THE AUSABLE COOPERATIVE

JOHN E. FRANSON.

The Huron National Forest is in the cast-central part of the Lower Michigan Peninsula. It embraces some of the land that grew the famous Michigan white pine. The present annual cut in the forest consists largely of jack pine in scattered blocks of poor stocking and quality. The best blocks of this remaining timber were sold in the 1930's to large pulpwood operators. Between 1938 and 1940, several blocks of the remaining jack pine were advertised for sale on the Tawas District. But for a significant reason that gives point to this article no bids were received on those offers.

In an effort to harvest the mature timber and to establish a group of local experienced cutters who would receive the benefit of part-time employment to supplement their farm income, men in the Department of Agriculture considered the possibility of forming a cooperative. One was established in 1940, the AuSable Forest Products Association, a nonprofit organization, which was incorporated under the State laws as a timber-marketing cooperative and whose membership is restricted to residents within or near the Huron National Forest.

Before then, the timber had been sold by bid to contractors the so-called "gyppo" operators. Those contractors had recruited transient labor, some with families, others single, who would move to the woods and there live in shacks or huts with poor sanitation and unsatisfactory social conditions. Wages paid to cutters were low; failure of the contractor to live up to the usual codes of conduct made local laborers refuse to work at pulpwood cutting; and county officials held the operations to be liabilities because of the added drain on their meager resources. When the work was finished, some cutters and their families remained to become public charges. Worse, the sales to large operators negated the previously favorable public relationship with local residents and authorities; the large advertised sales were more economical to administer, but citizens strongly objected to them and officials had to spend considerable time in attempting to justify them.

For those reasons, and others, no bids had been received on the Tawas Ranger District, even though the minimum stumpage was only 75 cents a standard cord. Prospective bidders stated the timber was too scattered, of poor form, and too difficult to haul because of plantation furrows. Repeated sale offers brought no better response, but the job of disposing of 3,600 cords of jack pine a year remained.

On the other hand, many men in the intermingled small farming communities in the forest area needed more money. Also, to help them, work in the woods needed to be integrated with the spare time of the farm labor, rather than used at the will of the contractors.

This need for employment was recognized in the preliminary discussions, and it was thought a cooperative might be the solution : Individuals in a cooperative would not be too interested in the size of blocks of timber as long as a cord or two could be easily ricked together; a marketing agency could overcome the objections of the pulp companies, who would not deal with an operator who might have only 10 or 20 cords to sell, and wages would tend to be higher without a trader or contractor who would take his commission and profits and reduce unfairly the margin for cutting and stumpage. A marketing cooperative, moreover, would employ local labor; stumpage would be at an appraised rate, and any money remaining after expenses would be returned to the cutters as patronage refunds; and the serious objections of local governing bodies would be eliminated.

Three meetings were held in the communities to explain the workings of a cooperative and to determine the attitudes on such an organization. The men who attended the meetings expressed themselves in favor. The larger paper companies agreed to buy the output of the association. By-laws and articles of incorporation were drafted and approved and recorded by the Michigan Corporation and Securities Commission. The Farm Security Administration ( now the Farmers Home Administration) of the Department of Agriculture approved a $3,000 unsecured loan.

Individuals then began cutting on a sale of $500 or less, the amount that is within the ranger's authorization. When one man's output was measured, the cooperative paid him the agreed price with money from the loan. The first year's cut amounted to 400 cords of peeled jack pine, valued at $3,200 on the railroad cars.

The cut in the second year, which amounted to about $15,000, consisted of jack pine pulp and sawbolts and aspen pulpwood. The third year's operation was reduced to about $1,000 because exceptionally heavy snow impeded winter operations. The fourth year, however, 100 participating members sold timber worth $40,000.

The first 3 years, the ranger was the elected secretary- treasurer of the cooperative, but when the volume of business reached $40,000, a part-time secretary- treasurer was hired by the board of directors to keep the accounts, bill freight cars, and do the general clerical work. The ranger still administered sales, scaling, and hiring of truckers. In 1946, a full-time secretary-treasurer, experienced in woods work, was hired to handle administration.

The cooperative now does an annual business of about $100,000, has retired the $3,000 loan, and has $20,000 in working capital of undeclared patronage dividends. About 25 cutters and 6 truckers depend upon the cooperative for most of their livelihood. About 75 part-time cutters and truckers earn supplemental income. A comparison of wages indicates the cooperative pays the highest wage rate for comparable jobs in the vicinity, and about 25 percent higher rates than pulp contractors. Deep snow, which once stopped work, is now plowed by county employees and paid for by the association at standard wages. Stumpage rates and the value of the product both have increased. Bad social conditions in the woods have been eliminated; objections and concern about conditions have given way to cooperation among residents in other phases of forest administration, such as forest-fire control.

Because most of the timber has been cut from national forest lands, encouragement is given to adding output from privately owned wood lots and other timberlands. Because the contracts require the use of good forest practices as a condition of marketing, productivity of the forested acreage is improving. A further requirement is that the participants cannot employ others to work for them; members of a family or neighbors, therefore, usually work together on a partnership basis, and nobody can form a group of undesirable "gyppo" operators that could circumvent the primary purpose.

The area is fortunate in that the only equipment necessary for cutting is an ax and a buck saw.

The AuSable Forest Products Association has proved to be good business for its members, companies that buy its products, and the public agencies whose work it furthers. Similar cooperatives possibly can be successful in places where the following conditions exist: The product to be harvested is of low value with little margin for profit and risk; the annual cut is relatively small, so that the total margin does not attract large operators; some agency is at hand to aid the organization during its formative years; local experienced wood cutters are available; only a small investment per person is required; and a local individual or organization is willing to lend money under strict supervision at 5 or 6 percent interest.

JOHN E. FRANSON is forest ranger on the Lower Michigan National Forest, with headquarters at East Tawas.