Low-Grade Markets, Oil Subsidies

Ron Wenrich woodtick at kaley.net
Sun Jan 30 10:49:53 EST 2000


Joseph Zorzin <redoak at forestmeister.com> wrote in message
news:38940E53.C626E410 at forestmeister.com...
> Karl Davies wrote:
>
> >  Of course the lack of
> > markets for low-grade material is the perennial excuse from loggers and
> > sawmill owners, and some foresters, for their inability to practice good
> > silviculture.
>
> Right, most loggers around here aren't in the silviculture business-
they're
> in the logging business- i.e., they're in the "logging the best trees"
> business- fully approved by our glorious but useless state government-
> fooling landowners into thinking that the harvest will be well done.
>
The harvest is well done, the tree selection process usually isn't.  That's
where the distinction must be made.

>  Adherents of "the rationale" have criticized me and other
> > foresters saying things like "Oh yeah?  If you think you can market the
> > stuff, prove it!"  Of course that's just what we do every day that we're
> > out in the woods marking.
>
> That usually ends the debate. <G>
>
Current low grade markets are pallet stock and RR ties.  Most guys can't
produce a decent tie, so that market doesn't look attractive.  Good quality
guarantees a good market and leads to a better bridge timber market (using
large low grade oaks).  Firewood market has been real low for the past
several years - changing due to colder weather and higher fuel prices.
Biomass is pretty well extinct due to the push by natural gas, coal and oil.
Propose a plant, and they will undercut the price.  Of course, the govt
tampers with the numbers which tips the balance away from wood products.

The available profit from low grade logs is a lot lower than from high
grade.  This is due to high operational costs.  Bolter mills, scragg mills,
and the like have better production capabilites, but no mill wants to put
these in due to the soft nature of the pallet industry.  Cant stock in our
area is going for $280/Mbf delivered, boards at $260/Mbf.  Logging expenses
are higher for smaller trees, as well as handling costs.  If a lot of mills
started to produce an overabundance of low grade stock, prices would drop.
The recent fuel price increase has tacked an additional $10-15/Mbf in
logging costs.

Other low grade markets would include chipping and converting into mulch.
Couple that with firewood production and the cycles cancel each other out.
These markets tend to be more retail oriented, which is beyond most mill
operators who rely on wholesale markets.  Distribution is the key.

I'm not defending high-grading, just pointing out the low-grade markets.  Of
course, we could grow mushrooms <G>.

> >
> >
> > But now I'm thinking a better strategy with these guys would be to argue
> > that if they really want to improve markets for low-grade timber, wood
> > and pulp, then they should get out and work for the elimination of oil
> > subsidies--the real cause for less than optimal markets.

I don't think this will take the traditional high-grade logger into
low-grade stands; unless the difference between stumpage and cut product
will compete.   Firewood is $90/cord.  If it jumps to $150/cord, people
convert to coal and we get a bunch of pickup truck+chain saw operators doing
lousy work.

Chip market is so satuarated that land clearers are blowing chips on the
ground instead of taking them to market.  There is also an abundance of mill
residue to compete for biomass energy.  Of course, the shutting down of
several pulp mills hasn't helped matters.

Higher oil prices will also bring along the promised technology revolution
of fuel cells, solar and wind energy.  Not a bad idea.

RDW







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