By Jonathan Dingler
Journal Correspondent

Effects of globalization on the timber industry, and divestiture of timberlands by major corporate forest products companies were among major issues discussed at the Society of American Foresters 2005 annual meeting at Fort Worth, Texas last month. The Texas-sized round-up of the nation's forest enthusiasts included over 1200 forestry professionals from all across the country for the five day event to discuss multiple issues facing the forest industry.

On hand to address the meeting was Roger Sedgo, Director of Forest Economics at Resources for the Future, a nonprofit organization that conducts independent research on environmental, energy, and natural resource related issues. Sedgo discussed how globalization is changing the face of forestry in the U.S. and around the world. He noted that two of the biggest challenges to the U.S. forest industry competitiveness are those posed by Canada and Brazil.

The natural boreal forests of Canada are seemingly endless, and with the present day tariff free trade policies, so are the timber exports.

Recent mountain pine beetle damage is another factor occurring in Canada projected to accelerate the amount of Canadian timber exports. It's been estimated that over 17 million acres of timber have been damaged in the western province of British Colombia. In perspective, that's over two-thirds of the amount presently owned by industrial timber companies in the U.S.

In addition to these challenges from the North, Brazil has emerged as a major exporter of forest products as well. This is a result of the unusually short rotation periods for timber species like Eucalyptus made possible by the tropical climate there. With all of this international competition, the question becomes: Can the U.S. remain competitive in the global market?

Jim DeCosmo, Vice President of Temple Inland Forest Products, who also addressed the convention, seems to think so. Although the U.S. has become one of the major importers of softwood products, DeCosmo noted that it's still a substantial exporter as well.

In the forests of the Southeastern U.S., DeCosmo affirmed that supply and demand have maintained a pretty good balance in recent years. For the most part, that balance is expected to remain steady. He noted that over the next quarter century, there are a projected 20 million housing units expected to be built in the U.S., most of which will be in the Southeast. This forecasts a less dismal future for the forest industry in the South.

Both Sedgo and DeCosmo acknowledged that with the increase of globalization in the timber market, forest managers will see a significant shift in the non-timber values associated with forests. One of the non-timber values of forests expected to see an increase is recreation. Already there's been a monumental shift in the management of national forests from timber production to recreational use.

The speakers agreed that it's not unrealistic to expect the same trend in privately owned forests, particularly in the densely populated Northeast and Pacific Northwest.

Another practice expected to increase in popularity is that of conservation easements. These are limitations that landowners voluntarily place on their properties to protect non-timber resources, such as wildlife habitat, water quality or scenic views. These restrictions stay with the property even if it changes hands, ensuring permanent protection while allowing private ownership and productive use to continue. When landowners make this commitment to conservation, they are compensated for protecting the non-timber resources on their private property from funds available through local, state or federal conservation programs.

Carbon sequestration is another example of a method to potentially generate income from non-timber forest resources. The purpose of carbon sequestration is to capture carbon dioxide from the atmosphere, which trees do as a natural part of their biologic process. This in return reduces the effects of global warming. The function of a carbon sequestration program is to quantify those benefits, and compensate the forest landowner accordingly. While these options might not generate as much income as intensive management for timber production, they are being utilized in some parts of the country to offset the effects of increased timber imports.

Also discussed at the SAF meeting was the increasing trend of divestiture of U.S. industrial timberland. The recent announcement by International Paper Company of the sale of their 6.8 million acres of timberland is just the latest example of this trend. DeCosmo noted that in the last six years, the amount of private industrial timberland has decreased from about 50 million acres to around 25 million acres.

There are several reasons for this trend. One of these is increased productivity. Companies are able to grow more fiber on fewer acres as a result of intensive management. The use of genetically modified seedlings, fertilization, and weed control have increased the potential production per acre substantially.

Another reason for the divestiture of U.S. timberlands is that current tax codes favor non-corporate ownership of timberlands. In addition, the high current land values make divestiture an attractive option for companies. In an age where corporate decisions are influenced by shareholder expectations, DeCosmo notes that divestiture by timber companies is just part of the competitive nature of business.

The good news is that a large part of the land sold by timber companies remains in production by going into the hands of timber investment firms. This assures a steady supply of timber resources for the forest products manufacturers of the nation.

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