Soil & Mulch Producer News Jan/Feb 2013

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Vol. VII No. 1

January / February 2013

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YE 20 R 1 ISS S’ G 3 UE UID E

www.SoilandMulchProducerNews.com

Surplus and Scarcity of Trees in Southeast

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ob Abt describes the timber situation in some parts of the southeastern United States as both a “wall of wood” and a “famine.” While that may at first sound contradictory and somewhat incongruous, Abt explains that the glut of trees in both Georgia and South Carolina — which he describes as the two worst-case scenario states and two of the most important timber states —are sawtimber, which, due to the recession and the slowdown in the housing and construction markets, have remained unharvested. Meanwhile, the failure to plant new trees has resulted in a famine of smaller trees for the pulp, paper, mulch and energy industries, which have been forced to use larger trees — generally chip-n-saw trees of up to 13 inches in diameter — to meet demand. “First, plant a lot of trees, then stop planting trees. Next, have a big housing recession when all those trees we planted reach sawtimber size, then start using biomass when the trees we didn’t plant reach pulpwood size,” he says in explaining the current situation. Abt, professor of natural resource economics and management in the Department of Forestry and Environmental Resources at North Carolina State University, runs various supply-and-demand scenarios for both the traditional timber industry and the energy industry. “My history is working on timber supply for traditional

By p.j. heller

industry,” Abt says. “The last decade has been focused on what happens to the resource with an additional energy demand including both the carbon and the timber supply consequences.” A report on Bioenergy Demand and the Southern Forest Resource, presented at the annual Mulch & Soil Council meeting in late 2012, concluded that the planting peak in the 1980s and the economic recession in 2010 resulted in some states having “both a timber famine and a wall-of-wood.” The study was funded by the Southern Resource Assessment Consortium at NC State University, composed of traditional wood product companies as well as half a dozen firms tied to the energy industry. “The debate is interesting,” says Abt, the co-director of the

consortium. “If you own timberland, you want as much demand as possible. If you use wood, you want as little extra demand as possible. We have members on both sides of that market.” Abt’s research indicates that there are a variety of factors — both known and unknown — which will impact the wood industry and prices in the years ahead. “Predicting timber supply isn’t all that difficult . . . but it’s impossible to get a clear handle on future demand,” he says. “Timber demand is tied to housing and the overall economy and not even the Nobel Prize-winning macro economists know how to predict business cycles.” While traditional industry demand is tied to business cycles, the growing need for pellets to feed biomass plants both domestically and abroad is tied to U.S. and EU bioenergy policy. Pellets compete for the same forest resource as paper mills, whose demand has remained strong through the recession. Abt predicts that even if the U.S. housing market comes back strong, prices for sawtimber will not increase as much as people expect due to the excess supply of trees. “The huge bubble of older trees sitting out there means that even when demand for housing goes up, you still have more supply sitting out Continued on page 3


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Soil & Mulch Producer News Jan/Feb 2013 by Downing and Associates - Issuu