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Re: Logging Restrictions And Regulations Are The Reason!
Author: Forester
Date: 01-10-2015 - 19:03
Well, it is true. If you look the regulatory environment for forestry in Washington, Oregon, and California, California is by far the most cumbersome and restrictive. I say this as a professional forester who works with those regulations in all three states. I work in Oregon and Washington as a professional forester and in Califuas an LTO. If you do nt believe an industry professional who works with the landmanagers of most major companies, than watch the video linked below where Mark Emmerson CFO of Sierra Pacific talks about the regulatory environment. if the link does not work, Search You Tube for SJ Hall Lecture in Industrial Forestry Mark Emerson. Mark is the son of Red Emerson who owns Sierra Pacific Industries, the largest landowner and Timberland owner in California at 1.8+ million acres. I think he would know.
[url=http://www.youtube.com/watch?v=0SIBg-tIpz8][/url]
The regulations in California decrease the return on investment, so forest product companies leave California. There are better places to do business. You see this in the level of interest in timberland for wood production and what the sales price is for that land. On a per acre basis it is higher in Oregon and Washington as a result. The lands in the redwood region are very productive, so that is not the issue, the issue is regulation and ROI. There are no longer any virgin fiber pulp and paper mills left in California for this same reason. It was not a lack of fiber, it was regulation and high operating costs that shut them down. Wood chip by products from mills are now either burned for cogen or are sent by rail up to pulp mills, or export docks in the PNW as a result.
California has a permit system that is cumbersome and full of hoops to jump through just to harvest ones own private timber. This process involves multiple agencies, fees and public comments this process can take up to 2 years costs on average $40k per harvest plan and ends up being a 4" thick binder before it is done. This is a huge disincentive for small landowners to harvest because this can eat up any potential profit on a harvest after logging costs, and harvest taxes.
Contrast that to Oregon where we have the first and oldest Forest Practices Act in the country. Here we do a notification, work with one agency, the Oregon Department of Forestry for everything and the process takes 15 days or less and costs $0. Harvest and severances are collected on the amount harvested. Private lands in Oregon have many landowners, and we still enjoy a healthy industry where there is ample private land to support mills. There are many players here and investment in the land takes place because the environment is supportive of working forests and companies generating a return on investment. We also enjoy a 99%+ compliance rate and there are more acres growing trees now then when we started cutting years ago. See OFRI web page for data to back this up.
The Federal Government basically stopped managing timber and now we have HUGE unnatural forest fires that destroy the resources that everyone is concerned about.
As for the age of stands in relation to mills, we are thinning and sending small logs to mills from stands as young as 23-27 years old. Final harvest on private lands can range from ages 45-90 years old depending on stand characteristics and landowner objectives. Mills today are set up based to run different size classes of logs and make different products out of the various size classes. There are many places on the 3rd generation of timber since original harvest.
There have been and always will be bad players in the forest products industry. Palco after the hostile takeover comes to mind. But in one way you really can't blame them because the government was coming to take their land just as they did in making Redwood National Park, and headwaters forest, so they cut as fast as they could to reduce the amount of land taken. This was partly their own doing, so I don't agree with how it was managed, but I am just giving a rational for what they did.
This discussion is really all about the business climate, regulation and ROI for companies, and not about the quality or quantity of timberland in California. California mills have a shipping advantage because of where the markets are, but are at a huge disadvantage due to the regulatory environment. How else can you explain why wood out of the NW and Canada can undercut California wood production costs. This is why the industry in California lobbied for and got the legislature to impose a tax on all wood products sold in California in an attempt to lower fees for harvest on the state level to try and help Ca mills to compete. You are right the enemy is "us" in the "us" being the State of California.
Matt
[url=http://www.youtube.com/watch?v=0SIBg-tIpz8][/url]
The regulations in California decrease the return on investment, so forest product companies leave California. There are better places to do business. You see this in the level of interest in timberland for wood production and what the sales price is for that land. On a per acre basis it is higher in Oregon and Washington as a result. The lands in the redwood region are very productive, so that is not the issue, the issue is regulation and ROI. There are no longer any virgin fiber pulp and paper mills left in California for this same reason. It was not a lack of fiber, it was regulation and high operating costs that shut them down. Wood chip by products from mills are now either burned for cogen or are sent by rail up to pulp mills, or export docks in the PNW as a result.
California has a permit system that is cumbersome and full of hoops to jump through just to harvest ones own private timber. This process involves multiple agencies, fees and public comments this process can take up to 2 years costs on average $40k per harvest plan and ends up being a 4" thick binder before it is done. This is a huge disincentive for small landowners to harvest because this can eat up any potential profit on a harvest after logging costs, and harvest taxes.
Contrast that to Oregon where we have the first and oldest Forest Practices Act in the country. Here we do a notification, work with one agency, the Oregon Department of Forestry for everything and the process takes 15 days or less and costs $0. Harvest and severances are collected on the amount harvested. Private lands in Oregon have many landowners, and we still enjoy a healthy industry where there is ample private land to support mills. There are many players here and investment in the land takes place because the environment is supportive of working forests and companies generating a return on investment. We also enjoy a 99%+ compliance rate and there are more acres growing trees now then when we started cutting years ago. See OFRI web page for data to back this up.
The Federal Government basically stopped managing timber and now we have HUGE unnatural forest fires that destroy the resources that everyone is concerned about.
As for the age of stands in relation to mills, we are thinning and sending small logs to mills from stands as young as 23-27 years old. Final harvest on private lands can range from ages 45-90 years old depending on stand characteristics and landowner objectives. Mills today are set up based to run different size classes of logs and make different products out of the various size classes. There are many places on the 3rd generation of timber since original harvest.
There have been and always will be bad players in the forest products industry. Palco after the hostile takeover comes to mind. But in one way you really can't blame them because the government was coming to take their land just as they did in making Redwood National Park, and headwaters forest, so they cut as fast as they could to reduce the amount of land taken. This was partly their own doing, so I don't agree with how it was managed, but I am just giving a rational for what they did.
This discussion is really all about the business climate, regulation and ROI for companies, and not about the quality or quantity of timberland in California. California mills have a shipping advantage because of where the markets are, but are at a huge disadvantage due to the regulatory environment. How else can you explain why wood out of the NW and Canada can undercut California wood production costs. This is why the industry in California lobbied for and got the legislature to impose a tax on all wood products sold in California in an attempt to lower fees for harvest on the state level to try and help Ca mills to compete. You are right the enemy is "us" in the "us" being the State of California.
Matt
