Recession hurting timber sales

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Published: January 18,2010

Tags: forestry, recession

For those among the roughly 310,000 individuals and families who own timber in Mississippi, it is a great time to do managed thinning but a poor time to be selling mature timber.

“For quite some time, lumber has been down,” said State Forester Charlie Morgan. “Pricing is off as much as it’s been probably in the last 15 years.”

Morgan said timber prices paid to landowners vary regionally depending on weather, accessibility, local mill inventories and other factors.

“If you go back two or three years, (pine sawtimber) was $40-55 per ton; today it’s somewhere between $30 and $40,” he said. “For small pine sawtimber, it was around $30 ranging from about $25 to $35 and now it’s about $20 per ton.”

Nearly a dozen forest-related manufacturing facilities have closed in Mississippi since the recession began, says James Henderson, an extension forestry specialist with Mississippi State University.

“Standing timber prices, particularly for sawtimber and chip-and-saw, have been trending downward over the past several years,” he said. “Much of that decline is a result of the problems in the U.S. housing market.” Pine sawlogs largely become dimension lumber used in building frames, while chip-and-saw is used to make chipboard and small lumber.

Timber owners, unless they have a dire need for cash, have the option of waiting for the sawlog market to improve. Others in the industry aren’t always as fortunate.

“There’s been a reduction in the number of loggers statewide,” said Charles Carter, a registered forester with Mid-South Forestry in New Albany. “One factor is the average age of logging contractors I’ve read it’s somewhere around 60 years old. But the cost of equipment is high, and credit is tight, and every consumer good that they use has increased in price.”

Carter said because of nearly 50-percent drops in local on-the-stump prices, his firm recommends clients not sell pine sawlog harvests right now.

“You have a rather large window of opportunity to go into the marketplace unless some kind of personal situation requires you to go into the marketplace,” he said.

In Northeast Mississippi, hardwood sawlogs are down from their record highs of a few years ago but still “reasonably good,” Carter said.

Demand for pulpwood — especially pine — is strong.

“We’ve noticed pulpwood demand improving noticeably since earlier this summer,” Henderson said. “This is partially a result of improvement in the overall economy.”

Henderson also cited a tax credit on “black liquor” a byproduct of the pulping process currently promoted as an alternative fuel as boosting pulpwood prices.

“Pine pulpwood was about $6 per ton, and now it’s $8 to $10 where it can be harvested in wet weather,” Morgan said. “This is an excellent time to do a thinning.”

A promising development for future sawlog prices is a change in building codes in Shanghai, China, after officials there saw that well-engineered wooden structures often survived earthquakes that destroyed concrete buildings.

Wood again is allowed in construction. Other regions in China are expected to follow suit.

One Canadian analyst went so far as to say the opening of Chinese markets could make timber “the oil of the next decade.”

Debbie Gaddis, an extension professor of forestry at Mississippi State University, said tough economic conditions make timber theft more tempting than ever. The most blatant theft involves unauthorized cutting of trees, to which absentee landowners are especially subject.

Any such thefts should be reported immediately to local law enforcement and the Mississippi Department of Agriculture’s theft investigation bureau.

Other thefts can include contracted harvesting in which a logging company simply doesn’t pay or in which some loads are credited to someone other than the proper landowner.

“If you’re selling timber and you’re not getting paid quickly, that’s a red flag,” Gaddis said. “The law states that you’re supposed to receive payment within 30 days.”

One of the subtlest ways for an unsuspecting timber owner to lose money is to accept a first offer for standing trees. To those who don’t know the value of timber, even a low offer can seem an enticing amount of cash.

“We encourage people to work with a consulting forester so they’ll know what they’re selling,” Gaddis said.

Carter, one of those consulting foresters, said low solicited bids can honestly reflect a logger’s busy schedule, current inventories and other factors, but getting the best price available usually requires having several potential buyers vying for the timber.

“To achieve your highest value, you need competition,” he said. “That normally means having sealed bids.”

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One Response to “Recession hurting timber sales”

  1. prentiss reeves Says:

    With these conditions, someone ought to ask the SoState why the rush to cut all the 16th section lands now. They sure ain’t just thinning them

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