Friday, May 13, 2022
CapitalPress.com 11
Timber: South is now top lumber-producing region
Continued from Page 1
Lumber production in the
Western U.S. still slightly
outpaced the South in the
early 2000s despite protec-
tions for threatened species
that restricted logging on
federal lands.
However, the region lost
its lead during the collapse
of the housing market after
the 2008 financial crisis.
Since then, the production
gap has only widened.
Mateusz Perkowski/Capital Press
Doug Cooper, vice president of resources for Hampton
Lumber, at the company’s sawmill in Warrenton, Ore.
South keeps growing
The South produced
about 21 billion board-feet
in 2020, up from about 12.5
billion board-feet a decade
earlier.
To compare, the West’s
output rose from about 11
billion to 14 billion board-
feet in that same period.
“Billions of dollars are
being invested in the South.
They don’t have the spotted
owl and the marbled mur-
relet and some of the oth-
ers that have impacted the
lands here,” said Bryan
Beck, president of the Beck
Group. “The West has been
a more challenging place
for sawmills for decades
now.”
While the South is now
the top lumber-produc-
ing region in North Amer-
ica, that doesn’t mean the
West’s timber industry will
“collapse,” he said.
The region’s battle-hard-
ened sawmills remain com-
petitors despite the uneven
playing field.
“The silver lining is the
folks who are here, who
have survived, are very
good at what they do,” Beck
said. “They have strong
manufacturing know-how.”
Southern advantages
The South’s rise in the
timber industry isn’t strictly
a function of environmental
laws reducing harvest lev-
els in the West.
Federal policies have
long encouraged South-
ern farmers to plant trees
on marginal agricultural
lands, resulting in a surplus
of inexpensive pine logs for
the region’s sawmills.
Aside from incentives
that expanded forestland
acreage, the Southern pine
is a fast-growing species
that’s logged about 25 years
after planting, said Tom
Schulz, vice president of
resources and government
affairs for the Idaho Forest
Group.
Tree species in the inter-
mountain West, where the
company is based, are typ-
ically harvested at 75 years
of age, he said.
“Over there, you may
have three crops in that
same period of time,”
Schulz said.
Much of the forestland
near the company’s six
mills in Idaho and Mon-
tana is owned by the federal
government, which means
logging projects entail strict
environmental reviews and
restrictions.
The forestlands in the
South are mostly on private
property, which is one rea-
son the Idaho Forest Group
Mateusz Perkowski/Capital Press
Logs are cut into lengths before getting peeled for veneer at the Freres Lumber ply-
wood mill in Lyons, Ore.
Mateusz Perkowski/Capital Press
Rob Freres, president of Freres Lumber in Lyons, Ore.
Travis
Joseph
Mateusz Perkowski/Capital Press
Kevin Brown, left, is the Pacific Northwest area manag-
er for Greenwood Resources, a company that manages
forestlands and owns property in the Northwest. Chad
Washington is the company’s stewardship and commu-
nity engagement coordinator.
is building a mill in Missis-
sippi that’s expected to start
operating this year.
“You do have national
forests down there but
they’re very small contrib-
utors to the overall supply,”
Schulz said.
Pine beetle problems
As
forestland
has
expanded in the South,
another major North Amer-
ican timber region has
endured a slow-moving
catastrophe that’s forced
manufacturing capacity to
relocate.
Mountain pine beetles
have devastated some Brit-
ish Columbia, Canada, for-
ests, which required large-
scale logging of dead and
dying trees to ensure the
logs retain salvage value.
That supply of damaged
timber is now dwindling
but replacement trees won’t
reach harvestable age for
many decades, prompting
some Canadian companies
to invest in the South.
“With the loss of wood
coming from Canada, that
gap will be made up for
by the South,” said Roger
Lord, president of the
Mason, Bruce & Girard
natural resources consult-
ing firm. “The West doesn’t
have the capacity to absorb
that volume.”
New opportunity
Meanwhile, the North
American
wood
sup-
ply equation continues to
change.
Billions of dollars slated
for thinning and fuels
reduction in national forests
were approved under a fed-
eral infrastructure bill last
year, raising the possibility
of more harvests on West-
ern public lands.
To be effective, the fed-
eral government should
avoid “random acts of res-
toration” and instead imple-
ment a coherent strategy for
enhancing forest resilience,
said Travis Joseph, presi-
dent of the American Forest
Resource Council, a timber
group.
“It can’t just be a one-off
treatment,” he said. “Our
current system and the for-
est health and wildfire crisis
are not compatible.”
Opposition from envi-
ronmental groups is bound
to be an obstacle, but
there is a real opportunity
to reduce the congestion
that’s resulted from stagnat-
ing timber harvests, Joseph
said.
“I don’t accept that has
to be our status quo,” he
said.
Tighter restrictions
While there’s a potential
for more logging on federal
lands, new harvest restric-
tions by Northwest state
governments are a certainty.
Washington is dedi-
cating forestland to stor-
ing carbon, making those
areas off-limits to commer-
cial logging. Oregon is con-
templating a habitat conser-
vation plan for threatened
and endangered species that
would also decrease log-
ging on state forests.
Private lands aren’t
Hemp: ODA is planning to roll
out heightened hemp inspections
Continued from Page 1
The 2018 Farm Bill legalized hemp
at the national level but required that
state governments get their regulatory
plans approved by the USDA. Ore-
gon’s plan, which includes the felony
background checks, was cleared ear-
lier this year.
It took repeated attempts for state
lawmakers to grant ODA the full
authority to carry out the USDA-ap-
proved hemp plan, which prevented
the agency from seeking the FBI’s
help earlier, Henderson said.
However, the problem likely isn’t
limited to Oregon, he said. “We under-
stand this is not a unique delay.”
There are currently about 300 farm-
ers waiting for hemp licenses, which
may not be enough to justify the full
12 hemp program positions autho-
rized by the Legislature, said Mike
Odenthal, the program’s manager.
Under a new state law, Douglas,
Jackson and Josephine counties have
opted to impose a two-year morato-
rium on new hemp licenses, which
means 27 licenses will automati-
cally be denied this year.
The moratorium is intended
to improve enforcement so that
hemp isn’t used as camouflage for
illicit marijuana, a related can-
nabis crop with psychoactive
properties.
Some hemp farmers form new
limited liability companies each
year to grow the crop, but they can’t
in those three counties because new
licenses won’t be available, Oden-
thal said.
The ODA plans to roll out
heightened hemp inspections across
the state this year to check for pre-
sumptive marijuana, expanding on
an operation that focused on South-
ern Oregon last year, he said.
Most of the farmers whose
crops tested positive for presump-
tive marijuana haven’t tried renew-
ing their hemp licenses this year,
Odenthal said. “Should they reap-
ply, they will be denied.”
Mateusz Perkowski/Capital Press
Bryan Beck, president of
the Beck Group, a timber
industry consulting firm.
immune from state logging
restrictions, either. Earlier
this year, Oregon lawmak-
ers approved a compromise
deal between environmen-
tal and timber interests to
widen no-harvest buffers
around streams.
The long-term implica-
tions of this “private forest
accord” are up for debate in
the timber industry.
Among critics of the leg-
islation, it’s bound to harm
landowners while causing
closures and curtailments
at sawmills that can’t get
enough logs.
“They’ve had their pri-
vate property rights taken
away and the value of
their land is diminished,”
said Rob Freres, presi-
dent of Freres Lumber Co.
in Lyons, Ore. “If I was
a small woodland owner
today, I’d be harvesting to
capture the value before it’s
taken away from me.”
However, that opinion is
not unanimous.
Greenwood Resources, a
company that manages for-
estlands and owns property
in the Northwest, believes
the bill has stabilized the
regulatory outlook for
landowners.
“It offers more certainty
for our investments,” said
Kevin Brown, the compa-
ny’s Pacific Northwest area
manager.
High log costs make it
tougher for Northwest saw-
mills to compete against
those near the “wall of
wood” in the South, said
Chad Washington, the com-
pany’s stewardship and
Tom
Schulz
community
engagement
coordinator.
On the other hand,
Northwest
landowners
are in a stronger position
because timber isn’t over-
supplied, he said.
“Just as an increase in
demand drives prices up, so
does a decrease in supply,”
Washington said.
Constraints on the North-
west wood supply will limit
the region’s milling capac-
ity but that doesn’t mean
the industry is in decline, he
said.
“We’ve hit that equi-
librium of outlets to land
base,” Washington said.
“It’s a good place to be a
mill owner but not to invest
in a new mill.”
When sawmills compete
over a smaller number of
logs, that does tend to boost
prices in the short term.
However,
long-term
supply reductions make
it harder for mills to stay
in business, said Hakan
Ekstrom, president of the
Wood Resources Interna-
tional forest market analy-
sis firm.
“Every time you have
some new regulations that
limit supply or make it more
expensive to harvest, you’ll
likely see some sawmills
or plywood mills curtail or
shut down permanently.”
If fewer mills are com-
peting for logs, that pre-
vents prices from get-
ting bid up, particularly
for sellers with few market
options, said Brooks Men-
dell, CEO of the Forisk for-
estry research firm.
“Losing mills is bad for
landowners,” he said. “Part
of the logic of timberland
investment is there are mul-
tiple independent log buy-
ers out there.”
On a national scale,
lower raw material costs
mean Southern lumber mills
can extend their reach into
markets traditionally served
by Northwest facilities.
“They can produce it
for cheaper than what we
can produce it for, which
gives them the ability to
ship it further,” said Doug
Cooper, vice president of
resources for Hampton
Lumber, an Oregon-based
manufacturer.
The Northwest’s iconic
Douglas firs have long
been recognized for produc-
ing stronger and straighter
boards than Southern pines,
which does provide an
advantage in the construc-
tion industry, he said.
Mill upgrades
Sawmills in the North-
west are investing in new
equipment that saves on
labor and maximizes the
value of each log, but the
South is also upgrading its
milling technology, said
Steve Zika, Hampton Lum-
ber’s CEO.
For example, continuous
drying kilns are preventing
the warping that historically
impeded the desirability of
Southern pine lumber, he
said. “By drying the lumber
better, you get a better qual-
ity piece out of it.”
The
Northwest’s
restricted wood supply
means sawmills “will be put
to the test again to remain
viable,” but the region’s tim-
ber industry doesn’t face
an existential threat, said
Geyer of Roseburg Forest
Products.
Ultimately, the shift in
investment toward the South
doesn’t represent a defeat for
the Northwest so much as a
strengthening and diversifi-
cation of the national indus-
try, Geyer said.
The real competition is
between U.S. lumber prod-
ucts and imports from
China, Russia, Chile and
Brazil, he said. “They have
nothing close to the envi-
ronmental restrictions or
the science-based manage-
ment we have here in the
United States.”
Nitrogen: ‘There generally is some
pressure downward on the nitrogen market’
Continued from Page 1
Co-Op, an Oregon supplier.
“There generally is some pres-
sure downward on the nitrogen
market at this point,” he said.
Experts say soaring prices in
early 2022 were simply unsus-
tainable for urea, a benchmark
fertilizer that’s considered to set
prices for other forms of nitrogen.
“It was a case of prices going
up too much and too quickly,”
said Deepika Thapliyal, senior
editor at the ICIS market analy-
sis firm.
Spring demand for nitrogen
and other fertilizers will soon
taper off in the U.S. while China
is tentatively re-entering the
export market for urea, reducing
the likelihood of another sharp
price surge, experts say.
“We don’t see prices coming
back up, but they may stabilize,”
Thapliyal said. “I think the highs
are behind us.”
However, it’s unlikely that
urea prices will continue steeply
dropping, given the volatile geo-
political conditions and rising
inflation rates across the world.
“The markets are still quite
supportive,” Thapliyal said.
Urea prices are closely associ-
ated with natural gas, a key input
that increased in price when Rus-
sia — a major supplier — was
economically sanctioned for
starting the war in Ukraine.
Even so, nitrogen is still sub-
ject to seasonal forces.
Fertilizer prices in the U.S.
generally tend to flatten in June
with the end of planting, said
Mark Milam, a senior editor with
ICIS.
The urea price may rise mod-
erately again this spring but won’t
likely approach the levels seen
earlier in the year, he said.
“Once we’re done with the
season, it’s like our balloon has
popped,” Milam said.
After farmers finish spring
fertilizer applications, whole-
sale urea will probably trade at
roughly $500 per short ton, he
said.
The amount of urea purchased
by India, a major center of global
demand, will influence specific
prices, with the impact becoming
clearer by mid-May, experts said.
Higher prices can be consid-
ered the “new normal,” since fer-
tilizers aren’t likely to fall to the
lows seen during the early coro-
navirus epidemic, said Julie Mee-
han, managing editor of fertilizers
at ICIS.
Due to the economic shock
that resulted from the outbreak,
urea prices fell to about $200 per
short ton in 2020.
As global events have demon-
strated in recent years, fertilizer
markets are prone to turbulence,
Meehan said.
“Every corner you turn, there’s
so much uncertainty,” she said.