Pulpwood prices salvage 2008 timber crop value


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Posted: 12/18/2008


The continuing decline in housing construction was supposed to decrease the value of Mississippi's timber harvest for the third consecutive year, but an increase in pulpwood demand kept that from happening.

Although the final value of the 2008 timber crop will not be available until February 2009, a preliminary December estimate indicated the crop was worth $1.16 billion, a 5.7 percent increase from its $1.1 billion value in 2007. In 2006, the crop's value was $1.21 billion, which was a post-Katrina drop from 2005's watermark value of $1.45 billion.

"2008 was a tough year for forestry because of the contraction in housing starts and declining demand for lumber and paneling," said James Henderson, forestry specialist with the Mississippi State University Extension Service. "The price increases for pine pulpwood caused by rising demand apparently were sufficient to offset the sawtimber harvesting and price declines."

Declines in new construction lower demand for sawtimber and other wood-based building materials. Harvest, milling and finishing operations for those products dwindle or cease as a result of decreasing demand, Henderson said.

Higher demand for pulpwood occurred when wood chip supplies were reduced as manufacturers scaled back production of solid wood products. A relatively strong pulp and paper market earlier in 2008 also raised demand and resulted in higher prices for pulpwood.

Mississippi's timber crop harvest has been valued at more than $1 billion annually over the last 15 years. The state's forest industry, which includes forestry and forest products, contributes more than $17 billion to Mississippi's economy.

"Demand and production of building materials, wood products and pulpwood and the prices the industry will pay for these supplies are the factors that influence the rise and fall of the crop's annual value," Henderson said.

Forests cover more than 19.6 million acres in Mississippi, which is 63 percent of the state's total land area. The forest industry owns 10 percent of that acreage. Nonindustrial, private ownership accounts for 78 percent, while 7 percent is part of national forestland and another 5 percent is on other public land.

Workers in the forest industry often lose jobs as production stops, and many of the state's logging operations felt this impact in 2008. Some firms went out of business and others left Mississippi.

"Since 1996, more than 50 percent of the logging companies in Mississippi have moved away," said John Auel, MSU Extension logging education coordinator. "Others have parked their equipment and are working other jobs until the economy picks up again."

Full-time loggers deliver more than 90 percent of raw wood materials for manufacturing. Most of these businesses have invested more than $1 million in high-tech equipment, a highly skilled workforce, continuing education and liability insurance.

Although most logging operations are mechanized, the occupation is considered one of the most dangerous because of the inherent hazards in felling trees and the skill needed to maximize safety and efficiency when harvesting, loading and transporting.

"Loggers are keenly aware of the environment in which they operate," Auel said. "They maintain this safety perspective through participation in continuing education programs and certification training."

A bright spot for the forest industry may be the potential of making biofuel from forest byproducts. Researchers are investigating environmentally friendly methods of biomass breakdown that are effective, efficient and affordable.

"Forestry is a cyclical industry of good times and hard times," said MSU forestry research associate Marc Measells. "Research into wood-based biofuel may offer a way to survive some of the economic downturns that inevitably occur."

Some industries are using pellets made from compressed wood fiber to produce heat and energy.

"There are many natural materials left over in the woods after harvesting that cannot be used by the mills," Auel said. "There is much undiscovered potential in these materials that research might bring to the forefront."