Inrs mppa presentation 11.17.2015 final
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Factors Influencing the Price of Wood in Maine Presentation at Maine Pulp & Paper Association summit, November 2015
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Inrs mppa presentation 11.17.2015 final
- 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”
- 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
- 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.
- 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
- 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