Forest Production, Industry and Forest Retention Assessment Steven W. Koehn Director / State Forester September 21, 2005 From a Report for the Maryland.

Forest Production, Industry and Forest Retention Assessment

Steven W. KoehnDirector / State Forester

September 21, 2005

From a Report for the Maryland Center for Agro-Ecology Center by The Irland Group

• In 2002, the Maryland Center for Agro-Ecology commissioned a study to assess forest production, industry and forest retention

• The Question:

What is the critical mass of forest land needed to support the wood-based manufacturing industry in Maryland?

Background

Why the Question?

• Changes in forest ownership and management

• New forms of conservation valuation

• Uncertain fiber supply• Sprawl• Business Challenges• Assorted public policy

initiatives

To Answer the Question

• Assess Maryland’s wood dependence

• Estimate wood flows• Assess trends in

Maryland wood-using industries

• Explain impact of land use change

• Identify significant issues and competitiveness challenges

Maryland’s Forests

Growth/Drain

Softwood 1.25

Hardwood 1.31

• Approximately 2.4 Million Acres of Forestland

• 43% Forested• Over 130,600 Forest

Landowners• Average Woodlot is 17

Acres

Maryland Land Use Trends

• Since 1950, 12% forest land loss -- 4% since 1982• From 1982 to 1997, “developed” acres in Maryland

increased by 35% - projected to increase by 14,000 acres per year

• 7% Decrease in “rural” acres• 4% Loss in forest acres since 1982• Ownerships are getting smaller, parcels more

fragmented• Nationally, at least 25 million acres has dropped out

of forest industry ownership since the 1980s• In 2003 alone, 4.5 million acres of major US timber

holdings changed hands

Factors Affecting Industry Expansion and Fiber Availability

• Challenging economic situation

• Globalization of forest production and markets

• Industry consolidations• Imports• Loss of secondary

manufacturing• Weak markets for lower

quality hardwoods

• Ind. wood use rose 40% since 1960: ~ 1.6 BM3 but flat over last 20

• Fuel wood use > industrial wood use: ~ 1.8 BM3 and growing

• Ind. wood use could increase < 33% by 2050: from 1.6 - 2.1 BM3– 75% of global wood and fiber will come from planted forests by

mid century or earlier (Sedjo and others)– 31% of global solid wood consumption crosses an international

boundary from tree to product; most likely to increase

• US imports 30% of solid wood products consumed; exports associated jobs & impacts (81% growth since 1991)

• US uses 30% of world’s solid wood products; largest per capita

• US forest and wood choices drive global wood market

UN FAO 2005: 2002 data + Perez-Garcia on future demand

Global & U.S. Wood Use

US in Global Context

30

30

8

8.6

9

5.8

7

4.7

0 5 10 15 20 25 30 35

Solid Wood Imported

Solid Wood Used

Wood Volume in Forests

Plantion Forests

Reserve Forest

Forest Land

Land

People

UN FAO 2005: 2000, 2003 dataUN FAO 2005: 2000, 2003 data

Percent of World SharePercent of World Share

Some Global Leaders

32

30

30

22

24

27

23

22

0 5 10 15 20 25 30 35

Solid Wood Exports = Canada

Solid Wood Imports = US

Solid Wood Used = US

Solid Wood Produced = US

Plantation Forests = China

Wood Biomass = Brazil

Wood Volume = Russia

Forest Area = Russia

UN FAO 2005: 2000, 2002UN FAO 2005: 2000, 2002 datadata

Percent of World SharePercent of World Share

Global Plantation Forests

42

24

5.6

4.7

0 10 20 30 40 50

India + China

Russia + US + Japan

Brazil + Chile + NZ + SA + Australia

EU

Percent of World SharePercent of World Share

UN FAO 2005: 2000, 2002UN FAO 2005: 2000, 2002 datadata

U.S. Imports from China

Wood Household Furniture

41% and growing!

Furniture Imports

$0

$2

$4

$6

$8

$10

$12

$14

$16

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 20020%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Imports China Share

$ Billion China’s Share

U.S. Imports From Low Wage Countries

0% 20% 40% 60% 80% 100%

Leather Goods

Apparel

Toys

Furniture

Plastic/rubber

Stone/Concrete

Textiles

Fabricated Metals

All Manuifacturing

2001 2011

Softwood Lumber Competition from Southern Hemisphere

0

100

200

300

400

500

600

700

800

900

1000

0

20

40

60

80

100

120

140

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Imports (Million BF) from Chile Brazil, Mexico, NZ, Australia

Plantation Pine Timber HarvestFrom Southern Hemisphere

Million M3

Source: R. Taylor, WMM

Source: R. Taylor, WMM

Ways of Looking at Maryland’s Wood Dependence

• Consume 5 million cords of wood per year

• Rely on 2.2 million acres in-state, and 7.4 million acres outside the state to build homes, use paper, etc.

• Are 20% self-sufficient

As Consumers of Forest Products, Marylanders:

Ways of Looking at Maryland’s Wood Dependence

• About 35% of Maryland’s fiber is transferred out-of-state for processing

• At the same time, Maryland’s industry relies on out-of-state fiber for 52% of its needs

• Net Import Dependence is 38%

As Producers of Timber and Forest Products:

Maryland Wood Fiber Flow -- 2001 Wood Fiber Harvested in Maryland and Processed In and

Out of State (All units in Green Tons)

Industrial Roundwood HarvestSoftwood 657,548Hardwood 1,595,087

Pulp IndustryRoundwood 323,000Rdwood Chips 244,000Residues 244,300TOTAL 811,300

Residues244,300

Other27,645

Pulp566,989

Sawnwood1,537,371

1 Includes Bark

Fuel1

129,254Mulch1

518,459Farm1

137,705

Exports120,619

04/10/23 09:37 PM

Recovered Wood FiberConst. Demolition Debris 32,858Land Clearing Debris 15,430 Total 48,287

Lumber691,817

Wood Fiber Processing in Maryland -- 2001 Wood Fiber From All Sources (In and Out-of-State)

Processed in Maryland (All units in Green Tons)

SoftwoodTotal Rdwd Prod 670,603Fuelwood1 13,055Industrial Rdwd 657,548

HardwoodTotal Rdwd Prod 1,790,647Fuelwood1 195,560Industrial Rdwd 1,595,087

Sawnwood396,375

Pulp241,150

Other15,605

Pulp Industry

Softwood HardwoodRoundwood 97,150 225,850Rdwood Chips 144,000 100,000Residues 148,450 95,850TOTAL 389,600 421,700

Residues148,450

Residues95,850

Other12,040

Pulp325,859

Sawnwood1,140,996

1 Fuelwood From Growing Stock Only2 Includes Bark

Fuel2

105,273Mulch2

479,218Farm2

82,722Fuel2

23,981Mulch2

39,241Farm2

54,983

Exports4,418

Exports116,201

04/10/23 09:37 PM

Recovered Wood FiberConst. Demolition Debris 32,858Land Clearing Debris 15,430 Total 48,287

Lumber178,369

Lumber513,448

Out of State215,448

Out of State451,276

Use of Maryland Timber*

Softwood Sawnwood

18%

Hardwood Pulp & Other

15%

Softwood Pulp & Other 15.0%

Hardwood Sawnwood

52%

Maryland Ind. Roundwood(Million Green Tons)

Hardwood 1.5 67%Softwood 0.7 33%

*In and Out of State

Wood Fiber Processed in Maryland*

Softwood Sawnwood

16%

Hardwood Pulp & Other

32%

Softwood Pulp & Other 13.0%

Hardwood Sawnwood

38%

Wood Fiber Processed(Million Green Tons)

Hardwood 2.3 68%Softwood 1.1 32%

*Including Fiber From Other States

Trends in Maryland’s Forest Industry

• Manufacturing is not big part of Maryland economy – and has been declining

• Manufacturing accounts for 6% of total employment

• But wood-using industries important in some of Maryland’s most rural areas

• Wood-using manufacturing accounts for 9% of manufacturing employment

Manufacturing as % of Total Employment

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

Source: Maryland DLLR

USA – Right Scale

MD – Left Scale

Maryland’s Wood-Using Industry

• In general, Maryland’s wood-using industry has fared about the same as the nation as a whole, but better than MD manufacturing in general

• About 5,000 jobs depend directly on Maryland wood

• Aboout 14,000 jobs rely on the forestry, wood and paper sector

• Several mills have closed, but production has remained stable

MD Employment Trends

6.80%

7.30%

7.80%

8.30%

8.80%

9.30%

9.80%

10.30%

1988 1990 1992 1994 1996 1998 2000

Mfg. as % of Total Employment

Forest Products as % of Total Mfg.

Source: Maryland DLLR

MD Counties Where Forest Products are “Basic” Employment

20.4%

7.7%

17.7%

1.6%

1.1%

9.0%

Allegany

Caroline

Carroll

Garrett

Queen Anne's

Somerset

Wicomico

37.7%

Factors Affecting Industry Expansion and Fiber Availability

– parcel fragmentation– increasingly passive

management on state lands

– changing owner preferences (non-timber objectives)

– regulatory burdens– Lack of public

awareness

•Major trends affecting timber availability:

Factors Affecting Industry Expansion and Fiber Availability

• Smaller tracts make logging more expensive, reduces returns to loggers, drives down stumpage prices, and reduces incentives for management

•Major trends affecting timber availability:

Back to the Question

• What is the critical mass of forest land needed to support the wood-based manufacturing industry in Maryland?

• Wood-based primary industry consumes about 3.3 million green tons of wood fiber, while producing 2.2 million tons

• To support Maryland’s wood based manufacturing would require the use of annual growth from 2.2 million acres

• Only 1.7 million acres of available land (probably less), but not all growth being harvested, thus forests are advancing in age and stocking

• To meet Maryland’s consumer needs requires 9.6 million acres each year

• But self-sufficiency is not necessary

Back to the Question

• What is the critical mass of forest land needed to support the wood-based manufacturing industry in Maryland?

• Answer: no “threshold” to define critical mass. As parcel sizes decline, owner interest in management declines, management costs increase, revenue possibilities decline and commercial resource leaches away acre by acre

• Wood fiber flow from other states likely to increase• Base for the remaining wood-based manufacturing

economy is slipping away

Possible Strategies to Retain Working Forests and Viable Industry

• Articulate goal of no net loss of commercial forestland • Undertake review of entire family of forest policies

– Conservation Easements– Local Zoning Regulations– Further Property Tax Abatements (i.e. zero property tax)

• Ensure working forest easements• Assess ownership fragmentation issue• Shortage of “intellectual capital” – more technical and

educational assistance• Deeper subsidies • Improve outreach• Develop markets for low value wood (i.e. energy generation)