Timber Marketing Strategies

Transcription

1 Timber Marketing Strategies Dennis Hazel 1 Clay Altizer 2 1 North Carolina Cooperative Extension Service AND College of Natural Resources NORTH CAROLINA STATE UNIVERSITY 2 North Carolina Forest Service

2 Do You Really Need a Strategy? You would not put your life savings into the first investment you found You would not sell your house to the first offerer Maximizing your profit/income requires some knowledge/work and a strategy But, markets are complex and different place to place and change over time Seek professional advice!

3 Factors That Used to Influence Stumpage Local demand for lumber vs. local supply, especially for hardwoods Local mill capacity relative to demand (especially influenced local stumpage prices) Changes to tastes for paneling, flooring, etc.

4 Today s Factors are Much More Complex Health of the global economy Global supply Global demand Value of the U.S. dollar relative to other currencies Despite national and global factors, local supply vs. local demand still a big factor

5 Let s Start With the Old Timber Value Model for Plantations Lowest value pulpwood (1X value at 12 to 18 years first thinning) Then, chip n saw for thinnings (3X value at 15 to 18 years) Highest value Pine sawtimber (6X at 30 to 40 years)

6 The Old Model for Hardwoods Lowest value pulpwood (1X value at maybe 25 to 50 years for TSI or OSB or pallet wood) Highest value Sawtimber (4X to 7X depending on species, size, & local markets at 40 to 60+ years)

7 The Great Economic Downturn Nationally 2008 to Date Housing starts down 75% Lumber production down 40% Much softwood stumpage down 50%

8 Forest Sector Reeling During Economic Downturn Society of American Foresters - The Forestry Source: January 2012

9 What Has Happened in NC? Source: David Ashcraft. Presented at Wood to Energy: Fueling Economic Growth in North Carolina Workshop 9/8/11

10 350 Traditional Industry Decline Sawmills Number of Facilities Year

11 Traditional Industry Decline Number of Facilities Veneer Mills Pulpmills Composite Panel Mills

12 Price Impact for NC

13

14

15

16

17

18 The Push for Renewable Energy is Creating New Markets Most of the important development policy driven

19 Examples of Policies That Encourage Biomass for North Carolina Long-standing ethanol subsidies (U.S.) Renewable Fuels Standard of 2007 (U.S.) Interests of the US Military Senate Bill 3 from 2007(the REPS) (North Carolina) The Biofuels Center of NC * (EU) *

20 In Response, Biomass Energy in North Carolina is Rapidly Developing Three private electricity (power) plants have converted to woody biomass New biomass power plants planned Various-scale CHP conversions completed or underway using woody biomass and agricultural residues Wood pellet plants being constructed or planned for EU power markets Cellulosic ethanol plant

21 What Will This Mean in Terms of Market Strategies?

22 Electricity, Process Steam, Will mostly be done using dirty chips (or fuel chips) harvested from logging residues during otherwise conventional harvesting Heat, and CHP 3/1/

23 How are Most Wood Chips for Fuel Produced? (1) Mostly during otherwise conventional harvesting Chipper added Logging slash & cull trees normally left are chipped (called logging residues ) (2) Use of low-value trees in absence of pulp markets which can be chipped or delivered as logs?

24 Biomass Markets May Help the Logging Industry

25 We Start by Felling Trees with Cutting Machines Today s Chainsaw The Felling in Our Tree-length Harvesting Systems Machine 3/1/

26

27

28 The Rubber Tired Skidder 3/1/

29 What We Did Not See Coming Large Scale Wood Pellet Production Biomass Plant in Italy Bulk Carrier from U.S. Pellet Stoves Overseas or Domestic

30 What Will the Pellet Companies Be Purchasing? Mostly low-value logs In NC, mostly hardwood May use some logging residues

31 Biomass Transportation Fuels Feedstock purchased will depend on the technology May be logging residues or lowvalue trees or energy crop trees (slide borrowed from Alex Hobbs)

32 What Will All of This Mean to You? Stumpage for logging residues will be $0 to maybe $2 or $3 per ton, but you may not have to do site prep before planting Low-value trees for energy will probably pay about pulpwood prices, but it will improve your ability to manage your stands

33 There Are Some Cautions for Energy Wood The value of logging residues will increase, thus payment to landowners will be appropriate Pulpwood often gets chipped for energy (you get $0 per ton instead of $4 to $8) Quotas Sometimes it s just logistics

34 Other Cautions in a Changing Market Pulpwood prices for Chip n Saw Super Pulpwood New term for large straight pulpwood trees

35 Final Thoughts Main value will always be on sawtimber and high-quality tree products It may be 5-10 years of recovery Always get professional advise before selling timber

36 For more information Dennis Hazel, For woody biomass see: html