Forest Production, Industry and Forest Retention Assessment

1
Forest Production, Industry and Forest Retention
Assessment
From a Report for the Maryland Center for
Agro-Ecology Center by The Irland Group

• Steven W. Koehn
• Director / State Forester
• September 21, 2005

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Background

• In 2002, the Maryland Center for Agro-Ecology
  commissioned a study to assess forest production,
  industry and forest retention
• The Question
• What is the critical mass of forest land needed
  to support the wood-based manufacturing industry
  in Maryland?

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Why the Question?

• Changes in forest ownership and management
• New forms of conservation valuation
• Uncertain fiber supply
• Sprawl
• Business Challenges
• Assorted public policy initiatives

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To Answer the Question

• Assess Marylands wood dependence
• Estimate wood flows
• Assess trends in Maryland wood-using industries
• Explain impact of land use change
• Identify significant issues and competitiveness
  challenges

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Marylands Forests

• Approximately 2.4 Million Acres of Forestland
• 43 Forested
• Over 130,600 Forest Landowners
• Average Woodlot is 17 Acres

Growth/Drain Softwood 1.25 Hardwood 1.31
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Maryland Land Use Trends

• Since 1950, 12 forest land loss -- 4 since 1982
• From 1982 to 1997, developed acres in Maryland
  increased by 35 - projected to increase by
  14,000 acres per year
• 7 Decrease in rural acres
• 4 Loss in forest acres since 1982
• Ownerships are getting smaller, parcels more
  fragmented
• Nationally, at least 25 million acres has dropped
  out of forest industry ownership since the 1980s
• In 2003 alone, 4.5 million acres of major US
  timber holdings changed hands

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Factors Affecting Industry Expansion and Fiber
Availability

• Challenging economic situation
• Globalization of forest production and markets
• Industry consolidations
• Imports
• Loss of secondary manufacturing
• Weak markets for lower quality hardwoods

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Global U.S. Wood Use

• Ind. wood use rose 40 since 1960 1.6 BM3 but
  flat over last 20
• Fuel wood use gt industrial wood use 1.8 BM3
  and growing
• Ind. wood use could increase lt 33 by 2050 from
  1.6 - 2.1 BM3
• 75 of global wood and fiber will come from
  planted forests by mid century or earlier (Sedjo
  and others)
• 31 of global solid wood consumption crosses an
  international boundary from tree to product
  most likely to increase
• US imports 30 of solid wood products consumed
  exports associated jobs impacts (81 growth
  since 1991)
• US uses 30 of worlds solid wood products
  largest per capita
• US forest and wood choices drive global wood
  market

UN FAO 2005 2002 data Perez-Garcia on future
demand
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US in Global Context
Percent of World Share
UN FAO 2005 2000, 2003 data
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Some Global Leaders
Percent of World Share
UN FAO 2005 2000, 2002 data
12
Global Plantation Forests
Percent of World Share
UN FAO 2005 2000, 2002 data
13
U.S. Imports from China
Wood Household Furniture 41 and growing!
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Furniture Imports
Chinas Share
Billion
15
U.S. Imports From Low Wage Countries
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Softwood Lumber Competition from Southern
Hemisphere
Plantation Pine Timber Harvest From Southern
Hemisphere
Imports (Million BF) from Chile Brazil, Mexico,
NZ, Australia
Million M3
Source R. Taylor, WMM
Source R. Taylor, WMM
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Ways of Looking at Marylands Wood Dependence
As Consumers of Forest Products, Marylanders

• Consume 5 million cords of wood per year
• Rely on 2.2 million acres in-state, and 7.4
  million acres outside the state to build homes,
  use paper, etc.
• Are 20 self-sufficient

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Ways of Looking at Marylands Wood Dependence
As Producers of Timber and Forest Products

• About 35 of Marylands fiber is transferred
  out-of-state for processing
• At the same time, Marylands industry relies on
  out-of-state fiber for 52 of its needs
• Net Import Dependence is 38

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Maryland Wood Fiber Flow -- 2001 ? Wood Fiber
Harvested in Maryland and Processed In and Out of
State ? (All units in Green Tons)
Industrial Roundwood Harvest Softwood
657,548 Hardwood 1,595,087
Other 27,645
Pulp 566,989
Sawnwood 1,537,371
Exports 120,619
Pulp Industry Roundwood 323,000 Rdwood
Chips 244,000 Residues 244,300 TOTAL
811,300
Lumber 691,817
Residues 244,300
Fuel1 129,254
Mulch1 518,459
Farm1 137,705
Recovered Wood Fiber Const. Demolition Debris
32,858 Land Clearing Debris 15,430
Total 48,287
1 Includes Bark
9/17/2009 21914 AM
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Wood Fiber Processing in Maryland -- 2001 ?
Wood Fiber From All Sources (In and Out-of-State)
Processed in Maryland ? (All units in Green Tons)
Softwood Total Rdwd Prod 670,603 Fuelwood1
13,055 Industrial Rdwd
657,548
Hardwood Total Rdwd Prod 1,790,647 Fuelwood1
195,560 Industrial Rdwd
1,595,087
Out of State 215,448
Out of State 451,276
Exports 4,418
Exports 116,201
Sawnwood 396,375
Pulp 241,150
Other 15,605
Other 12,040
Pulp 325,859
Sawnwood 1,140,996
Lumber 178,369
Lumber 513,448
Pulp Industry Softwood
Hardwood Roundwood 97,150
225,850 Rdwood Chips 144,000
100,000 Residues 148,450
95,850 TOTAL 389,600 421,700
Residues 148,450
Residues 95,850
Fuel2 105,273
Mulch2 479,218
Farm2 82,722
Fuel2 23,981
Mulch2 39,241
Farm2 54,983
Recovered Wood Fiber Const. Demolition Debris
32,858 Land Clearing Debris 15,430
Total 48,287
1 Fuelwood From Growing Stock Only 2 Includes Bark
9/17/2009 21914 AM
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Use of Maryland Timber
Hardwood Sawnwood 52
Softwood Sawnwood 18
Maryland Ind. Roundwood (Million Green Tons)
Hardwood 1.5 67 Softwood
0.7 33
Softwood Pulp Other 15.0
Hardwood Pulp Other 15
In and Out of State
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Wood Fiber Processed in Maryland
Hardwood Sawnwood 38
Softwood Sawnwood 16
Wood Fiber Processed (Million Green Tons)
Hardwood 2.3 68 Softwood 1.1
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Softwood Pulp Other 13.0
Hardwood Pulp Other 32
Including Fiber From Other States
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Trends in Marylands Forest Industry

• Manufacturing is not big part of Maryland economy
  and has been declining
• Manufacturing accounts for 6 of total employment
• But wood-using industries important in some of
  Marylands most rural areas
• Wood-using manufacturing accounts for 9 of
  manufacturing employment

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Manufacturing as of Total Employment
USA Right Scale
MD Left Scale
Source Maryland DLLR
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Marylands Wood-Using Industry

• In general, Marylands wood-using industry has
  fared about the same as the nation as a whole,
  but better than MD manufacturing in general
• About 5,000 jobs depend directly on Maryland wood
• Aboout 14,000 jobs rely on the forestry, wood and
  paper sector
• Several mills have closed, but production has
  remained stable

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MD Employment Trends
Mfg. as of Total Employment
Forest Products as of Total Mfg.
Source Maryland DLLR
27
MD Counties Where Forest Products are Basic
Employment
37.7
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Factors Affecting Industry Expansion and Fiber
Availability

• Major trends affecting timber availability

• parcel fragmentation
• increasingly passive management on state lands
• changing owner preferences (non-timber
  objectives)
• regulatory burdens
• Lack of public awareness

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Factors Affecting Industry Expansion and Fiber
Availability

• Major trends affecting timber availability

• Smaller tracts make logging more expensive,
  reduces returns to loggers, drives down stumpage
  prices, and reduces incentives for management

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Back to the Question

• What is the critical mass of forest land needed
  to support the wood-based manufacturing industry
  in Maryland?
• Wood-based primary industry consumes about 3.3
  million green tons of wood fiber, while producing
  2.2 million tons
• To support Marylands wood based manufacturing
  would require the use of annual growth from 2.2
  million acres
• Only 1.7 million acres of available land
  (probably less), but not all growth being
  harvested, thus forests are advancing in age and
  stocking
• To meet Marylands consumer needs requires 9.6
  million acres each year
• But self-sufficiency is not necessary

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Back to the Question

• What is the critical mass of forest land needed
  to support the wood-based manufacturing industry
  in Maryland?
• Answer no threshold to define critical mass.
  As parcel sizes decline, owner interest in
  management declines, management costs increase,
  revenue possibilities decline and commercial
  resource leaches away acre by acre
• Wood fiber flow from other states likely to
  increase
• Base for the remaining wood-based manufacturing
  economy is slipping away

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Possible Strategies to Retain Working Forests and
Viable Industry

• Articulate goal of no net loss of commercial
  forestland
• Undertake review of entire family of forest
  policies
• Conservation Easements
• Local Zoning Regulations
• Further Property Tax Abatements (i.e. zero
  property tax)
• Ensure working forest easements
• Assess ownership fragmentation issue
• Shortage of intellectual capital more
  technical and educational assistance
• Deeper subsidies
• Improve outreach
• Develop markets for low value wood (i.e. energy
  generation)