Coleman W. Dangerfield, Jr.
Professor, Economics
David J. Moorhead
Professor, Silviculture
Warnell School of Forest Resources
The University of Georgia
"Continued population growth and the assumed expansion of the United States economy will impact heavily on the forest resources of the United States. Additionally, changes in social values and attitudes are increasing the demand on the forest resources to produce a variety of goods and services. Such demands are shifting harvesting pressure from western to eastern forests." (Rosson, 1995). Forestry in the state of Georgia is reported as the number one manufacturing industry in the state in employment, output, and value added. The purpose of this presentation is to explore issues related to timber product output, forest land resources, ownership, employment, output, value added, and other forestry resource related issues in Georgia. Also, comparisons are made with other agricultural crops in Georgia and in the region. According to U.S. Forest Service statistics, the U.S. has 737 million acres of forested acres (forests lands). 490 million acres of these are classified as "timberlands", forests capable of growing at least 20 cubic feet of commercial wood per acre per year. 70% of these timberlands are located in the East (American, 1995). 59% is private non-industrial, 14% forest industry, 10% national forest, and 17% other public. Of these timberland acres, 36 million acres are reserved for non-timber uses through special legislation. 65% of Georgia's total land area is forested, almost 24 million acres in commercial forests. In 1994, Americans each used an average of 749 pounds of paper products and 18 cubic feet of lumber and structural panel products. By 2050, demand for timber products is projected to nearly double. That value is expected to reach 25 billion cubic feet annually by then, up from nearly 18 billion cubic feet in 1991. On a per acre basis, average net annual tree growth in the U.S. is 53 cubic feet compared with 27 in Canada and 24 in Russia.
In this figure, we look just at the manufacturing industries in Georgia that accept raw materials and/or intermediate products, and produce finished and/or intermediate products, not at the producers of raw materials. In relation to all manufacturing in Georgia, forest industries in 1990 employed 23% of workers. Thus, forest industry employs one of almost every four manufacturing workers, and is the number one employer in manufacturing. Of 305,256 manufacturing workers in Georgia, forest industry (wood and paper processing) employs 69,292 workers directly. With a type 2 employment multiplier (direct plus ripple effects, including household spending) of 2.5443 in Georgia, the wood and paper processing sector directly and indirectly employees 176,300 workers in a total Georgia economy employing 3.7 million workers. Wood and paper, as used here, encompasses all or part of four main industry groups under the Standard Industrial Classification system used by the Bureau of the Census in collecting data on manufacturing. These are: lumber and wood products, furniture and fixtures, paper and allied products, and gum and wood chemicals. The U.S. forest products industry employs approximately 1.6 million people in forest and paper production.
In relation to all manufacturing in Georgia, forest industries in 1990 produced 24% of total output in the state. This is $1 of each $4 of output added to the Georgia economy by manufacturing. Wood and paper processing is the number one output producing manufacturing sector in the Georgia economy. Of total Georgia manufacturing output of $45 billion, forest industry (wood and paper processing sector) produced $11 billion directly in 1990. With a type 2 output multiplier (direct plus ripple effects, including household spending) of 1.7092 in Georgia, the wood and paper processing sector directly and indirectly produced almost $19 billion in output in a total Georgia economy with $243 billion in output in 1990. There are 1,600 forestry manufacturing firms in Georgia.
In relation to all manufacturing in Georgia, forest industries in 1990 earned a value added performance of 22% of the group's total. This is $1 of every $4.50 of value added to the Georgia economy by manufacturing. Wood and paper processing is the number one earning value added manufacturing sector in the Georgia economy. Of $16 billion total manufacturing value added in Georgia, wood and paper processing earned $3.5 billion in value added directly. With a type 2 value added multiplier (direct plus ripple effects, including household spending) of 2.2335 in Georgia, wood and paper processing directly and indirectly earns $8 billion in value added in a total Georgia economy with $136 billion in value added.
What is going to happen to forestry-related employment, output, and income in the future? More people means increased demand for forestry-related products, which in-turn means increased employment, output, and income. At the same time, more population means more competing uses for forest land. It also means that more forest acres will be unavailable for timber harvest as the number of Georgia citizens increases. Increased population means more homes and businesses located in the urban/rural forest interface. Managing forest fuels in these areas with timely prescribed fires will be necessary to reduce potential wildfire damage. There will also be a greater need to better manage smoke from prescribed fire used as a productive management tool in the forest.
In 1994, U.S. forest products companies exported goods worth more than $18 billion, including over $11 billion worth of paper products and over $7 billion worth of wood products. Of this $18 billion, Georgia forestry related exports were over 11% of total U.S. forestry related foreign exports. Of Georgia's roughly $18 billion in total annual forests related products, eleven percent, or $1.992 billion, are sold to foreign markets. In 1995, all Georgia exports to foreign markets totaled over $12.4 billion. Of this amount forestry related exports were $1.992 billion or 16.1% : paper and allied products = $1.878 billion; lumber and wood products = $75.842 million; furniture and fixtures = $35.168 million; and roundwood products = $2.369 million. In 1995, of Georgia's total foreign exports of $75.842 million in lumber and wood products, the most, $15.7 million, went to Japan. The second largest amount, $12.7 million, went to Canada, and a distant third, $5.8 million, went to China (Taiwan). The Georgia ports Authority handled 9,519,942 tons of cargo in 1995. Of this amount, forest products play a major role with: 801,359 tons of woodpulp; 305,715 tons of linerboard; 33,196 tons of plywood; and, 16,666 tons of poles. In 1995, forestry related tonnage of cargo handled by the Georgia Ports Authority was 12.1% of the Ports' total tonnage handled.
In 1991, the Southeast produced 22% of total roundwood production in the U.S. Pulpwood is mainly supplied from relatively short rotations of tree growth, 20-25 years for pines. Pulpwood is also produced from thinnings taken periodically from longer, multiple-product tree rotations. Longer rotations, >25 years, are required to produce sawlogs for higher quality/price solid-sawn wood products such as lumber, poles, and veneer. The U.S. South will be the major source of any expansion in softwood timber supply for the next 50 years. If high tree planting rates in the South continue as expected, real product and timber prices will stabilize, and in some cases decline, after 2040. Rising real prices for hardwood lumber are caused by declining inventory trends of hardwoods which, in turn, result from land use conversion to softwoods, limited intensity of hardwood silviculture, and some predictions of large increases in demands for pulpwood until 2040. Price increases in solidwood products and sawtimber until 2010 appear to be nearly inevitable, unless there is some major reduction in timber demand, as might occur with increasing substitution of competing products, or with higher levels of recycling or an increase in world-wide raw material production.
Timber product output in Georgia closely follows that of the region. There is a large infrastructure in place in the region designed to generate timber products in the ratios and amounts currently manufactured. Over time, as the forest resource changes, this infrastructure will change too. However, rapid changes are not likely without large fluctuations in price and supply/demand stability. In Georgia in 1992, all forest products harvested totaled 1,229,921,000 cubic feet; 506,385,000 cubic feet of sawlogs were harvested; 72,605,000 cubic feet of veneer logs; 44,948,000 cubic feet of composite board; 547,855,000 cubic feet of pulpwood; and, 58,128,000 cubic feet of poles, piling, posts, and other miscellaneous products. Pulpwood production in Georgia for 1993 was 9,935,900 cords (approximately 80 cubic feet of solid wood = one cord). Projections for softwood timber removals in Georgia show a slight decrease from 1,132 million cubic feet in 1984 to 1,125 million cubic feet in 2030. Uncertainties in the projections of roundwood use for pulpwood, paper, and paperboard and structural panels are the result of such things as rates of wastepaper recycling and use. In the longer-term, growing utilization of recycled wastepaper in the production of paper and paperboard is expected. This will reduce growth in demand for softwood pulpwood, particularly in the South, allowing expanded tree harvests for solidwood products as timber growing rotations are increased to produce sawtimber products. Structural panel prices will be stable in the longer-term because of competition between plywood and oriented strandboard and waferboard, and nearly constant fiber costs for board products. Oriented strandboard and waferboard absorb essentially all of the growth for this class of product.
Currently, in the U.S. Southeast there exists a wide range of primary wood-using plants. In this region in 1992, forest industry included more than 1,144 primary and 7,056 secondary manufacturers of wood products, provided jobs to nearly 350,000 employees, and had an annual payroll in excess of $6.7 billion. There are more sawmills than all other type plants combined. However, sawmills tend to be relatively small compared to pulpmills, for example. From 1969 to 1992, the number of primary wood product manufacturers has dropped by more than half, while total receipts have increased by more than 68%. From 1989 to 1992, the total number of sawmills declined from 975 to 910, while total volume of sawlogs received at sawmills increased 6% to 1.5 billion cubic feet, or 41% of total wood received. During this same time, the volume of softwood sawlogs received increased 12% to 1.2 billion cubic feet, while volume of hardwood sawlogs decreased 11% to 311 million cubic feet. Yellow pine accounted for 96% of sawlog volumes in 1992 in the Southeast. In 1993, Georgia had 4 particleboard plants, 4 oriented strandboard (OSB) plants, and 16 facilities producing veneer and/or plywood. Two mills produce laminated veneer lumber (LVL), 1 makes laminated beams (GLULAM), and 1 produces parallel strand lumber (Parallam). Georgia has 164 sawmills, 48 companies apply preservatives to wood, 12 produce untreated posts and/or poles, which are also treated with preservatives, and 9 manufacturers produce log homes, 18 mills produce bark products, 6 make shavings for animal bedding, 3 produce pine "gum" products, and 24 firewood. To add value to primary products, there are 22 lumber resawers, 8 custom kiln dryers, and 26 planer mills.
1996 statistics on wood-using industries from the Georgia Forestry Commission, indicate Georgia has 13 wood-based pulp/paper mills, 152 sawmills, 1 laminated veneer lumber (LVL) plant, 1 plant that manufacturers parallel strand lumber (PSL), 6 particleboard plants, 4 oriented strand board (OSB) mills, 6 plywood plants, 12 plants producing poles and posts for subsequent treating, 7 manufacturers of log homes, 1 company buys pine gum and 1 distills it, 17 companies produce firewood, 2 manufacture excelsior. Some companies perform initial value-added activities, such as 29 lumber resawers, 38 independent planing operations and 8 custom kiln dryers. In addition, there are 100's of cabinet-millwork-custom furniture makers, 60 makers of engineered wood products like roof trusses, 39 preservative-treating plants, 9 mills making shavings for animal bedding, 23 producers of bark products, 16 flooring producers, 60 producers of manufactured homes and/or storage buildings, 1 buggy maker, 1 casket maker, 1 saddle maker, 1 maker of artificial limbs and 6 truck body manufacturers.
Pulpwood mills in the U.S. South are located near their raw material, trees. An adequate supply of water for pulp processing is also necessary. Access to navigable waterways for shipping processed wood pulp and paper products is also an important consideration.
Over the next five decades the consumption of paper and paperboard will grow more rapidly than any category of forest products, about 1.2% per year.
Over the past 40 years pulpmill capacity has increased roughly three-fold. Pulpmills are larger than they used to be, but they are also more efficient and environmentally compatible. For example, it takes far less water to make paper today than it once did - 70% less than that used in 1959. The U.S. paper industry has reduced its air pollution emissions by removing 97% of particulate matter generated during manufacturing. Sulphur compounds emissions - the chief cause of nuisance odor in mill communities - have been reduced by 90% since 1968. Also, since 1988, forest industry has reduced dioxin from pulp bleaching by 94%.
Many pulpmills are using hardwood as well as softwood pulpwood as their raw material. Some mills use as little as 10% hardwood, and others use as much as 50% hardwood. To make one ton of bleached kraft paper requires approximately 1 3/4 cords of pine pulpwood. For the South, about 60 million cords of pulpwood per year are required to keep all the pulpmills going at full capacity. In Georgia, for example, pulping capacity is over 20,000 tons per day. That equates to approximately 35,000 cords, or about 192 million pounds of pulpwood per day, or 8 3/4 million cord equivalents of pulpwood per year. Georgia timberlands produced approximately 7 million cords of softwood and hardwood roundwood pulpwood in 1994. In addition, approximately 2 3/4 million cord equivalents of wood residues for pulp manufacture were also produced in 1994.
The U.S. South contains about two-fifths of the timberland in the U.S. It contains 23% of the softwood growing stock in the U.S. and 44% of the hardwood growing stock. Pulpwood production in the U.S. South has increased dramatically over the past 40 years. Available land with excellent growing conditions coupled with development of markets, labor, transportation, and other aspects of infrastructure have made commercial tree growing a success. Consumption of roundwood in the manufacture of paper and paperboard will rise about 0.7% per year.
Southern softwood removals comprise 53% of the U.S. total. Hardwood removals are 60% of totals. Southern hardwood annual growth exceeds harvests by 51%. Whereas, total average softwood growth is only 88% of harvest. The Southern softwood annual removal to total inventory ratio is 1:18 and is 1:48 for hardwoods. This indicates an 18-year supply of standing softwood and a 48 year supply of standing hardwoods, at current harvest rates, if there were no annual new growth. From 1984 through 1993, Southern pulpwood production increased almost 13%, from 58.7 to 66.3 million cords.
In the Southeast region of the U.S. with 84.9 million acres of forest, 15% is in pine plantations, 25% is in natural pines, 11% is in mixed pine/hardwoods, and 16% is in bottomland hardwoods.
In 1991, the South central region of the U.S. ranked first in roundwood production. States from Alabama to Kentucky to Oklahoma supplied 27% of roundwood production. The Southeast produced 22% of the total.
Wood volumes from planted pines can be 25% to 50%, or more, higher than for naturally regenerated stands, and total revenues can be more than 50% higher, because of higher-value wood that can be merchandized from larger diameter and taller stems in shorter time periods than with planted trees. Such products include larger size lumber and better plywood veneers. Also, the total volumes of pulpwood grown per acre with planted stands is higher than natural stands. The planted pines usually grow faster than the naturally regenerated trees, because of generally wider tree spacing, often more managed care, and possibly improved genetic stock.
Cost trends for forest management activities in the U.S. South generally increased more rapidly until the mid-1980s. Increases have been less rapid since that time. What has happened is that the tree growing part of forestry is more intensively managed now than in the past. This level of management is expected to increase in the future. The more intensive management is being carried out on privately owned forest land. Generally, forest industry is doing the most intensive forest management. Public owned forests are managed the least intensively. Non-industrial, private forest landowners are managing somewhere in between these two. More intensive management generally produces more wood-flow over a shorter period of time, with higher total earnings from forestry. Multiple product woodflow to satisfy increases in future demand will come from more intensively managed forests. Less intensively managed publicly owned forest land will produce less woodflow in the future. Public forest land will provide multiple uses over longer rotations.
The figures shown on this slide represent all silvicultural burning, including site preparation, as reported on Georgia Forestry Commission Monthly Fire Business Summary. Fiscal year runs from July 1 - June 30 each year. As seen in the previous slide showing cost trends, prescribed burning has had a relatively small per acre cost as a forest management tool. Prescribed fire in the forest remains an effective forest management tool for a variety of reasons. Advantages of prescribed fire include: low cost relative to other management tools, cost-effective control of competing vegetation, improves wildlife habitat, reduces dangerous accumulation of fuel from forest floor, and safeguards surrounding populated areas from wildfire. As forest management becomes more intensive in the future, concerns associated with planned use of fire in the forest must be addressed. These include: vunerable development of homesites and businesses in close proximity to forests where wildfires occurr; management of prescribed fire generated smoke in areas with high road traffic and in high population centers. Fire is a necessary management tool, not only for active forest management, but is even more essential in public forests that face limits on timber harvests and thinning to maintain forest health. Fire is necessary to keep fuels under control and to maintain various successional habitat stages that the public demands. There are increasing concerns by forest managers for maintaining healthy forests and keeping fuel loads under control as the public expands demands for use of public forestlands and builds houses in close proximity to those forests. This situation requires raised public awareness and support of the use of prescribed fore in private as well as public forests regardless of uses made of those forests.
Annual growth in Georgia softwoods was estimated at 1.16 billion cubic feet in 1984, but is expected to dip to 1.12 billion cubic by the year 200, then climb to 1.21 billion cubic feet of annual growth by 2030.
By the year 2040, pulpwood demand for softwoods is expected to rise to twice that for hardwood pulpwood. Pulpwood and paper real price increases (net of inflation) are projected to be relatively flat over the next five decades with increases slightly above general inflation. However, with a shift to more planted pine acres, income per acre will increase substantially because of the greater woodflow of planted pine compared to naturally regenerated pine.
In Georgia, net annual growing stock of hardwoods increased from 329 million cubic feet in 1952 to 577 million cubic feet in 1984, or by 75%. This net annual hardwood growth in Georgia is projected to decline to 436 million cubic feet by 2010, then increase slightly to 443 million by 2030. Hardwood inventories (growing stock) in Georgia rose from 8,191 million cubic feet in 1952 to 14,288 million cubic feet in 1984, a 74% increase. By the year 2000, growth and removals are projected to come into balance. Inventory in 2010 is projected to be 15,627 million cubic feet of hardwoods, decreasing to 14,245 cubic feet by 2030.
Georgia projections indicate that annual softwood timber harvests will exceed annual growth in the 1990s, but a surplus will be realized by the year 2000. Pine plantation growth will almost triple from 307 million cubic feet per year in 1984 to 860 million cubic feet per year in 2030, a 46-year span. Georgia softwood timber inventories experienced a large increase from 1952 to 1984 - from 10.31 billion cubic feet in 1952 to 15.74 billion cubic feet in 1984, a growing stock increase of 53%. The Georgia softwood timber inventory is projected at 14.31 billion cubic feet in 2030.
Georgia annual hardwood timber harvest remained flat from 1952 to 1976, at about 265 million cubic feet per year. These annual harvests are projected to increase to 505 million cubic feet by 2020, then decline to 491 million cubic feet by 2030. Although average prices for mixed hardwoods in Georgia held near the regional average for a good while, since 1990, variation in prices has not been so pronounced as those regional prices.
Hardwood species encompass many varieties, with extremely variable characteristics. Such variability satisfies a wide diversity of product categories, with a wide range of prices. Certain species, such as oak, cherry, walnut and ash, are in high demand for furniture, panelling and other appearance-grade products. However, many other species are used for much lower-value products such as internal furniture parts, boxes and door veneers. Stumpage prices for such mixed-hardwoods often are comparatively low. A general upward trend for such species began in the Southeast around 1990, although regional variability has been large since then.
Because of consumer demand, material quality and/or relative scarcity, some timber is worth more than others. For instance, pulpwood timber is ready to cut sooner than sawtimber. Its requirements for size, straightness, freedom from knots, etc. is lower, so there is usually a larger amount available for the market. Such availability and relatively low quality demands, make its price per measuring unit lower than that for sawtimber. Conversely, few trees develop the size, straightness and freedom from strength-reducing knots that make them suitable for use as poles to support electrical distribution lines. That means pole timber is relatively scarce and usually commands stumpage prices higher than for most any other product category. Many factors influence stumpage prices. The rate of home building starts and the public’s style desires which determine household furniture selections, are two such reasons. Currently, housing starts are fairly high and oak furniture is not so popular as in the past. Those two elements may be part of the reason that pine sawtimber stumpage prices are nearly twice oak sawtimber prices when compared on the same unit basis. Reasons for differences between hardwood and softwood pulpwood prices are not always so obvious. Hardwood is often used for higher-quality paper than pine, and changes in the relative demand for the two types of paper can affect such pricing.
The growth of southern timber inventories has leveled off due to increased removals, plus environmental and urban factor constraints on available harvests in the U.S. (Haynes, 1995). The South contains about two-fifths of the timberland in the U.S. It contains 23% of the softwood growing stock in the U.S. and 44% of the hardwood growing stock. Southern softwood removals comprise 53% of the U.S. total timber removal value. Hardwood removals are 60% of total U.S. totals. In the South, hardwood annual growth exceeds harvest by a ratio of 1.51:1. Softwood growth to harvest ratio is currently 0.88:1. The softwood annual removal to total inventory ratio is 1:18 and is 1:48 for hardwoods indicating an 18-year supply of softwood and a 48-year supply of hardwoods currently on the stump, without further growth.
Cash value of major U.S. crops and timber harvested was $111 billion in 1992. The annual stumpage value of timber harvested is number one of agricultural crops in the U.S. with a value of over 21% of total crops, or almost $24 billion. Corn and soybeans trail in the number 2 and 3 positions.
Annual cash value of major Georgia crops and timber stumpage harvested totaled $2.9 billion in 1994. In Georgia, forestry has 30% of the annual total cash agricultural crop value. In Georgia, as in the U.S., annual timber harvest stumpage value is number one, at $850 million, in value of agricultural crops grown on the land. Peanuts ($533 million) and cotton ($406 million) trail as the number 2 and 3 crops with all vegetable crops ($366 million) running a close fourth. Following are: nursery/greenhouse ($190 million), tobacco ($136 million), fruits and nuts ($104 million), corn ($100 million), soybeans ($69 million), and all other crops ($142 million). Most of the forestry acres are marginal for crop production and represent the best available economic use of the land.
The total cash value to producers of all of Georgia's agriculture was $5.6 billion in 1994. Of four major groupings in the state, crops rank as the number one group with 37% of the total, or $2.05 billion. Poultry is a close second with 36% of the total, $1.98 billion. Then, annual timber harvested stumpage value is third with 15%, $850 million. Livestock ranks fourth in value of Georgia agriculture with 12%, $693 million.
In 1956, Georgia had a cropland base of 5.5 million acres. By 1992, this cropland base had been reduced to 3.8 million acres, 69% of the 1956 total. Most of this cropland base acreage reduction, 31% of the 1956 cropland total, shifted to tree crops (mostly pine plantations) planted under enrollment in three major USDA programs. These programs are: the Soil Conservation Reserve Program (Soil Bank) with 693,499 acres; the Agricultural Conservation Program (ACP) with 353,798 acres; and, the Conservation reserve Program (CRP) with 645,931 acres. According to a 1988 report (USDA-FS), even after the CRP enrollment ended in 1992, there are still 1.1 million marginal cropland and pasture acres in Georgia, that if planted to forest crops, would earn higher producer incomes than the current crop and pasture uses. Revised current estimates of forestry production and economic outlook allows a conservative estimate of between 1 and 1.5 million acres of marginal current crop and pasture land would earn more producer income if planted to tree crops in Georgia.
As seen here, timber production is the largest acreage use of all agricultural land (field crops, pasture, and timber) in Georgia.
Georgia agricultural land, farm and forest, is owned by over 695,000 individuals. Ownership of agricultural land in Georgia is concentrated among forest landowners with over 93% of the agricultural landowners, 650,000, classified as forest landowners. By comparison, only 6.5% of all agricultural landowners, 45,000 are classified as farm landowners.
In Georgia there are 23.631 million acres of commercial forest land. In Georgia around 695,000 farmers and other non-industrial private forest (NIPF) landowners own 72% of the forest land, almost 17 million acres. This compares to 63% in the U.S. South. Forest industry ownership in Georgia, almost 5 million acres, is almost the same as South-wide at 21%. Other private, at 4%, and national forests (public ownership), at 3%, are relatively small ownership classes in Georgia.
Approximately 7 million non-industrial private forest landowners own 288 million acres of timberlands in the U.S. 70% of U.S. timberland acres are located in the eastern half of the country. The U.S. South, composed of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and Virginia, has 212 million forested acres, or 40% of total land area, 2 of every 5 acres. Alabama, Georgia, North Carolina, and Virginia each average approximately 65% of total land area in forests. Over 70% of the U.S. forestland owners, approximately 5 million, are in the South. 90% of the Southern forestland is privately owned. Fully 63% of the forest land acres in the U.S. South are owned by farmers and other individuals. Forest industry owns 20% , with non-forest industry owning 8%. In the U.S. South, the public owns only 10% of the forest land.
In the U.S. about 600,000 non-industrial private forest landowners, or about 8.7% of total owners, have land holdings larger than 100 acres. In the U.S. South, forest tract acreage size class distribution is spread widely. 29% of forest tracts are less than 100 acres in size, 32% are from 100 to 1,000 acres, and 39% are over 1,000 acres in size.
Forest tract acreage size class distribution for the Southeast U.S. closely follows the total U.S. South. Georgia forest tract acreage size class distribution is expected to resemble that of the Southeast.
In the U.S. South, 47% of total forest inventory is softwood with the remaining 53% hardwood. Similar percentages hold for Georgia. Current softwood harvests run slightly above growth, while hardwoods harvests run only about one-half of growth. Over the period 1990 to 2040, softwood harvests from U.S. forests are projected to rise by 35%. Hardwood harvests are projected to rise by more than 51%. Total timberland area in Georgia is projected to decline from 23.5 to 21.8 million acres by the year 2030. Pine plantation acres are projected to increase from 4.72 to 7.17 million acres by 2030. Naturally regenerated pine acres are projected to decrease from 6.97 to 3.14 million acres by 2030. Mixed pine/hardwood acreage is expected to decrease slightly from 2.74 to 2.42 million acres by 2030. Typically these mixed stands are 50% or more oak and 25 to 50% pine. Upland hardwood acreage in Georgia is expected to decrease slightly from 3.58 to 3.44 million acres by 2030. Annual sawtimber stumpage real price growth, in the order of 1 to 2 %, is expected over this projection period. Real pulpwood and paper price growth is projected to be flat over the period. To meet this projected increase in demand, output from southern forests is expected to increase by shifts toward more acres of planted pine with corresponding decreases in acreage of natural pine, mixed pine/hardwood, and hardwood. Additionally, forestry cultural and management practices are expected to intensify. Increased future production from more intensively managed planted pine will moderate further price increases of wood and paper products, relieve harvest pressure from public forests, and assure sustainable production of forests crops, a renewable, natural resource.
With reduced softwood stumpage supply during the 1990 to 2010 period, demand is expected to adjust downward following higher prices. Until 2010, there is expected rising consumption, less rapid growth in timber inventories, and increasing real prices for stumpage and products. After 2010, there are expected declining growth in rates of consumption and increasing inventories in an amount to stabilize prices until the end of the projection period in 2040. A recent study (Pienaar, 1996) shows that the growth rate of oldfield planted pine exceeds that earlier estimated. These higher growth rates from intensively managed stands, allow timber producers to harvest wood-flows and earn economic returns from pine plantations as early as 13 to 15 years after planting. At this early harvest, stands could be clearcut for pulpwood and replanted, or thinned for pulpwood with the rotation continued to ages greater than 25 years for multiple product production before replanting. As shown earlier, almost one-half of roundwood harvested in Georgia, 45%, is for pulpwood, with another 4% used for composite panels. These can come from relatively short-rotation forestry, or from thinnings from longer, multiple product rotations. Longer, multiple product rotations produce the 41% of Georgia's forest product output that is saw logs, as well as the 6% of total output that is veneer logs.
Future forest acreage distributions by age class for forest industry are expected to be similar, but generally of shorter rotations, that those for NIPF landowners. By 2040, U.S. timberland will comprise two distinct components: 1) Private inventories with relatively stable total volumes, rapid growth harvested close to minimum merchantable ages (shorter rotations), and employing increasingly intensive silvicultural methods to grow softwoods; and, 2) Public lands with rising inventories of older stands using much less intensive silviculture. In addition, more intensive forest management and more tree planting on private land do not limit short-term price increases or harvest short-falls, although their long-term impacts can be substantial.
Tree planting on all ownerships in the U.S. totaled 2,421,861 acres in 1995. This was 2% less than 1994 and equal to 1993. In 1995, forest industry planting decreased 2%, non-industrial private forest (NIPF) landowners decreased planting by 9%. Other industrial owners (non-forest industry) posted a six-fold increase over 1994 by planting 54,654 acres. Tree planting on National Forest System (USDA-Forest Service) public land was down 17% in 1995 from 1994, and down 35% from 1990. USDA forestry cost-share programs have accounted for between one-third and one-half of tree planting on NIPF lands for decades. Recent, sharp reductions in fundings for the Forestry Incentive Program (FIP), Agricultural Conservation Program (ACP), and Stewardship Incentive Program (SIP) will decrease forest tree planting in the future.
The U.S. South planted 1,689,981 acres of trees (70% of the U.S. total) in 1995. The West was next with 601,786 acres (25%), and then the North with 130,094 acres (5%). Tree planting in 1995 is comparable to the level of planting in the early 1980s, prior to the CRP tree planting. Tree planting is not keeping pace with timber harvesting in the U.S. South, where most of the timber harvesting and tree planting occur. Numerous studies have shown that non-industrial private forest (NIPF) landowners will respond to higher prices for standing timber (stumpage) by cutting more timber, but higher timber prices have little effect on their propensity to plant more trees. Meanwhile, there is mounting concern about the sustainability, and even scarcity, of timber resources in the U.S. South.
Nine U.S. states each planted more than 100,000 acres of trees in fiscal year 1995. Collectively, these states planted 1,864,686 acres, 77% of the U.S. total. Georgia led the Nation with 287,247 acres, while Alabama and Mississippt were not far behind with over 250,000 acres each, and Oregon easily exceeded the 200,000 acre mark.
Tree planting in Georgia has increased dramatically since the mid-1970s. The increase began in the early-1980s on timber harvested acres as well as on marginal row crop and pasture acres converted to pine production. These combined tree planting increases (1982 - 85) were likely mostly due to an outlook for improved future forestry profitability and a down-turn in the agricultural economy. The largest increase in new tree planting (afforestation) during this period was as a result of the Conservation Reserve Program (CRP) from 1985 to 1992. Georgia set a world record for tree planting in 1988 with 603,000 planted acres.
A total of 706,459 acres in Georgia were enrolled in the CRP, with 645,931 acres (91.4%) planted to tree crops, mostly pine. These acres of CRP pines in Georgia represent highly productive tree growth. These acres will also return higher producer returns than earlier crop production. A study by Dangerfield and Moorhead (1996) shows that production from CRP pines is expected to increase total agricultural income $98.4 million annually, create 364 jobs, and increase total personal income $10.8 million annually in Georgia. In the Southeast, 1.7 million acres were enrolled in the CRP. This is just over one-half of the 3.1 million Southeast cropland acres classified as highly erodible. Production on these acres is expected to range from short-rotation pulpwood (15- to 25-years) to longer, multiple products rotations (>25-years). Under the newly authorized CRP, almost one million acres are expected to qualify according to soil erosion criteria.
Available wood-flow from CRP stands peaks in 2006 at over 12 million total cords available that year when projected for 20-year pulpwood rotations. Obviously, most CRP pine stands (other forest stands as well) will not be harvested at 20 years of age. In practice, the first harvests will begin around age 15 years through 25 years. Some of these stands will be clearcut and replanted while other stands will receive only the first of several possible thinnings. After thinning, stands will be grown for longer multiple product rotations to be finally harvested, and replanted, between ages 25 to 40 years or longer. Average tree rotations are projected to be shorter in the future than in the present. While shorter on average, a likely scenario is for enough acres of short, pulpwood rotations, plus thinnings from longer rotations, to be grown to provide one-half of Georgia's forestry output needed for fiber and composite panels. The other part of that scenario would be for adequate acreage of longer rotation trees to be grown to provide the other one-half of timber output needed for sawtimber and veneer products. As mentioned earlier, these products harvested ratios can, and will, change over time. Changes in product demand and production technology will likely allow acceptable, and profitable output, from generally shorter rotations.
The natural regeneration scenario was computer-modeled using WINYIELD 1.11 (Hepp 1996), while the cut over and oldfield scenarios were modeled using GaPPS Version 4.0 (Zhou and Bailey 1996). Each scenario was examined using common assumptions, where possible, to compare the scenarios. Site productivity, indicated site index (SI), averaged 68 feet at 25 years. This SI can be described as highly productive and would be expected where additional inputs such as site preparation, weed competition control, and fertilizer are added. Financial parameters were set as: a 28 percent marginal federal tax bracket; 4.0 percent, uninflated, before tax discount rate to provide a conservative alternative investment return; South-wide 1996 prices of $35 per cord for pulpwood, $62 per cord for chip and saw (CNS), and $243 per thousand board feet Scribner for sawtimber. Stumpage prices were projected uninflated. Total harvest expenses were computed at 12.5 percent of the harvest value, including 10 percent for marketing and 2.5 percent for ad valorem property taxes on timber harvested. Planting costs were charged at $50 per acre. Management was charged at $1 per acre per year. All results are reported uninflated, before taxes. Other variables such as hunting leases, and pine straw harvests were omitted from the assumptions because they would be common to each scenario and would add no real new information to this comparative study.
All three pine regeneration scenarios examined earned attractive returns for landowners. This indicates that in a wide range of situations, from mature forest to former agricultural land, landowners can earn profits when they take an active role in promoting pine regeneration. If a forest landowner harvests trees but cannot afford several hundred dollars an acre to replant trees on cut-over sites, planned natural regeneration is a good option. Obviously, replanting a cut-over stand with a pine plantation will earn a higher rate of return, and more total dollars per acre, than natural regeneration, $25 compared to $84 per acre per year for the two methods. But, cut-over plantations require more investment capital to be tied up while the trees are growing than does a naturally regenerated stand. The highest returns, and easiest tree planting can be realized through afforestation of marginal rowcrop land. Several million acres of marginal rowcrop land across the U.S. South will earn higher producer returns planted to pine trees instead of to annual rowcrops. An Annual Equivalent Return of $133 per acre from trees competes favorably with most annual crops on marginal rowcrop land, Table 2. Also, with afforestation of rowcrop land, less investment capital is tied up in the growing trees compared to cut-over plantations leading to a substantially higher IRR. The attractive growth and financial performances of tree plantations established on oldfield sites deserves a closer look by those landowners and investors interested in the practice of more intensive forestry.
Forestry is the largest industry within the manufacturing sector in Georgia. It is also the largest industry within the group of food, fiber and related sectors. Georgia has the largest commercial forest in the U.S. almost 24 million acres. Forestry is the largest single ag. crop in the state, $850 million annually in producer income. Since 1956 there has been a steady shift of marginal row crop acres to tree crops, where producers earn higher incomes. The number of forest landowners in the state is very large relative to row crop farmers. By 2040 tree harvests will increase dramatically from present to meet demand. Private lands will provide the bulk of forest harvests, from generally shorter rotations. Public lands will move toward longer rotations, fewer harvests, and multiple use as determined by public policy.
The demand for forest products is largely determined by growth in the U.S. population, income, and aggregated economic activity as indicated by the Gross National Product (GNP) and total personal income. In broad terms, future projections for timber demand show rising trends in the consumption of forest products with a much more cyclical outlook for timber growth and inventories. Over the period 1990 to 2040, softwood harvests from U.S. forests should rise by 35%. Hardwood harvests should rise by more than 51%. This level of consumption requires annual sawtimber stumpage real price growth in the order of 1 to 2 percent above general inflation. Pulpwood and paper real price increases (net of inflation) are projected to be relatively flat over the next five decades with increases slightly above inflation. However, with the shift to more planted pine acres, pine pulpwood income per acre will increase substantially because of increased woodflow per acre from planted pine compared to naturally regenerated pine. With reduced softwood stumpage supply during the 1990 to 2010 period, demand will adjust downward following higher prices. Until 2010, there is expected to be rising consumption, less rapid growth in timber inventories, and increasing real prices for stumpage and products. After 2010, there are expected declining growth rates in consumption and increasing inventories in an amount to stabilize prices until the end of the projection period in 2040.