A3
THE ASTORIAN • SATURDAY, JUNE 13, 2020
Forests: Profi ts concentrated in small number of companies
Continued from Page A2
collects a smaller share of log-
ging profi ts than Washington
state or California.
If Oregon taxed timber
owners the same as its neigh-
bors, which are also top lum-
ber producers with many
of the same companies, it
would generate tens of mil-
lions of dollars more for local
governments.
Timber once employed 1
in every 10 working Orego-
nians and pumped over $120
million per year into schools
and county governments
through severance and prop-
erty taxes. Now, it employs
1 in every 50 working resi-
dents and pays about $24 mil-
lion in severance and property
taxes that go directly back to
communities.
The profi ts are concen-
trated with a small number of
companies controlled by real
estate trusts, investment funds
and wealthy timber families.
Small timber owners, who
grow forests that are older
and more biologically diverse
than what corporate owners
manage, have sold off hun-
dreds of thousands of acres.
In western Oregon, at least
40% of private forestlands are
now owned by investment
companies that maximize
profi ts by purchasing large
swaths of forestland, cutting
trees on a more rapid cycle
than decades ago, exporting
additional timber overseas
instead of using local workers
to mill them and then selling
the properties after they’ve
been logged.
Such intensive timber
farming contributes to global
warming because younger
trees don’t store carbon diox-
ide as well as older ones. It
also relies heavily on the use
of herbicides and fertilizers,
magnifi es drought conditions
and degrades habitat for wild-
life such as threatened salmon
and native songbirds.
Jerry Anderson, region
manager for Hancock Forest
Management, one of the larg-
est timber investment com-
panies in Oregon, said local
Beth Nakamura/The Oregonian
A few trees are left behind after a clearcut in an industrial forest in the Coast Range.
leadership makes decisions
about the best practices for the
land despite responsibilities to
investors.
“There’s nobody from out-
side this area that has come
in and told us what to do on
these individual plantations.
Those are local decisions,”
said Anderson, who has
been managing land in Polk
County under various com-
panies for the past 40 years.
The last eight years have
been with Hancock. “I think
our decision-making is very
measured.”
In investor materials, Han-
cock, which belongs to the
publicly traded, $25 billion
Canadian Manulife Financial,
says that it is well-equipped
for the shift from managing
natural forests to plantations
of trees designed to grow as
fast and as straight as possi-
ble, like arrows jutting out
from the ground.
From a distance, tree plan-
tations can be confused for
natural forests. Oregon vistas
still boast hundreds of thou-
sands of acres of green tree-
tops. But, on the ground,
plantations of trees crammed
together are often eerily bar-
ren, devoid of lush vegetation
and wildlife.
Former Oregon Gov. John
Kitzhaber said that he and his
advisers were alarmed by the
shift toward investor-driven
forestry during his last of
three terms in offi ce. By then,
forest ecologists, the U.S.
Forest Service and even a for-
mer chief investment offi cer
for Hancock had published
papers warning that inves-
tor-driven forestry was eco-
logically damaging and less
capable of sustaining rural
communities.
“They have a completely
different business model,”
Kitzhaber, a Democrat, said.
Kitzhaber, who received
nearly $200,000 in contri-
butions from timber-con-
nected donors while in offi ce,
supported multiple indus-
try-backed measures during
his tenure. He led a plan to
save Oregon’s salmon that
relied on voluntary mea-
sures from timber companies
instead of regulations, and he
signed into law a massive tax
cut for the industry that’s still
felt in many counties.
“The current state isn’t
working,” Kitzhaber said
in an interview. It may ben-
efi t investors, he said, “but
it’s not working for small
mill owners. It’s not working
for rural communities. They
don’t have any control of their
future.”
A forest town
surrounded by
corporate trees
From his favorite spot on
a hill near Falls City, Ed Frie-
dow can see what he refers to
as the big picture: the Oregon
C oast, rolling hills, a national
forest and industrial lands
now managed mostly by tim-
ber investment companies.
Friedow, a logger who
grew up on a farm outside of
town, watched as smaller tim-
ber companies from his child-
hood closed in the aftermath
of the spotted owl protections,
leaving control of the indus-
try with larger companies that
were more equipped to scale
production.
“All of a sudden, it was
just like a takeover situation,”
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Friedow said.
At the same time the
changes were happening in
Oregon, the timber industry
was emerging from a nation-
wide recession that caused
widespread bankruptcies in
the 1980s. Many debt-laden
companies began selling
off forestlands. Meanwhile,
changes in the federal tax
code made timber an attrac-
tive investment that wouldn’t
crash with the stock market.
Under federal tax law, pen-
sion funds and other investors
can acquire forestlands with-
out paying the corporate taxes
incurred by traditional timber
companies that mill their own
products. Those corporate
taxes can reach 35%. Inves-
tors in the company instead
pay a capital gains tax closer
to 15%.
In the 1990s, as federal
logging plummeted, timber
prices skyrocketed, making
those investments look even
smarter, said Brooks Mendell,
president of the forest invest-
ment consultancy Forisk.
“Overnight, private land-
owners had something that
became more valuable,”
Mendell said.
Investors jumped at the
opportunity to own timber,
and existing companies like
Weyerhaeuser restructured
to take advantage of the tax
breaks. The longtime Seat-
tle-based timber company
converted into a real estate
investment trust in 2010.
Timber investment com-
panies, a rarity in the 1990s,
now control a share of the
forestland in western Oregon
roughly the size of Delaware
and Rhode Island combined.
Weyerhaeuser, the larg-
est of such companies, has
more than doubled its size in
western Oregon over the past
15 years, the investigation by
the three news organizations
found. The company owns
more than 1.5 million of west-
ern Oregon’s 6.5 million acres
of private forestland.
Despite its growth, Weyer-
haeuser employs fewer peo-
ple than it did two decades
ago and has shed most of
its mill operations. It has
three wood products facili-
ties in Oregon and directly
employs about 950 people,
fewer than a quarter of the
4,000 employees the com-
pany listed in a 2006 news
release. The decrease stems
from factors that include con-
solidation and automation of
jobs in mills.
Just outside of Falls City,
Weyerhaeuser owns roughly
21,000 acres. The company
controls the road into the for-
est that leads to public lands
and the land surrounding the
creeks that supply the town’s
drinking water. In 2006, the
city temporarily shut down
its water treatment plant
because it was clogged with
muddy runoff from logging
operations.
Weyerhaeuser spokesman
Karl Wirsing said the com-
pany remains a good partner
to local communities. In the
past fi ve years, the company
has donated nearly $1.6 mil-
lion across the state, includ-
ing $10,000 to the Falls City
Fire Department and $16,000
to the Polk County sher-
iff to help fund a new posi-
tion that also patrols private
forestlands.
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