There Are So Many Forests In Southern US That It’s Wrecking Timber Prices

Tim Pearce | Energy Reporter

Timber farmers in the southern U.S. are struggling to make a profit harvesting stands of trees planted decades earlier when market prices were significantly higher, The Wall Street Journal reports.

The southern U.S. is rich with pines and hardwood, but sawmills that can process the raw timber are relatively scarce. The market price of southern pine has fallen 45 percent since 2007, and the price of saw-timber – used for lumber – is at a five-decade low, Auburn University forestry economics professor Daowei Zhang told WSJ.

Roughly 10 million people in the South own plots of forested land. Decades ago, buying a plot of land and seeding it with trees was a popular alternative to investing in stock or funding a retirement account. The price of timber typically ensured a good profit margin, and the federal government was encouraging forest and tree planting by handing out subsidies worth $30 to $50 annually for every acre set aside to grow trees or grasses.

“If you work and you didn’t want to put all your money in the stock market, you’d buy 40 acres and plant trees and they’d be ready to cut by the time your kid went to college,” Lincoln, Alabama, timber broker Skip Stead told WSJ. “It’s like a 401(k).”

The South’s glut of lumber may have diluted some of the impact of tariffs on Canadian softwood, however, before Canada joined the U.S. and Mexico in a renegotiated NAFTA trade deal. (RELATED: Tariffs Making Houses More Expensive For Many Americans)

Large timber companies operating in the South have been able to ship lumber out of the glutted market to other areas of the U.S. where timber prices are higher. The housing market has recovered some since the Great Recession, increasing the demand for lumber in many areas of the U.S.

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Tags : alabama north american free trade agreement the wall street journal
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