Page 8 - Georgia Forestry - Issue 2 - Spring 2021

ECONOMIC OUTLOOK
Balancing Supply & Demand
What’s It Going to Take to be More Profitable in the Tree-Growing Business?
The trees planted in the late ‘80s and early ‘90s first hit the market in the early 2000s. This huge surge of wood onto the market really depressed the pulp- wood market. Then, in the late 2000s, those trees planted in the late ‘80s entered the chip and saw market. Most recently, we’ve seen those trees create a huge oversupply of saw timber. That oversupply has been exacerbated by the post-2008 decline in housing starts, less demand due to greater efficiencies in the sawmills, and increased multi- family housing, which requires less lumber than single-family housing.
Working Through the Surplus
What’s it going to take to get back to a decent level of profit?
We have to work through the surplus of saw-timber-sized trees in this state. Based on current levels of growth and harvest, it doesn’t look like it will happen any time soon. But there are a few factors
By Marshall Thomas
Southern pine lumber prices reached all-time highs recently, which in the past would have been good news for tree growers
in Georgia. But not now. The linkage between lumber prices and the prices paid for the trees used to make lumber has been broken by an oversupply of those trees.
Why do we have so much over- supply today?
In the 1980s, as we harvested trees naturally established in the decades following the Great Depression, we planted trees with genetically improved stock, using herbaceous weed control.
We were doubling yields. There was real excitement about making money growing trees. And in response to the collapse of the farm economy in the same period, the Conservation Reserve Program (CRP) encouraged even more planting with government subsidies to take marginal crop land out of production, put it into trees and prevent erosion.
In Georgia alone, 600,000 acres of trees were planted in the late ‘80s, early ‘90s. These trees were planted on old field sites, so they grew much faster than the trees being planted on cut-over sites. We had another surge of planting in the late ‘90s in response to the good markets and demand shifting to the Southeast after the spotted owl was listed as an endangered species.
6 | GEORGIA FORESTRY