Growing Georgia: Southern Timber Could Hit New High by 2017

In an economy that has been as unpredictable as the World Cup, a classic contender may become the reigning champion. Given current conditions in both the U.S. and overseas, the next 10 years could very well be the “decade of forestry.” Georgia’s abundance of trees could position the state to reap some big rewards: More production, new jobs, greater revenues. A triple play!

Economists examine the past to forecast the future. In the last few years, the forecasting part hasn’t been easy, but three trends in the market give us a clear view of forestry’s future.

First, housing starts are expected to increase now that the job market is improving. Household formations — the key driver for housing demand — have been far below the historic average because of the U.S. economy’s anemic pace. Job and income growth, particularly for young adults under age 35, have been slower than past recoveries. Millennials have been reluctant to either form households or buy homes, but look for that to change. Over the next two years, they’ll gain jobs and confidence, move in together, and start families. Housing starts will climb above 1.5 million units annually from the current one-million-unit level by 2017.

Second, China’s demand for lumber and logs will remain high over the next 10 years as the country builds vast metropolises to house people moving to urban areas. The Chinese also are showing real interest in container log shipments from the South.

Third, and perhaps most importantly for the South, will be the inability of other major timber-producing regions to meet the strong growth in demand over the next five years. The housing rebound and Chinese exports mean North American lumber production needs to increase by 13 bbf by 2017-18. The Canadian lumber industry cannot expand — in fact it’s shrinking. Canadian lumber capacity will drop from a peak of 39 bbf in 2005 to under 31 bbf over the next few years, all because a nasty little bug — the pine beetle — has destroyed millions of forest acres or about half the commercial pine forest in British Columbia. Because the U.S. Pacific Northwest ramped up its harvest after 2007 to meet China’s log demand, it hasn’t seen a large timber inventory build. Western lumber production could increase by 3-4 bbf, but that still leaves a big gap to fill – like another 8-10 bbf. This may appear to be a serious problem, but Georgia and its Southern neighbors will pick up the slack.

Read more at www.growinggeorgia.com.

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