In recent years, the forestry industry has seen dropping timber prices, a shifting demand in the housing market for wood products, and a continued trend of increased regulation putting strain on multiple facets of the industry, from small forestry operations to regional mills.
Since 2014, timber prices in Washington have dropped significantly, according to a report from the state Department of Natural Resources. Prices peaked in January 2014 at $393 per 1,000 board feet, dropping to $287 per 1,000 board feet in May 2015, according to the report.
Since May prices have buoyed again, reaching a year-to-date average of $317 per 1,000 board feet as of September, when the report was published.
Dipping timber prices were evident in Oregon as well, said Paul Barnum, executive director of the Oregon Forest Resources Institute. However, like Washington, Oregon has seen prices start to move upward again.
“It’s a commodity business, and prices fluctuate,” Barnum said.
With a rebounding housing market, the timber industry has started to see some growth, Barnum said, but it’s been slow since 2009.
Housing starts, a measure of the number of construction projects started on new private homes, rose to just over 1.2 million in September, a 17.5 percent increase over the same measure in September 2014, according to a joint release from the U.S. Census Bureau and the Department of Housing and Urban Development.
That growth in housing starts hasn’t had as much impact on the timber industry as some hoped, however, due in part to new trends in building, said Cliff Tuttle, plant manager for the Hampton Lumber Mills Inc. Warrenton division.
In recent years the number of single-family dwellings has slowed. More multi-family units — which tend to use less lumber — have taken their place, he said.
“Even though the housing start numbers are finally starting to recover a little bit, it doesn’t necessarily mean it’s the same consumption of wood that it would have been 10 years ago for a comparable number,” Tuttle said.
Environmental and land-use regulations have been building up for decades, said Doug Cooper, vice president of resources for Hampton Lumber Mills. Regulations to protect riparian zones have been a focus in both Oregon and Washington, and have the capacity to cut into workable forest land in favor of protecting waterways, Cooper said.
Rex Storm, a forest policy manager for Associated Oregon Loggers, echoed Cooper, adding that as regulations in forestry and business regulations in general increase over the years, it provides a heavier economic burden for timber businesses.
“Depending on the outcome (of recent policies), there’s that pressure to add more regulation, which translates to more cost, which translates into lower profit or lower economic return,” Storm said.
Even without increases in regulation policy, the increasing number of agencies involved in land regulation put a strain on tree farmers, said Greg Patillo, owner of Patillo Tree Farms in Raymond. Roughly one-third of Patillo’s 700 acres aren’t available for him to use due to regulations, he said.
In particular, Patillo takes issue with the fisheries representatives requiring buffer zones around seasonal streams, or streams that don’t hold water year-round.
“We kind of think they’re a little bit out of line — they’re exceeding the rules at this point,” Patillo said.
He understands the need to protect the environment, Patillo said, but feels that, at times, regulations have been allowed to grow too far and create undue strain on foresters looking to use their land.
Exports, in particular those to China, a normally strong consumer of U.S. timber, have dropped in recent months, Barnum said. That decrease has had a significant impact on the flow of wood domestically, Tuttle added.
“China has been a huge customer of not only the United States, but also of Canada, but that has fallen in recent months so we are not seeing as much lumber or logs exported to China currently,” Barnum said.
As foreign demand lags for Oregon and Washington timber, the domestic market has absorbed some of the timber that’s not leaving U.S. shores, Tuttle said.
It takes months to plan a harvest, Tuttle said, meaning that, when a dip in demand occurs — like the one in the export market — harvesting takes some time to catch up with demand. That, in turn, leaves more wood than normal available in the domestic market, which can depress the price of domestic wood products somewhat, he said.
“I would say that there... have been plenty of logs of reasonable quality because the Chinese haven’t been taking as much wood and because the system was set up to harvest quite a bit,” Tuttle said.
Eventually harvesting will catch up with market demand and the number of logs available will even out again, he added.