Factors Influencing the Price of Wood in Maine Presentation at Maine Pulp & Paper Association summit, November 2015

1. Factors Influencing the Price
of Wood in Maine
Eric Kingsley
Innovative Natural Resource Solutions LLC
Phone 207‐233‐9910, kingsley@inrsllc.com

2. Why Are Maine
Wood Costs So High?
Eric Kingsley
Innovative Natural Resource Solutions LLC
Phone 207‐233‐9910, kingsley@inrsllc.com
Alternative Title: Mill Perspective

3. Why Do I Get Paid So Little for
Trees it Takes Decades to Grow?
Eric Kingsley
Innovative Natural Resource Solutions LLC
Phone 207‐233‐9910, kingsley@inrsllc.com
Alternative Title: Landowner Perspective

4. Why Am I a Million Dollars in Debt
and Burning Through Equity?
Eric Kingsley
Innovative Natural Resource Solutions LLC
Phone 207‐233‐9910, kingsley@inrsllc.com
Alternative Title: Logger Perspective

5. Innovative Natural Resource Solutions LLC
• Founded in 1994
• Offices in New Hampshire and Maine
• Focus at the intersection of forest industry, energy and economic
development
• Author of Maine Future Forest Economy Project (2005)
• Services include:
‐ consulting in renewable energy
‐ advocacy
‐ forest management and protection
‐ forest certification and sustainability
• Clients from the private, non‐profit and government sectors
• Conducted work in all regions of North America
• www.inrsllc.com

7. Reported 3Q 2015 Hardwood Roundwood Pricing
(Verbally reported data should have large error bars)
$0
$70
Maine Northeast Lakes South
Data from phone inquiries of
buyers and suppliers in each
region, based upon spot
market, and considered less
reliable than F2M
transactional data.
“Maine” is a subset of
“Northeast”

9. Issues Impacting Price & Availability
of Pulpwood in Maine
•Logging Capacity
•Capacity Creep
•Market Diversification
•Product Diversification

10. Logging Capacity is a Real Issue
• Not enough people
• Not enough iron
• Hard to finance, particularly new crew and used
equipment
• Major constraint on wood supply
• Trends suggest this will get worse before it gets better
• Issue nationally as well as locally

11. We have lost markets, but have gained through
“capacity creep” and new demand
Markets Lost:
• Old Town
• Bucksport
• Lincoln
• Millinocket
• East Millinocket
• Androscoggin (reduction)
Markets Gained:
• Wood Pellets
• Firewood (increase???)
• Biomass (incl. NH facility)
Capacity Creep:

12. Input Cost for Delivered Pulpwood
Percent of total (estimated, aggregated)
0
20
40
60
80
100
Stumpage Harvesting Trucking Diesel Wood Yards

13. Input Cost for Delivered Pulpwood
0
20
40
60
80
100
Stumpage Harvesting Trucking Diesel Wood Yards

14. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Sawlogs Pulpwood Biomass
Volume (Tons)
Value ($)
Volume and Value to Landowner of Products from a Timber Harvest
North East State Foresters 2013

15. All figures in 2013 dollars, using the US Bureau of Labor Statistics CPI
Inflation Calculator, http://www.bls.gov/data/inflation_calculator.htm
Stumpage Price for Selected Pulpwood Species, 2004 ‐ 2014
Statewide Average from Maine Forest Service ‐ Stumpage Price Reports
$‐
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Mixed Hardwood Spruce / Fir White Pine

16. Growth as a % of Removals
(@ 100%, Growth = Removals)
147%
0% 50% 100% 150% 200% 250%
GEORGIA
LOUISIANA
MAINE
MICHIGAN
MINNESOTA
MISSISSIPPI
NORTH CAROLINA
WISCONSIN

17. Growth as a % of Removals
(@ 100%, Growth = Removals)
165%
129%
0% 50% 100% 150% 200% 250% 300%
Georgia
Louisiana
Maine
Michigan
Minnesota
Mississippi
North Carolina
Wisconsin
Hardwood Softwood

18. Input Cost for Delivered Pulpwood
0
20
40
60
80
100
Stumpage Harvesting Trucking Diesel Wood Yards

19. “[Loggers] would be willing to make the investment and gear up to
supply more wood on a steady basis, but only if they could be sure they
wouldn’t be cut off or cut down at some point, unable to meet their
expenses.
The only problem with this scenario is that very little trust currently
exists between producers and consuming mills in the Northeast and
Lake States. Mills may realize that they need to repair relations with
suppliers in order to secure enough wood moving forward, but loggers
are understandably skeptical about claims that things have changed.
They’ve heard that before.”
‐ Editorial by Eric Johnson, The Northern Logger, October 2015

20. Input Cost for Delivered Pulpwood
0
20
40
60
80
100
Stumpage Harvesting Trucking Diesel Wood Yards

21. Trucking Distance
• Average haul distance in the Northeast is high relative to
most other areas.
• As an example, haul distance for hardwood and softwood
pulpwood is about 40% longer than in the south.
• Northeast haul distance is slightly less than the Lake States
which may be a better comparison but they have a
component of rail transportation which is more efficient but
operates longer distances.

22. In 2014, Maine Imported Wood from New England, New
York, Maritime Canada, Quebec, and…Michigan
Information source: 2014 Wood Processor Report, Maine Forest Service

23. 2014 Data (000 cords)
• Harvest: 5,824
• Processed: 6,027
• Exported: 827
• Imported: 1,029
• All data from 2014 Wood Processor Report,
Maine Forest Service
• All data converted to cords (for
consistency) assuming 1 cord = 2.5 tons

24. Input Cost for Delivered Pulpwood
0
20
40
60
80
100
Stumpage Harvesting Trucking Diesel Wood Yards

26. First, Do No Harm

27. Give me your business card and get:
• Link to my post on Forest2Market – “Despite Lower Demand, Pulpwood
Prices Remain High in the Northeast”, 2015
• White Paper on Components of Pulpwood Pricing, prepared for State of
Maine, 2015
• Presentation on Benchmarking Maine’s Forest Industry (wood availability,
certification, energy costs, etc.) prepared for Maine Department of
Agriculture, Conservation & Forestry, 2015
• Link to The Economic Importance of Maine’s Forest‐Based Economy, 2013,
North East State Foresters Association
• Northern Logger editorial “No One Else to Blame”, October 2015
• Subscription information for the Northern Logger magazine
• Your name added to Forest Resources Association NE Region email list, for
invitations to upcoming Forums and updates on regional news
Eric Kingsley, Innovative Natural Resource Solutions LLC
kingsley@inrsllc.com, 207‐233‐9910