News Update Affecting Forest Business & Timber Supply

By Rex Storm, Forest Policy Manger
Associated Oregon Loggers

State Timber Sale Suspension Offer: A devastating timber economy prompted OR Dept. of Forestry(ODF) to offer state timber sale purchasers the option to temporarily suspend, for up to 2 years, any active sale contract that meets certain criteria.  Qualified sales must have sold before 1/1/08, have 2009 or 2010 termination, not be salvage, and have over 10% of volume left to cut.  By March 4th, purchasers can opt to either: 1) suspend with 90% payment; 2) suspend with interest paid; or 3) operate the contract.  This unprecedented suspension entails up to about 40 sales and 150 million bdft.  ODF justifies this first-ever move under contract Section 1570(g), Suspend operations in the public interest to maintain (industry) infrastructure.  AOL reminded ODF that those contractors idled by suspensions may be unable to maintain their infrastructure.

Counties Need State Harvest: Over the long-term, increasing State Forest timber sales by 100 million bdft/year could raise $15 to $35 million/year for NW Oregon counties.  Tim Josi, Tillamook County commissioner and Council of Forest Trust Land Counties chair, wrote a pointed editorial column Feb. 10th in the Oregonian newspaper.  “While the Board of Forestry reads reports in Salem, good-paying jobs from ‘shovel ready’ (timber sale) harvest projects sit idle. These projects would feed Oregon families and provide a lifeline to 15 counties decimated by budget cuts that affect schools, prisons and public safety.”

Hancock & Stimson Reconfigure Timberlands:
On the heels of last autumn’s north coast land purchase by Hancock Timber Resource Group—of 114,000 acres from Green Diamond Resources—HTRG and Stimson Lumber Co. completed a strategic trade that consolidates their respective land assets.  Stimson acquired the former Green Diamond tree farm in Tillamook County near their sawmill; and HTRG acquired Stimson’s Grand Ronde tree farm near the remaining former GD lands in Polk & Lincoln counties.

Weyco has Huge Losses:
Oregon’s last publicly-traded forest products firm, Weyerhaeuser Company, reported that their worldwide fourth-quarter ’08 loss was $1.2 billion.  The shrinking US housing market forced the company to book a massive charge and write-down other assets, as revenues fell far short of operating costs… a familiar note in Oregon’s forest sector.

Schrader Oregon’s Newest Congressman: In Jan., Rep. Kurt Schrader (D-OR) was sworn in to the 111th Congress representing Oregon’s 5th District, which includes Benton, Clackamas, Lincoln, Marion, Polk and Tillamook counties.  Seeking to serve Oregon’s small rural business as he had in the State Senate, Schrader—a veterinarian & farmer—was appointed to two House Committees on Small Business and Agriculture.  “Economic recovery for OR requires a strong commitment towards agriculture and natural resource businesses.” Schrader replaces the retired Darlene Hooley.

Senator Merkley New to Congress: In Jan., Sen. Jeff Merkley (D-OR) became Oregon’s newest US Senator.  Known in the Oregon State Legislature as a staunch liberal, Merkley was appointed to four Senate Committees on: Banking, Budget, Health/Education/Labor, and Environment/Public Works.  Gordon Smith lost the seat to Merkley in the Nov ’08 election.

New Directors on OFRI Board: Oregon State Forester Marvin Brown appointed three new directors to Oregon Forest Resources Institute’s 11-person board.  The new directors are: Wade Mosby, VP of Collins Companies; Steve Zika, CEO of Hampton Affiliates; and Bill Kluting, legislative director for Carpenter’s Industrial Council union.  OFRI is the forest industry’s public education agency, which is funded solely by the forest products harvest tax.

Seneca to Build Cogen Plant: Eugene’s Seneca Sawmill Co. plans to construct a new $45 million waste wood-fired power plant, operating by Oct. 2010.  The 18.8-megawatt cogeneration plant will produce twice the mill’s power needs, selling the remainder to the local utility—enough electricity to power 13,000 homes.

Cogen Resurgence: The resurgence of co-generation technology is driven by rising energy costs and by federal & state tax incentives for renewable energy, although wood-fired power has been used for decades at Oregon timber mills.  Two years ago, Oregon’s Legislature adopted a renewable energy portfolio standard that requires large utilities to get 25% of their power from renewable sources. In the past five years, cogen plants were built by: Freres Lumber, Douglas County FP, Rough & Ready Lumber, Frank Lumber, Fremont Sawmill, and Roseburg FP.

Franklin Shuts: A sign of an ailing US timber industry, Franklin Equipment Co.—makers of skidders, diesel tractors and logging machines popular in the East—declared bankruptcy and shut-down nationwide in Jan.  The Franklin, VA-based business formed in 1962 and had facilities in 25 states, including a foundry in Independence, OR that made axle and transmission housings.  The Independence plant employed 18.

ESA Reform Issued: In December, the US Fish & Wildlife Service (FWS) issued an important new regulation that streamlines so-called “consultation” under the federal Endangered Species Act.  The Forest Service and BLM can now conduct their own internal biological decisions—without obstructive consultation required by anti-forestry biologists at the FWS and NOAA Fisheries. Consultation is eliminated where a beneficial project will not adversely impact a listed species, and FWS or NMFS do not complete review within 120 days.

ESA Reforms Attacked: Democrats in the 111th Congress introduced a measure (H.J.Res. 18), which would erase the streamlined rules that improved Endangered Species Act consultation (adopted in December ‘08).  President Obama (D) supports this scheme that forces the US Forest Service and BLM to succumb to former Clinton-era species hurdles, which often stalled federal timber sales with litigation.  Environmental groups and California Attorney General Brown (D) filed four lawsuits in federal courts challenging the streamlined rules.

Trees Dying in Western Forests: A federal research study found that tree mortality in Western US forests doubled over the past two to three decades, driven in largely by warm temperatures and water scarcity linked to climate change.  The US Geological Survey study examined old growth changes in 76 long-term forest plots in three Western regions.  Although much has been made about “climate”, the obvious conclusion is that the preponderance of aging federal forests means more trees will die.

Ethanol Hits Hard Times: Ethanol stocks have been shocked by a storm of negative factors, including over-production, declining gasoline consumption, rising costs, infrastructure restrictions, and growing debt/borrowing problems.  The lone hope for ethanol makers is added government subsidies and mandates expected under President Obama’s new Secretaries of Energy and Ag, Stephen Chu and Tom Vilsack—both proponents of corn and cellulosic ethanol.

Trouble with Biofuels: Cellulosic ethanol production from waste wood fiber remains cost prohibitive, while inexpensive corn ethanol production has shown to have seldom-mentioned problems that are worse than just using foreign oil.  Research shows that corn ethanol/soy biodiesel manufacture yields little net energy gain, requires taxpayer subsidy, produces more emissions than regular gasoline, and increases net carbon dioxide pollution.  In the coming few years, the best energy future for waste wood is fuelling electricity boilers or co-generation.

Ecosystem Services Pursued by Feds: The US Dept. of Agriculture has created a new Office of Ecosystem Services & Markets, which will be directed by a new Conservation & Land Management Environmental Services Board.  Created by the 2008 Farm Bill, this new federal agency will assist the Secretary of Ag to develop policies that promote markets for so-called “ecosystem services”—including carbon credit trading and biomass energy.  Former Deschutes Nat. Forest supervisor and Forest Service associate chief, Sally Collins, has been appointed OESM Director.

Newspapers Reeling in Loss: America’s economic recession has been a double impact on the newspaper industry’s already declining readership.  US demand for newsprint paper dropped 20% in 2008, after an 11% decline in 2007, according to the Pulp & Paper Products Council.  In response to declining revenues, most newspapers print fewer pages and several are facing bankruptcy.  The printed liberal bias is becoming a less popular media, challenged by an expanding array of cable, online, radio, satellite and cellular news.

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