“Good stewards of your timber for over 30 years”.

Burns Forestry

FORESTRY NEWS LETTER SUMMER 2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOW SPB LEVELS CONTINUE

 

             For seven consecutive years no infestations of the southern pine beetle (SPB) were detected in East Texas, Louisiana, Oklahoma, or Arkansas in 2005.  Attractant-baited trapping in March of 2005 correctly forecasted these low infestation levels and the 2006 SPB survey indicates another low-activity year.  SPB outbreaks have historically occurred every 6-9 years in East Texas, the last outbreak subsiding in 1994.  A few infestations were detected from 1995-1998, mostly on federal lands.

             Preventative measures to avoid SPB losses in the future include thinning dense pine stands with over 120 square feet per acre to maintain the vigor of the remaining trees.  Healthy pines are more capable of warding off initial beetle attacks with copious flows of pitch or oleoresin.  Also, SPB spots are less likely to expand in thinned stands.

             Despite damage to pines from Hurricane Rita and another mild winter, SPB populations have not rebounded from the low levels since 1998.  Continued low SPB levels are expected throughout this year in East Texas, Louisiana, Arkansas or Oklahoma.

 

GAO REPORT

 

             The Government Accountability Office (GAO) has issued a report (GAO-06-624) on federal research and development related to wood utilization.  The report notes that the U.S. is the world’s leading producer of lumber and wood products used in residential construction and in commercial wood products in 2004.  The nation is also a leader in the pulp and paper business.

             However, the report also states that the US forest products industry faces increasing competition, not only from Canada, Japan and the Scandinavian countries, but also from emerging competitors such as Brazil, Chile, and Indonesia.  Approximately 120,000 jobs were lost in the paper-manufacturing sector from 1999 to 2004 and during the last decade.  The furniture industry lost about one-third of its market share to wood imports.  The report suggests additional federal research and product development is needed to boot U.S. competitiveness.

LA HURRICANE LESSONS

 

             The theme of the recent Louisiana Society of America Foresters annual meeting was “Louisiana Foresters Weather the Storm.” Foresters discussed the after effects of the Hurricanes Katrina and Rita which rolled through the Gulf Coast in 2005.  The Forest Service estimates the storms damaged more than 5 million acres in Mississippi, Alabama, Louisiana, and Texas.

             Claudette Reichel and Rich Vlosky of the Forest Products Lab at the LSU Agricultural Center spoke about new construction techniques.  While homes have been built on concrete slabs for the past 30-40 years in New Orleans, they recommend building raised houses with wood floors that can better withstand flooding.

             Katrina downed at least 10 years worth of pine harvests and it was dangerous to get the logs on the ground because the green timber that was bent could potentially spring back.  The state had to bring in bulldozers from the Forest Service because theirs weren’t large enough to move the downed timber.

 

HURRICANE DISASTER AID

             Texas landowners may apply federal aid for the restoration and replanting of forests damaged by Hurricane Rita last year.  The emergency Forestry Conservation Reserve program (EFCRP) is designed to restore and enhance critical forest habitat damaged by the hurricane.

             Family forest owners must have losses of at least 35 percent of the timber value.  Participants will remain under contract for 10 years and may receive annual rentals over the contract period or a discounted lump sum payment.  The landowners may also qualify for 50 percent cost-share assistance to offset reforestation and/or rehabilitation expenses.

             The area damaged must be at least 10 acres.  The Consolidated Farm Services Agency (CFSA) will administer the program and the Texas Forest (TFS) will provide technical assistance in damage assessment, as well as mitigation and recovery practices.

             The following Texas countries are included in the EFCRP:

Angelina                                                  Brazoria                                      Chambers

Cherokee                                                 Fort Bend                                   Galveston

Gregg                                                       Hardin                                         Harris

Harrison                                                  Houston                                      Liberty

Jasper                                                       Jefferson                                     Nacogdoches

Marion                                                      Montgomery                              Panola 

Newton                                                    Orange                                         Sabine 

Polk                                                          Rusk                                            Shelby 

San Augustine                                         Tyler                                            Walker 

Trinity

 

PRESCRIBED BURNING GRANTS

 

             The Community Protection Grant Program gives prescribed burning grants for private lands within 3 miles of a National Forest.  Landowners will be reimbursed for the cost of prescribed burning not to exceed $30 per treated acre.  Applications are available from Ernie Smith, Texas Forest Service, (903)-734-7007.

 

I.P. SUIT

 

             International Paper (IP) has agreed to settle a class-action suit brought by a group of Southern landowners that alleged the company’s purchasing policies used agreements with suppliers to depress stumpage prices.  The action was filed 2002 and was granted class-action status in 2004.  The plaintiffs had sought $60-80 million.  IP, without admitting wrong doing, agreed to a pre-trial settlement of $12 million, which included the plaintiff’s legal fees.  The negotiated settlement is subject to a final hearing scheduled for September 25.

 

TIMBER GROWTH

 

             According to data derived from the “U.S. Forest Service Forest Resources of the U.S.-2002” tables (http://fia.fs.fed.us/rpa.htm.), southern pine exhibits an average annual growth rate of 6.52 percent.  Industrial forest landowners, however, increased their pine biological growth rate in the South from 6.5 percent in 1953 to 9.0 percent in 2002.  Southern hardwood growing stock averages about 3.5 percent per year.

 

WOOD PELLETS

 

             The use of wood pellets as a fuel source has been overlooked, but is now rapidly gaining attention.  More than 600,000 homes in North America, as well as many schools, manufacturing facilities, prisons, and retail businesses are heated by wood pellets.

             Tall Oil Canada Inc., a subsidiary of the Swedish bio-energy company Tall Oil AB, recently announced the expenditure of nearly $136 million (US) to build four pellet-manufacturing plants in British Colombia.  The factories will make pellets primarily from mill waste products.  Millions of trees in interior British Colombia have been killed by massive Mountain Pine Beetle attacks.

             Tall Oil will ship most of the pellets to Sweden, the world’s top producer of pellets with an annual production of 1.36 million tons.  It is followed by Canada with 1 million tons and Russia with 758,000 tons.  The U.S. currently produces 600,000 tons per year.  According to the Pellet Fuels Institute, based in Arlington, Virginia, pellets produce about four times t he energy as the same volume of wood chips.

 

U.S. – CANADIAN AGREEMENT

 

             The proposed U.S. – Canadian Lumber Agreement includes unrestricted trade in “favorable” market conditions.  In a “weak” lumber market, Canadian exporters would pay export taxes that are adjusted as the price fall below $355 /MBF (Random Lengths Farming Lumber Composite Price).  Canadian provinces may also pay lower export taxes by limiting exports.

 

TIMBER INDUSTRY LAND SALES

 

Many people ask why timber product companies are selling their timberland.  Part of the answer is that they are usually C corporations which are double taxed – taxed at the corporate level and then taxed again when they pay dividends.  Most of the investors in forestland, however, are tax exempt.  They don’t pay any tax on the gains from the sale of timber and timberland.

             The timber products companies also have extensive capital tied up in timberland.  Selling the land releases the capital for improvements they can make to be cost – efficient producers of lumber, paper, etc.

 

TIMO’S AND FORESTRY RESEARCH

 

             TIMO’S and large institutional investors are buying up lots of forest industry timberland.  Forest industry has a legacy of forest research and new technology and it is generally thought that the new buyers are not likely to commit money to research.  They usually have 10 – 15 year investment horizons and expect to profit from good management during this time span.  They are not managing on time periods that would benefit from research requiring longer waiting periods.

 

RITA AND RCW HABITAT

 

             Hurricane Rita inflicted moderate damage to red – cockaded woodpecker (RCW) habitat in National Forest.  The Sabine National Forest was the hardest hit.  The Angelina National Forest and the Sam Houston National Forest received light damage while the Davy Crockett National Forest received light to moderate damage RCW groups in the Davy Crockett have gone from 54 groups in 2001 to 61 in 2005.  There are from 2.2 to 2.6 individuals per group.

 

TEXAS TIMBER TAX RATE

 

             The State Comptrollers office announced a 2006 timber tax cap rate of 9.05%.  The cap rate consists of the Farm Credit Bank interest rate on December 31^st of the previous year plus 2.5 percent.  The rate was 7.17 percent in 2005.  Once the cap rate reaches 10 percent, it triggers a 5 year averaging of the cap rate

This tree was damaged by Hurricane Rita’s winds in 2005.