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AFRC: Timber seeks injunction barring contract suspensions

Timber seeks injunction barring contract suspensions

October 16, 2013


By American Forest Research Counci
l
Timber Industry Seeks Injunction Barring Federal Government’s Suspension
of Timber Contracts

Purchasers of federal timber sales and stewardship contracts filed suit yesterday against the Forest Service and the Bureau of Land Management (BLM). They are asking the Oregon Federal District Court to enjoin the agencies from suspending timber contracts during the government shutdown.

The American Forest Resource Council (AFRC), an industry trade association, joined an action brought by Murphy Company, High Cascade, Inc. and South Bay Timber, LLC.

“It makes zero sense for the cash strapped government to shut down operations that pay millions into the United States Treasury,” said Tom Partin, President of AFRC. “These companies employ loggers and truck drivers that need to be making money to feed their families. Getting logs out of the woods and into mill decks is especially important at this time of the year. Otherwise, these companies won’t be able to operate through the winter.”

Under contract law, the government cannot summarily stop timber operations. Contractors operate under harvest plans already approved by the agencies before ground work begins. As long as critical inspections are not needed, they can continue to work. Scheduled payments are made electronically, similar to those made by businesses making quarterly income tax payments.

“One of the purposes for these contracts is to improve forest health and reduce fuel for forest fires and protect federal and adjoining property. Issues of public safety in campgrounds and along roads are involved. Shutting down operations means these objectives won’t be met and things will get worse,” Partin said.

“A timber operation isn’t something you can turn on and off like a light switch. Once equipment has to be moved out, it can be months before it can be moved back in. For example, operators have waited through the fire season for helicopters to be available. If they can’t fly, they will start work on private contracts and it could be another year before they can come back. Meanwhile, downed timber rots on the ground,” Partin said.

“What is happening to our members is particularly frustrating when other businesses with contracts to operate on federal land, such as ski areas, are being allowed to continue working,” Partin said.

The National Forest System includes approximately 190 million acres of public land throughout the United States. The BLM administers approximately 264 million acres of public lands. A blanket, unwarranted suspension of revenue-generating timber operations on these vast acres will have a devastating effect on individuals dependent on the timber industry and will exacerbate the impact of the government shutdown on the nation’s economy.

Murphy Company employs over 500 people in its manufacturing facilities in Oregon and Washington. Timber from Forest Service and BLM contracts supplies over one-third of the raw material needs of its Oregon plants. High Cascade purchases timber from the Gifford Pinchot, Mt. Hood and Ochoco National Forests to supply mills in Carson, Washington and Hood River, Oregon. South Bay Timber currently has cutting rights under four stewardship contracts with the Forest Service and BLM on which it employs about 40 people.

AFRC is a regional trade association representing some 60 lumber, plywood and wood products manufacturers in California, Idaho, Montana, Oregon and Washington. Its members utilize public timber in their manufacturing operations. In many areas where its member mills are located, the national forests are a significant source of timber supply because there are few private lands.

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August 13 Timber & log prices drop

Timber & log prices drop

 

September 9, 2013

Timber Industry Report
By Rick Sohn PhD.
Umpqua Coquille LLC

Interest rates increased last month, but real estate sales rose, as if homebuyers wanted to catch the bottom. Log prices dropped a lot, and lumber only somewhat, helping the mills. Seven-year trend of lumber, logs, housing, and mortgage statistics are shown below.

chart-sohnsept2013

Interpretation
The price of lumber has decreased, but the price of logs has REALLY dropped. Net result? Logs are more affordable, mills are breathing a sigh of relief, and are making some money.

Fire danger has decreased in areas of the Pacific Northwest where it has been raining, This will ultimately help keep log prices down since logging operations can proceed and logs become more plentiful. Fire season still has life however, and things can change with a dry September.

According to Janet Johnson, Prudential Realty, The Roseburg Real Estate market has “exploded” with more offers being written and properties coming on the market, in the last few weeks. Judie Dunken, with the Dunken Group in Portland, is similarly positioned. RMLS reports that the Portland market has closed 10% more sales than last month, and that number for July is the best since 2005. The median home sales price in Portland is up to $280,000 and the average is $326,000. Rising interest rates, now 4.40%, have not hurt the summer home market, even though they are up over a full percentage point compared to the beginning of 2013. Many people are saying that buyers seem to be jumping in, before the interest rates rise even further.

The Portland unsold inventory remains below 3 months. The time on the market is 63 days, one month less time on the market than a year ago. Compare this to Roseburg, where there are 9.5 months of unsold inventory on the market, and an average market time of 190 days – also 30 days less time on the market than a year ago. While both markets are making significant improvements, its slower in a rural area like Roseburg than an urban area like Portland. This discrepancy leads to the following conclusions (with pockets of exceptions): there is an overall sellers market in Portland, but an overall buyer’s market in Roseburg and other rural towns.

This major difference in housing markets mirrors the economic recoveries that have occurred in rural and urban Oregon. If only rural Oregon could cut – or even salvage– more timber, rather than let it burn or get devoured by massive populations of bugs, the economies could improve.

Housing starts and building permits are showing some improvement this month, but are well short of the 1 million levels, reached in the Spring of 2013. Home prices continue to rise, albeit more slowly. According to Zillow, median home price rose the most in May, where it increased $1,300 over April, and has continued trending up with lower increases since then, as shown in the chart above.

It will be interesting to see if the gradual increases in home values and the rate of sales can continue, despite the rising interest rates. If so, there is hope that the housing starts and building permits will rise once again. This would really help the overall economy. We are still at typical deep recession levels of housing starts and building permits.

Data reports used with permission of:
1) Random Lengths. Through Sept. 2012, 2”x4”x8’ precision end trimmed hem-fir stud grade from Southern Oregon mills. Starting Oct. 2012, consolidated with Kiln Dried Studs, Coast Hem-Fir 2x4x8’ PET #2/#2&Btr. Price reported is Dollars per Thousand Board Feet, generally the third week of the month. One “board foot” of product measures 12 inches by 12 inches by one inch thick.
2) RISI, Log Lines. Douglas-fir #2 Sawmill Log, Average Region 3 Southern Oregon price, reported in Dollars per Thousand Board Feet of logs, Scribner Scale. The standardized Scribner Scale includes expected saw trim waste, so a log board foot is much more wood volume than a product board foot.
3) Dept. of Commerce, US Census Bureau. New Residential Housing Starts and New Residential Construction Permits, seasonally adjusted, annual rate. Recent reports are often revised in bold. Also, major revision made each May, reaching 2 1/2 yrs back.
4) Regional Multiple Listing Service RMLSTM data, courtesy of Janet Johnston, Prudential Real Estate Professionals Broker, Roseburg, OR. Inventory of Unsold Homes (Ratio of Active Listings to Closed Sales) in Portland, Oregon, for most recent month available.
5) Freddie Mac. Primary Mortgage Market Survey. 30-year Fixed Rate Mortgages Since 1971, national averages. Updated weekly, current report is for the prior full month.
6) Mortgage-X Most recent weekly rate of 30-year Fixed Rate Mortgages, national average.
7) Zillow.com Median value of homes sold in the United States during the month, weighted according to each area population. The Median removes the effect of outlier expensive homes, with equal numbers of homes above and below the median value each month. Revisions in bold
Issue #6-8. © Copyright Rick Sohn, Umpqua Coquille LLC.

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