Housing Construction; Effects on Timber Prices, Part 2

Announcer: Farm and Family is a production of the Mississippi State University Extension Service.

Amy Myers: Today we're talking about housing construction and its effect on timber prices, part two. Hello. I'm Amy Myers and welcome to Farm and Family. Today we're speaking with Dr. Randy Rousseau, Mississippi State University Extension Forestry Specialist. Randy, we've talked before about housing construction and its effect on timber prices. How would you like to continue that today?

Randy Rousseau: In addition, the trees planted in the 1980s and the 1990s are growing at a much higher rate of productivity which is attributed mostly to intensive forestry practices such as those made from tree improvement, fertilization, improved site preparation, competition control all during the life of that stand. This has been the case in decades since 1980. All of this would be great but with the loss of the pulpwood market and very little biomass market what we have seen in central and north Mississippi and added to that the lack of housing starts means that landowners are growing timber at a much-increased rate thus complicating the enormous timber inventory buildup as the outlets of this material has been greatly constrained. With the loss of the pulpwood outlet, forest landowners have really no options for thinning their pine stands as well as larger trees that do not meet specifications of added value products such as chip-n-saw or saw logs. However, this does not include the entire state as the South Mississippi is a viable pulpwood market with mills in Southern Mississippi and Southwest Alabama as well as good chip-n-saw and sawtimber markets.

Stumpage prices remain high for pulpwood thus providing landowners a market for their first thinnings as well as the rougher trees that do not meet the grade for saw logs. The other aspect that is being seen in the southeast United States is the movement of sawmills from Canada into the area. By all reports, these mills will be highly automated and significantly higher production rates. In fact, it's been stated that the log demand will exceed peak levels of the early 2000s. On the surface, this seems like it would be a good thing for landowners however the prime reason they're moving into the southeast is the excessive amount of feedstock or fiber that exists out here which translates to cheaper timber prices. It remains to be seen whether these mills when up and fully running at their highest potential will actually be seeing an increase in stumpage prices as competition sets in.

Amy Myers: Do you have any thoughts for how we can change or design our timber planting to meet future markets and be more successful in the timber industry?

Randy Rousseau: I think I do. I basically want to look at really what we have out now is 25 years of glut of timber on the market. That is not quality, that is quantity, and what we need to focus in on is quality of our pine timber. We want to change the plan and strategy not only to bypass the pulpwood market but to accentuate the quality of the trees that we are growing today. We've looked at different spacing studies at Newton, Mississippi. We looked at 6 by 14, 9 by 14, and 16 by 14, and we've kind of settled in on that 8 by 14 or 9 by 14 which is around 246 trees per acre. Much less than what we normally would plant which is around 550 trees per acre today, in most instances, but with 246 trees at a wider spacing of say 16 foot, now we can allow to go in there, bypass the pulpwood, get in there when we do the chip-n-saw market first.

We're harvesting those trees that are in that 13 to 14-inch diameter class and removing any of the trees that really wouldn't make pulpwood, so we're focusing really on the crop trees. Those trees that we're going to make our biggest payday out of. Those trees are going to be somewhere in the neighborhood of 100 to 125 individual trees, so we want to accentuate that. But knowing that we're shooting for quality, we're also going to have to do a little work with our trees in terms of maybe actually doing some pruning on the first logs so that we get a much clearer first log from our saw log material is that we had, that it really relates almost back to hardwoods where you focus on quality. Again, pine in the coming years will want to be all on quality and that's what the sawtimber market, those new sawmills, will actually be looking to actually produce.

Amy Myers: So there is money to be made in the timber industry, but you want to focus on raising crops that are more geared towards maybe housing market materials and maybe poles and things like that. Is that correct?

Randy Rousseau: That's correct. That's the way I would go.

Amy Myers: Today we're speaking with Randy Rousseau, Forestry Specialist. I'm Amy Myers, and this has been Farm and Family. Have a great day.

Announcer: Farm and Family is a production of the Mississippi State University Extension Service.