Tuesday, February 27, 2007

Forest Fragmentation and Logging

As many people have noted, one of the impacts of the changing timberland scene associated with the HBU sales is forest fragmentation. This is generally regarded as a bad thing but, as I have noted before, it has many positive benefits as well. Either way, it is a reality and certain issues need to be addressed if we expect to practise forestry on these smaller tracts of land.

At one point in my Westvaco career I was responsible for monitoring the global fiber supply. The supply/demand situation was fairly straight forward for most countries but Japan was a real paradox. Japan was purchasing chips from all over the world but hitting our Southern ports very hard. They were importing large amounts of logs from our West Coast and moving aggressively into the Chilean radiata market. On the surface it was obvious that Japan was clearly using more wood than it could possibly grow. But the growth/drain ratio, and herein lies the paradox, told a very different story. Japan was not only growing more wood that it was cutting but Japan was actually growing more wood than it was using! So what was happening?

Forest fragmentation was so severe that harvesting costs were so great that it became cheaper to buy and pay heavy transportation costs than to harvest locally. Will this happen to us?

To a degree, yes, it will happen to us. But we certainly don't have to follow in Japan's footsteps. These smaller tracts of land forming the "family forests" represent an opportunity for a logging model that leaves a "kinder, gentler" footprint on the landscape. Yes, logging costs will be higher and landowners will have to accept less for stumpage than a traditional, high capacity logger can afford to pay. But the Japan experience says that some of the higher production costs would be offset by lower transportation costs.

Question: What is the key to capturing the forest products from the smaller family forests? Answer: Wood Procurement management willing to supplement existing harvesting systems with producers capable of low-impact (and lower production rates) systems. Higher logging costs in return for lower transportation and stumpage costs. Given the current state of the domestic pulp and paper industry, its doubtful that we will see anything significant along these lines anytime soon. But wood demand will increase (nature abhors a vacuum) and this opportunity will present itself in the not to distant future.

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