The Sun Will Soon Shine

2011-03-28T20:00:00.000-07:00

Recently, in the forest products industry there has been a prevailing atmosphere of doom and gloom. Being a commodity based business, ups and downs are a given. However it seems that in the the last five years, we have been in a downward cycle that doesn't show many signs of reaching bottom. High fuel costs, poor markets for both logs and pulp etc...
Does this mean that the end of the industry is at hand. Does this mean that suddenly your timber is or will become worthless? Not hardly! We are going through a period of change. This means that the old paradigm is falling apart and a new one is replacing it. Change is inevitable - there is no use fighting it. The key is to see the opportunity throughout the dust kicked up by the chaos.
I would argue that we are on the verge of some of the biggest opportunities ever to be presented to those who own timberland. If you are committed to holding on to your asset for the long term - you will reap great rewards in the not too distant future. The demand for wood is poised to grow. The largest areas of population growth in the world are in Asia. Outside of Indonesia this is a region with very little forestland relative to the overall size of the land base and its population. This means only one thing - as their populations grow so will the demand for lumber, paper and any other products that are derived from wood. Where will the wood come from? Some will undoubtedly come from Russia -however this region has huge hurdles to overcome before it ever becomes a steady producer of wood products. South America is and will continue to be a huge producer. However, the largest producer of all will be North America. Nowhere else in the world do you have such vast of forestland, coupled with the modern infrastructure in place to efficiently get the harvested material to market. Increasingly business people are taking note of this and investing accordingly.
I was reading a good article today in the Daily Globe. It was talking about an investor who just bought an old obsolete pulp and paper mill in Thurso Quebec and is in the process of reconfiguring this mill to begin producing dissolving pulp for export to Asia. This mill used to produce paper used in photographs -however the digital camera destroyed this market and the parent company Fraser closed it in 2007. A substantial volume of pulp for this mill came from private landowners in the northern and western Adirondack Mtns of New York. When this mill closed that clearly had a negative effect on those landowners who had pulp to harvest. One less market translated into that much less income for those with wood to sell. However for those landowners, in this region, who stayed the course and held on to their timberland - the rewards are just around the corner. Although this is just one illustration hopefully the point has been made. When the doom and gloom seems greatest we can say with confidence that the sun will soon shine.

Good Marketing

2010-11-23T18:59:00.000-08:00

For most landowners, here in New England, they may only see two timber harvests during their entire time of ownership. In light of this it is crucial that when the time comes to sell your timber -you receive the highest possible value for it. As a responsible landowner you have diligently cared for and held onto the land, payed taxes etc.. and the timber sale is your chance to see a financial reward for doing everything right.
Hiring a consulting forester to represent you in the process is a first step in making sure the process goes well. However it is not the only step.
Next you need to determine if the forester has a good grasp of the markets. Oftentimes consulting foresters neglect the marketing aspect of the process choosing instead to place most of their focus on the silvicultural implementation. They may think as long as the harvest is done correctly, looks neat and all the forestry goals are met and their client was paid in a timely manner, then it was success. However, what if by understanding the markets better the forester could have generated an extra $ 5000.00 for their client. Suddenly we see how important, good marketing , really is. Ignoring it comes at the expense of the landowner client's bottom line.
To determine whether or not the forester understands the importance of this , you need to be willing to ask some questions of him or her.
Ask them , before the start of the harvest, what you can expect for value, by individual species. How did they determine this figure? If their answer is something to the effect " the logger we are going to hire has told me this is what he is willing to pay" or " the mill we usually sell to, told us this all its worth" your forester is probably not that savvy at marketing your harvesting timber. In short he/she has neglected the good -marketing part of the timber harvesting equation.
Another area where good -marketing is neglected is on those timber sales where a large variety of species and products are present. Here in the central and southern portions of NH and VT this can be a problem.
The focus of the savvy marketing only takes place on the high grade hardwood sawlogs and veneer or high grade pine sawlogs while the hardwood pallet, hemlock logs,spruce logs and pulp are ignored. This shouldn't be. In many instances these ignored products and species can generate as much income as two high quality loads of hardwood veneer - if these ignored species and products are marketed well.
Hopefully this information is beneficial and will enable you to make informed decisions about your forested asset..

Here at Stillwater Forestry LLC. we understand the importance of good marketing. In almost all instances we market the wood direct to the various markets. When we combine the volumes from all of our different client's harvests that may be going at any one time the volume is significant. At times this large volume can be used to generate higher prices for our clients harvested timber. We also have contracts with 5 different pulp mills in New York and Maine. This enables us to avoid having to use brokers and in turn we are able to pass the savings on to our clients. If you have land in NH or VT and are in need of assistance please contact us. We are found on the web at www.stillwaterforestry.com

The Forest Commentary

The Sun Will Soon Shine

Good Marketing