September 14, 2013

Forestry industry in SC is making a comeback

South Carolina’s forests are fuller than at any time in the past 100 years, just as demand for wood is very slowly on the rise and prices also are creeping up.


South Carolina’s forests are fuller than at any time in the past 100 years, just as demand for wood is very slowly on the rise and prices also are creeping up.

That could portend a pine harvest boom in the next seven years and trigger the most significant seedling replant of the 21st century in the state, forestry experts say – depending upon how fast the U.S. housing market comes back.

A new study, set to be released next month, predicts the 20 million-ton annual wood harvest rate in the Palmetto State will increase by between 4 million and 8 million more tons by 2020, a 20 percent to 40 percent increase.

That, of course, is good news for tree growers, who have been sitting on a couple of decades or more worth of harvest-ready softwoods, as they rode out the Great Recession and the struggle to begin recovery from it.

“We are excited to see that the study shows increased total wood availability for many years to come,” said state forester Henry Kodama, of the South Carolina Forestry Commission. “South Carolina’s forest industry and forests are critical to the state’s economic and environmental health.”

The new study, a nine-month undertaking known as the “20-15 Project,” is the work of the Forestry Commission, the South Carolina Forestry Association – which represents landowners, tree growers, conservationists and others – and their partners, including regional timber market specialist Bob Abt, of North Carolina State University, who conducted the study.

The study, initiated in 2009 – after the recession, which officially ran from December 2007 to June 2009 – was designed to help the S.C. forestry industry recover from the recession and have a greater economic impact on the state.

Forestry products in the state include sawtimber – which is a mature, large diameter pine – and pulp, paper and pellets made from small, roundwood pine.

Forestry is the No. 1 manufacturing industry in South Carolina in terms of jobs, at 90,624 employed, and payroll, at $4.1 billion annually, according to state and federal statistics.

Timber, according to those figures, is the state’s No. 1 commodity at $784 million a year, the No. 1 export out of the Port of Charleston at 30 percent of volume, and the state exports more than $1.4 billion in forest products each year.

Right now, S.C. timber volumes and growth are at record levels and rising, officials said, which provide for expanded mill production and employment growth, along with improved financial returns for landowners.

There are 23.4 billion cubic feet of wood in S.C. forests, more than at any time in the past century, including on pine plantations, which now provide more than 50 percent of the state’s pine harvest, officials said, and on smaller individual holdings.

The 20/15 project’s goal was to increase forestry’s economic impact in the state from $17.4 billion in 2006 to $20 billion by 2015.

“The (timber) situation in South Carolina is sort of defined by the planting history and the cycles of the planting history,” said Abt, who concentrated on the economics of timber in the 20/15 study.

Seedling planting in South Carolina is down 75 percent over the past decade from levels in the 1980s, the study finds.

Overall in South Carolina, the planting trend and the drop off in planting in the state means there are plenty of larger trees, Abt said, but in a world that’s still in a recession, people aren’t demanding the larger pine trees anymore.

The demand for small pine trees, used to make paper and at pellet plants, on the other hand, didn’t go down at all during the recession, he said.

“One of the opportunities for the state of South Carolina is how to get the planting cycle started again, and to me, a key factor there is going to be what happens to housing starts,” Abt said. “If housing starts don’t come back quickly, people will still postpone that harvesting of the big trees, and therefore new trees aren’t planted, continuing this cycle of low planting.”

A growing housing market would trigger cutting the big trees and planting more small trees, and that would put the state on a better cycle for the next couple decades, Abt concluded.

Three key factors account for the state’s existing mix of timber inventory, said Kodama, the Forestry Commission state forester.

The first is the federal and state government’s strong push in the early 1980s to get landowners to plant pines under the Conservation Reserve Program. There, landowners were incentivized to plant the trees, covering unused farmlands and in some cases, growing pines instead of crops.

The second reason is the devastating 1989 weather phenomenon, Hurricane Hugo, which ravaged South Carolina and destroyed approximately three years of tree harvest, Kodama said.

Only a single-digit fraction of a forest’s value can be saved after a major hurricane, Kodama said, and barely a double-digit fraction (10 percent) of its volume.

The third factor accounting for the state’s disparity in its timber age inventory is the Great Recession, Kodama said. Two million housing starts in 2005 dropped off to 500 million when the downturn hit a couple years later, all but halting real estate construction and timbering – until now.

South Carolina, which is almost 70 percent forest (13 million acres out of 19 million acres total land) must concentrate now on getting more economic impact per ton of timber and lowering the number of tons needed per job, or per use, in industry to maximize forestry’s value, Kodama said.

“That’s what we’re focusing on now, is how to improve the economy of South Carolina and do more jobs by understanding the forestry cycle,” Kodama said, “and moving wood where it ought to be moved to create the most impact and the most jobs.

“That’s what that 20 by 15 is all about, is to study it, understand it, then push the right buttons.”

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