Like Aspen Business Journal on Facebook Follow Aspen Business Journal on Twitter Sign Up for Aspen Business Journal's e-newsletter Subscribe to Aspen Business Journal's RSS feed
Forest industry may reap the benefits of skyrocketing timber prices
The Mountain iJournals

Forest industry may reap the benefits of skyrocketing timber prices

Saw logs could help create more active forest management

Beetle-kill, or blue-stained, pine can be milled into dimension lumber. (Colorado State Forest Service)
Beetle-kill, or blue-stained, pine can be milled into dimension lumber. (Colorado State Forest Service)
While Colorado’s forests continue to suffer from beetle epidemics at high altitude and the hangover from a century’s fire suppression at lower altitude, there’s some good news out there for those who believe in active forest management.

Timber prices, which were bottomed out during much of Colorado beetle kill epidemic, are set to skyrocket, and the state’s timber industry may be rising in time to take advantage, industry experts said. And while there are millions of acres of standing dead timber that may never be harvested, there’s also some good news out there for at salvaging at least some of the beetle-kill pine, as well.

“In general, we’re still suffering the impacts of a century of fire suppression, so at this point active management makes a lot of sense,” said Mike Eckhoff, a PhD Candidate in forest science at Colorado State University.

“We’ve lost 80 percent of our (timber) productivity since the 1980s,” Eckhoff said. “This could be a boon for Colorado’s timber industry provided that timber is actually made available for the industry to use.”

Timber prices hit an eight-year high in March, largely due to the rising U.S. housing market. Research by the International Wood Markets indicates the U.S. and Canada probably will not be able to fulfill that timber demand in two to three years, creating even higher prices and perhaps prompting imports from Europe.

Canadian timber production was hurt by the pine beetle epidemic, the report said, but also by permanent mill closings during the recession and the loss of two large mills due to fire.

The past failure of the Colorado timber industry is usually blamed on the U.S. Forest Service making fewer trees available in light of environmental resistance to logging. While the beetle-kill epidemic and catastrophic wildfires may have taken some of the edge off the latter concern, forest industry experts are now more worried that cuts to the Forest Service’s budget may hinder making wood available through forest management.

“We just went through a hit in the national Forest Service budget in the sequester (and the U.S. House of Representative may cut more), and very unfortunately that is cutting timber management dollars,” said Nancy Fishering, the Colorado timber coordinator for the Intermountain Forest Association. “Obviously they don’t understand what’s going on out here in D.C. We have new investments in a growing market.”

Fishering estimated that $150 million has recently been invested by the new owner of the Montrose timber mill, now known as Montrose Forest Products, LLC, and the mill in Saratoga, Wyo., Saratoga Forest Management, LLC, which has historically handled much of the wood harvested in North Park, Colo. Saratoga has been mothballed for five years, and the Montrose mill hasn’t been operating even close to capacity for about that long, as well.

In addition, Fishering said smaller processors are sprouting up in Colorado, bringing new faces and energy to the industry, such as Eagle Valley Clean Energy. But while everyone looks at the millions of acres of dead lodgepole pine, and the extremely valuable upland spruce trees that are now dying in higher elevations, the Forest Service still isn’t making enough wood available, she said.

“Everyone makes money when you do that (create saw logs), but there’s also a sweet spot that allows more acres to be treated,” Fishering said. “The trees that you can’t use for logs can go into biomass energy.

“But I can call every one of these people and ask them, ‘do you have enough logs,’ and the answer will be ‘no.’”

Fishering said the new mills have state-of-the-art equipment and will be extremely competitive. In fact, she thought that given enough wood both the Saratoga and Montrose mills would open multiple work shifts.

In addition, things have also been looking up for Colorado’s two large pellet mills, and rising timber prices will also help them, Fishering said.

“Our industry is pretty diverse, and we’re a lot more competitive than we were in the ’70s,” she said. “We are extremely optimistic.”

Colorado may also be able to salvage much more of the standing dead lodgepole pine, than previously thought, Eckoff said. While most industry experts thought that after three or four years the beetle-kill trees were not sturdy enough to create dimension timber, he said, new studies indicate that doesn’t appear to be the case for trees that have not fallen.

The upland spruce trees that are now being killed by the spruce bark beetle are highly prized in the industry, though not all the acreage will be available to loggers. In fact, about two-thirds of the state’s 4.5 million acres of spruce-fir forests are off limits to management because of wilderness or roadless designation, according to a study by the Colorado State Forest Service.

Still, Eckhoff thought there are plenty of acres in need of management that could be producing forest products.

“Colorado produces an annual net forest growth of 1.5 billion board feet, but we only harvest 6 percent of that, or 87 million board feet,” he said. “In other words the removals do not significantly reduce the interest nor do they touch the principal.”

You must be signed in to post a comment. Sign in or Register.