reading between the rows continues
TRANSCRIPT
Reading Between the Rows Continues
Dean McCraw CF
McCraw Energy LLC
3/26/2014
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McCraw Energy LLC
We provide a variety of services for the bioenergy and forestry field. These include: Assessment of forest inventories, including forest residue Valuation of delivered forest and bioenergy feedstocks Long range planning, including assessment of options to increase future
feedstock supplies Establishment of a bioenergy and forest feedstock procurement
organization. This can include contract procurement or the training of personnel for your facility
Contract production and/or delivery of timber and forest residue Design consultation on feedstock receiving facility Contract operation of feedstock receiving facility Consultation and/or contract establishment of energy tree plantations and
energy grasses Business contacts with all major forest landowners in the Southeastern US
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Outline
• Background
• What has happened to tree planting?
• How commodity pricing is impacting tree planting?
• Is the Pulp/Paper Industry dying?
• Review of timber price trends
• Review of FIA Data
• Summary
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Feedback from these articles
I am a lowly timber buyer in Bonifay FL. I have lived and worked in this general area for over 20 years. You are dead on with your article in Florida Forests. I see the problems daily. Add this to bad land management practices and I can get mighty depressed trying to be a "good guy" in this mess. Again, you wrote the truth and all I can add is that a lot of acres are getting counted as having something on them when in fact they are so poorly stocked you can hardly log them without having to pay a premium rate just to get the land cut...... Thanks again for your insight and for bringing it to print in a very readable easy to understand format. I plan to copy it and share it with several friends.
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Southern Seedling Planting all Owners & all States: 1925-2010
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-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,0001
92
51
92
71
92
91
93
11
93
31
93
51
93
71
93
91
94
11
94
31
94
51
94
71
94
91
95
11
95
31
95
51
95
71
95
91
96
11
96
31
96
51
96
71
96
91
97
11
97
31
97
51
97
71
97
91
98
11
98
31
98
51
98
71
98
91
99
11
99
31
99
51
99
71
99
92
00
12
00
32
00
52
00
72
00
9
Acre
s P
lan
ted
Auburn University Forest Seedling Nursery Coop - Data from USFS and GFC
CRP
Southern Forest Seedling Nurseries Closures and Reduced Production 2000-2013
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Closed
Reduced Production
Open
Auburn University Forest Seedling Nursery Management Cooperative
Tree Planting
• Industrial landowners (TIMOs & REITs)are not helping the situation as most have lowered planting densities . Some have lowered densities to 218 stems/acre.
• Many are now planting CMP and SE seedlings. These high priced, low density seedlings are being grown for the sawtimber market.
• Private landowners are not incentivized to plant seedlings any longer. Later timber pricing trends show why.
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An Example of What is Happening
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An Example of What is Happening
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Pulp/Paper Industry
“The reports of my death are greatly exaggerated.” Mark Twain
• This can also be said about the pulp/paper industry in the South.
• Freesheet (fine papers) have declined. Closure of the Franklin VA and Courtland AL fine paper mills.
• Linerboard appears to be holding its own.
• Pulp is the golden boy at present. Franklin mill has reopened producing fluff pulp.
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Present state of things
• At this level of pricing, pulp mills are making more than $400/ton.
• Typically a mill uses around four tons of greenwood to produce a ton of pulp.
• Based on this ratio, a pulp mill could currently pay an additional $100/ton for green wood before they run into the red.
• Energy users will have a tough time matching these prices for wood.
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Southern Average Pulpwood Stumpage Prices 1972-2011
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Source: Timber Mart South
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0
5
10
15
20
25
30
35
40
45
2006 2007 2008 2009 2010 2011
$/t
on
South-wide Pine Stumpage Prices
Sawtimber
Chip-N-Saw
Pulpwood
Expon. (Sawtimber)
Expon. (Chip-N-Saw)
Expon. (Pulpwood)
Source: Timber Mart South
Points about FIA
• All inventory data shown is from the US Forest Service Forest Inventory and Analysis Program
• 6,000 acres timberland/plot, private, growing stock • 5-yr states, 20% plots annually, must be in hex grid • 7-yr states, 16.34% plots annually, must be in hex grid • 7-yr states are NC, AL, MS and LA • Data is averaged over a 5 year period. An average for
2010 will include data from 2008 to 2012 • Weakest data on GRM (Growth, Removal and
Mortality) is for the states of FL, MS, LA and OK • Strongest data is VA, SC, GA, AL and TN
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Timber Type Distribution
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Lupold Consulting, Inc
FIA Acreage Data shows Planting Decline
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Southern Forest Research Station, Forest Inventory & Analysis, The Inventory, September 2011
Annual growth overstated by 45 million tons
Who will win the 10” Timber?
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If 10” goes to Sawmills, the Sawtimber volume is 71%
Average Annual Acres Harvested by Harvest Type in Georgia
(softwood and hardwood)
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0
100
200
300
400
500
600
700
Final harvest Partial harvest Commercialthinning
Thou
sand
acr
es
Harvest type
1989 1997 2004 2011
Richard A. Harper, USDA Forest Service Southern Research Station FIA
FIA Annual Growth less Removals by County
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Lupold Consulting Inc
What does the future hold?
• Southern pine plantations will be heavily stocked with sawtimber.
• The specifications that differentiate pulpwood from small sawtimber will probably change with the smallest of this sawtimber moving into pulpwood.
• This will result in landowners wanting increased pricing for pulpwood and downward pricing pressure on small sawtimber. There have been recent incidences of spot markets paying more for pulpwood than for small sawtimber.
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Summary • We are just seeing the tip of the iceberg. This situation
will worsen as we move forward.
• Unlike agriculture, forestry can not react to market changes in a quick way.
• We need to start planting trees NOW! We need to bring back the landowner assistant programs that existed in the 90’s. This includes all users of pine pulpwood.
• For the next decade or more we will see strong competition for reducing inventories of pine pulpwood. This will be followed by strong competition for reduced inventories of CNS and sawtimber.
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Questions
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