More on Timber Harvests, the Economy and Montana

Thanks to Matthew Koehler for this submission:

The following guest column was written by the USFS Supervisor of the Bitterroot National Forest. While the Tester mandated logging bill collaborators falsely give the public the impression that politicians stepping in to mandate more industrial logging of national forests is the key to economic development, the supervisor of the Bitterroot National Forest offers her perspective based on economic reality.

SNIPS:

“Some of you may be wondering why timber is not being sold as it was in previous decades when the Bitterroot routinely produced 20 million board feet or more. One of the main reasons is that no one is buying the wood. For example, the Bitterroot National Forest recently offered two different timber sales on land that is easy to access near paved roads, and neither sale received any offers. These were not isolated incidents. In 2011, the forest brought four timber sales to the public that did not receive one bid from an interested buyer. Why is this happening? Much like the housing crisis, the answers can be found in the market. Many of the problems occurring in the timber market today are not due to a lack of supply, but rather a lack of demand. Logs that were selling for $80 a ton during the housing boom, are worth less than $45 a ton today. This loss of demand has had a significant local impact on acres harvested. Poor market conditions have also forced us to use scarce taxpayer dollars to pay to remove timber to meet our forest fuel reduction goals in areas adjacent to private property.”

Timber harvests just one piece of forest management
Guest column by JULIE KING | Posted: Friday, December 16, 2011
http://missoulian.com/news/opinion/columnists/timber-harvests-just-one-piece-of-forest-management/article_04e78d00-27f9-11e1-8fb2-001871e3ce6c.html

HAMILTON – A fair and adequate amount of accurate information is central to a healthy discussion and reasonable decision-making process. In the U.S. Forest Service, we practice this as a matter of direction under the National Environmental Policy Act when it comes to public involvement and interaction on our land management decisions. I believe it is imperative that communication lines remain open and we work together to find solutions and ways to survive the current economy and poor market conditions of our timber industry.

So it is unfortunate for us all that incomplete information in a recent article in local newspapers claimed that the Bitterroot National Forest, unlike other national forests, was not selling timber. The article went on to suggest that if national forests would sell more timber, local jobs would return, shuttered mills would re-open, and the boom days of the Bitterroot Valley would be back. While I certainly wish all our challenges were this easy to solve, I feel compelled to share some facts and information with you regarding timber sales on the Bitterroot National Forest.

First and foremost, the Bitterroot National Forest is continuing to sell timber. In 2011, 9.6 million board feet were harvested on the Bitterroot National Forest. Trees were cut on more than 2,000 acres, sending an estimated 1,933 truckloads of logs to Montana sawmills. The Bitterroot’s largest timber project, Trapper Bunkhouse (2,700 acres) continues on the Darby Ranger District and is our largest stewardship project in 10 years. There were eight timber projects under contract on our forest this year.

The Bitterroot currently ranks number three among the nine national forests in Montana in total saw log volume. This despite the fact that we have less acreage available for timber as half of our forest is dedicated to the largest expanse of continuous wilderness in the lower 48 states. Perhaps most importantly, all of our current timber projects accomplish needed reductions in hazardous fuels, address wildlife habitat needs and forest health issues. While the timber industry is a valued partner in land stewardship, our timber sales are not offered simply because a buyer desires a certain product like house logs. All timber projects must meet multiple land management objectives outlined in the forest plan.

Some of you may be wondering why timber is not being sold as it was in previous decades when the Bitterroot routinely produced 20 million board feet or more. One of the main reasons is that no one is buying the wood. For example, the Bitterroot National Forest recently offered two different timber sales on land that is easy to access near paved roads, and neither sale received any offers. These were not isolated incidents. In 2011, the forest brought four timber sales to the public that did not receive one bid from an interested buyer. Why is this happening? Much like the housing crisis, the answers can be found in the market.

Many of the problems occurring in the timber market today are not due to a lack of supply, but rather a lack of demand. Logs that were selling for $80 a ton during the housing boom, are worth less than $45 a ton today. This loss of demand has had a significant local impact on acres harvested. Poor market conditions have also forced us to use scarce taxpayer dollars to pay to remove timber to meet our forest fuel reduction goals in areas adjacent to private property.

Here in the Bitterroot, the problem is compounded even more with the recent closure of many sawmills. Logs must now be hauled to the closest operational mills in Seeley Lake or St. Regis, more than doubling hauling distances and costs. Rising fuel prices have added yet another obstacle when you consider that some timber projects on our forest are now located more than 150 miles from the nearest mill. It all adds up to the “perfect storm” and it is going to take all of us working together to find answers and solutions moving forward.

We live in very challenging times, and if we spend energy opposing and not communicating on these issues it will only contribute to our demise. I am open to hearing your ideas or any other issues concerning the national forest. Please contact me at (406) 363-7100.

Julie King is Forest Supervisor for the Bitterroot National Forest.

24 thoughts on “More on Timber Harvests, the Economy and Montana”

  1. This information makes one wonder how Oregon Representatives Walden, DeFazio, and Schrader can say with a straight face in today’s Oregonian that they can create 12,000 jobs out of thin air by massively increasing logging on BLM lands. Is there a market for an extra billion board feet of timeber? What about log prices that small woodland owners need to pay for their retirement? Sheesh.

    Reply
    • The information in the story is specific to the Bitterroot NF in Montana, where markets for logs are quite different than in Oregon, particularly western Oregon, where BLM’s O&C lands are.

      Multiple Oregon (and Washington) mills have curtailed operations over the past few months because of the high cost of logs in the region. Log costs (prices paid by mills) were high in western OR & WA because of additional demand from off-shore log buyers. When log prices are high, that can be beneficial to timberland owners, but it increases costs for mills.
      By law, timber from BLM land, like Forest Service land, cannot be exported. The timber would first need to be processed into a product like lumber or pulp. Timber from private land has no such restrictions.

      So, providing more timber to local (domestic mills) from federal lands could provide some price relief to the local Oregon mills while not necessarily reducing the prices that private timberland owners get for their logs–which would presumably continue to go to export markets.

      With regard to timber sales offered but not purchased on the Bitterroot, one would need a lot more information about the specific sales before drawing the conclusion that there is NO market for timber. (Which is a story that some in the anti-logging community like to repeat.)

      No doubt, the domestic demand for lumber, log homes, and other wood products is down from the very high levels of 2005 & 2006, so mills in Montana are producing less output and buying less timber than in previous years, but they are still buying some timber and producing some outputs. So, what would make a mill buy timber from one landowner vs. another? One key thing is the cost of that timber. What is it about timber from the BNF that might make it cost more than timber from another landowner? Well, it’s not always “the market”.

      Ms King properly points out that the distance to the nearest mill has increased, and that combined with fuel prices can make timber from one location more expensive than timber from another location (perhaps the Lolo NF if you are a mill in Seeley Lake).

      However, there are many items not related to “the market” (for wood products) that can increase the costs of timber from one sale compared to another. First, are the characteristics of the timber itself–is it sawtimber, pulpwood, or fuelwood that is being offered, how much of each, is the wood blue-stained or not, is it a desirable size and species for the mills within a feasible hauling distance? Is there even a mill that can use the type of timber being offered for sale within a reasonable haul distance?

      Sale characteristics also play a huge role. Does the sale require helicopter yarding or cable yarding or is it flat (tractor) ground? Is there a requirement to remove non-merchantable wood along with the timber? Are road construction and/or demolition required? Are there restrictions on the timing of the harvesting and hauling? Is there a requirement to install or replace culverts? Are there other contract requirements that make the timber more difficult/expensive to harvest? All of these items can add to the final costs that mills and loggers incur when harvesting timber.

      Is the timber sale subject to appeals and/or litigation? Is there some possibility that the mill with the winning bid may never get to harvest and use the timber, or may only get a fraction of the timber? These risks may make an otherwise attractive sale seem not-so-attractive to a potential buyer.

      Lastly, (and this one is a “market” reason) what was the minimum bid required for the timber sale? When was the appraisal conducted? Were prices adjusted to reflect current market conditions, or does the minimum bid reflect markets of 4 or 5 years ago? The Forest Service is notorious for “planning” a harvest project that doesn’t get offered for sale for 2 or more years because they were waiting for NEPA analysis to be completed, or appeals and litigation to run their course, or the project just got put on hold because of a wildfire or government shut-down, or any number of reasons.

      In short, there is a real problem of faulty inductive reasoning (using limited information about a specific event and drawing false conclusions about some general condition) with this piece. Instead of asking what was up with these specific BNF timber sales that kept them from selling when other landowners and other National Forests are able to sell timber; folks are jumping to a faulty conclusion that there are no markets for timber in Montana because these two sales were never bid.

      Of course no one bothers to ask when most of the mills shut down in Montana. It is incorrectly assumed that the lack of mills in the region is a recent (2007-2011) phenomenon caused by poor domestic markets for lumber and other wood products. In actuality, Montana lost more of its milling infrastructure during the 1990s and first half of the 2000s, when domestic home building and lumber consumption were setting record highs, and “the market” was much better than it is today. But that would point out the fact that lack of available timber supply from federal lands was the prevailing issue causing mill closures in Montana and other western states, and we are just now beginning to realize the consequences of that infrastructure loss.

      Reply
      • VERY well said, Todd. The trend is to load timber sales down with as many non-commercial treatments as possible. In some areas, a lack of mills create monopolies, and that enables those mills to have more dealbreakers. Even with sales at base rates, the mills sometimes want those other concessions. It’s hard to see what can be done in this economy, and with this infrastructure. The Quincy Library Group is the future of collaborative efforts. Despite the extra millions, and the coming together of stakeholders, a ma and pop litigation team has thwarted QLG projects, in favor of their goal of eliminating all timber sales.

        Reply
      • “By law, timber from BLM land, like Forest Service land, cannot be exported. ”

        This is incorrect. In southeast Alaska’s Tongas National Forest, 50-100% of a timber sale can be exported, and often is.

        Reply
        • Indeed, David, there are waivers around. High-value hardwood logs can go to European bidders, and southern California logs, at one time, had a waiver because of zero mill capacity. I’m not a fan of what you claim is happening in Alaska.

          Reply
        • I thought we were discussing Oregon and Montana, not Alaska. But, hey, why stay on-topic?

          The Tongass also has a harvest volume that is somewhat determined by estimates of Alaska milling capacity–something not common to other national forests in the lower-48. I think that is part of the Tongass Timber Reform Act of 1990.

          For more thorough discussion of timber harvest and the forest industry in Alaska, I would suggest PNW-GTR-787.

          Reply
          • “By law, timber from BLM land, like Forest Service land, cannot be exported. ”

            You said it Todd, not me. (Not on-topic enough for you?)

            It seems to me to be quite topical, demonstrating wide variations in the Forest Service timber sales promoted for local sawmill “jobs” which then get exported to China and Japan in the round.

            Reply
            • I will leave it to you, David, to provide actual volume figures of exported logs, by Forest Service Region. I “wood” guess that ZERO logs are exported to China and Japan from Regions 1, 2, 3, 4 and 8, not exhibiting the “wide variations” you claim. Region 5 has not exported many logs under their waiver for the 4 southern California Forests, when mortality was so high. I doubt Region 6 has any kind of waiver but, I cannot say so for sure.

              Reply
  2. Very interesting and informative comments, Todd. Now wouldn’t it be interesting to conduct a study of timber sales offered by a National Forest such as the Bitterroot and investigate exactly why some are sold and others receive no bids at all? Because, as we know, these debates can go around and around for lack of better information to inform our arguments. Perhaps GAO should take this on? Does the Forest Service do this type of analysis internally as a response to unsold sales? I would like to know.

    Reply
  3. Chelsea, I think it would be fairly easy to do that- you could just pick a couple of forests around the country, look at the timber industry capacity close to them, look at the timber sale documents, and call around to the potential purchasers and see what they have to say about why they did or did not bid.

    I think people in the FS know what the purchasers tell them, but not sure it is documented.

    I also think the most interesting part of the study would be to compare how sales are packaged in different areas, the state of the industry in different areas, and how that all works together or doesn’t. Since the FS is a decentralized organization, there can be many differences about the ways people do things and the outcomes.

    Perhaps someone at U of M (or elsewhere) would have an interested graduate student?

    Reply
  4. Sharon, I agree, there seems to be a lot of variation in the way that contracting authorities are interpreted and used across regions and forests. The Ecosystem Workforce Program at U of O has done some interesting studies of innovative contracting mechanisms in Oregon, which can be found here: http://ewp.uoregon.edu/publications/working (see Working Paper #12). I know that this is a topic of great interest for local collaborative efforts such as the Lolo Restoration Committee and such a study would be very helpful as they work with the FS to increase the local benefits of restoration projects.

    Reply
  5. Todd Morgan said, “With regard to timber sales offered but not purchased on the Bitterroot, one would need a lot more information about the specific sales before drawing the conclusion that there is NO market for timber. (Which is a story that some in the anti-logging community like to repeat.)”

    Ahem…are you saying that Bitterroot National Forest supervisor Julie King is part of the “anti-logging community,” Todd?

    These are Supervisor King’s words:

    “One of the main reasons is that no one is buying the wood. For example, the Bitterroot National Forest recently offered two different timber sales on land that is easy to access near paved roads, and neither sale received any offers. These were not isolated incidents. In 2011, the forest brought four timber sales to the public that did not receive one bid from an interested buyer. Why is this happening? Much like the housing crisis, the answers can be found in the market. Many of the problems occurring in the timber market today are not due to a lack of supply, but rather a lack of demand. Logs that were selling for $80 a ton during the housing boom, are worth less than $45 a ton today. This loss of demand has had a significant local impact on acres harvested.”

    Also, Todd, I don’t believe anyone is saying there’s “NO market for timber” (your words, not mine). What many of us have been correctly pointing out for some time now is the very significant economic realities associated with this continuing economic crisis. An economic crisis decades in the making, which, I should point out, many environmentalists had been warning about the entire time.

    By any real measure, home construction and wood consumption in the US are way, way down from what became “normal” levels during the past few decades. Remember, it was you, just 3 or 4 years ago, who told us on NewWest that the economic crisis and the related problems for the wood-products industry and construction industry would be short-lived and that we’d rebound right back to the over-consumption and over-development that got us into this mess in the first place. Funny, but you just keep pushing that “rebound” further and further down the road. First it was 2010, then 2011. Is it 2013 now? Or 2015? Or ever?

    Reply
    • Certainly. timber companies aren’t going to bid on projects that won’t earn them worthwhile money. There is no mention of how many non-commercial tasks, above and beyond what “normal” contracts require, that drag down the value of the contracts. Slash requirements that include hand-felling, piling near WUI’s adds labor-intensive costs to these projects that the value of the logs cannot offset. Some mills want base rates AND major concessions on other costs and tasks. Or, they simply won’t bid on them, until the Forest Service backs down. That is why Sierra Pacific shuttered their small log mills in several areas, until the Forest Service makes timber sales more economically-sustainable and more resistant to lawsuits.

      We could easily increase demand for wood by making products with wood from small (10-14″ dbh) trees, instead of importing plastics from China, made with Arab oil. Brand the change from plastic to wood as “green” and “saving the planet” through excellent sustainable forest management, and you have a partial solution to broad environmental issues.

      Reply
  6. Well, Matt, you started this thread with a “snip” of Julie’s op-ed piece. The second sentence in that snip reads: “One of the main reasons is that no one is buying the wood. ”

    In the middle of your snip is this statement: “Many of the problems occurring in the timber market today are not due to a lack of supply, but rather a lack of demand.”

    My responses to the comments were pretty clearly: that there are people buying wood and there are more reasons than “the market” for two particular sales not getting bids. All the National Forests in Montana combined cut more than 130 million board feet in FY 2011, and sold more than 130 million board feet the same year. Seems like a market for Forest Service timber to me.

    The fact that two sales (not sure of their volumes) from the BNF didn’t sell does not mean that the market is saturated, there is no demand, or no one is buying wood. It is probably a better indicator that there was something, possibly several issues with the sales themselves that caused them not to be bid. Some of those issues may be related to markets, but not all of them. If I were a timber seller, I would be doing my best to make sure I understood and responded to market conditions, so that I could sell the timber and accomplish my other land management objectives.

    Total timber harvest in Montana during CY 2011 is estimated to be about 348 million board feet, very similar to last year’s harvest volume. Any reasonable person would conclude that there are people/firms buying timber and that there is still demand for timber (from all ownership sources) in Montana. How many DNRC sales went un-sold this year, how many Forest Service sales, how many Tribal or private timber sales?

    Since Julie was the originator of the comment, i wouldn’t consider her to be “repeating it”. And I have no idea what her leanings are relative to being pro- or anti-logging. That comment was aimed squarely at you, the originator of this thread. YOU are the one who chose to repeat a portion of her piece–at least twice in this thread alone and no doubt in several other online forums. (I know you are skilled at copy and paste.) Thus, I would conclude that YOU are selectively using, and re-using, parts of her statement to bolster a point you can’t seem to make on your own.

    There is another thread related to the Tester bill. So, what exactly was the point of your original post on this thread? What is your thesis statement? I don’t think the BNF is part of Tester’s bill, so i don’t see where Julie’s comments about two timber sales on the BNF are necessarily relevant to the Tester bill, unless you are trying to draw a more general conclusion about the (lack of) markets for timber in Montana.

    Yeah, I have not aced all my predictions about economic recovery. I was not educated as an economist; it is challenging to forecast when, how much, and in which directions housing & wood markets will change; and i clearly haven’t been reading the “right” forecasts. But I am not really familiar with the specifics of your keen predictions. I guess when you say “the sky is going to fall” long enough, and eventually something falls from above and hits you on the head, you also get to say “see, i was right.”

    Out of curiosity and a clear need for better information, please tell us when your sources indicate US home starts will surpass 1 million units per year again. When do you see the average price of sawlogs in Montana hitting $400 per MBF again? When will harvest in the state go back above 500 MMBF annually?

    Reply
  7. Kind a hard to top that. All I can add is that the amount of USFS timber harvested in Montana for FY 2011 was the third highest in the last 10 years-in the middle of the great recession. The second highest was last year.

    Foto makes a good point about all the “add on’s” the USFS includes with “timber sale projects”. When you look at the “economics” section of an EIS, one certainly gets the impression of “below cost timber” sales because the PNV is usually below revenue (nothing makes my eye’s glaze over quicker than PNV). Most of the “costs” have nothing to do with “timber sale layout or administration”. A lot of it is “road decommissioning and prescribed burning”. Most of which probably never gets done.

    What really bothers me is the cost to do the NEPA is never revealed. It’s classified as “sunk costs” (what a great term). This is unfortunate, as the standard response of the USFS to enviro litigation of an “environmental assesment” is to upgrade that to a full blown EIS. Doesn’t the public have a right to know how much litigation adds to the cost of a timber sale. Maybe congress should require the USFS to keep track of such costs-in the name of transparency of course.

    A great research paper for a grad student would be “Why does EVERY state timber sale program make so much profit while the USFS has below cost timber sales”. I’ve harped many times about the State of Montana making $2.00 in revenue for every $1.00 in cost (perhaps that is down in the last couple years). What’s the difference between the two entities? Maybe Congress should transfer some USFS land to the states? Who could be opposed to that?

    Reply
  8. And a happy winter solstice to you too, Todd.

    For the record, I didn’t set out to write a “thesis” here, so please don’t judge it as such. What I did was simply send Supervisor King’s guest column to Shannon and Martin (moderators of this blog) as an email FYI, so that they would post the guest column on the blog, its relevance to topics here being obvious. If I would have known the blog moderator was going to include my two sentence comment as part of the blog “submission” I, of course, would have provided more context. I just expected Supevisor King’s column to appear here and we all could discuss it. I did provide some additional context in the comment section here, but apparently you didn’t like what I had to say. I’m just glad you got to air out your personal feelings about me. If I find time to comment tomorrow I’ll try harder to impress you tomorrow, ok Todd?

    Reply
  9. Hello: I’d just like to point out that Todd Morgan’s comment #12 here is not the same comment as the original comment that he posted here late yesterday afternoon. That original comment from Todd included many more nice zingers and put-downs. I can only assume that Todd re-considered some of the stuff he said about me, or perhaps he was told to tone it down. Either way, I have to wonder who removed and replaced Todd’s comments. Sharon? Is it standard procedure for this blog to let commenters go back and entirely re-write comments once they’ve been posted? If that’s the case, can the rest of us go back to our previous comments and make changes and have the blog managers replace our old comments with new ones? I’m not sure how a blog would operate under such a scenario , but I do know for certain that Todd’s comment #12 here is not the same comment as was there yesterday. Thanks.

    Reply
  10. So Matthew, here is the story. I checked the blog on my Droid when I got off work. I saw Todd’s piece and knew I couldn’t edit the post (well maybe someone could, but I can’t..) so just let it go. all the way home I thought about it and thought.. well maybe that was too far over the line in terms of our vision of a respectful environment for each other. so when I got home I deleted that paragraph and let Todd know and he was fine with it.

    The whole idea of where the line is is pretty much of a judgment call.. so if any of you think something should have been edited and wasn’t, let me know. I try to draw the line between attacking someone’s ideas and attacking them or accusing them of having the wrong motives. But with regulars I sometimes let them slide..

    Reply
  11. Sharon: Thank you for offering this explanation. It’s too bad that Todd Morgan wrote a comment here attacking me that may have been “too far over the line in terms of our vision of a respectful environment for each other.” I only wish I would have cut and pasted Mr. Morgan’s entire, original comment so I could have kept it for my records, and perhaps have sent it to Mr. Morgan’s supervisor at the University of Montana.

    Reply
  12. I’ll be glad to email you my full response, Matt, but only if you say “please.” Then you can send it to my supervisor. Maybe you can send it to my mom too, or tattle on me to my son’s pre-school class for not using my sunshine voice.

    By the way, good job avoiding the topic of discussion. If your discussion points related to timber markets, harvesting costs, and “economic reality” were exhausted with your copy and paste from Julie King’s op-ed piece, you could have just said so.

    If folks are actually interested in the Montana and Idaho forest industry or forecasts my program has developed over the past 10 years or so, they are available at: http://www.bber.umt.edu/forest

    You can also find delivered log prices, forest industry wage and production reports for Montana, results from several logging cost studies, information on timber-processing capacity in the western US, information related to logging residue and woody biomass, and several periodic reports on timber harvest and forest industry conditions in about 9 western states.

    Peer-reviewed scientific documents addressing forest economics are somewhat missing from the Wild West Institute and Last Best Place Wildlands Campaign web sites, but I’m sure the webmasters can set up some links.

    Reply
  13. Smokey, you’re right, this is getting old, just like your anonymous comments. I didn’t realize there was a “peer review” requirement needed in order to express ones opinion about public lands management. Is that a NEPA requirement? I notice that you didn’t both to address any of the substance of what I’ve written. I wonder why.

    Reply

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