menu-bgimg

What we can offer you

We provide detailed transactional data, cost benchmarks and in-depth analytics for participants in the wood raw materials supply chain.
  • Pricing Data
  • Benchmarks
  • Product Forecasting
  • Advisory Services
  • Analytics
Learn More

SilvaStat360 Platform

  • Price Benchmarks
  • Madison’s Lumber Reporter
  • The Beck Group’s Sawmill TQ
  • Timber Supply Analysis 
  • Global Economic Data

Explore Forest2Market's Interactive Business Intelligence Platform

Learn More

Industries

From biomass suppliers in the Baltics to pulp producers in Brazil and TIMOs in the United States, Forest2Market provides products and services for suppliers, producers and other stakeholders in the global forest products industry.

Learn More
x
 
Blog

Wood Supply Sources in the US South

October 28, 2014
Author: Javon Carter

The fragmented nature of timberland ownership across the US South can make it difficult to identify wood suppliers. Non-industrial private forest (NIPF) landowners – whose primary business or means of income comes from a source other than timberland ownership – own a majority of the forestland in the Southern United States.

NIPF landowners own forestland for any number of reasons that range from recreation to conservation to a way to pass land down to their heirs. The varied ways NIPF landowners make use of their land is reflected in the range of acres – dominated by upland hardwoods – they own.

In contrast, corporate owners such as Timberland Investment Management Organizations (TIMOs) and Real Estate Investment Trusts (REITs) own more planted pine. The nature of their business – focused on clear return on investment objectives – necessitates the steady supply fast-growing pine offers. Unlike the small parcels owned by most private landowners, corporate owners also own a substantial volume of contiguous acres.  

US_South_Acres_by_Ownership_Type

Data Source: USDA Forest Service, Forest Inventory and Analysis Program (2013).

Nevertheless, non-contiguous parcels held by private landowners account for over half (55%) of timber sales in the US South. Given the majority of forestland in the South consists of these small parcels owned by private landowners, buyers can expect to work through wood dealers who source supply from multiple landowners.

Wood dealers organize fragmented forests owned by individuals and organizations with a wide range of objectives that affect harvest timing and type into a reliable supply chain. The dealer buys trees from the landowner, contracts with independent contractors to harvest and deliver the timber, and sells the harvested trees to the wood consuming facility.

US_South_Removals_by_Ownership_Type

Data Source: USDA Forest Service, Forest Inventory and Analysis Program (2013).

As with most things, the 80/20 rule also applies to wood dealers: 20 percent of dealers control 80 percent of supply. Buyers face the challenge of finding the right dealers (those in the 20 percent) who are known for good working relationships with both facilities and landowners.

Like wood dealers, some TIMOs and REITs act as direct suppliers of wood fiber. This eliminates the stumpage contract process and allows corporate owners to enter into contracts with wood consuming facilities and harvest and transportation contractors directly.

Whether a wood buyer works with a dealer or with a corporate owner, a key to developing strong trading relationships is the use of a price index free of survey-bias. When both parties trust the index, they can move on to address other matters such as quality and service at their respective businesses.

Wood Supply Agreements Slide Deck

Back to Blog

You May Also be Interested In

August 28, 2019
Biased Coverage of Rainforests Impacts Brazil’s Primary Forest Industry
The executive branch of the Brazilian government recently questioned the official data citing an increase in...
Continue Reading
August 19, 2019
The Seven Most Expensive Words in Business
There is an old adage said to encompass the seven most expensive words in business: “This is how we’ve always done...
Continue Reading
June 27, 2019
Labor Market Disappoints at Mid-Year Mark
Every month, Forest2Market publishes updated forecasting products designed specifically for participants in the...
Continue Reading