Governor's Advisory Committee on Chip Mills

Statement to Chip Mill Advisory Committee

Feb 1 1999

Hank Dorst, Mark Twain Forest Watchers

Need to take close look at statistics – can't take raw growth/removal #s

A general look at the numbers will show Missouri has a cushion of growth to exploit.

Numbers from different sources are different. Several subtly different categories exist. Raw numbers need to be put into real world scenarios.

Actual timber base is smaller than gross figures indicate.

Growth/removals ratio:

Growth:

Subtract:

Some owners won't cut: - (19% in Ark Ozarks.)

Some land not-operable/inacessable

Removals:

Add: out of state raw log exports

Example of number confusion: MDCs use of 50 tons per acre off a couple thinnings, extrapolation to 100 tons clearcut.

- This was likely a high quality site, with a well stocked stand of timber. Much private timber land is not well stocked with large diameter trees. Small Sample.

- Other states numbers:

Arkansas study (Guilden+Gray) pg. 9:

Forest survey data: Average private stand (NIPF) in Western Arkansas Study Area (the Ark Highlands): 30-37 tons

Thinning Volume – only 12 tons from 6"-10" trees per acre

***(Their statement that it's not profitable for companies merely to thin whats needed – need to cut addl' poles + some STBR to make profit.) ***

- TVA 1993 E.I.S. used 38.5 tons per cc acre (F.E.I.S. Tenn. River Chipmills Vol. 2, pg. 641.)

Emerging trends:

Sourcing to the south:

Southern timber shortage: speculators for both STBR+Rdwd:

Winona – Bibler Bros-buying pine + timberland- (bought by Weyerhauser?) (Supplys Russellville Arkansas mill.)

Willow Springs – LEDC from Georgia, sells to southern pine markets, experiments with hdwd sales. Bought land locally.

RR link; can feed Ark River + other southern HCCMs

If they open hdwd STBR/rdwd market: could hit local supply hard

Ark River mills could need our timber as soon as 2004 - Via rail link

Increasing Missouri cut in stbr:

Cut up 20% from ‘91-'94 (570 mmbf-709 mmbf) (Mo Wood Products Bulletin 97)

Augmented by HCCMs (both rdwd + stbr) – (HCCMs buy stbr, sell to local sawmills, use rdwd themselves.)

Land turnover due to large # of ageing landowners coming: increases likliehood of being logged (commonest time to log is just before or after sale)

****MO wildcard: our 2 HCCMs are capable of producing much more than their projected goals. (i.e. milling and loading capacity is greater than projected goals.) ****

Other states experience with rapid cutting increases:

Tennessee – Increased cut rdwd from 1989 to 1996: 2.7 to 5.2 million tons (paper distributed to committee.)

W. VA. – From 1987 to 1995 state cut doubled. (Employment only up by a third.) (1 to 1.3 removal to growth ratio)

(www.wvgazette.com/timber/)

Kentucky – state economic developers refused to provide tax credits to a chipboard mill because of concerns about wood supply.

Alabama: Mobile Register Guard series on Alabama forests.

www.mobileregister.com/forest/

Missouri Ratio: Avg. 1972-88 Removals were 41-44% of growth

(409 mmbf cut out of 1 billion grown) – '94 cut was 709.

My estimated guess is we're cutting at perhaps 70% of growth. What is the current figure?

MDCs "Background Info on Forest Resources" (Nov 25th Adv Com meeting states about 70% of AGS growth is cut in HCCM source area. Using their estimate of additional drain from HCCMs, if it all came from AGS, cut would equal growth.

Hence their statement: **** " . . . it is important that the additional drain, resulting from chip mills, be taken from the rough growing stock category in order to minimize the effect on existing industry. In the past, the majority of drain has come from the good growing stock . . . " ****

(-Another way to look at the 20 million cubic feet estimate for HCCMs is that it represents around 23% of all growth (AGS plus Rough and Rotten) in source area. A significant new drain.)

Forest Management:

- How to insure that HCCM cut is centered on "Rough and Rotten"? This is a central question.

- How to transfer forest management information to landowners, loggers, etc?

- There is general agreement in the forestry community that current assistance programs are inadequate.

- Also agreement that mgt. advice is essential.

- If no control over gatewood, HCCM demand will be negative. (Forester statements to CFM SubCommittee.)

- (Current logger training prototypes focus on safety + BMPs)

- The debate over clearcuts (EAM) vs. selection cuts (UAM):

- No easy answers, but Uneven Aged Management can be more financially lucrative and yield a more regular return than EAM. UAM also better for multiple use.

- See John Dwyer submission to CFM Forestry SubCommitee on HCCMs for UAM information.

- Many NIPF stands are currently in uneven aged condition due to past cutting.

- UAM is easier for most landowners, and society at large, to see the benfits of forest management.

- Even if EAM is "good": What about 300 acre heavy cuts?

- Concern that heavily cutover timberland will become "defacto dedicated" to rdwd production, that it will not be allowed to grow back to stbr, it will be cut for chips when it's big enough. (i.e. Short rotations dedicated to HCCM supply.)

Likely future developments:

- more heavy cuts as stbr hi-grades become rdwd hi-grades.

- larger heavy cuts.

- more competition for all diameters, tighter supplies.

- higher price=better management?

probably will push some landowners positively, but

will make others more likely to liquidate for fast money.

encourage investors to buy and log off parcels.

All this must be seen against a background of slow growth/low productivity soils in Ozarks – much lower site quality than south or Appalaichans.

Economic Development –

Rural economic development not driven primarily by resource dependant industries as in past:

- communications

- education

- quality of life, amenities

"Our . . . hills. clear water, mild climate and rural Ozark culture now might be our best selling points to folks who want to invest and reside in our area. These points relate to the aesthetic values more than the productive values . . . This creates a new challange to those who want to plan for local development." "The challange is to grow without destroying those qualities which drive our growth."

- Forrest Pugh, writing on agriculture, 3-11-98 – S. Central Agri-Advertiser.

(Assessing economic tradeoffs in forest management – 1997 Gen. Tech Report PNW-GTR-403

www.fs.fed.us/pnw/pubs.htm

- Makes the point that increasing volume to mills doesn't contribute equal increases in employment, partly due to automation. Other details on rural development.)

Mills in HCCM Source Area (eastern Oz+4 RiverBorder counties):

- 14 large mills (over 5mmbf)

- 176 small or medium

(Statewide, in '94, there were more total mills than '91, in spite of less small mills.)

- Pallet mills employ more people, and will compete for wood

- Sawtimber mills are concerned about reduction in good growing small trees, their future sawtimber. (The direct stbr competition arguement advanced by some is a red herring, it's future stbr being allowed to grow that is a concern.)

(- Ideally, chips probably should be a niche market, like Garnetts, using coarse mill residue, perhaps some rdwd, not high capacity chip mills.)

Split in HCCM industry between domestic producers and exporters like canal.

Conclusions:

- Don't offer incentives to more HCCMs.

- Incentives to value-added industry.

- Economic development shouldn't recruit HCCMs.

- MDCs and UMCs Forest Products Utilization people shouldn't attempt to attract more HCCMs.

- How to increase use of BMPs?

- How to increase "good" forest management?

- How to focus HCCM cut on "Rough and Rotten"?

- Legislation to not allow new high capacity wood industries if state judges it is not in best interest. (Ky. model)

- There is political will to address this challange.

- Tax on HCCMs for Forest Mgt. Education?

Carefully monitor current HCCMs for a variety of impacts, ranging from wood utilization to environmental impacts.