Southern Forestry Situation and Outlook

Paper presented at the Extension Southern Agricultural Outlook Converence, Atlanta, Georgia, October 2-4, 1995.

Coleman W. Dangerfield Jr.
Professor, Economics
Warnell School of Forest Resources
The University of Georgia

October 3, 1995

Abstract

The forestry situation and outlook in the Southern U.S. is examined with respect to the major items of concern in forestry today. These items are: forestry resources, timber income and employment, current and projected timber supply and demand, imports, exports, recycled wastepaper, marketing and prices, land use policy on public lands, NAFTA, and GATT. Forestry is a major resource in the twelve Southern states with two to three of every five acres devoted to forest production. The total acreage of productive forests in the U.S. South is, and will continue to be, declining slightly reflecting seven percent (24 million acres) fewer acres resulting from losses to other land uses. However, this smaller forest will contain slightly more timber volume in 2040 than in 1990. It will also grow 12 percent faster and support a 48 percent larger total harvest. This increased growth and productivity is reflected by declining hardwood forests, softwood harvests near minimum merchantability limits, and more intensive timber management. Planted pine stands have increased in acreage and will continue to increase for the foreseeable future at the expense of natural pine stands and of hardwood acreage. Increased timber harvest will result in shorter rotation ages near minimum merchantable volumes. Roundwood removals are expected to exceed growth from 1990 to 2010/2015. Growth will catch-up to and exceed removals from 2015 to 2040. Real pulpwood prices are expected to be constant for the long-run. Softwood pulpwood supply is projected to be adequate for the short-run and for the long-run with increasing inventory and removals. Softwood sawtimber supply is projected to be adequate for the short-run and to be below demand for the long-run. Real sawtimber prices will increase for the long-run.

Keywords

Forestry, United States, South, Southeast, timber, pulpwood, employment, income, imports, exports, supply, demand

Acknowledgements

Content for this Southern Forestry Situation and Outlook report is largely adapted from articles in: The Journal of Forestry 93-7, 1995; USDA-FS RM-GTR-259, 1995; Forest Farmer 54-3, 1995; and "U.S. Forest: Facts and Figures," 1995. Thanks to Julian R. Beckwith, III for review of a near-final draft of this paper.

Objective

It is the objective that through this paper agricultural economists and others working in the forestry area will have the printed resource material necessary to answer most questions concerning the major issues of the forestry situation and outlook in the United States South and Southeast. Discussion is supported by table and figure presentations suitable for use in other programs.

Timber Statistics

Forestland/Timberland

The U.S. has one of the world's largest and most productive forest resources. Most of its forests are managed on a sustainable basis and are concentrated along the eastern and western coasts, close to major ports (Wisdom, 1995). The U.S. has 2,263,259,000 total acres of land area. Thirty-three percent, or 736,681,000 acres, are forested acres (forestlands). Federal ownership is 34 percent of total forestland.

Two-thirds of U.S. forestlands, some 490 million acres, are classified as "timberlands" (table 1). These timberlands are forests capable of growing 20 cubic feet of commercial wood per acre per year. Timberland ownership is 59 percent private non-industrial, 14 percent forest industry, 10 percent national forest, and 17 percent other public. Some 36 million acres of timberlands are reserved for non-timber uses through special legislation. Altogether, federal, state, and local governments own 131 million of the 490 million acres or 27 percent of commercial timberland in the U.S. Approximately 7 million non-industrial private owners hold 288 million acres of timberlands in the U.S. Only about 600,000 non-industrial timberland owners have holdings larger than 100 acres.

Table 1. Selected United States Timber Characteristics, 1992.

Region Ownership Class
Characteristic South North Rocky Mountain Pacific Coast National Forest Other Public Forest Industrial Non-industria Total
Timberland Area
(million acres)		 199 150 63 70 05 47 70 200 490
Softwood growing stock
(billion cubic feet)		 103 51 101 95 106 51 71 143 450
Hardwood growing stock
(billion cubic feet)		 140 156 9.0 2.3 26 33 35 242 336
Annual Softwood Growth
(billion cubic feet)		 5.1 1.2 2.0 3.7 2.7 1.1 3.2 4.9 12.0
Annual Hardwood Growth
(billion cubic feet)		 4.7 4.1 0.2 0.6 0.5 0.0 1.1 7.2 9.7
Annual Softwood Removals
(billion cubic feet)		 5.0 0.7 0.0 3.6 1.0 0.7 4.1 4.4 11.0
Annual Hardwood Removals
(billion cubic feet)		 3.1 2.0 0.0 0.1 0.2 0.3 1.2 3.6 5.4
Seventy percent of U.S. timberlands are located in the East (American, 1995). The U.S. South, composed of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and Virginia has 211,838,000 forested acres (figure 1) or 40 percent of total land area (American Forests, 1995) (tables 2, 3). Alabama, Georgia. North Carolina, South Carolina, and Virginia average approximately 65 percent of total land area in forest.

Figure 1. Forest Service regions and assessment regions.

Figure 1.

Table 2. Timberland Ownership by State, 1992 (in thousands of acres)

Region & State National Forests Other Public Forest Industry Farmer & Other Private All Owners
Southeast
Florida 990 1,444 4,789 7,779 14,983
Georgia 752 894 4,990 16,995 23,631
North Carolina 1,082 868 2,252 14,508 18,710
South Carolina 577 596 2,626 8,380 12,179
Virginia 1,446 507 1,614 11,724 15,292
Total 4,847 4,309 16,253 59,387 84,794
South Central
Alabama 615 557 4,795 15,975 21,941
Arkansas 2,338 794 4,386 9,905 17,423
Kentucky 631 329 205 11,196 12,360
Louisiana 568 743 3,937 8,607 13,855
Mississippi 1,144 721 3,267 11,859 16,991
Oklahoma 244 346 1,077 4,455 6,122
Tennessee 565 953 1,122 10,635 13,275
Texas 602 196 3,986 7,763 12,548
Total 6,707 4,639 22,774 80,395 114,515
Source: Powell, et al.

Table 3. Land areas (in thousands of acres).

Region & State Total Land Area Forested Acres Forested Percent
Southeast
Florida 34,558 16,549 48%
Georgia 37,068 24,137 65%
North Carolina 31,180 19,278 62%
South Carolina 25,343 15,858 64%
Virginia 25,343 15,858 63%
Total 147,419 88,078 60%
South Central
Alabama 32,480 21,974 68%
Arkansas 33,328 17,864 54%
Kentucky 25,429 12,714 50%
Louisiana 27,882 13,864 50%
Mississippi 30,025 17,000 57%
Oklahoma 43,954 7,539 17%
Tennessee 26,380 13,612 52%
Texas 167,625 19,193 11%
Total 387,104 123,760 32%
Source: Douglas S. Powell, et al.

Top Ten States in Planting and Seeding, 1993 (in acres)

1. Georgia 284,482
2. Mississippi 264,264
3. Alabama 216,275
4. Florida 204,768
5. Oregon 194,707
6. Washington 163,442
7. Louisiana 150,017
8. South Carolina 128,126
9. Texas 112,923
10. North Carolina 112,899
Source: Tree Planting in the United States-1993, USDA Forest Service

Forest Products and the Consumer (American, 1995)

The U.S. is the world's leading producer and consumer of forest products, accounting for about one-quarter of the world's production and consumption. In 1994, Americans used an average of 749 pounds of paper products and 18 cubic feet of lumber and structural panel products. The U.S. is the world's largest producer of softwood lumber, followed by Canada and Russia. The U.S. is also the largest producer of hardwood lumber, softwood plywood, and composite panels.

The Food and Agricultural Organization of the United Nations forecasts that world demand for timber products will nearly double by the middle of the next century. In the U.S. the Forest Service projects that demand for forest products will reach 25 billion cubic feet annually by that time, up from nearly 18 billion in 1991. On a per acre basis, net annual tree growth in the U.S. is 52 cubic feet compared with 27 in Canada and 24 in Russia.

Other benefits of wood production include a favorable energy system. To grow a pound of wood, a tree consumes about 1.47 pounds of carbon dioxide and releases approximately 1.07 pounds of oxygen. An acre of trees is expected to grow 4,000 pounds of wood per year, consuming 5,800 pounds of carbon dioxide and releasing 4,280 pounds of oxygen. Old, slow growing forests can consume more oxygen than they produce but young, vigorous forests tend to be the most efficient at absorbing carbon dioxide and producing oxygen.

The energy efficiency of forests extends to forest products. Building products made from aluminum require 126 times more energy than wood to fashion a final product. Products made from steel. glass, plastic, cement, or brick require approximately 24, 14, 6, and 4.5 times more energy, respectively, than does wood to make a final product.

Forestry Employment, Earning, Production and Value

The forest products industry employs approximately 1.6 million people in forest and paper production, or 1.2 percent of the U.S. workforce (tables 4, 5). For every jobcreated that is directly forest-related, another two jobs are created that areindirectly related. Such jobs are in transportation. distribution, and sales offorest products, and add another 3.8 million jobs to the U.S. economy.

Table 4. Forest related employment for the U.S. South and Southeast, 1990.

S & SE. STATE Total Employment Forestry Employ Paper Employ Lumber Employ Total Forestry Percent Forestry
#
Alabama 2,037,441 2,358 22,315 36,509 61,192 3.0
Arkansas 1,204,329 2,331 13,790 23,453 39,574 3.3
Florida 6,894,294 1,704 14,143 26,342 42,189 0.6
Georgia 3,686,563 2,330 33,819 35,700 71,849 1.9
Kentucky 1,923,933 636 9,928 16,013 26,577 1.4
Louisiana 1,979,125 962 12,114 13,528 26,604 1.3
Mississippi 1,196,953 1,449 8,915 31,642 42,006 3.5
North Carolina 3,861,115 1,675 23,515 43,527 68,717 1.8
Oklahoma 1,611,353 352 3,752 3,752 7,856 0.5
South Carolina 1,925,045 1,869 16,736 16,890 7,856 0.5
Tennessee 2,741,808 944 21,376 25,644 47,964 1.7
Texas 8,874,650 1,620 25,512 34,489 61,621 0.7
Virginia 3,686,238 1,187 16,613 27,687 45,487 1.2
Total S & SE 41,622,847 20,317 222,528 335,176 577,121 1.4
Total U.S. 137,153,200 59,100 701,800 852,200 1,613,100 1.2
Table 5. Forest related earnings for the U.S. South and Southeast, 1990.
State Total Earnings Forestry Earnings Paper Earnings Lumber Earnings Total Forestry Percent Forestry
$ Thousands
Alabama 43,671,808 22,481 962,784 686,654 1,671,919 3.8
Arkansas 23,617,455 17,151 484,456 481,526 983,133 4.2
Florida 150,022,436 18,057 513,639 545,064 1,076,760 0.7
Georgia 85,021,241 31,589 1,245,171 781,785 2,058,545 2.4
Kentucky 39,235,184 202 309,102 286,104 595,408 1.5
Louisiana 43,561,249 8,751 526,993 307,710 843,454 1.9
Mississippi 22,622,374 10,676 330,611 618,216 959,503 4.2
North Carolina 82,612,178 8,223 826,659 883,104 1,717,986 2.1
Oklahoma 33,764,180 1,184 128,524 78,832 208,540 0.6
South Carolina 39,208,636 36,826 659,391 364,918 1,061,135 2.7
Tennessee 58,349,487 3,973 742,607 489,996 1,236,576 2.1
Texas 214,975,826 13,785 867,727 761,598 1,643,110 0.8
Virginia 86,737,148 2,708 611,976 645,551 1,260,235 1.5
Total S & SE 923,399,202 175,606 8,209,640 6,931,058 15,316,304 1.6
Total U.S. 3,378,896,920 350,000 26,024,000 19,938,000 46,312,000 1.4
In 1991, the most recent year for which complete information is available, the SouthCentral region of the U.S. ranked first in roundwood production. States from Alabamato Kentucky to Oklahoma supplied 27 percent of roundwood production. The Southeastproduced 22 percent of the total.

In 1992, timber products composed the largest portion of total agricultural cropvalue in the U.S. Valued at $23.8 billion, roundwood forest products topped corn($19.7 billion) and soybeans ($16.7 billion) as the leading agricultural commodity (see figure). Total agricultural crop and timber production in the U.S. in 1992 was approximately $111 billion (figure 2).

Figure 2. Value of major U.S. agricultural crops and timber, 1992.

Figure 2. Value of major U.S. agricultural crops and timber, 1992.

Source: USDA Economic Research Service Crop Values. Timber value extimated from Forest Service Timber Cut/Sold Reports adjusted for value added to local points of delivery.

Timber Supply and Demand in the South (Cubbage, et.al., 1 & 2, 1995)

Situation

During the early 1900s onto the 1950s timber supplies for the U.S. South were projected to fall significantly below demand. By the 1960s and 1970s softwood and hardwood growing inventories had increased sufficiently to prompt expansions in the solid wood and pulp and paper manufacturing sectors throughout the southern region (Figure 3). 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.

Figure 3. Timber net annual growth and removals.

Figure 3. Timber net annual growth and removals.

Source: USDA Forest Service: An Analysis of the Timber Situation in the United States. 1952-2030: Forest Resources of the United States, 1992

The South contains about two-fifths of the timberland in the U.S. It contains 23 percent of the softwood growing stock in the U.S. and 44 percent of the hardwood growing stock. Southern softwood removals comprise 53 percent of the U.S. total. Hardwood removals are 60 percent of totals.

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 a 18 year supply of softwood and a 48 year supply of hardwoods at current harvest rates (tables 6, 7, 8, and figures 4, 5).

Table 6. Softwood timber inventory, growth, and removal data in the South.

Growing Stock Sawtimber
State Survey
Year		 Inventory Growth Removals Inventory Growth Removals
million cubic feet million board feet
Alabama 1990 11,100 661 720 42,810 2,780 2,860
Arkansas 1988 7,920 388 423 34,660 1,826 1,880
Florida 1987 9,305 487 484 28,369 1,498 1,270
Georgia 1989 15,600 817 959 53,400 3,258 3,311
Louisiana 1991 9,900 527 659 44,690 2,573 2,916
Mississippi 1987 9,090 509 520 39,600 2,522 2,147
North Carolina 1990 12,530 589 511 44,050 2,468 2,015
Oklahoma 1993 1,390 109 55 4,160 287 218
South Carolina 1993 8,030 344 492 29,380 1,186 1,975
Tennessee 1989 2,895 100 52 35,080 381 163
Texas 1992 7,870 512 526 9,615 2,266 2,451
Virginia 1991 6,650 317 252 19,880 1,078 842
Total 102,280 5,360 5,643 385,694 22,123 22,048
Source: USDA Forest Service Inventory and Analysis Reports, Southeastern and Southern Forest Experiment Stations.

Table 7. Hardwood timber inventory, growth, and removal data in the South.

Growing Stock Sawtimber
State Survey
Year		 Inventory Growth Removals Inventory Growth Removals
million cubic feet million board feet
Alabama 1990 11,974 568 370 33,360 1,710 1,070
Arkansas 1988 11,068 425 241 33,085 1,583 742
Florida 1987 5,660 140 66 16,497 482 179
Georgia 1989 15,130 456 342 42,370 1,659 1,036
Louisiana 1991 8,920 310 261 30,560 1,168 861
Mississippi 1987 10,340 436 241 33,610 1,666 813
North Carolina 1990 20,212 569 427 62,540 2,315 1,460
Oklahoma 1993 8,650 182 236 25,870 678 80
South Carolina 1993 13,800 539 168 44,000 2,165 774
Tennessee 1989 13,800 539 168 44,000 2,165 163
Texas 1992 5,060 199 159 15,753 755 434
Virginia 1991 19,840 531 346 60,370 2,192 1,176
Total 132,264 4,421 2,885 401,685 16,532 9,292
Source: USDA Forest Service Inventory and Analysis Reports, Southeastern and Southern Forest Experiment Stations.

Table 8. Selected southern timber inventory projections.

Projected Timber Volumes by Year
Characteristic 1990 1995 2000 2005 2010
billion board feet
Virginia
softwood 6.6 6.9 7.2 7.6 8.1
hardwood 19.0 20.6 21.7 22.7 23.7
North Carolina
softwood 12.5 12.0 13 13.1 13.3
hardwood 20.2 20.9 21.7 22.4 23.1
South Carolina
softwood 0.0 0.6 0.3 0.0 7.3
hardwood 9.2 9.6 10.0 10.4 10.0
Georgia
softwood 15.4 14.4 13.2 11.4 10.5
hardwood 15.2 15.0 16.4 17.0 17.6
Florida
softwood 9.3 9.1 0.6 7.7 7.0
hardwood 5.0 6.2 6.5 6.0 7.1
Tennessee
softwood 2.9 3.2 3.4 3.7 4.0
hardwood 14.0 15.5 16.9 10.3 19.7
Alabama
softwood 11.1 10.9 10.7 10.4 10.7
hardwood 12.0 13.0 13.9 14.0 15.6
Mississippi
softwood 0.0 0.0 0.0 0.9 9.2
hardwood 11.1 12.3 13.0 14.7 15.0
Louisiana
softwood 9.9 9.2 0.6 7.9 0.3
hardwood 0.9 0.5 0.9 0.9 0.7
Arkansas
softwood 7.9 0.0 0.3 0.0 9.5
hardwood 11.3 12.0 13.2 13.7 15.4
Texas
softwood 7.9 0.0 7.6 7.2 6.6
hardwood 5.1 5.0 6.39 6.7 7.2
Note: Initial year for Virginia as of 1991 FIA survey, not 1990; 1991 for Louisiana; and 1992 for Texas. Source: Georgia Regional Timber Supply Model program (Cubbage et.al. 1990).

Figure 4. U.S. timberland softwood inventories for all owners and regions with projections to 2040.

Figure 4. U.S. timberland softwood inventories for all owners and regions with projections to 2040. U.S. inventory. Source (Haynes, 1995).

Figure 5. U.S. timberland pulpwood fiber supply from all sources, from 1950 with projections to 2040.

Figure 5. U.S. timberland pulpwood fiber supply from all sources, from 1950 with projections to 2040. U.S. pulpwood supply quantities by category. Source (Haynes, 1995).

Timber Supply Assumptions

The supply of timber at any point in time is modeled, in part as a function of private timber inventory levels, stumpage prices, and the amount of public harvest available. Projections require models of forest growth, and assumptions on private timberland management, timberland area change and forest type transition, harvest flows from public timberlands, and an array of market forces.

Timber Availability

Timber inventories are impacted by other factors to determine timber supplies. These factors include: environmental constraints, demographic trends, public opinion, and landowner objectives. These factors effectively reduce timber supply when expressed as excessively sloped land, water quality problems, broken terrain, road access, small harvest areas, public ownership, growing metropolitan areas, endangered species, wetlands, increased costs due to adoption of best management practices for timber, state and local regulations, nontimber objectives of landowners, increased recreational use of forest lands, and conversion of land use among agricultural. forest, and urban uses.

Timber Demand Assumptions (Hayst 1995)

The (demand for forest products is largely determined by growth in U.S. population, income, and aggregated economic activity as indicated by Gross National Product (GNP) and total personal income. Projections of demand for lumber, structural panels, and nonstructural panels are based on the end use approach. Future consumption is estimated by multiplying the projected consumption per unit of activity in the endure market, times the projected level of endure activity. Key endure activity concepts include the number of housing starts and house size. levels of expenditures on residential upkeep and improvements, levels of expenditures for non-residential construction, the index of manufacturing production, and measures of activity in shipping and transportation.

Growth in aggregate economic activity, as measured by GNP, is expected to range between two and three percent over the next 50 years, in contrast to the average of three to four percent characteristic of the 1960 to 1990 period. Paralleling expansion in GNP, total disposable personal income increases more than three times and some two and one-half times on a per capita basis (table 9).

Table 9.  Population, gross national product, and disposable personal income in the United States, selected years, 1929-1990, with projections to 2040.

Year Population Gross national product Disposable personal income Per capita disposable personal income
Millions Annual rate of change Billion 1982 dollars Annual rate Billion 1982 dollars Annual rate of change 1982 dollars Annual rate of change
1929 121.8 709.6 498.6 4.091
1933 125.7 0.8 498.5 -8.4 370.8 -7.3 2,950 -7.8
1940 132.1 0.8 772.9 7.9 530.7 6.2 4.017 5.4
1945 139.9 1.1 1,354.8 -1.9 739.5 -1.3 5,285 -2.4
1950 151.7 1.7 1,203.7 8.5 791.8 7.1 5,220 6.2
1955 165.3 1.8 1,494.9 5.6 944.5 5.6 5.714 3.8
1960 180.8 2.1 1,665.3 2.2 1,091.1 2.2 6.036 0.1
1965 194.3 1.3 2,087.6 5.8 1,365.7 5.8 7,027 4.5
1970 205.1 1.2 2,416.2 -0.3 1,668.1 4.3 8,134 3.1
1975 216.0 1.0 2,865.0 -1.3 1,931.7 1.9 8,944 0.9
1976 218.0 0.9 2,826.7 5.3 2,001.0 3.6 9,175 2.6
1977 220.3 1.0 2,958.6 4.7 2,066.6 3.3 9.381 2.2
1978 222.6 1.1 3,115.2 5.3 2,167.1 4.9 9,735 3.8
1979 225.1 1.1 3,192.4 2.5 2,202.6 2.1 9,829 1.0
1980 227.7 1.2 3,187.1 -0.2 2,214.3 0.1 9,723 1.1
1981 230.1 1.0 3,248.8 1.9 2,248.6 1.5 9,773 0.5
1982 232.4 1.0 3,166.0 -2.5 2,261.5 0.6 9.732 -0.4
1983 234.8 1.0 3,279.1 3.6 2,331.9 3.1 9,930 2.0
1984 237.1 0.9 3,501.4 6.8 2,469.8 5.9 10,419 4.9
1985 239.3 1.0 3,607.5 3.0 2,542.2 2.9 10,622 1.9
1986 241.6 1.0 3,713.3 2.9 2,645.1 4.0 10,947 3.1
1987 243.9 1.0 3,863.5 4.0 2,691.2 1.7 11,034 0.8
1988 246.3 1.0 4,015.5 3.9 2,785.1 3.5 11,308 2.5
1989 248.8 1.0 4,116.1 2.5 2,839.9 2.0 11,414 0.9
1990 251.5 1.1 4,157.0 1.0 2,894.7 1.9 11,510 0.8
1991 252.7 0.5 4,121.5 0.1 2,983.8 3.1 11,808 2.6
1992 255.5 1.1 4,222.5 2.4 3,071.3 2.9 12,021 1.8
Projections
2000 272.0 0.8 5,383 2.6 3,580.7 2.1 13,164 1.4
2010 291.0 0.7 7,031 2.7 4,503.0 2.3 15,474 1.6
2020 307.0 0.5 9,166 2.7 5,697.7 2.4 18,559 1.8
2030 318.0 0.4 11,957 2.7 7,259.5 2.5 22,829 2.1
2040 327.0 0.3 15,627 2.7 9,313.3 2.5 28,481 2.2
Sources: Historical Data--Council of Economic Advisors 1992. Projections--The WEFA Group Special Report to the Forest Service 1987, WEFA, 1991.

Timber Demand (Hays, 1995)

In broad terms, future projections show rising trends in the consumption of forest products with a much more cyclical outlook for timber growth and inventories (table 10). Over the period 1990 to 2040, softwood harvests from U.S. forests should rise by 35 percent. Hardwood harvests should rise by more than 51 percent. This level of consumption requires annual sawtimber stumpage real price growth in the order of 1-2 percent. 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 in rates of consumption and increasing inventories in an amount to stabilize prices until the end of the projection period in 2040 (table 11 and figures 6, 7, 8, 9).

Table 10. Selected 1993 RDA Timber Assessment Southern Projections

Year
Characteristic 1990 2000 2010 2020
Pulpwood Consumption
(billion cubic feet)
softwood 3.06 3.42 3.5 4.19
hardwood 1.45 1.90 2.39 2.30
Lumber Production
(billion cubic feet)
softwood 12.7 17.1 19 26.4
hardwood 5.2 6.2 7.1 7.0
Structural Panel Production
(billion square feet 3/8" basis)
total 12.9 14.6 15.0 16.9
Sawtimber Prices
softwood ($/mbf) 114 205 229 262
hardwood ($/mbf) 45 70 80 94
Pulpwood Prices
softwood (index) 113 121 129
hardwood (index) 144 169 163
Timber Removals
(billion cubic feet)
softwood 103 103 115 123
hardwood 147 152 153 146
Source: Haynes et.al. 1993. Notes: Southern Average, calculated as the unweighted average of southeast and South Central Prices. Pulpwood prices taken from 1989 RDA (Haynes 1990); 1993 not yet available.

Table 11. U.S. regional shares of total softwood and hardwood harvest for 1990, 2000, and 2040.

1991 2000 2040
percent of U.S. harvest
Region
North 26 28 28
South 47 52 52
Rocky Mountains 4 4 4
Pacific Coast 23 16 16
Species
Hardwood 39 43 42
Softwood 61 57 58

Figure 6. U.S. timberland softwood sawtimber and pulpwood price trends in the South, from 1986 projected to 2040. Softwood price trends in the South. Source (Haynes, 1995).

Figure 6. U.S. timberland softwood sawtimber and pulpwood price trends in the South, from 1986 projected to 2040. Softwood price trends in the South. Source (Haynes, 1995).

Figure 7. U.S. timberland softwood sawtimber stumpage prices for the Pacific North West West (PNWW), Pacific North West East and Pacific South West (PNWE + PSW), South, Rockies, and North, from 1950 with projections to 2040.

Figure 7. U.S. timberland softwood sawtimber stumpage prices for the Pacific North West West (PNWW), Pacific North West East and Pacific South West (PNWE + PSW), South, Rockies, and North, from 1950 with projections to 2040. Softwood sawtimber stumpage prices. Source (Haynes, 1995).

Figure 8. U.S. acreage distributions of Southern other private (Non-industrial private forest [NIPF] lands) timberlands for 1990, 2010, and 2030.

Figure 8. U.S. acreage distributions of Southern other private (Non-industrial private forest [NIPF] lands) timberlands for 1990, 2010, and 2030. Timberland area by age class, Southern Other Private.

Figure 9. U.S. Southern forest industry timberlands area by age class for the years 1990, 2010, and 2030.

Figure 9. U.S. Southern forest industry timberlands area by age class for the years 1990, 2010, and 2030. Timberland area by age class, Southern Forest Industry.

By 2040, U.S. timberland will comprise two distinct components: 1) private inventories with relatively stable total volume, rapid growth, harvested close to minimum merchantable ages, 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 do not limit short-term price increases or harvest shortfalls, although their long-term impacts can be substantial.

Demand for Pulpwood, Paper, Paperboard and Structural Panels (Hays, 1995)

Over the next five decades, the consumption of paper and paperboard will grow more rapidly than any category of forest products, about 1.2 percent per year (table 10). Consumption of roundwood in the manufacture of these products will rise about 0.7 percent per year. Pulpwood and paper prices are projected to be flat over the next five decades (figure 6). By 2040, pulpwood demand for softwoods is expected to rise to twice that for hardwood pulpwood (table 10).

Uncertainties in the outlook related to this sector, such as rates of wastepaper recycling and use, are particularly critical to the roundwood use projection. 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 harvest for solidwood products as pulpwood stands increase to sawtimber size.

Structural panel prices will be stable 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.

Demand for Sawtimber, Solidwood Products

Real prices of softwood sawtimber and softwood lumber are expected to rise steadily from current levels until 2010 to 2015, then stabilize or fall in subsequent periods (figures 6, 7). There is expected to be a reduction in harvests of timber from pubic lands in all U.S. regions, but particularly in the West. There is a limited ability of private timber owners in the West to sustain increased harvest due to limited merchantable growing inventories. Lumber demand recovers by 1995 to the earlier high levels of 1987 and remains so for the remainder of the projection period, until 2040. Maturation of young-growth forests on both industrial and nonindustrial lands in the South leads to increases in softwood timber cuts.

Price increases in solidwood products and sawtimber until 2010 appear to be nearly inevitable, unless there is some major immediate reduction in timber demand, as might be possible with major shifts toward substitution for solidwood products or higher levels of recycling. The South will be the major source of any expansion in softwood timber supply for the next 50 years. If high planting rates in the South continue, as expected, real product and timber prices will stabilize, and in some cases decline, after 2020.

Rising real prices for hardwood lumber are caused by declining inventory trends which, in turn, result from land conversion to softwoods, limited intensity of hardwood silviculture, and large increases in demands for pulpwood.

Forestry Imports and Exports (Hagler, 1993)

In 1994, American 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 (table 12). The U.S. is also a major importer of paper and wood products. In 1994 imports totaled $21 billion with paper products over $11 billion and wood products over $9 billion.

Table 12. U.S. Imports and Exports (in $ thousands).

Imports Exports
1993 1994 1993 1994
Paper Products
Recovered Paper $22,285 $34,546 $533,235 $875,330
Total Paper &
Paperboard		 7,242,851 7,392,589 4,236,577 4,897,408
Newsprint 3,593,326 3,332,727 496,047 480,190
Printing/Writing 2,570,081 2,772,232 980,122 1,263,383
Kraft Linerboard 81,638 106,696 931,800 890,878
Bleached Paperboard 44,333 50,354 776,504 890,878
Converted Paper & Paperboard 1,283,698 1,570,406 2,299,406 2,643,137
Other 175,157 201,807 169,502 178,596
Paper Totals $10,584,154 $11,470,892 $9,608,135 $11,427,906
Wood Products
Softwood
Logs 40,869 52,092 2,236,555 1,995,803
Chips 26,210 13,973 194,396 190,729
Lumber 4,797,431 5,755,708 1,372,065 1,309,874
Flooring 1,353 1,100 8,338 7,297
Siding 106,235 103,586 1,061 1,071
Molding 187,595 186,346 94,377 85,569
Veneer 44,051 59,946 25,842 21,880
Plywood 15,319 19,049 332,498 289,513
Hardwoods
Logs 8,575 13,861 253,005 282,178
Chips 517 1,291 228,892 265,050
Lumber 224,209 283,435 1,077,273 1,118,088
Flooring 51,013 59,599 38,507 19,913
Siding 637 244 349 393
Molding 50,380 64,633 16,963 16,290
Veneer 194,684 213,616 227,459 286,536
Plywood 661,963 675,972 69,091 61,228
25,842 21,880
Other 1,879,282 2,022,951 1,104,245 1,078,311
Wood Total $8,290,323 $9,527,402 $7,280,916 $7,029,723
Source: U.S. Department of Commerce

Increased lumber imports are expected from Canada in the long-term. By 2040, the U.S. will remain a net forest products importer, but the gap between imports and exports, on a volume basis will decline.

Through the 1990's, the world demand for wood fiber imports is expected to grow in the Atlantic and Pacific regions because of pulp and paper expansions in areas with projected declining supplies and rising costs of wood (Hagler, 1993). Further into the future, international wood trade is expected to level off and eventually decline, due to increasing pulping capacity in wood producing regions of the world and because of more joint ownership of this capacity by producers which formerly imported raw wood. World trade in wood fiber has grown more than 300 percent since 1960, which represents a compounded annual growth rate of about five percent. In 1990, international wood fiber trade totaled 53 million cubic meters.

GATT (Wisdom, 1995)

The General Agreement on Tariffs and Trade (GATT) is a multilateral agreement governing international trade that is global in scope. The fundamental goal is to foster economic growth. The agreement will cut tariffs worldwide by one-third over a 10-year period. The World Trade Organization (WTO) was created to administer the agreement and oversee dispute resolution (Esly, 1994). U.S. tariffs are low on most forest products and global reductions on tariffs should generally benefit the U.S. forest products industry. Exceptions are resistance of European countries to eliminate tariffs immediately on paper and paperboard products. Also, Japan has refused a complete tariff reduction on solid wood products.

NAFTA: (Wisdom, 1995)

The North American Free Trade Agreement (NAFTA) essentially improves and expands the U.S.-Canada Free Trade Agreement (CAFTA) of 1988. As the new member, Mexico, agrees to implement the trade and investment liberalization accords agreed on in 1988 by the U.S. and Canada. NAFTA's central objective is to eliminate import dities on all goods that originate in North America. Duties on many goods were eliminated on NAFTA implementation in 1994. Duties on other goods will be phased out over 5-, 10-, and 15-year periods. With NAFTA, Mexico is expected to enjoy the biggest economic boost, a 2 to 5 percent increase in gross domestic product (GDP). The U.S. will gain approximately 0.1 percent of GDP. Canada is not expected to realize gains beyond CAFTA. Canada is the U.S. 's major source of wood and paper imports and is a major export market for the U.S. (table 13). U.S. forest products trade with Mexico is minor. NAFTA is likely to generate little change in U.S.-Canada forest products trade. However, it should generate significant increases in U.S. wood and paper exports to Mexico as the Mexican economy improves.

Table 13. U.S. forest products trade to NAFTA countries, 1991 (millions of $'s).

U.S. exports to: U.S. imports from:
Product Group World Canada Mexico World Canada Mexico
Cork and wood 5,103 665 227 3,342 2,970 145
Pulp & waste paper 3,604 227 285 2,301 1,983 2
Paper & related products 5,961 1,536 775 8,435 6,352 124
Furniture 2,113 895 638 5,286 1,081 751
All forest products 16,781 3,323 1,925 19,364 12,386 1,022

Summary

The total acreage of productive forests in the U.S. South is, and will continue to be, declining slightly reflecting seven percent (24 million acres) fewer acres resulting from losses to other land uses. However, this smaller forest will contain slightly more timber volume in 2040 than in 1990. It will also grow 12 percent faster and support a 48 percent larger total harvest. This increased growth and productivity is reflected by declining hardwood forests, softwood harvests near minimum merchantability limits, and more intensive timber management.

Planted pine stands have increased in acreage and will continue to increase for the forseeable future at the expense of natural pine stands and of hardwood acreage. Increased timber harvest will result in shorter rotation ages near minimum merchantable volumes. Roundwood removals are expected to exceed growth from 1990 to 2010/2015. Growth will catch-up to and exceed removals from 2015 to 2040.

Real pulpwood prices are expected to be constant for the long-run. Softwood pulpwood suply is projected to be adequate for the short-run and for the long-run with increasing inventory and removals. Softwood sawtimber supply is projected to be adequate for the short-run and to be below demand for the long-run. Real sawtimber prices will increase for the long-run.

Bibliography

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