"Ah, Young Lord Ferrum," Master Elm greeted, his voice as dry as autumn leaves. There was a faint emphasis on the 'Young' that hinted at condescension. "Punctual. Commendable. Please, take your seat. Today, we continue our examination of estate resource management – specifically, maximizing yields from the Ducal holdings in the Whisperwood."
Lloyd slid into his usual chair, nodding politely. Whisperwood timber. Right. He remembered his father mentioning it just yesterday morning. He settled in, projecting an air of attentiveness he didn't entirely feel, but his mind was already working, connecting the dots.
Master Elm tapped the slate board with a long, bony finger. "As we've established," he began, his voice droning slightly, "the primary driver of profit from timber resources is calculated thusly: Total volume of timber extracted," he wrote Vt on the board, "multiplied by the prevailing market price per cubic measure," he added Pm, "minus the combined costs of logging labour and transportation to the nearest trade hub," finishing with - (Cl + Ct). He underlined the equation: Profit = (Vt * Pm) - (Cl + Ct).
"The key," Master Elm continued, peering over his spectacles at the assembled youths, "is twofold. Firstly, maximizing Vt – efficient extraction. Clear-felling designated sectors provides the highest immediate volume. Secondly, securing stability through long-term contracts with major timber guilds or consortiums. This guarantees a fixed Pm, insulating the estate from minor market fluctuations and ensuring predictable revenue streams. Predictability," he emphasized, rapping the board again, "is the bedrock of sound financial management."
He droned on about established contracts with the Royal Shipwrights Guild and the Southern Provinces Construction Consortium, locked in for the next ten years at a price Lloyd suspected, even without seeing the figures, was probably mediocre at best. It was the epitome of safe, traditional, unimaginative thinking. Maximize immediate extraction, lock in a guaranteed (if low) price, rinse, repeat. It was the economic equivalent of driving with the handbrake firmly engaged.
Lloyd listened, years of Earth-based economics, resource management theory, and technological advancement bubbling up inside him. He saw the flaws, the missed opportunities, glaringly obvious from his perspective. He saw the 'predictability' Elm prized as stagnation, a slow bleed of potential profit sacrificed on the altar of 'how things have always been done'.
He waited for a suitable pause, then raised his hand politely.
Master Elm stopped mid-sentence, blinking owlishly. "Yes, Lord Ferrum? A question?" His tone implied questions were interruptions to the smooth flow of established wisdom.
"Indeed, Master Elmsworth," Lloyd began, keeping his voice respectful but clear. "Regarding the profit calculation… it seems to focus solely on the value of the raw timber at the point of extraction."
Elm frowned slightly. "Naturally. That is the commodity being sold."
"But," Lloyd pressed gently, "is the raw log the only potential product? Consider the transportation cost, Ct. We are paying to transport the entire log – bark, sapwood, unusable knots, branches – only for much of it to be discarded or used as cheap firewood at the destination."
Elm adjusted his spectacles. "That is the nature of the trade, young lord. Waste is inevitable."
"Perhaps," Lloyd conceded mildly. "But what if we reduced that waste before transport? What if sawmills were established within or adjacent to the Whisperwood?"
A few of the other students stirred, looking mildly interested. This was slightly less boring than contract law.
Elm sniffed dismissively. "Sawmills? An unnecessary expense! Infrastructure, specialized labour… complexity! We are timber merchants, not carpenters."
"Are we?" Lloyd countered, leaning forward slightly. "Or are we resource managers? Establishing basic sawmills near the source allows us to transport processed lumber – planks, beams, standardized sizes – instead of raw logs. This drastically reduces the weight and volume being transported, significantly lowering Ct. Furthermore, the 'waste' – the sawdust, the offcuts – could potentially fuel the mills themselves, or be processed into charcoal briquettes, another potential revenue stream, however minor."
Elm's frown deepened. "Preposterous theorizing! The upfront investment…"
"An investment," Lloyd interjected smoothly, "that could yield higher net profits within a few years by selling a higher value product – processed lumber demands a better price than raw logs – while simultaneously reducing transportation costs. We shift from merely selling volume to selling utility."
He warmed to his theme, the eighty-year-old engineer and strategist surfacing. "And what about Vt, the volume extracted? Clear-felling provides immediate volume, yes, but devastates the forest floor, hinders regrowth, and depletes the resource entirely within decades. What then, Master Elmsworth? Do we simply move on to the next forest until the entire Duchy is barren?"
Elm sputtered, colour rising in his thin cheeks. "Resource management dictates maximizing current yield! Future generations will manage future resources!"