FS Northern Region reduced values of 40 timber sale contracts 40% to 70%

According to a Missoula TV station last week:

Tricon Timber in Mineral County will have to close if the U.S. Forest Service won’t compromise on their contract. Tricon recognized it can’t afford to complete the helicopter logging it promised in 2003 realizing that it’s just too expensive in today’s economy.

What’s sort of interesting is that just a short 16 months ago the Missoulian ran this article about this very same Tricon Timber, an article about Tricon finding a growing demand for metric lumber order in China.   Yet today, this same Tricon Timber claims it would cease to exist if the federal government doesn’t bail it out by re-negotiating a 2003 timber sale contract?  Does that seem a tad strange?

Here’s something else that should be clearly highlighted.  According to an article in this weekend’s Missoulian:

A quandary that threatened the existence of one of the few large sawmill operations left in Montana moved toward resolution Friday evening. A spokeswoman said Sen. Jon Tester had just received written assurance from the U.S. Forest Service that Tricon Timber’s Aug. 12 deadline to complete an expensive helicopter logging project near Thompson Falls will be extended if a permanent agreement isn’t hammered out soon.

The Missoulian article went on to report:

“[T]he 2008 farm bill provided two options for relief for mills with onerous timber contracts. One is to grant contract extensions in 30-day increments to “hopefully spread the length of the contract over a longer period of time and lessen the impact they might have from a declining market.”

The other is a rate re-determination, to adjust for reduced market values and increased costs to contractors in these hard economic times. Since then, the Northern Region has granted 45 contracts and reduced the values of 40 contracts by 40 percent to 70 percent.

So, what this means is that while some people are going around Montana claiming that we need to start having politicians mandate more logging on Montana’s National Forests, the very simple fact is that the Forest Service’s Northern Region has reduced the values of 40 different (already signed) timber sale contracts by 40% to 70%.

In other words, if the timber industry signed a contract with the federal government 3 or 5 or 9 years ago to log X amount of trees for, let’s say $100,000, now the timber industry gets to log that same amount of trees for $30,000 to $60,000.  Wow! If only the federal government and politicians were this generous with “Bail outs” for homeowners facing foreclosure, eh?

Has anyone else around the country caught wind of the Forest Service reducing the value of timber sale contacts in your neck of the woods? If so, please feel free to make note of it in the comments section.

Finally, it should be noted that Tricon Timber was one of the timber mills who last month took part in $30,000 in Ads attacking the Alliance for Wild Rockies, which claimed “the Forest Service is being held hostage by a small group of professional obstructionists” and  called for an end to the public appeals process and exempting many Montana national forest timber sales from judicial review.

6 thoughts on “FS Northern Region reduced values of 40 timber sale contracts 40% to 70%”

  1. The Alaska Region is the MECCA of rate-re determinations. I can remember one case in the 1980’s where between rate-re determinations and purchaser credit roads the agency had to cut a check from the federal Treasury for the timber purchaser.

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  2. Region 6 (Oregon and Washington) has done this (devaluation) of ponderosa pine across the board (on all active sales and now all future sales) to “base rates” about 2 years ago. This also makes a large difference in returns (in lieu of taxes) to the states when theses rates are reduced.

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  3. Matt,

    Interesting, but please make your point. Are you suggesting we use past project planning (and subsequent timber sales) as the appropriate measure of “need’ into the future?

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  4. No problem….

    What I read is a not so subtle decrying of the need for more management (logging).

    Let’s assume there is a two year lag time between the decision (which produces some amount of timber) and the sale offering (to account for layout, sale prep, contract prep, etc). Many decisions produce multiple sales. That would make most of those projects 5-11 years old. It is unlikley that back then the FS was designing projects to produce timber purely for economic benefit. There was probably plenty of other rationale for the project(s) that would resut in flying logs off a hill. Probably something rediculous like reducing the risk of “catastrophic” fire, on the heels of the 2000, 2003 fire seasons but I digress.

    Enter the cyclical log market, market crash etc. Logs still have value, just not as much. Mills still need to be fed to keep the doors open. Now what? The value of the land management activity may justify dropping the price.

    What about situations where the Agency flat out PAYS to harvest trees? There is plenty of “need” for that, especially in MT.

    What about programs that are designed to “encourage utilization of forest restoration by-products to offset treatment costs, to benefit local rural economies, to and improve forest health.” (CFLRP) Note “offset” not “pay for”.

    So when you say…
    “what this means is that while some people are going around Montana claiming that we need to start having politicians mandate more logging on Montana’s National Forests, the very simple fact is that the Forest Service’s Northern Region has reduced the values of 40 different (already signed) timber sale contracts by 40% to 70%.”
    …I get confused. I think you may be mixing apples and oranges here. Or am I missing something? There is need to do more land management ({logging}…just go with it….don’t want to debate it). Markets suck, logging is expensive in places. Now what?

    I’ll ask flat out. Are you suggesting the Agency doesn’t propose any more commercial acivities on National Forests based on uncertainties in the market? You wouldn’t be the first.

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  5. JZ= thanks for asking this question.. In Colorado as in many places, as you say, we pay people to take the material. I don’t see why it’s bad to get (x-y) instead of x when the alternative is paying z. Of course, I have implicit values of x, y and z in my head.

    But this might go back to your view of how necessary, or not, the treatments are.

    I just have trouble getting excessively worried about supporting local sawmills, employing local people, in some cases perhaps victims of unfair trade practices (some people think so) and unfair NGO certification practices (IMHO). And calling them out when the US supports many other large firms with (IMHO) more questionably environmental practices – the difference being the amount of political support/potential donations to national candidates?

    Anyway, we need to have environmentally, socially and economically sustainable management and I think we all agree on that concept, perhaps not on how to get there or what it looks like.

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