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Econ Home > Products > Southern Markets > Timber Sector
Timber production in the southeastern United States has grown in absolute terms and relative to other regions of the country since the 1970’s. At the turn of the twenty first century, the South produced about sixty percent of all wood products in the US (Wear and Greis 2002). Over this period, the region has demonstrated strong comparative advantage in producing a renewable timber resource, as management has shifted from mining of volunteer second growth forests to intensively managed forest plantations. Forest products remain an important part of southern rural economies. While the timber growing sector experienced steady expansion from the late 1960’s until the late 1990’s, recent changes in these markets have raised questions about the future. This report intends to examine these recent changes in timber markets and assess the implications for the future.
The coincidence of several factors has altered forest products markets since the late 1990’s. Industry consolidations changed land ownership across a large portion of the region’s most productive timberland. Changes in domestic consumption patterns, coupled with shifts in international trade, shifted timber demands. Depreciation and closure of older processing facilities, especially in the paper industry, accentuates many of these factors and changed the spatial arrangement of timber markets within the region. These observations have led many in the forestry community to conclude that the future of timber markets in the US in general and in the South in particular is one of decline.
At the same time, other developments seem to bode well for southern forest products industries. Production of newer, engineered wood products continues to grow. Timber supply is strong and appears to have expanded throughout the 1990’s in spite of competing land use pressures. Intensive forest management continues to expand yields and the potential for growth appears to persist. Indeed, long run forecasts of general economic and timber market activity predict expanding domestic timber demand over the coming decades. Any expansion in timber production is expected to be concentrated in the South. Forecasts from both the Southern Forest Resource Assessment (Wear and Greis 2002) and the 2000 RPA Timber Assessment (Haynes 2003) suggest that southern forest landowners, facing strong future markets, will continue to invest in and expand their timber production capacity.
The objective of this report is to provide an objective assessment of long-run trends and recent (5 year) changes in timber markets in the southeastern United States. Such an assessment is necessary to reconcile: (1) the recent decline in prices and production of some wood products, and (2) long-run optimism regarding the prospects for timber demand and productivity in the South. This assessment relies strictly on the interpretation of historical data and not on forecasting models. The focus is exclusively on understanding the most recent historical episode and placing it into the context of other developments in the world’s markets for wood products.
This report is organized as follows. We start by charting the most basic timber market indicators: price and harvest quantity. Patterns of price and quantity change provide insights into overall market direction. We then explore a set of factors that affect the demand for timber products, including domestic conditions and forest products trade. This analysis of demand is then followed by an analysis of timber supply fundamentals, which focuses on land use, forest investment, and timberland ownership. We conclude with a synthesis of these findings and implications for the future of southern timber markets.
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modified: 07-Feb-2017 created by: John M. Pye |
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