Portable Sawmills – A Small Scale Microenterprise Development

Abstract

A Cobb-Douglas cost function of portable sawmill industry for United States based sawmill owners was estimated using cross-sectional data with two inputs and capital. The elasticity of the output (bf) to total variable cost was estimated to be 0.58. This shows that United States Portable Sawmill industry exhibits increasing returns of scale. The optimal scale of production for these sawmill operations was calculated to be 74607 board feet from the best estimated model. This value lies above the mean production 46182.17 board feet for these sawmill owners. Results of this research emphasize the fact that forest based microenterprises that utilize equipments like portable sawmills can be operated at increasing returns to scale. The positive economies of scale make it elusive that these operations can be expanded to utilize the positive economies of scale. The production can be increased with decreasing costs until the optimal scale of production is achieved.