Half of the U.S. Forest Service timber sales in Utah don't even make enough money to cover the costs of just holding the sales themselves.
That is according to a new report by the U.S. General Accounting Office, an investigative arm of Congress.The report said that in 1988, 16 of the 31 sales of timber lots in Utah forests - or 52 percent - did not manage to recover the cost of holding the sales, let alone the cost of raising the trees, supervising harvesting and reforestation.
The GAO figures that those 16 below-cost sales fell $426,283 short of meeting just the administrative costs of the sales. Such costs include identifying sales boundaries, surveying tree condition, preparing logging and transportation plans, and advertising.
Nationally, the GAO figures about 24 percent of all timber sales fail to recover the costs of merely staging sales, and they fell short by about $22.1 million overall in 1988.
"Various laws and regulations require the Forest Service and the Bureau of Land Management to sell timber for fair market value. However, neither agency is under a legal or regulatory requirement to sell timber at a price that will recover costs," the study said.
It added that the Forest Service does not consider its own costs when it sets minimum bid prices for timber. It sets them based on how much other similar lots of trees have sold for recently, or on how much timber companies could pay and still make a profit.
Because of such practices, 71 percent of the minimum bids advertised in Utah - or 22 of 31 - were for less than the cost of holding the sale. But competitive bidding drove the price up so that only 16 of them sold for less than the cost of the sale.
Nationally, about 40 percent of all timber sales allow minimum bids that would not cover sales costs.
Among individual national forests in Utah, Ashley advertised minimum bids for all 17 of its sales in 1988 for below sales cost, and sold 11 for less; Fish Lake advertised and sold its only sale for less than sales cost; Manti-LaSal advertised and sold one of three sales for less than sales cost; and Wasatch advertised and sold three of four sales for less than cost.
All sales in Uinta and Dixie national forests recovered sales costs.
The GAO recommended that the Forest Service begin basing its asking prices more on its actual costs.