Forest harvest value rebounds from 2009


 

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Posted: 12/16/2010

 

The estimate for this year’s forestry year-end harvest value is better than last year’s dismal showing, and if the forecasted improvement in the overall economy is accurate, this trend could continue for the next few years.

The preliminary estimate for forestry’s overall harvest value is $1.078 billion, which is comparable to 2008’s value of $1.079 billion. The harvest value for 2009 was $864 million, the first time in 16 years the value dipped below the billion-dollar mark.

The harvest value estimate is based on the prices mills pay for harvested timber. The estimate for 2010 is 25 percent higher than the 2009 value. An unusually wet fall of 2009 significantly impacted timber harvest and sales.

"The unusual supply disruption resulted in uncommonly high pulpwood prices and modest increases in sawtimber prices during the first half of 2010," said James Henderson, assistant Extension professor of forestry at Mississippi State University.

Heavy logging equipment cannot be operated in the woods when the ground is soggy, and most harvest operations ceased from the fall of 2009 into the first quarter of 2010. Sawmills depleted much of their inventories, and competition for available wood caused prices to rise.

Harvest volumes rose sharply during the second quarter of 2010 as forests dried out and loggers could get back into the woods, Henderson said. The spike in prices moved sellers to take advantage of the situation.

"When the woods dried out, activity stayed fairly level for the rest of the year," said David Jones, MSU assistant Extension professor of forest products.

Timber severance tax collections during the first quarter of 2010 were 2 percent below those of the previous year. During the second quarter, harvest resumed and collections were 33 percent higher than they had been during the same period of 2009.

Harvest tapered off later in the year as mills built up their log inventories and timber prices began to fall. By the end of 2010, demand for timber products remained weak because of the lingering effects of the recession and high log inventories, Jones said.

While several mills went out of business in 2009, those that remained were able to keep operating for much of 2010. But many mills struggled to stay ahead and are still in a survival mode.

"The collapse of the housing market has caused some mills to reduce the number of shifts and put loggers on a quota, which limits the amount of wood coming in," said Extension forestry professor Glenn Hughes of MSU’s Coastal Research and Extension Center. "The collapse will end one day, and the mills want to survive until the market starts back up."


Forestry