Abstract: In a veneer lathe having a knife mounted to a knife support frame with a backing plate, a roundup control system for a veneer lathe is disclosed that recognizes or detects the production of usable veneer using the body of the knife as a signal source. During initial production of veneer, the lathe produces a trash or roundup veneer that is directed to a chipper through a trashgate. When there begins production of usable veneer, the trashgate is closed and the usable veneer is directed toward production trays or stackers. A sensor or displacement detection device is mounted in the backing plate of the knife support frame lateral the unsupported portion of the knife. As the knife contacts wood, the unsupported span of the knife flexes causing the magnet to move which the sensor detects. The sensor outputs a voltage signal proportional to movement of the knife in magnitude and direction. This voltage signal is relayed to a central processing unit where it is converted into a digital signal.