It seems the spike in lumber prices over the summer and early fall would have had a positive impact on timber stumpage prices paid to landowners for large pine sawtimber, but the correlation is not there, explains Marshall Thomas, president of F&W Forestry Services, in his company’s fall newsletter.

While sawmills cut back production at the start of the coronavirus pandemic in anticipation of greatly reduced demand, they did not foresee the huge demand for lumber from people sheltering at home and embarking on home improvement projects.  Furthermore, after a significant drop in new home construction at the beginning of the pandemic, the industry rebounded quickly, and this one-two punch had the effect of creating a huge lumber supply/demand imbalance. 

“Unfortunately, the supply/demand imbalance that exists with lumber doesn’t exist for the raw material:  trees,” Thomas writes.  “In the South, we are still suffering a supply hangover from the Conservation Reserve Program (CRP) trees planted in the late 1980s and early 1990s.”

Thomas also cautions policy makers to be careful about implementing new incentive programs that pay people to plant trees, such as the Trillion Trees Act.  Without qualifications and limitations, such programs could result in another oversupply of trees and harm private forest landowners already doing what they want to encourage them to do.

This year’s tree planting season was almost upended, but swift and coordinated advocacy efforts by forestry associations made certain that it will continue unabated after the Trump administration issued exemptions following their appeals.

President Trump signed a series of proclamations this spring, suspending entry of most temporary seasonal workers into this country for the remainder of 2020.  The suspension included  H-2B guest workers, who are critical to the forest sector, planting the bulk of U.S. trees each year, along with other forestry operations that are necessary to maintain healthy and productive forests.

Research by Forest Landowners Association (FLA), Forest Resources Association (FRA), and National Alliance of Forest Owners (NAFO), among others, demonstrated to the administration the importance of allowing this program to continue.  Most significantly, these organizations showed that a ban on these workers would impact the forestry sector and rural communities by $725 million.

The state of Florida has reached an agreement with the U.S. Department of Agriculture (USDA) on the distribution of $380.7 million in block grant funding to Florida timber growers for the damage caused by Hurricane Michael.  The agreement covers all types of timber producers as well as farmers who have damaged irrigation systems.

The October 2018 Category 5 hurricane tore through the Florida Panhandle, Southeast Georgia, and Southwest Alabama.  According to the Florida Department of Agriculture and Consumer Services, the timber industry lost $1.3 billion when more than 550 million trees, weighing 72 million tons, were damaged.  Timber is the leading industry in the region.

A $3 billion federal disaster assistance package signed into law in 2019 made the grants available to counties impacted by natural disasters.  In March, Georgia began accepting applications from eligible landowners and farmers for its $347 million block grant program.  However, a dispute between Florida officials and the USDA over payment limits caused a delay in implementing the program in the Sunshine State.

State officials will work with the USDA to create a plan to distribute the funds.  Florida forest landowners impacted by Hurricane Michael are advised to gather documentation and evidence of damage for submission and apply to the USDA Emergency Forest Restoration Program.  The Florida Department of Agriculture and Consumer Services, the Florida Forest Service and the Florida Division of Emergency Management will together administer the funds.  Funds may be distributed as soon as this fall.

Housing was poised to make a comeback in 2020 but, like everything else following the start of the coronavirus pandemic, home construction plummeted.  With unemployment reaching record highs and consumer spending low, a rebound in housing was not expected to be imminent.  But according to recent data, we might be pleasantly surprised.

The year began with the highest level of housing starts since December 2006, but tumbled moving into April as a result of the shutdowns.  But as states began easing restrictions, housing starts and building permits rose from April to May, yet remained below May 2019 levels.  However, May sales of newly built, single-family homes are 12.7 percent above where they were a year prior.

“We are seeing many positive economic indicators that point to a recovery, including low interest rates, rising demand, and an increase in mortgage applications,” said Dean Mon, immediate past chairman of the National Association of Home Builders.

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It’s too soon to know what kind of impact the COVID-19 pandemic will have on U.S. timber markets, but the forestry sector has been designated as an essential industry and is therefore allowed to operate during the crisis, the head of one of the nation’s largest forest management firms writes in his company’s quarterly newsletter.

“Pulp mills for the most part are still operating with some forgoing planned downtime to continue production.  There have been some production curtailments at sawmills in the South due to the virus, while hardwood sawmills in the North are responding favorably to tariff relief on hardwood lumber,” reports Marshall Thomas, president of F&W Forestry Services, Inc.

Despite the coronavirus disruption, the first quarter of the year was a busy one for forestry, with significant attention focused on the global trillion trees tree-planting scheme and the introduction of the Trillion Trees Act in Congress.

Thomas lauded provisions of the federal legislation, particularly those that aim to improve timber markets and incentivize innovative building practices that utilize wood, which would result in increased carbon storage.  But he cautioned legislators against subsidizing commercial tree planting without restricting future harvest.

“The private sector can handle reforestation—what we need are markets,” Thomas writes.  “Let’s hope that planting incentives come with strings that prevent subsidized trees from being dumped into and ruining our Southern pine markets like the Conservation Reserve Program (CRP) did for pulpwood-sized trees in the early 2000’s and is currently doing to sawtimber-sized trees today.”

TO SEE THE FULL ARTICLE IN THE SPRING 2020 F&W FORESTRY REPORT, SUBSCRIBE NOW