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Economic impact estimated at $11 billion per year

Timber industry seeing higher prices, increased utilization of wood resources

Mississippi saw record high prices for timber in January and February, good news to an industry that has an estimated economic impact of $11 billion per year. Timber vies with poultry for being the state’s top income producing commodity.

Sparked in part due to a wet winter that kept log inventories low, pine saw timber prices reached record high prices early this year with prices ranging from $484 per thousand board feet in south Mississippi to $420 per thousand board feet in the Delta. Average prices were about 10% higher than a year ago.

Prices for hardwood were also up with hardwood pulpwood averaging $25.50 per cord, a 43% increase from January 1997. Oak saw timber was up 31% from January 1997 selling at an average of $331 per thousand board feet.

Prices have dropped somewhat going into the spring, a seasonable fluctuation usual in the industry, but are still considered good.

Prices usually bottom out in mid-summer, and then start moving up again in the fall.

Dr. Steve Bullard, a forester with the Forest and Wildlife Research Center at Mississippi State University (MSU), said the higher prices for timber make tree farming increasingly attractive.

“Prices for standing timber, pulp wood and saw timber are much higher than they used to be, and I think it is reasonable to expect those prices to be sustained,” Bullard said.

“If we sustain good markets, there are a lot of new opportunities for private landowners to make money growing trees. This also contributes to the economy by way of providing increased raw materials for industrial production.”

Higher prices mean tree farmers can spend more on intensive cultivation practices to increase the amount of yield per acre. Bullard said intensive production practices are in common use by big timber companies, but haven’t been as widely adopted by small private landowners.

“But today things have changed,” Bullard said. “What we are finding out is it is possible to more than double how much wood you can grow on an acre. At the higher prices it makes more sense to invest the money to produce the wood.”

Intensive wood-producing techniques include using genetically improved seedlings that grow at a fast rate, properly preparing the site, managing competition from other plants, and fertilization.

Bullard said there have been major changes in the state’s timber industry in the past year, and private landowners are doing more to increase production. And, for those who don’t want the expense up front, land can be leased. Lease rates are ranging from $60 to $90 per acre per year for 20- to 25-year periods.

Progress is also being made in timber utilization. For example, oriented strand board (OSB) made from wood chips has become an increasingly popular substitute for plywood. The OSB makes more efficient use of a tree, and smaller trees can be used to make the product.

“That enables us to use more of the timber resource effectively,” Bullard said.

“What we’re saying now is that the same thing may happen in the lumber market. Wood engineered products like laminated veneer lumber and parallel strand lumber can be substituted for lumber like trusses, 2x4s and 2x6s.”

Bullard said being able to use smaller trees is important because it allows sustainable timber production in a shorter period of time. “Our economic development needs to be something we can sustain, not something that is an overnight flash in the pan,” he said.

Previously it has taken about 35 years for a stand of timber to mature for harvest in the South (and far longer in other areas of the country where trees grow at a much slower rate).

In the future, use of smaller trees might allow 15- or 20-year harvesting rotations.

“That makes it more attractive for private individuals because within our lifetime we can see several cycles,” Bullard said. “That makes us more willing to invest.”

Small landowners aren’t the only ones who see potential gold mines in stands of trees.

Large investment companies like John Hancock Insurance Co., Prudential Insurance Co. and others are using pension fund money and investment capital to buy timber land and manage it on a sustained basis to produce wood products for industrial use.

“These large companies now own millions of acres in the South,” Bullard said. “The Southern U.S. is one of the hottest areas for investing in forestry. Mississippi is in a good position in that compared with the states in the South, our timber land is very productive.”

Bullard said the high productivity is due to soil types and a climate that are ideal for growing pine trees.

A favorable forest market economy has meant that many Mississippi manufacturers have been able to invest in upgrading facilities, according to Dr. Terry Sellers, a professor with the MSU Department of Forest Products.

“Times are good, and manufacturers are upgrading and they are improving manufacturing process,” Sellers said. “That includes computerized equipment and hiring more college graduates.

Two examples of industry upgrading are Weyerhauser in Philadelphia, which has installed a new state-of-the-art Southern pine sawmill, and International Paper’s Masonite division in Laurel, which invested in new fiber board facilities to produce door skins.

Sellers said Mississippi is in the forefront when it comes to regeneration of its forests through plantation plantings as well as natural regeneration. He said sustainable forestry is important to continue to supply wood products to maintain the country’s quality of life.


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