Logging slump puts pressure on forest owners

An Oregon Department of Forestry report titled "Oregon's Timber Harvest: 1849-2004" shows that the state's timber industry has yet to recover from the downturn that slashed logging volumes in 1994  to the lowest levels since the Great Depression.

Yearly timber harvest in Oregon since 1994 has hovered between 3 billion and 4 billion board-feet, according to the report.

That's less than half the 7 billion to 9 billion board-feet cut annually during previous 50 or so years.

But cutting on federal lands has declined from a yearly average of nearly 3 billion board-feet to 596 million board-feet in 1994, and to between 166 million and 337 million board-feet from 1998 through 2004, the last year covered in the report.

In Baker County, logging on private and public forests averaged more than 75 million board-feet during the 1980s, peaking at 97 million in 1987.

The harvest remained relatively high in 1990, at 86.5 million board-feet, then plummeted to 45.6 million in 1991.

The annual harvest continued to drop, reaching a low of 16.5 million board-feet in 2003 before rising to 31.5 million in 2004.

During the 20-year period 1984-2004, timber cutting on Forest Service land in Baker County peaked in 1987 at 83 million board-feet, then dropped to 8.5 million in 1994 and to 6.5 million in 1995.

That wasn't enough to sustain the county's last sawmill - Ellingson Lumber Co. in Baker City, which closed in early 1996 - even though private forests in the county produced a total of 48 million board-feet of timber in 1994-95.

State Forester Marvin Brown said the reduction in timber harvests on federal lands played a major role in the demise of lumber mills across Oregon, but especially in the northeastern corner, where 72 percent of the forests are managed by the federal government.

Fewer mills, lower log prices

With the decline in timber harvests from federal forests, many of the region's lumber mills couldn't get enough logs to operate.

The closure of many mills left private forest owners in Baker County and across Northeastern Oregon with fewer places to sell their logs, Brown said.

Prior to the 1990s, forest owners could sell logs to any of several mills within 50 miles.

Today, though, some landowners have to go as far as 300 miles to find a mill that's buying logs, Brown said. 

Bob Parker, forester for the Oregon State University Extension Service in Baker County, said this year's recession and housing market crash have exacerbated problems in the state's timber industry.

With the closure of several area lumber mills, including the Boise Cascade mill in La Grande earlier this year, Parker said forest owners in Baker County are having a hard time finding buyers for their logs.

And when they do, the prices offered often are too low to offset the cost of growing, harvesting and hauling the logs.

"Bottom line - (log) prices are still in the tank with no prospect for improvement anytime soon," according to a report from Parker.

Another report, from John Buckman, Oregon Department of Forestry district forester for Northeast Oregon, shows that current low log prices hit forest owners in this area harder than those in other parts of the state.

That's because forests in the northeast corner (and in Central Oregon) have the lowest potential for producing timber, with a projected yield of 30 cubic feet per acre. 

By comparison, of the state's 15 forest districts, the Tillamook district has the highest potential for producing timber at 140 cubic feet per acre, followed by Astoria at 130 cubic feet per acre. West Oregon, Western Lane, Forest Grove and the Coos Bay area all have potential yields of 120 cubic feet per acre.

Buckman said in addition to the lower potential timber yields, forests in Northeast Oregon have a much higher fire frequency and propensity for larger, stand-replacing crown fires due to the drier climate, higher number of lightning strikes and greater forest health and fuel loading problems, compared to forests in wetter Western Oregon.

Because fire protection fees are based on actual firefighting costs, Buckman said fees in Northeast Oregon are $3.06 per acre, nearly double the $1.56-per-acre cost in districts with the lowest combined assessment: Astoria, Forest Grove and Tillamook districts, Buckman said.

The Central Oregon district has the highest fire protection rate, $3.41 per acre.

Landowners pay half the fire protection cost, and the state the rest.

The state contributes because the entire population shares in the benefits forests provide, including clean air and water, fish and wildlife habitat, recreational opportunities, as well as wood products, Buckman said.

However, with declining timber harvest, paying their half of the annual fire protection costs has become an increasing burden on private forest owners, particularly those in Northeast and Central Oregon, Buckman said.

"What we have right now is a situation where the districts with the lowest forest productivity and the lowest income potential from timber harvests are paying the highest fire assessments," Buckman said.

Lyle Defrees, a forest owner and member of the Baker County Private Woodlands Association, said actual timber harvests in Northeast Oregon have fallen far below the potential yields calculated by the ODF.

He said to survive in Northeast Oregon, lumber mills need a stable supply of timber from federal forests to augment sustainable harvests from private lands, but to make that happen, changes in federal forest policies are needed.

Brown said he understands the situation faced by woodland owners in Northeast Oregon, and the ODF is working with the U.S. Forest Service to increase timber harvests in the region.

Those efforts, however, aren't likely to get much traction until the housing market improves and demand for lumber increases, Brown said.

In the meantime, Brown said the ODF is pushing federal forest managers to do more to improve forest health and reduce fire danger by cutting smaller trees and striving to stimulate the region's budding biomass industry, which relies on logging slash that has in the past been piled and burned in the woods.

That type of thinning would also reduce the threat of fires that spread to or from federal lands and drive up firefighting costs on state and private lands, he said.

Biomass touted to fill gap

Brown said a $4.9 million federal grant to build a biomass processing plant in Grant County, announced by Gov. Ted Kulongoski last week, reflects the governor's recognition of the precarious state of the timber industry in Northeastern Oregon.

Gene Stackle of the Baker City/County economic development team, said Elkhorn Biomass of Baker City and others in Baker County have invested money in biomass projects and are planning to forge ahead with or without federal stimulus dollars.

"Stimulus funds would speed things up, but we are not going to give up just because we haven't been chosen to receive federal assistance," Stackle said.

Stackle said biomass could wind up being the first wave of resurgence of wood products coming out of Baker County, and he's encouraged by the award of stimulus funds for the Grant County biomass project announced last week, because it shows the federal government is serious about pushing biomass harvesting and processing into renewable energy products and electricity.

"Who knows, we may get some stimulus funds yet," Stackle said, adding that it would not be financially feasible for Baker County woodland owners to transport woody biomass to Grant County at current prices.

"For biomass to be a financially viable industry for woodland owners here in Baker County, we need to develop and expand biomass processing facilities within the county," Stackle said.