Mississippi: Pulp market replaces lumber market?

The continuing decline in housing construction was supposed to
decrease the value of Mississippi’s timber harvest for the third
consecutive year, but an increase in pulpwood demand kept that from
happening. Although the final value of the 2008 timber crop will not
be available until February 2009, a preliminary December estimate
indicated the crop was worth $1.16 billion, a 5.7 percent increase
from its $1.1 billion value in 2007. In 2006, the crop’s value was
$1.21 billion, which was a post-Katrina drop from 2005’s watermark
value of $1.45 billion. “2008 was a tough year for forestry because of
the contraction in housing starts and declining demand for lumber and
paneling,” said James Henderson, forestry specialist with the
Mississippi State University Extension Service. “The price increases
for pine pulpwood caused by rising demand apparently were sufficient
to offset the sawtimber harvesting and price declines.”

Declines in
new construction lower demand for sawtimber and other wood-based
building materials. Harvest, milling and finishing operations for
those products dwindle or cease as a result of decreasing demand,
Henderson said. Higher demand for pulpwood occurred when wood chip
supplies were reduced as manufacturers scaled back production of solid
wood products. A relatively strong pulp and paper market earlier in
2008 also raised demand and resulted in higher prices for pulpwood.
Mississippi’s timber crop harvest has been valued at more than $1
billion annually over the last 15 years. The state’s forest industry,
which includes forestry and forest products, contributes more than $17
billion to Mississippi’s economy. “Demand and production of building
materials, wood products and pulpwood and the prices the industry will
pay for these supplies are the factors that influence the rise and
fall of the crop’s annual value,” Henderson said. Forests cover more
than 19.6 million acres in Mississippi, which is 63 percent of the
state’s total land area. The forest industry owns 10 percent of that
acreage. Nonindustrial, private ownership accounts for 78 percent,
while 7 percent is part of national forestland and another 5 percent
is on other public land. Workers in the forest industry often lose
jobs as production stops, and many of the state’s logging operations
felt this impact in 2008. Some firms went out of business and others
left Mississippi.

Posted via email from Deane’s posterous

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