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Towering pines line the roads of Alabama, a state where construction is booming and lumber prices are skyrocketing. Meanwhile, owners of forest land whose raw materials are in demand are suffering from stagnant timber values.
“We provide that lumber, and the lumber is there, but the price hasn’t gone up for us,” said Elliott Poole, owner of a forest in Sumter and Clarke counties.
In the fourth quarter of 2019, sawn lumber from Alabama averaged $ 22.84 per tonne. It only rose 69 cents in a year to $ 23.53. Almost at the same time, low interest rates fueled a building frenzy. From early 2020 to 2021, one thousand board feet of 2 by 4 lumber increased from $ 370 to $ 1,155. Oriented strand board (OSB) has gone from $ 255 to $ 795 per thousand square feet.
Demand drives up prices
Demand is still driving up the costs of lumber (and the shock of stickers) for construction companies and homeowners who undertook do-it-yourself home improvement projects during the pandemic. The increase comes even as factories that slowed down during the pandemic-induced labor shortages are back in production.
Builders like Matt McIntyre of McIntyre Home Builders are feeling the effects; customers are too.
McIntyre said plywood cost $ 8 per sheet last fall. Prices jumped in the mid-forties or so. If it uses an average of 220 sheets of plywood per 2,000 square foot home, that’s $ 8,000 more per home just for the plywood. The National Association of Home Builders reports that lumber prices have added nearly $ 36,000 to the price of an average single-family home.
Experts say inflation could temper prices, but that’s not a given. (April’s consumer price index rose 4.2% from April 2020, the biggest month-on-month jump since September 2008. The March-April increase was 0.8%)
The rising costs of the final product do not correlate with Alabama’s abundant forest land, said William Green, director of the forestry division of the Alabama Farmers’ Federation. More than two-thirds of Alabama is covered in forests. It’s 23 million acres. Alabama landowners also plant more trees each year than they harvest.
More mills may not be the answer
Building more factories to process more wood seems to be a solution. But it’s not that simple, Green said.
“You don’t know what the market will look like in more than 18 months when the plant is finally built,” said Green, who also heads the Alabama TREASURE Forest Association (ATFA). “Will this investment be profitable? Many family sawmills were taken over by larger companies during the last recession. It is not easy to predict how a market will react over time.
Time is of the essence
Time is of the essence in the wooden basket. The wood is sawn from pine logs and it takes about 30 years of growth before the pines are harvested. A lot can change in three decades, said ATFA member Poole.
For example, the conservation reserve program was started in 1985 to compensate landowners who planted trees on former cropland. The federal program was supposed to control erosion and stabilize commodity prices.
Over thirty years later, he is also adding a glut of timber to the market.
The mills are also demanding, said Poole. As factories improve technology, smaller, more uniform logs are processed, meaning some pines have exceeded higher market values.
Poole doesn’t expect an immediate response. But in a state where forestry has an economic impact of $ 21 billion a year, he and other landowners need a breakthrough – soon.
“We’re not looking to take someone else’s profit,” Poole said. “But what is the solution?”
Marlee Moore grew up in Thomasville.