Demand for Wood Fiber
Historically, we Americans consume a vast amount of wood fiber. The demand is increasing both in the U.S. and abroad. Growth is slightly more than demand presently, but may fall below future demand.
There is increased pressure on available wood supply due to the increased Federal and state restrictions on timber harvesting on both private and public lands. President Clinton took most of the timberland in the northwestern part of the United States out of production over concern about the spotted owl. The argument used by environmentalists was that the spotted owl was being killed by the timber being harvested in the northwest.
Today we know that the brown owl is killing the spotted owl. But nobody has bothered to open up production in the northwest timberland. So timberland in the northwest just simply grows and then forest fires burn it down. Not good management of a valuable asset.
Nevertheless, the demand for wood fiber continues to increase. The fact that we will have more demand than available supply means that prices, historically, move upwards. Like any other commodity, timber prices move up and down with the overall economy responding to short term variations in demand versus supply.
However, the overall long-term bias in demand and therefore price is up because our available timber production is less than our long-term average demand for wood fiber. Buying in the trough of a cycle such as today and holding for the long-term peak is a way of maximizing your return on a timberland investment.
We hope that the information we share over the next 12 weeks will assist you in making a timberland investment. We believe doing so will make you look brilliant over the next 10 years. Call us, at Grant Massie Land Company we love to help our clients look brilliant.