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Factors Influencing the Price of Wood in Maine
Eric Kingsley
Innovative Natural Resource Solutions LLCPhone 207‐233‐9910, [email protected]
Why Are Maine Wood Costs So High?
Eric Kingsley
Innovative Natural Resource Solutions LLCPhone 207‐233‐9910, [email protected]
Alternative Title: Mill Perspective
Why Do I Get Paid So Little for Trees it Takes Decades to Grow?
Eric Kingsley
Innovative Natural Resource Solutions LLCPhone 207‐233‐9910, [email protected]
Alternative Title: Landowner Perspective
Why Am I a Million Dollars in Debt and Burning Through Equity?
Eric Kingsley
Innovative Natural Resource Solutions LLCPhone 207‐233‐9910, [email protected]
Alternative Title: Logger Perspective
Innovative Natural Resource Solutions LLC• Founded in 1994• Offices in New Hampshire and Maine• Focus at the intersection of forest industry, energy and economic development
• Author of Maine Future Forest Economy Project (2005)• Services include:
‐ consulting in renewable energy‐ advocacy‐ forest management and protection‐ forest certification and sustainability
• Clients from the private, non‐profit and government sectors• Conducted work in all regions of North America• www.inrsllc.com
Reported 3Q 2015 Hardwood Roundwood Pricing(Verbally reported data should have large error bars)
$0
$70
Maine Northeast Lakes South
Data from phone inquiries of buyers and suppliers in each region, based upon spot market, and considered less reliable than F2M transactional data.
“Maine” is a subset of “Northeast”
Issues Impacting Price & Availability of Pulpwood in Maine
•Logging Capacity •Capacity Creep
•Market Diversification•Product Diversification
Logging Capacity is a Real Issue•Not enough people•Not enough iron•Hard to finance, particularly new crew and used equipment
•Major constraint on wood supply • Trends suggest this will get worse before it gets better• Issue nationally as well as locally
We have lost markets, but have gained through “capacity creep” and new demand
Markets Lost:• Old Town • Bucksport• Lincoln• Millinocket• East Millinocket• Androscoggin (reduction)Markets Gained:• Wood Pellets• Firewood (increase???)• Biomass (incl. NH facility)
Capacity Creep:
Input Cost for Delivered PulpwoodPercent of total (estimated, aggregated)
0
20
40
60
80
100
Stumpage Harvesting Trucking Diesel Wood Yards
Input Cost for Delivered Pulpwood
0
20
40
60
80
100
Stumpage Harvesting Trucking Diesel Wood Yards
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Sawlogs Pulpwood Biomass
Volume (Tons)Value ($)
Volume and Value to Landowner of Products from a Timber HarvestNorth East State Foresters 2013
All figures in 2013 dollars, using the US Bureau of Labor Statistics CPI Inflation Calculator, http://www.bls.gov/data/inflation_calculator.htm
Stumpage Price for Selected Pulpwood Species, 2004 ‐ 2014Statewide Average from Maine Forest Service ‐ Stumpage Price Reports
$‐ $2.00 $4.00 $6.00 $8.00
$10.00 $12.00 $14.00 $16.00 $18.00 $20.00
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Mixed Hardwood Spruce / Fir White Pine
Growth as a % of Removals(@ 100%, Growth = Removals)
147%
0% 50% 100% 150% 200% 250%
GEORGIA
LOUISIANA
MAINE
MICHIGAN
MINNESOTA
MISSISSIPPI
NORTH CAROLINA
WISCONSIN
Growth as a % of Removals(@ 100%, Growth = Removals)
165%129%
0% 50% 100% 150% 200% 250% 300%
Georgia
Louisiana
Maine
Michigan
Minnesota
Mississippi
North Carolina
Wisconsin
Hardwood Softwood
Input Cost for Delivered Pulpwood
0
20
40
60
80
100
Stumpage Harvesting Trucking Diesel Wood Yards
“[Loggers] would be willing to make the investment and gear up tosupply more wood on a steady basis, but only if they could be sure theywouldn’t be cut off or cut down at some point, unable to meet theirexpenses.The only problem with this scenario is that very little trust currentlyexists between producers and consuming mills in the Northeast andLake States. Mills may realize that they need to repair relations withsuppliers in order to secure enough wood moving forward, but loggersare understandably skeptical about claims that things have changed.They’ve heard that before.”
‐ Editorial by Eric Johnson, The Northern Logger, October 2015
Input Cost for Delivered Pulpwood
0
20
40
60
80
100
Stumpage Harvesting Trucking Diesel Wood Yards
Trucking Distance• Average haul distance in the Northeast is high relative to most other areas.
• As an example, haul distance for hardwood and softwood pulpwood is about 40% longer than in the south.
• Northeast haul distance is slightly less than the Lake States which may be a better comparison but they have a component of rail transportation which is more efficient but operates longer distances.
In 2014, Maine Imported Wood from New England, New York, Maritime Canada, Quebec, and…Michigan
Information source: 2014 Wood Processor Report, Maine Forest Service
2014 Data (000 cords)
• Harvest: 5,824 • Processed: 6,027 • Exported: 827 • Imported: 1,029 • All data from 2014 Wood Processor Report, Maine Forest Service
• All data converted to cords (for consistency) assuming 1 cord = 2.5 tons
Input Cost for Delivered Pulpwood
0
20
40
60
80
100
Stumpage Harvesting Trucking Diesel Wood Yards
First, Do No Harm
Give me your business card and get:• Link to my post on Forest2Market – “Despite Lower Demand, Pulpwood Prices Remain High in the Northeast”, 2015
• White Paper on Components of Pulpwood Pricing, prepared for State of Maine, 2015
• Presentation on Benchmarking Maine’s Forest Industry (wood availability, certification, energy costs, etc.) prepared for Maine Department of Agriculture, Conservation & Forestry, 2015
• Link to The Economic Importance of Maine’s Forest‐Based Economy, 2013, North East State Foresters Association
• Northern Logger editorial “No One Else to Blame”, October 2015• Subscription information for the Northern Logger magazine• Your name added to Forest Resources Association NE Region email list, for invitations to upcoming Forums and updates on regional news
Eric Kingsley, Innovative Natural Resource Solutions [email protected], 207‐233‐9910
