used NTFP appraisal system in 

place by the late 1990s. In the following section, we discuss the section 339 legislation and its implications for SFP management on national forest lands.

Section 339 and SFP Management

This 2000 appropriations law defines forest botanical products as “any naturally 

occurring mushrooms, fungi, flowers, seeds, roots, bark, leaves, and any other 

vegetation (or portion thereof) that grow on National Forests System lands” 

(Department of the Interior Appropriations Act 2000, as amended November 

2003). Section 339 directs the Secretary of Agriculture to develop and implement a 

pilot program to charge for forest botanical products through the establishment of 

appraisal methods and bidding procedures. The act also requires analysis regarding 

the sustainability of harvest levels and exempts personal, but not commercial, use 

from fees. The act was amended in 2003 so that fees are not only set by an appraisal 

process, but also require that a portion of fair market value and costs be recovered 

(Department of the Interior Appropriations Act 2000, as amended November 

2003). Public forest management agencies define harvest of NTFP as either for 

personal or commercial use. For example, if someone gathers a few mushrooms or 

berries for personal consumption, in most places no permits are required, nor are 

fees charged.3

 If someone gathers larger quantities for personal use, the FS might 

require a free-use permit so the agency can keep track of such activities (Pilz et al. 

2007). Commercial harvest, which is defined as harvesting forest products for the 

purpose of reselling for economic gain, requires a permit or contract that includes a 

fee. 

Under the fees section of section 339, it is stated that the FS shall also charge 

and collect sufficient fees from harvesters to recover a portion of costs to the 

Department of Agriculture associated with the granting, modifying, or monitoring the authorization for the harvest of forest botanicals, including the cost of 

any environmental or other analysis. One of the most important directives from 

3 Many agencies, landowners, and states regulate more than what they often call incidental 

use. For example, a state might consider possession by an individual of more than a gallon 

of mushrooms commercial use and regulate that, but possession of less than a gallon would 

not require the person to show they have a permit or other form of source documentation. 

The definition of incidental use varies among federal agencies and state laws. McLain, R. 

2010. Personal communication. Senior social scientist, Institute for Culture and Ecology, 

711 SE Grand Ave., Portland, OR 97214.
9

A U.S. Forest Service Special Forest Products Appraisal System

the standpoint of the FS included in the law was the section “Deposits and Use 

of Funds.” This section allows funds from the sale of botanicals to be deposited 

into a special account. Funds collected are available for conducting inventories, 

determining sustainable harvest levels, monitoring, assessing impacts of harvest 

levels and methods, and for restoration activities. This law created an opportunity 

for proactive program managers to develop programs that could be funded outside 

the appropriated funds process, instead of being limited by budgeted amounts for 

natural resource management. Subsequently, a decision was made that the deposited 

funds could be placed in a separate account on a national forest and used for forest 

botanical program needs on that forest. This decision allowed a funding mechanism 

for well-managed programs.

The Appraisal Process for SFP in R6

In 1905, Congress created the Forest Service in the U.S. Department of Agriculture. 

The mission of the FS is to sustain the health, diversity, and productivity of the 

Nation’s forests and grasslands to meet the needs of present and future generations. 

Early on, the FS developed processes and guidelines for management and sale of 

products, which are outlined in FS manuals (FSM) and handbooks (FSH).

Guidance for consistent, accurate, and fair cost or appraisal systems is outlined 

in FSH 2409.18. Although there are products sold from national forest lands that 

do not have an active appraisal system, all products must have some type of cost 

analysis completed prior to being sold.

In response to section 339’s requirement that fees for “forest botanical products” on National Forest System lands be set by an appraisal process, an SFP cost 

analysis program was initiated in 2000 by FS R6 members of the natural resources 

staff in the regional office. The goal was to design an appraisal method to address 

the language and opportunities contained in section 339 and FSH 2409.18, section 

87.3-Valuation of SFP (USDA FS 2008). Staff in the R6 office worked with an FS 

enterprise business,4

 called Forest Resource Enterprises, to develop a design for 

the SFP cost analysis program. The draft design was to have a residual-value focus 

similar to the timber sale appraisal used by some regions in the FS. A residual-value 

timber sale appraisal uses the costs and revenues involved in the harvest of timber 

stands to develop minimum rates for the sale of the timber products. 

4 An enterprise business consists of one or more FS employees who operate like an internal 

consulting firm. Enterprise businesses do not receive any base or appropriated funding; 

rather, they market their services and products to customers within the FS, or with other 

government agencies and their partners.
10

GENERAL TECHNICAL REPORT PNW-GTR-822

All FS ranger districts or forests selling SFP are required to establish fair 

market values and develop minimum rates for individual products. A high percentage of the established minimum rates were reviewed by the R6 regional office and 

modified when product values were found to need revision or further analysis.

The appraisal model for R6 was designed to address the fair market value 

directives in section 339; provide resource managers with current, accurate, and 

easily updated values for products being sold; and maximize the retained receipts 

opportunities outlined in the law. The appraisal system is essentially an Excel5

spreadsheet model utilizing a residual-value appraisal design. 

This appraisal model was intended to be user friendly to allow those with no 

previous experience with residual-value appraisals to easily use it. The system 

provides the required information quickly, whether the user is issuing one or many 

permits. It is also designed to develop permit prices for districts or forests, at the 

beginning of the calendar year, so users can see what the product and minimum 

rates are for all products. During the beta testing completed on the Chemult Ranger 

District, personnel unfamiliar with appraisal systems conducted a product appraisal 

in less than 1 minute.

The residual-value appraisal uses a process whereby all associated harvest costs 

are included in the analysis to assist in achieving a fair and unbiased base rate or 

a minimum fee for permits. These costs were obtained by contacting harvesters 

and discussing their activities. They were asked which products they harvested, 

the locations of their harvest activities, how many miles they traveled to harvest 

their products, how many hours they worked per day on average, how much they 

harvested on an average day, fuel prices in their area, and the locations of the sheds 

or buyers where their products were sold.

This information was entered into the product price spreadsheet model. The 

model performs the calculations needed to develop individual product minimum 

rates for the point of sale. These calculations can be downloaded from the R6 Web 

site into the “existing product” appraisal system used by forest or district personnel.6

 All products included in the “existing product” appraisal have cost and price 

data already included in the model. 

Periodically, new markets develop, resulting in requests for new product sales. 

The “new product” appraisal module is designed for the frontline appraiser to 

collect the same harvest and cost information from the customer that has been 

5 The use of trade or firm names in this publication is for reader information and does not 

imply endorsement by the U.S. Department of Agriculture of any product or service. 

6 This Web site is http://www.fs.fed.us/r6/nr/fp/FPWebPage/FP70104A/

Special%20Forest%20Products.htm.

This appraisal model 

was intended to 

be user friendly to 

allow those with no 

previous experience 

with residual-value 

appraisals to easily 

use it.
11

A U.S. Forest Service Special Forest Products Appraisal System

collected on the existing products. This information can be saved in a separate 

electronic file and then downloaded into the “product price” database and included 

in the “existing product” appraisal model in the future. 

To gather first point of sales values for “new product” transactions, appraisers 

rely on relationships with customers to assist in gathering price information. An 

appraiser records the product name, the unit of measure by which the product 

is sold at the first point of sale, the fair market value of the product, harvest and 

transportation costs, and production per day. The average, or default, values for 

products by region are developed by gathering this kind of information for many 

locations and products. The starting point for fair market value is 10 percent of the 

average shed price for a given product.7

 A fair market value per unit of measure 

is developed for a given product, and is stored in the regional database. Each fair 

market value is based on the national forest in which the product is being appraised. 

Region 6 of the FS is divided into four zones that have significant differences in 

pricing, costs, or products: western and eastern Oregon, and western and eastern 

Washington.

A harvest and transportation cost per unit of measure is developed for each 

zone. The harvest and transportation cost includes the following variables:

• Hours per day: hours worked per day, including travel (the default is 8 

hours)

• Hourly wage rate: an estimate of the average hourly wage for harvesters 

for each national forest, using the state minimum wage where the harvest 

occurred

• Mileage rate: the cost per mile traveled, using the Internal Revenue Service 

mileage reimbursement figure ($0.55 per mile as of January 1, 2009)

• Miles per trip: average miles traveled, by zone and product type using the 

assumption that a trip is from home to the harvest area to the buying shed

• Production per day: average amount harvested per day by unit of measure, 

such as pounds or bunches

The equation for harvest and transportation cost is as follows:

harvest and transportation cost = [(hours per day x hourly wage rate) 

+ (miles per trip x mileage rate)] 

÷ production per day

7 Forest Service Handbook 2409.18.87.3 specifies that 10 percent be used to ensure that 

a harvester has a reasonable chance of making a profit over and above the fees paid for 

permits.
12

GENERAL TECHNICAL REPORT PNW-GTR-822

The appraisal cost is adjusted by a percentage of the fair market value, called 

a rollback factor, designed to adjust for profit and risk fluctuations. The rollback 

factor in R6 is currently 10 percent of the fair market value. 

There is a feature built in called “other costs.” This feature is an adjustment 

input that can be used for any additional or unusual costs outside the scope of 

normal business operations. This adjustment is only to be used in special situations, 

such as when motorized access to a harvest area is blocked so that the additional 

cost of the time it takes to walk in and out of the area needs to be taken into 

account. The appraiser would work with the harvester to come up with a factor to 

be input as a monetary value. For example, if the minimum rate for the product is 

$0.10 per unit of measure and the additional time it takes to walk in adds 10 percent 

to the harvest and transportation cost, the input value would be $0.01. This would 

adjust the harvest and transportation cost-per-pound data and could change the 

permit price-per-pound amount. There is also a “notes” block associated with the 

“other costs” feature, where the appraiser types in the reasons and justification for 

these additional costs. 

The appraised price per unit of measure is given by the following equation:

appraised price per UOM = FMV (1 – RBF) – (harvest and transportation costs),

Where

UOM = unit of measure,

FMV = fair market value,

RBF = rollback factor, and

harvest and transportation costs have been adjusted for any “other costs.”

The permit price per unit of measure charged to the customer may or may not 

be the appraised price per unit of measure. The permit price per unit of measure is 

the greater of either the minimum rate per unit of measure or the appraised price 

per unit of measure. The appraised price per unit of measure may actually be a 

negative value. If the appraised price per unit of measure is a negative value, then 

the price paid per unit of measure for the product will revert to the established 

minimum rates. The minimum rates charged for each product are reviewed and 

approved by the R6 program director. 

The appraisal model includes the option to include program charges in the 

appraisal calculation. Section 339 includes wording associated with cost recovery, 

which can include activities such as inventory, planning, environmental analysis, 

permit issuance, and monitoring. The cell “program charge” addresses the need to 

include a method to provide for cost recovery. It can accommodate an additional 

charge to the cost of the permit. This charge can provide additional funds for the 
13

A U.S. Forest Service Special Forest Products Appraisal System

programmatic needs of SFP programs. This feature can only be used at the direction of the R6 regional office. This charge can only be applied to forest botanical 

products. 

The cell “total value” is equal to the permit price per unit of measure multiplied 

by the total number of units requested by the customer. As mandated by the Washington office of the FS, this charge cannot be less than $20.00 per transaction. 

The appraisal model showcases the pricing structure for an entire region and 

allows for periodic updates, value analysis, and monitoring. Product values, and 

harvest and transportation costs such as the mileage reimbursement rates, can be 

changed quickly. The model also meets the need for more consistent pricing structures on a broad geographic scale. For many years, customers had been expressing 

their dissatisfaction with the previous programs’ lack of consistent permit prices 

between districts and forests.

The default values and assumptions used in the model can be displayed in 

a table to illustrate how individual products are appraised. This feature is the 

“default” tab located on the bottom left area of the “existing product” spreadsheet. 

The intent of this feature is to provide an overview of the parameter values used to 

establish the permit fees that permit issuers can share with their customers. This 

table provides the viewer with a visual record of costs included in the computed 

values of the product. The information includes the default item, the values used, 

and a notes column with an explanation of the individual values. 

This feature was designed to be an educational tool for internal and external 

users of the program. The intent is to showcase the level of analysis that has gone 

into developing the prices for individual products. Although customers may not 

agree with the prices established for the products, they at least have the option of 

viewing the values included in the calculations, which provides a basis for discussion. Tables 1 and 2 are two examples of default tables. 

These tables illustrate that in some cases, a product will have a different permit 

price depending on the zones from which it is harvested and sold. Transplants 2 to 

3 feet in height sold on the Umpqua National Forest have a slightly different value 

than the same product sold on the Okanogan National Forest. The total permit price 

(“total permit value” in the tables) for 100 units sold on the Umpqua is $886.00, 

whereas the total value for this amount sold on the Okanogan is $856.00. In this 

example, this is due to differences in trip miles and differences in wage rates. 

The appraisal model 

showcases the pricing 

structure for an entire 

region and allows 

for periodic updates, 

value analysis, and 

monitoring.
14

GENERAL TECHNICAL REPORT PNW-GTR-822

Table 1—Default values for transplants 2+ to 3 feet on the Umpqua National 

Forest in Oregona

Appraisal item Default or calculated value Notes

Product Transplants 2+ to 3 feet Type of special forest product

Units (UOM) Each Base unit of measure for product

Forest or region Umpqua Product location, national forest, or

 region

Fair market value (FMV) $15.00 Dollars per unit, average wholesale

 price for forest or region

Wage rate $8.40 Dollars per hour for forest or region

 (minimum wage)

Mileage rate $0.55 Dollars per mile

Production 50.0 Average units produced per day

Hours per day 8.0 Hours worked per day, includes travel

Trip miles 300.0 Average trip miles for forest or region

Harvest and 

 transportation cost $4.64 Harvest cost + trans cost (per UOM)

Quantity 100.0 Quantity of units purchased or

 appraised

Rollback factor 10.0 percent Percentage of FMV (market fluctuation

 factor)

Minimum rate $1.00 Lowest amount per UOM the product

 can sell for

Total permit value $886

Value per UOM $8.86

UOM = unit of measure.

Note: This table is a modified version of the actual spreadsheet.

a Default and calculated values used in cost appraisal, version R6-3.53, appraisal date August 4, 2009.
15

A U.S. Forest Service Special Forest Products Appraisal System

Table 2—Default values for transplants 2+ to 3 feet on the Okanogan National 

Forest in Washingtona

Appraisal item Default or calculated value Notes

Product Transplants 2+ to 3 feet Type of special forest product

Units (UOM) Each Base unit of measure for product

Forest or region Okanogan Product location, national forest, or

 region

Fair market value (FMV) $15.00 Dollars per unit, average wholesale 

 price for forest or region

Wage rate $8.55 Dollars per hour for forest or region

 (minimum wage)

Mileage rate $0.55 Dollars per mile

Production 50.0 Average units produced per day

Hours per day 8.0 Hours worked per day, includes travel

Trip miles 325.0 Average trip miles for forest or region

Harvest and

 transportation cost $4.94 Harvest cost + trans cost (per UOM)

Quantity 100.0 Quantity of units purchased or 

 appraised

Rollback factor 10.0 percent Percentage of FMV (market fluctuation

 factor)

Minimum rate $1.00 Lowest amount per UOM the product

 can sell for

Total permit value $856

Value per UOM $8.56

UOM = unit of measure.

Note: This table is a modified version of the actual spreadsheet.

a Default and calculated values used in cost appraisal, version R6-3.53, appraisal date August 4, 2009.
16

GENERAL TECHNICAL REPORT PNW-GTR-822

Assessment of the Cost Appraisal System for R6

To assess the value, impact, and effectiveness of the cost appraisal system, we 

contacted four FS SFP program managers, four SFP harvesters, and four SFP 

buyers in the Pacific Northwest. In general, the harvesters and buyers had little to 

no knowledge of the detailed mechanics of the cost appraisal system. Some felt that 

the system had resulted in more consistent permit pricing for products across the 

region, whereas others felt that pricing was still inconsistent. Several of the harvesters and buyers offered comments that were unrelated to the cost appraisal system 

itself, but which point to the benefit of retaining receipts from the sale of permits. 

For example, they felt retained receipts could be used to train FS personnel to lay 

out SFP sales better. 

Buyers cited instances in which FS estimates of the amount of product in a 

sales area were overestimated. They expressed concerns that on some districts, 

very few sales were available, and, in some cases, access to harvest areas was 

difficult, whereas on other districts with proactive SFP managers, there were many 

sales, and access to products was very good. They also offered examples in which 

products were misidentified and sold as the wrong product (i.e., Shasta red fir [Abies 

magnifica A. Murray var. shastensis Lemmon] was being sold as noble fir [Abies 

procera Rehder]). One harvester/buyer stated that if the FS did not put out sales, 

the products would just be stolen without the FS or local communities reaping any 

of the benefits. They disliked the fact that on some districts, the SFP program was 

handled by detailers8

 or persons who had many other responsibilities with little 

commitment to SFP. Some felt retained receipts could be used to improve pricing 

consistency, product access, and quality of the offered sales. One harvester commented that a lot of theft was occurring and perhaps the retained receipts could be 

used to provide better enforcement of harvest. Another harvester believed retained 

receipts that allowed the FS to put money back into the program is a good thing, but 

worried that permit prices might be increased for this purpose even if actual costs 

and values do not change. This harvester did not believe the process of gathering 

fair market values was a good, equitable process and felt that the government is 

finding more ways to not provide goods and services to the public.

The SFP managers contacted had various levels of experience in that role 

ranging from a little over 2 years to over 20 years. Concurring with results from our 

harvester and buyer interviews, the managers felt that most harvesters and buyers 

8 A detailer is an employee who is temporarily assigned to a different position for a 

specified period and who is expected to return to his or her regular duties at the end of the 

assignment. 

In general, the 

harvesters and 

buyers had little to 

no knowledge of the 

detailed mechanics 

of the cost appraisal 

system.
17

A U.S. Forest Service Special Forest Products Appraisal System

are not interested in the inner-workings of the appraisal system and that questions 

generally arise only when a permit price is higher than expected. The managers 

appreciated the ability to show customers how prices are derived by either walking 

them through the appraisal process for a particular product or printing out a default 

page, which lists the prices and costs used in the calculation of the permit price for 

the product in question. If a customer believes some of the values or costs used have 

changed and can provide supporting information for more accurate costs or values, 

these new values can be easily put into the system to calculate updated permit 

prices.

Some of the managers commented that the prices coming out of the appraisal 

system were the same or varied little from the previous prices they were charging. 

However, they all agreed that having a single, well-documented system in place, 

which is used regionwide adds consistency and credibility to the prices charged. 

One manager stated that the system not only allows for better communication with 

customers regarding permit prices, but also facilitates better communication regarding the pricing process and the SFP program in general to line officers and other 

FS employees. Some managers felt that in the short term, their work load increased 

when the appraisal system first came online, but in the long term, it is leading 

to less work because the appraisal system allows them to easily update existing 

product prices when necessary and provides a consistent framework to follow to 

determine permit prices for new products as customers request them. 

In general, the managers were satisfied with the system used to update costs; 

however, one manager stated that he would like to be more involved in gathering 

information from harvesters during the updating process, because he feels managers are missing out on the benefits of customer contacts and building good relationships. He also believes a larger sample size (of harvesters to derive cost and product 

value estimates) would improve the credibility issue with harvesters.

With regard to their new ability to retain receipts, the managers felt that not 

enough money has yet been retained to lead to major improvements, but as time 

passes and receipts increase, there will be more opportunities for individual 

program improvements. Some of the current or proposed uses of retained receipts 

mentioned by managers included increased staffing of front desk employees during 

peak harvest times, funding SFP-related National Environmental Policy Act projects, and developing and implementing processes for monitoring the harvest and 

management of SFPs.
18

GENERAL TECHNICAL REPORT PNW-GTR-822

Conclusions

The SFP appraisal system developed for R6 was the first of its kind within the 

National Forest System. It was designed to be user friendly, address the needs 

for consistency across regional boundaries, showcase the pricing structure, and 

simplify the updating of costs. The system was to be flexible, quick, and easy for 

appraisers to use to establish both individual permit prices and annual pricing 

structures. 

The appraisal system was developed to address the language contained in section 339, the Forest Service Manual, the Forest Service Handbook, and the Code of 

Federal Regulations. It also provides opportunities contained in the wording within 

Section 339 regarding programmatic funding, environmental analysis, monitoring, 

and the important issue of sustainability. The potential for SFP programs to become 

more fiscally independent was also an important part of the design of the appraisal 

system. 

Many program managers had heard complaints from their customers about the 

lack of consistency in pricing structures in SFP programs across the region. Many 

complaints regarded pricing differences for the same products between districts 

on the same forests. Region 6 has been particularly proactive in addressing these 

issues. Many meetings were held with FS personnel, concerned citizens, and public 

interest groups to share thoughts on how programs were managed and issues that 

needed to be addressed. The SFP appraisal system was one of the primary tools that 

resulted from these meetings and discussions with customers. 

Our interviews with managers, harvesters, and buyers indicate that the cost 

appraisal system has led to a more consistent permit pricing methodology that is 

easier for managers to use, provides transparency for customers, and results in 

defensible permit prices. If a harvester believes the permit price for a particular 

product is incorrect, the default table for that product can be used to identify the 

specific values used in the calculation of the product’s permit price. This provides 

the harvester and manager the ability to easily identify and discuss the individual 

values that may (or may not) require adjustment.

The fact that some harvesters interviewed felt that prices were still inconsistent 

across the region may be attributable to a lack of understanding of the cost appraisal 

system. As discussed above, and illustrated by tables 1 and 2, there may be valid 

(and defensible) reasons why the permit price for a particular product will differ by 

zone within the region. More meetings to demonstrate the system to customers may 

help alleviate this perceived inconsistency. Whether customers would attend such 

meetings is unknown. Another possibility would be to develop a simple brochure to 

The cost appraisal 

system has led to a 

more consistent permit 

pricing methodology 

that is easier for 

managers to use, 

provides transparency 

for customers, and 

results in defensible 

permit prices.
19

A U.S. Forest Service Special Forest Products Appraisal System

illustrate why permit prices for the same product may differ between zones (similar 

to our illustration in tables 1 and 2).

The comment by one harvester who did not think the process of gathering 

fair market values is a good, equitable process is of concern. This comment lends 

credence to one of the manager’s statements that the SFP managers themselves 

should be more involved in the cost updating process or at least have more individual contact information, because they are missing out on the benefits of customer 

contacts and building good relationships. This manager’s comment that increasing 

the sample size of harvesters contacted when updating values for the model would 

help with the credibility issue with harvesters also appears valid. 

Although in general the managers interviewed concurred that not enough 

receipts had yet been retained to provide substantial enhancements to SFP programs, they were hopeful regarding their future use. Region 6 accounted for almost 

82 percent of the funds accruing to the FS retained receipt funds nationwide in 

fiscal year 2008, which is a testament to the proactive efforts in this region. In the 

future, some of these retained receipts may be used to address concerns raised by 

the harvesters and buyers interviewed including the need for permanent employees 

in SFP positions, better training for these employees in the design, administration, 

and monitoring of SFP sale areas, and more emphasis on putting SFP sales out on 

some forests or districts.

In conclusion, although there were some issues raised with the cost appraisal 

system, these issues stem mainly from a lack of understanding of how the system 

actually works rather than with the system design. Increased demonstration of the 

mechanics of the system and more interaction between SFP managers and customers in the updating process could go a long way to alleviate these issues. Perhaps 

the most important contribution of the SFP cost appraisal system developed for R6 

is that the methodology it employs has been demonstrated to work. Other regions 

of the FS have already adopted this system, and those regions that do not yet have 

a permit pricing system in place have this readily adaptable and proven system 

available to use.

Acknowledgments

We thank Steve Rheinberger of Forest Resources Enterprises for his role in designing and maintaining the cost appraisal system and for valuable comments on this 

paper. We also thank all of the interviewees for their time and responses. Finally, 

we are indebted to Frank Duran, SFP program manager in R6, for his support of 

this project and for sharing his knowledge and insights throughout the process.
20

GENERAL TECHNICAL REPORT PNW-GTR-822

Metric Equivalents

When you know: Multiply by: To find:

Feet 0.305 Meters

Miles 1.609 Kilometers

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Pacific Northwest Research Station

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