World’s ‘wood basket’ says forestry is key to boosting state revenues

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The Southern states of the US produce more wood than any single country and, with demand for wood products growing across the globe, the economic impact of the asset class is being brought sharply into focus.

According to South Carolina State Forester Gene Kodama, properly managed forests are the real key to boosting revenues across the state. The South is the ‘wood basket’ of the world, and South Carolina plays a crucial role in that. “Global demand for wood and wood products continues to grow along with the world’s population,” Mr Kodama told The Times and Democrat. “The Forestry Commission has led the state’s forest industry on a quest to increase its economic impact to $20 billion by the end of 2015. The industry has recovered from the ‘Great Recession’ and grown to $18.6 billion based on 2013 data, so the $20 billion goal is in sight. This will be confirmed late in 2016 when 2015 data is made available.”

Overall, South Carolina’s forestry sector employs over 90,000 people and has a yearly economic impact of $18.6 billion. Wood from the region’s forests is also the largest harvested crop and the top export commodity from the Port of Charleston, reaping $759 million and $1.5 billion respectively. Despite this figures, there remains plenty more room for growth, say forestry experts.

Walt McPhail, chairman of the South Carolina Forestry Commission and president of the Greenville Forestry and Wildlife Society, told the publication that timber was an extremely “valuable and renewable resource for the state.” He added that the vast majority – 70 per cent – of forest land in South Carolina is privately owned, and this can result in a lack of proper forest management. ” If we could improve our forest management even 10 per cent, it would lead to a tremendous increase in revenues,” said Mr McPhail.

Forest land that is sustainably managed will lead to far higher returns of top quality products and amenities, both of which are sought after the world over, especially from major powerhouses such as China. Harvesting, thinning and assuring proper and timely maintenance for all forest land is the key to ensuring a robust, reliable, productive woodland is created.

“Private landowners are the key to retaining and growing the state’s forest industry,” said Mr Kodama. “More active forest management can increase landowners’ investment returns, provide cash flow for more active management, keep forest as forests, protect the environment and support more forestry and related jobs. The state and the industry need to do more to educate landowners on the advantages of forestry and how to conduct good forest management.”

Regarding tree species, pines are the most valuable in the southeastern United States. Currently, the trees in this region are around half pines, and half hardwood types. The so-called ‘pine plantations,’ which are tracts of pines that are well managed and replanted after harvesting, account for a quarter of the entire state’s timberland and produce half of the timber that is cut annually.

McPhail added: “How much money pine farmers make depends on their management schemes. If you’re going to be harvesting timber, you don’t want to leave everything up to Mother Nature. Managing a forest is like tending a garden. You choose good soil. You plant good seeds. You thin them. You fertilize. And after all that, you can expect to produce an abundant crop.”

Investors should be aware of factors that can have an impact on a natural asset such as forestry, says Clemson Extension agent, Carolyn Dawson, from Clemson University, who examines forest health. Major storms and heavy rains can degrade young plantations as well as destroy seedlings and disrupt logging and mill production. Torrential rains can also have an impact on mature tree species. Landowners need to take a longer-term view – it can take many years for trees to mature, and it is not always wise to harvest them before they reach their highest value.

GWD Forestry spokesman, James Barrett, said: “The demand for wood and wood products is only going to rise as housebuilding picks up once again. In line with this, the interest in forestry as an asset class will also skyrocket, and it will increasingly be seen as a major power player on the investment stage.”

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