Forestry
rebound depends on housing By James Ronald Skains "The information out of Washington that I am getting is that we will see another big round of home foreclosures in March and April this year bringing thousands of existing houses on the market," Buck Vandersteen, Executive Director of the Louisiana Forestry Association told the Piney Woods Journal. "For every foreclosed home that comes on that market, that is one less new house start," Vandersteen explained. `"Until we reach the point where new home starts pick up dramatically, the timber industry will continue to suffer." Vandersteen is a professional forester and a tree farmer as well as Executive Director of the LFA. He presented a detailed report on the state of the Forest Industry in Louisiana at both the CENLA Forum and the Ag Outlook 2010 conference at LSU in Alexandria on January 20 and 21. "Ninety-one percent of the forest land in Louisiana is privately owned," Vandersteen pointed out. "That ownership breaks down into family landowners at 60%, forest industry at 8%, and the new guys on the block, REITS and TIMOS at 23%." A REIT is Real Estate Investment Trust and a TIMO is a Timber Investment Management Organization. Anthony Forest Products Company recently sold 91,000 acres to a TIMO for $1,900 per acre. "The actual price per acre for the timberland was very good," Vandersteen commented. "People are always looking to buy forestland so the prices are holding up okay. Timber production is down 25% in Louisiana," Vandersteen noted. "That translates to an income drop for landowners of $87 million. The economic impact to the state was a loss of one billion dollars from $4.2 billion to $3.2 billion." Vandersteen received a Bachelor of Science degree in forestry from the University of Massachusetts and MBA degree from Louisiana Tech University. Other related achievements include being a graduate of the LSU Ag Center's Agriculture Leadership program. He is also a graduate of the Institute of Organizational management through the U.S. Chamber of Commerce. "The down turn in the forest industry in the last decade has resulted in the loss of 10,000 jobs," Vandersteen, who worked as a member of the Peace Corps in Liberia, West Africa stated There he was an advisor to the government on forestry-related matters. "There is a real concern on my part that the logging force is going down so fast," Vandersteen stated. "We have lost 25% of our Master Loggers who had been trained in Sustainable Forestry. The other 75% of the Master Loggers who remain in business are in financial difficulty," Vandersteen elaborated. "This decline in qualified loggers poses a potential dilemma for us when housing starts do go up and the paper industry picks up. Where are our qualified loggers, going to come from?" In his responsibilities as Executive Director of the LFA, Vandersteen is involved in public relations, governmental affairs, membership development and education and generally promoting the practice of forestry in Louisiana. Vandersteen is also involved in the Louisiana Loggers Council which is the guiding force in Logger education, training and certification. He received achievement awards from the Louisiana Society of American Foresters. In 2008, Vandersteen was awarded Member of the Year by the Louisiana Society of Association Executives. "Looking at the actual prices of timber as calculated by the State Forestry Commission based on severance tax payments, you see a mixed bag," Vandersteen noted. "Who would have ever thought hardwood that at one time we tried to control would ever be more valuable than pine saw logs. But that is what has happened in Louisiana. Hardwood logs are at $300 mbf while pine saw logs have seen a drop in the last year from $314 mbf to $271.'' "Value of Chip-n-saw are down about 9% to $74 a cord," Vandersteen explained. "On the pulpwood side, hardwood pulpwood has almost overtaken pine pulpwood." "The value of pine pulpwood declined a little to $25.59; however, hardwood pulpwood increased in value from $17 cord last year to $23.76 a cord this year. Because of wet weather, we have seen a spike in timber prices already this winter," Vandersteen pointed out. "However, we all know that the spike will be short lived once the ground dries out." "Two major problems in the industry is that domestic capacity for softwood lumber production has increased to 80 billion board feet while demand has fallen from 70 billion board feet in 2005 to about 50 billion board feet in 2010," Vandersteen pointed out. "The increase in capacity is great for the industry but when the demand drops by 25%, this complicates problems for the mills, loggers and timber landowners," Vandersteen, the long time Director of the LFA said. "Plain and simple, we need a big jump in housing starts," Vandersteen stated at the Ag Summit meeting at LSUA's Dean Lee Research and Extension Center. "One of our previous speakers, Dr. Dek Terrel an economist with LSU has predicted that new home starts in 2010 would be around one million. Even that number is a significant drop from the 1.7 million starts in 2005," Vandersteen noted. "However, I would gladly take that number of starts in 2010 because my information indicates that we are looking at far less starts than that. Most housing start indicators are in the 600- to 700,000 range of housing starts in 2010," Vandersteen acknowledged. "In my opinion, housing starts will remain low for the year. That means that recovery from this recession will not take place until 2011-20-12, Vandersteen said. "That means another challenging year for the forest industry in Louisiana." "Diesel fuel along with insurance costs are rising for the loggers," Vandersteen admitted. "There is a lot of idle logging equipment around the state to go along with a lot of equipment that is for sale. To get through these difficult times, every business in the forest industry will have to watch their cost of operation extremely close." Vandersteen further said. "There are a few potential bright spots in central Louisiana for the forest industry," Vandersteen pointed out. "The CLECO Rodemacher plant is looking very closely at mixing biomass with pet coal to make electricity. This one production capacity for biomass has the potential of a one or two new paper mills in the area," Vandersteen was quick to point out. "The other bright spot is market diversification into using woody biomass as a renewable fuel source. This biomass to energy concept is already beginning, and the LFA certainly supports the use of woody biomass as a renewable fuel source. The Federal government has already set up the Biomass Crop Assistance Program known as BCAP to establish incentives for renewable energy from biomass," Vandersteen acknowledged. "However, we must be careful not to divert our log timber and paper mill quality pulp wood to the biomass to renewable energy efforts. We have been working very hard in the last few state legislative sessions to use some of the severance tax money to use in the forest industry," Vandersteen emphasized. "However, although we have gotten it past the legislature the last two years, we still have not gotten a signature from the Governor." "Although, there would be a front end cost of one million dollars to the state on this particular forest industry legislation, it would results in $8 million in new tax revenue and a total of $80 million in new economic activity," Vandersteen concluded. |