Wednesday, November 18, 2020

Timber Industry Update

I saw this in the Morning Ag Clips and thought I would share with my readers.  It was written by Andrew Muhammad, Professor of Agriculture and Resource Economics at the University of Tennessee.

American timber industry crippled by double whammy

Trade war, COVID-19 pandemic, natural disasters all take their toll on the timber industry

PUBLISHED ON November 17, 2020

WASHINGTON — The forestry sector – landowners, logging companies and sawmills – have lost an estimated US$1.1 billion in 2020. Devastating wildfires and Hurricane Laura have played a part, but the COVID-19 pandemic has also contributed to significant losses. If workers are required to stay home, then no trees will be felled or logs sawed into lumber.


These losses have been exacerbated and amplified because of a longstanding trade war that has severely curbed the sale of U.S. forestry products to foreign markets, particularly China.

I am a professor of economics with a specialty in international agricultural trade, trade policy and global food demand. My work at the University of Tennessee Institute of Agriculture is informed by my nearly 10 years as a senior economist with USDA researching international trade issues affecting agriculture and forestry.

The US-China connection

Forest product exports in the U.S., including logs and lumber, were valued at $9.6 billion in 2018, according to the U.S. Department of Agriculture. Forest products are the third leading U.S. agricultural export sector after soybeans and corn. In 2018, China accounted for nearly $3 billion of U.S. forest product exports.

The forest products relationship between China and the U.S. is complex. The U.S. sells logs and lumber to China; China uses the logs and lumber to produce finished wood products, such as furniture and hardwood flooring; and China exports these finished wood products to the world. Interestingly, the U.S. market is the leading destination for these exports. In 2018, U.S. imports of wooden furniture and other wood products from China exceeded $9 billion, according to the U.S. Census Bureau.

This raises an obvious question: Why doesn’t the U.S. simply make furniture and flooring? The answer is wages. The wage differential between U.S. and Chinese workers makes it more profitable to sell logs and lumber to China and then buy back finished wood products.

Since the demand for products like logs and lumber is directly linked to the demand for finished wood products like furniture and flooring, any decline in the latter negatively affects U.S. forest product exports. To say that what happens in China does not necessarily stay in China is an understatement.

A vulnerable industry takes the hit

COVID-19 has caused a major disruption on U.S. forest exports and hindered production because of lockdowns, business closures and production stoppages. Many of these supply disruptions started in China, where lumber was being turned into furniture, chairs and other goods where the pandemic began.

However, another major factor has been the interruption of demand because of decreased incomes and delayed purchases by consumers. In the U.S., furniture sales decreased as much as 66% in April 2020 when stay-at-home orders went into effect. As of August of this year, U.S. imports of wood furniture and other wood products from China were down by nearly $2 billion, or 40%.

Consequently, U.S. forest product exports as of August 2020 had dropped by more than $670 million overall, with exports to China down by more than $100 million. Geographically, most of these losses are in the South, a loss of $246 million, followed by the West, with losses of $183 million, and the Northeast, with losses of $143 million. In addition, these substantial losses are compounded by a multiplier effect that go beyond the raw export numbers.

In my state of Tennessee, for instance, the forestry sector provided nearly 100,000 jobs and had an annual economic impact of more than $24 billion in 2017, accounting for nearly 3% of Tennessee’s economy. This, of course, was before the COVID-19 pandemic and the U.S. trade war, which has devastated the forestry sector. When considering the related activities associated with the forestry sector, such as trucking or equipment, total income and job losses are likely double the direct losses from export sales.

The economic fallout of the trade war

Prior to the pandemic, the U.S.-China trade war had already made the forestry sector vulnerable because of the tariffs that the Chinese government imposed on U.S. timber and the resulting loss in exports. The industry was in a crisis when COVID-19 hit.

In 2018, President Trump ordered that tariffs be imposed on Chinese imports, including a 10% tariff on furniture and related goods from China. In retaliation, the Chinese government imposed tariffs on many U.S. agricultural goods, including 25% tariffs on U.S. logs and lumber. This double taxation resulted in nearly halving the export to China – from $3 billion in 2018 to $1.6 billion in 2019. The trade war, compounded by COVID-19, has had a major negative effect on forest products export sales – from timber harvest and lumber production to timber exports – which hurts working people including loggers and mill workers. Sawmills, in particular, have taken a serious hit.

How is this related to the current pandemic? In January 2020, the U.S. and China signed the Phase One Trade Agreement. Based on the details of the agreement, timber and other forest product exports to China were expected to reach more than $4 billion in 2020. The fact that current export sales to China, as of August of 2020, were only $1 billion suggests that COVID-19 is having an even larger impact than the numbers reveal.

–Andrew Muhammad

Professor of Agriculture and Resource Economics

University of Tennessee

Monday, November 2, 2020

Foresters, Loggers, and Trees

Introduction:

At the 2020 Pennsylvania Farm Show the Hardwoods Development Council (HDC) hosted the Pennsylvania Hardwoods exhibit. The exhibit’s theme was Imagine the Opportunities of a Smaller Carbon Footprint. The exhibit was made possible by a collaboration between the HDC and the three Pennsylvania Hardwood Utilization Groups (HUGs): Allegheny Hardwood Utilization Group, Keystone Wood Products Association, and the Northern Tier Hardwood Association.

The Hardwoods exhibit featured seven educational displays, all pertaining to how implementing sustainable forestry practices and the use of hardwood products can help reduce one’s carbon footprint. This is the fourth in a series of seven articles. These articles will provide information pertaining to each of the seven themes that were displayed. One article will be provided monthly.

Article 5: Foresters, Loggers, and Trees

By Jonathan Geyer and Dave Jackson

The forest products industry begins in the forest with foresters and loggers. Foresters help forest landowners implement practices that lead to healthy, well-managed, sustainable forests. It is the Loggers job to harvest the trees the foresters indicated should be cut. Loggers are an essential link in helping to enhance the health of our forests, improve wildlife habitat, and provide the industry with raw material.

When foresters manage forests in a healthy, sustainable way, they sequester carbon, thus reducing air pollution. Photo by Jon Geyer







Pennsylvania’s professional timber harvesting workforce serves an essential role in ensuring the sustainability of our state’s forest resources. Each day they operate as the boots on the ground, carrying out critical management activities that supply our forest products industries with the raw material necessary to produce wood products. There is no other link in the wood fiber supply chain that has as much of a direct impact on the management of our state’s forests. As such, timber harvesters in Pennsylvania are vital stewards of our forestlands.

Since harvested wood can store carbon for hundreds of years in various products from furniture to flooring, logging, when done properly, enhances the health of our environment. Photo by Dave Jackson

The Commonwealth’s forest products industry has a $21.6 billion direct economic impact to the state’s economy. The industry has over 2,100 companies that employ more than 66,000 Pennsylvania’s. Of those, just under 3,000 are foresters and loggers. The industry depends on foresters and loggers to provide the wood resource that keeps the industry working.

Pennsylvania is the only state in the nation named for its forests. In Latin, Pennsylvania translates to “Penns Woods.” Roughly 740,000 Pennsylvanian’s own nearly 70% of the state’s forests. Photo by Dave Jackson

To help landowners make wise and informed decisions on how to manage their forests the Pennsylvania Bureau of Forestry has service foresters assigned to each county. Contact information for county service foresters can be found here. Besides service foresters, there are also private consulting foresters who work across the state. The Bureau of Forestry maintains a list of consulting foresters that can be found here. Penn State Extension is also a great resource for landowners, they provide various publications, trainings, webinars, and workshops on forest management. With the proper instruction, tools, and technical assistance, landowners can manage their land in ways that enhance the production of wood, wildlife, water, and recreation.

Forestry, Wood, and Baseball


Recently a friend of mine by the name of Steve Bratkovich published a book that deals with forestry, wood, and baseball. The book is entitled The Baseball Bat: From Trees to the Major Leagues, 19th Century to Today. It was quite a long and challenging process, but Steve was able to combine two topics that he loves, trees (wood) and baseball. He turned the manuscript in to the publisher 16 months ago and it finally hit-the-streets.

Check it out at https://mcfarlandbooks.com/product/the-baseball-bat/ or at Amazon https://www.amazon.com/Major-League-Baseball-Century-TodayThe/dp/1476679282   

Steve is donating all author royalties to charity, primarily Cerebellar ataxia research (which is the neurological disease the author has).

Thanks for your support. 

Wednesday, October 21, 2020

Working Forests Work Video


A new educational video entitled "Working Forests Work" has just been completed and released. The project was spearheaded by the Keystone Wood Products Association and the PA Department of Agriculture's Hardwoods Development Council in collaboration with the Allegheny Hardwood Utilization Group, the Northern Tier Hardwood Association, the Sustainable Forestry Initiative Implementation Committee, and the Pennsylvania Forest Products Association along with several other state agencies as well as industry associations. Feel free to share this video on your social media. Spread the word that Wood is Good, and our only renewable, biodegradable, and recyclable natural resource.