Ga.’s bright forest future

In an economy that has been as unpredictable as the World Cup, a classic contender may become the reigning champion. Given current conditions in the U.S. and overseas, the next 10 years could very well be the “decade of forestry.” Georgia’s abundance of trees could position the state to reap rewards.

First, housing starts are expected to increase now that the job market is improving. Household formations have been far below the historic average because of the U.S. economy’s anemic pace. Job and income growth, particularly for adults under 35, have been slower than in past recoveries. Millennials have been reluctant to form households or buy homes.

But look for that to change over the next two years. Housing starts will climb above 1.5 million units annually from the current 1-million-unit level by 2017.

Second, China’s demand for lumber will remain high over the next 10 years as the country builds vast metropolises. The Chinese also are showing interest in container log shipments from the South.

Major timber-producing regions will be unable to meet the strongly growing demand over the next five years. The housing rebound and Chinese exports mean North American lumber production needs to increase by 13 billion board feet by 2017-18.

The Canadian lumber industry, however, cannot expand; it’s shrinking. Canadian lumber capacity will drop from a peak of 39 billion board feet to under 31 billion board feet over the next few years; the pine beetle has destroyed millions of forest acres, or about half the commercial pine forest in British Columbia.

And because the U.S. Pacific Northwest ramped up its harvest after 2007 to meet China’s log demand, it hasn’t seen a large build-up of timber inventory. Western lumber production could increase by 3 billion to 4 billion board feet, but that still leaves a big gap to fill.

Georgians should feel optimistic and confident about the future of the forest products industry because:

• Unlike the U.S. West, Southern timber inventory has increased and will support sustained growth in lumber production. Georgia has 24.3 million acres of timberland, strong infrastructure, experienced foresters and two vibrant ports.

• As the housing market improves, the U.S. West and Canada will not be able to fill the demand for lumber and logs. High mill margins in Southern sawmills plus ample timber supply will push lumber production above its previous peak of 19 billion board feet in 2005.

• Pellet mills are part of the picture. The Southern wood pellet industry didn’t exist in 2005. This year, close to 8 million tons of pellets will be produced. By 2017, production will approach 11 million tons. Over the past six years, Georgia’s pellet mills grew from zero to nine. More are being built. Places like Hazelhurst, Sandersville and Waycross are becoming biomass producers.

Although bustling Atlanta’s gleaming office buildings may seem a long way from the state’s quiet forests, those trees are one of the largest industries in Georgia, pumping $29 billion a year into the economy and paying more than $600 million in taxes. Georgia’s forestry future has plenty to cheer about.

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