Local forest owners: Don’t wait for wood market to recover
Enough talking, already — it’s time to take action to create profitable markets for logs and value-added wood products from private forests in Baker County and across Northeastern Oregon.
That message resonated among members of the Forest Industry Roundtable meeting July 23 in Baker City.
Currently there’s little demand for saw logs and prices are at or below the cost of producing and harvesting timber, and roundtable members agreed that situation is likely to continue for some time, with the state, national and world economies struggling to recover from the worst recession since the Great Depression.
Baker-area woodland owners Lyle Defrees and Kerry Borgen, and other members of the roundtable, said the housing and construction industries are not likely to rebound until late 2011 or 2012, and it could be a while after that before wholesale log prices rise enough for woodland owners to make a profit.“I hate to lose money on everything we do, especially given the amount of money and time we put into growing our product (trees),” Defrees said.
Other local forestry experts who attended the meeting included Steve Edwards, president of the Baker County Private Woodlands Association; Nils Christoffersen of Wallowa Resources; Arvid Anderson, a Baker City forest management consultant; and Bob Parker, Oregon State University Extension forester for Baker County.
They agreed that rather than waiting for saw log prices to rise, the time has come for local forest owners to choose one of the value-added wood products they've been studying for years, and collectively invest the time and money to hire a coordinator, buy equipment and develop retail markets.
“Logs only have a certain value at a certain time” sold into the wholesale market to lumber mills and other buyers or raw logs, Borgen said.
But he said timber growers can add value to their wood by making products such as posts and poles, using portable sawmills to make rough-cut lumber, or by chipping it and making hog fuel, as well as wood pellets or briquettes to fire boilers or to burn as fuel in co-generation plants.
Christoffersen said setting up a log-sorting yard could add value to logs because it would give local growers a place to have their logs sorted so only the types of logs buyers wanted would be sent to them.
He also said there’s an opportunity to sell certified pest-free firewood, by heating the firewood to 400 degrees with a wood-fired steam boiler.
“It would be the first pest-free firewood in the country,” Christoffersen said.
He said Baker County forest owners have already invested money to study an idea that he believes has great potential: Building a co-generation plant fired by wood chips, pellets or briquettes.
If school districts, area hospitals, the state prisons in Baker City and Ontario and other entities would replace or augment their existing heating and cooling systems with wood-fired units, Christoffersen said there could be a sufficient market to make it profitable for landowners to thin overcrowded forests and otherwise maintain their stands.
To go after state and federal grants to buy equipment or build a co-generation plant or other facility, Christoffersen said area woodland owners might benefit from creating a nonprofit organization. They’d also likely need to raise money to match certain grants, and hire someone to apply for grants and develop markets for the new products.
“What does this group want to achieve?” Christoffersen said. “In the past, this group has invested some options, then got pessimistic.”
However, some people at the meeting questioned the wisdom of waiting for federal grants.
“It’s frustrating that we keep talking about grants and federal money. We might be better off to put our own money in it,” Borgen said. “It goes on for years talking about how to form a business to get a grant. Maybe we ought to form a business to make money.
“A guy doesn’t have to start with a $3 million to $5 million project,” Borgen said. “We could start with a small project to get going, and it would branch out in different directions and grow.” But he said taking the first step “while the iron it hot” is the key.
Defrees agreed, saying a lot of people became millionaires during the Great Depression because they saw an opportunity when the economy was at a low point, and started businesses and made investments then, instead of waiting until the economy recovered.
With low log prices, Defrees said the big lumber companies have closed so many mills that the door is wide open for startup companies, possibly formed by a cooperative of Baker-area woodland owners, to launch a product line and claim a share of a new market.
“I think it is a good point that it is time for us who are interested in this to put some money in it,” Edwards said. “There is a lot of funding available, some of it to start and run a business, but some is only available through nonprofits.”
“There is a fairly good demand for rough cut lumber and custom beams,” Borgen said, adding that by developing value-added wood products and selling them retail, area woodland owners could quadruple their log prices, compared to what they are currently paid from wholesale buyers.
Edwards and Christoffersen said it makes the most sense to them to pursue both options — having landowners invest their own money, but also forming a nonprofit to apply for grants not available to individuals.
While there is a possibility that landowners could apply for grants through the Oregon Small Woodlands Association based in Salem, Edwards said that organization seems to him to be “basically a social organization” that collects dues of $80 per member, of which very little trickles back to help deal with issues or assist county woodlands groups in Eastern Oregon.
“When I look at what value I get from the OSWA, it is almost nothing,” Edwards said. “We pay $80 per person and we get $5 or $6 back.”
Parker recommended the roundtable look at a variety of business organizations, as well as the nonprofit needed to apply for grants.
“Explore a cooperative, LLC (limited liability Corporation) and all the other forms of business to see what’s best for what we are trying,” Parker said.
Christoffersen said Wallowa Resources had nonprofit as well as for profit business entities working together.
And since private forest owners are struggling across Northeastern Oregon, Christoffersen suggested several counties could work together to form a nonprofit as well as a for profit entity to pursue facilities, equipment and marketing for locally grown and processed value added wood products.
“We see advantages to all these counties working together,” Christoffersen said. “We’re not worried about competition” because it may take wood, investment and time commitments from private woodlands across several counties to support a large-scale value added wood products industry.
“From a capacity and infrastructure standpoint, it makes a lot of sense for all of us to work together,” he said.
“We need to come up with a plan by the end of the year,” Edwards said. “I think we’ve got a pretty good starting point.”
At the end of of the discussion, members of the roundtable agreed to a list of priorities including making a decision on what type of value-added product to start with, what infrastructure and equipment is needed to produce it, what the costs are, and decide what types of business to form in addition to a nonprofit needed to apply for grants.
The group divided up those goals for members to follow up on, and set a tentative meeting for 9 a.m. Aug. 6 at the Baker County Library, 2400 Resort St.