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Recession taking swings at timber

Timber is holding its own as the Magnolia State’s second most lucrative cash crop, but economic analysts and industry professionals say the recession is slowly chopping away at this once proud institution.

“We’re feeling the effects just like everybody else,” says Aaron Rambin, a forester with the Mississippi Forestry Commission in Jones County. Rambin says that the housing slump has left people only willing to sell pulpwood, timber that is grown primarily for paper products. “They are holding on to their mature timber and thinning and maintaining their stands, keeping them healthy.”

The timber industry in Mississippi hasn’t caught a break since the summer of 2005, when the 120 mile-per-hour winds of Hurricane Katrina caused significant damage to the state’s coastal and southern forestlands. “The storm knocked down a two-year supply of timber,” says Stephen Butler, president of TimberCorp, a forestry-consulting firm in Brandon. “For the next two years, prices for timber were low because there was so much ‘Katrina wood’ available to be salvaged at low prices.”

Skyrocketing fuel costs further drained loggers who rely on diesel for their trucks and equipment. “The loggers are really in a tight spot,” says Dr. Bill Stuart, a forestry professor at Mississippi State University. “They contract to cut a tract of timber and then move on to another one. If they don’t have a cash flow then they don’t have stable assets.”

Stuart says that at one time the logging community contributed more to the economy and generated more jobs than the timber itself, but right now loggers are living off their reserves and hoping things will turn around. “They are commonly forgotten but major players in these rural communities where they work,” he says.

Since trees, unlike corn or cotton, don’t have to be seasonally harvested. Loggers are waiting on the landowners who are waiting out the recession. “We are advising landowners that the markets aren’t good so don’t sell unless you have an urgent need,” Butler says. Many loggers have given up and are selling their skidders and saws and getting jobs elsewhere.

“We’re entering our fourth year of double-digit decline for housing starts,” says James Henderson, a forest economics professor for the MSU Extension Service. Housing starts are an economic indicator that measures the number of residential building construction projects, and the subsequent lumber and plywood demand for those projects. Henderson says they are at their worst position in over 40 years.

“At a time of year when contractors are gearing up for spring construction, there’s not a demand for new homes and the decline has effected the sawmill timber industry dramatically.” Henderson says. He hopes that low mortgage rates and Washington’s new housing incentives, like an $8,000 tax credit to first-time buyers, will encourage home purchases soon.

Mills are being forced to slow their amount of timber production thanks to the low demand for pulpwood. Embattled newspapers are switching to the Internet so less newsprint means lower paper demand. Meanwhile the recession has consumers buying less products this year such as furniture and TVs, so the paper boxes and packaging that those products come in remains on the shelf, another critical factor that has are further weakened pulpwood demand.

As foresters, loggers and mill companies hold their breath and wait for the dark clouds of recession to break, some believe that the future of Mississippi’s timber industry could be left up to science, with the next big boom just around the corner.

The Mississippi Institute for Forest Inventory (MIFI) was created by the Legislature in 2002 to do a complete statewide timber inventory and make it available to interested industrial companies. The worldwide search for alternative fuel has many states and countries looking for better ways to produce energy. MIFI executive director Wayne Tucker says wood pellets are the newest innovation.

“I remember when I was growing up, my job on a cold winter day was to go get wood for our pot bellied stove,” Tucker says, “Everything is coming full circle now.” Tucker says his office bridges the information gap with state-of-the-art technology using satellite imagery and a two-terabyte computer to take pictures and crunch data on Mississippi forests.

“You can make ethanol from trees. It’s there and it can be done,” Tucker says, “I was talking to a gentleman recently who wants to build a plant to make cellulosic aviation fuel.” Tucker says that companies in Nebraska, Florida, Colorado and Georgia are all looking to expand from corn ethanol while a company in Sweden is hoping wood pellets will reduce its national dependence on coal.

“Timber will revolutionize the way we produce fuel,” he says, “We could have a 30-million-gallon plant that costs only $40 million to build and covers four to six counties in Mississippi that is both economically and environmentally friendly.”

Contact MBJ staff writer/researcher Stephen McDill at stephen.mcdill@msbusiness.com .

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