The State and Future of U.S. Forestry and the Forest Industry (May ...

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2 IntroductionBoth the forest products industry, and accordingly, the forestry sector, in the United States (U.S.) have experiencedextreme volatility, unprecedented challenges, and substantial change over the past two decades. In many areas,old operating assumptions have been challenged and discarded at an increasingly rapid pace, and practitioners,policy makers, researchers, and educators have struggled to keep up. A group of leaders met in Washington, D.C.to discuss this changing context and its implications for forests and forestry at an event sponsored by the USDAForest Service (USFS) and the U.S. Endowment for Forestry and Communities (Endowment) and hosted by theSociety of American Foresters and Resources for the Future.The focus of the workshop dialogue resulted from surveying a diverse group of leaders in the forestry, forestproducts, and conservation sectors to identify and prioritize key issues in the forestry sector. The goal of thedialogue was to develop a roadmap for positive change to yield a brighter future for this important sector. Wefocused on five priority issues that included: 1) forest product markets; 2) forest land tenure and ownership; 3) thehealth and integrity of the current supply chain in forest products; 4) ecological health of federal forests (includingissues of disease and vulnerability to catastrophic wildfire); and 5) tax policy and forest land tenure. In additionto these priorities, we discussed such issues as ecosystem services, regulation, woody cellulose nanotechnology,invasive species, and effects of competition from other products.The organizing template that forms the forestry sector in the U.S. was generally set in the first decade of the 20thcentury. As new challenges have emerged, these issues have been addressed in the context of this template withrelatively modest modifications over time. Questions are now emerging about whether the existing templateis up to the task of resolving the new issues that confront the forestry sector, or whether more significantstructural changes are in process and/or needed. Much of the existing template is built on a platform of federalenvironmental, natural resources, fiscal, taxation, and trade policies. As change and restructuring of the sectorcontinues, this platform will benefit from re-examination. This Report summarizes trends in the five priority issueareas that were the focus of the workshop and presents proposed action items that resulted from the workshopdiscussions.Financial support for the convening and this report were provided by the USDA Forest Service State & PrivateForestry, and the U.S. Endowment for Forestry and Communities.
Chapter 1Trends and Future of U.S. Forest Products Markets3IntroductionEmerging from a recession that depressed some marketsto levels that equaled the Great Depression, the neartermfuture for U.S. forest products markets is generallyoptimistic. The longer-term future suggests bothopportunities and challenges.The markets into which U.S. forest products can be senthave never been more diverse and interconnected. Theseinclude both domestic and foreign markets. They alsoinvolve an expanding range of market opportunities, bothfor traditional, as well as newly emerging, products. Fortraditional forest products, these markets will also inviteincreased competition from alternatives to wood-basedmaterials.Priority Trends and Issues of ConcernEach of the major or emerging markets for U.S. forestproducts appear in a slightly different situation as to thenear term future, and with somewhat different issues ofconcern involving longer-term economic health.Paper and PackagingSingle Family 16%Other 10%Packagingand Shipping14%Total Use = 3,903 x 10 6 ft 3OtherManufacturing8%Multifamily 2%Mobile Homes 1%Residential Repairand Remodeling27%NonresidentialBuildings 11%Nonresidential Other 3%FurnitureManufacturing8%In the paper and packaging area, markets continue to improve. Much of the increasing demand is driven byemerging markets in China, Brazil, and India, as well as the recovery of more developed economies. Worldwidedemand for paper and paperboard is expected to rise at an average 2.4 percent annually. Yet, this overall growthbelies significant changes happening within the segment. Newsprint is expected to continue declining at about 5percent per year with printing and writing paper slipping by 3 percent.Despite the rise of a digital world, paper remains a critical necessity. It is on the rise as a green alternative topetroleum-based packaging. Research and innovation continue through product improvements, such as strongercorrugated boxes, as well as the development of new products.Areas of concern include how to enhance incentives to increase the raw material supply, create a more predictableenvironmental regulatory environment for manufacturing, engage new partnerships for resource sustainability, andcreate a mechanism (for example, through a commodity check-off program) to engage the public more activelyabout the renewability and environmental values of paper products.Hardwood Lumber ProductsMarkets in the hardwood lumber sector are improving slightly, but still down 40 percent from their high point inthe late 1990s. Full emergence from the recession will not likely restore these market highs due to a diminishedworkforce, timber supply restrictions, and tighter credit for expansion. The nature of the markets has also changed.In the 1970s, 68 percent of the hardwood market consisted of non-industrial uses. By 2012, this ratio reversed,with 61 percent of the market consisting of industrial uses. Nevertheless, the markets are expected to continue toimprove, albeit gradually.Areas of concern include the need to maintain and expand the ban worldwide of illegally harvested timber(hardwoods are particularly susceptible to competition in world markets from illegally sourced material), the
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