I own and manage a 55 acre forest in Tillamook County. The proposal to increase the state's timber harvest by 30 million board feet in this economy makes no sense at all. From an economic standpoint, it makes far more sense to let the trees grow until log prices return to their pre-economic downturn levels, then keep harvests within the 150 million board feet/year limit that ODF recommends.
Here's the business analysis for timber sales: It costs about $0.25/board foot to harvest timber and deliver the timber to the saw mill. That number can go up or down, depending on fuel prices, distance to the mill, and competition between loggers. However, that number is pretty stable over time. What isn't stable is log prices.
A saw mill might pay, in today's market, an average of $0.26/board foot for hemlock and spruce. Douglas fir might sell for $0.30/board foot. That means that essentially no revenue is generated from the harvest of spruce and hemlock; harvesting douglas fir yields $0.05/board foot. Harvesting 300 million board feet of douglas fir, as suggested by the proposed rule change, might yield $15 million in today's market. Not much revenue for a whole lot of trees being cut down. Of course, dumping 300 million board feet of timber into a depressed market will push prices even lower, cutting timber revenues.
However, if we look at log prices from three years ago, before the economic downturn, hemlock and spruce sold for $0.43/board foot, and douglas fir sold for $0.65/board foot. Net revenue was $0.40/board foot for douglas fir, 8 times what it is today!
Historical log prices can be found at:
We can expect log prices to return to previous values at some time in the future.
Here's what we could do: wait to harvest timber until market prices return to their pre-downturn levels, then harvest 150 (not 300) million board feet. At net revenue of $0.40/board foot, we realize $60 million in revenue. That's four times the revenue for half as many trees cut down.
-- Doc Martin
posted 3 years, 11 months ago
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