U.S. Timberland Ownership Shifts Change Timber Markets

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In his presentation on "Private Forestland Ownership Change in the U.S.," Jacek Siry of the CFB summarized findings from his new book US Timberland Markets: 2000 to 2010, which was jointly authored with Tom Harris and Sara Baldwin of Athens-based Timber Mart-South. Siry included some of the following points: 

• In 2000, forest products companies owned approximately 20% of privately owned U.S. timberland, of which 36 million was in the South. By the end of 2010, much of these Southern U.S. timberland holdings had changed hands, some more than once, and most of the rest had moved to different ownership structures ·
• The top 10 companies owned 38.7 million acres in 2000. Today, after a historic divestiture by nearly all of the large forest products companies, private corporate timberland ownership in the U.S. is more diverse and less integrated. The top 10 forest products company owners hold only 21.5 million acres and four of the top five are Real Estate Investment Trusts (REITs).
• Timberland Investment Management Organizations (TIMOs) purchased many of the acres sold by the forest products companies. Only one TIMO, Hancock Timber Resources Group, held more than 3 million acres under management in 2000. In 2010, the three top TIMOs each held more than 3 million acres, and the top 10 TIMOs held more than 20 million acres.
• In general, timberland appears to have been traded more frequently than in the past. Transition activity peaked mid-decade. The timberland acreage sold per year in large transactions increased from about one million acres in 2000 to peak at about 7 million acres in 2006. By 2010, sales had fallen back to 2000 levels.
• Timberland prices also increased over the period. Prices averaged around $800 per acre nation-wide from 2000 through 2004, peaked in 2007 at almost $1,800 per acre in 2007, and fell back by 2010. However, prices only returned to 2006 levels.
• REITs and TIMOs are widely thought to manage their land held for timber production in a similar manner to industrial owners. However, portions of the land may be managed less intensively or set aside for environmental purposes. Sales of non-core timberland and acquisitions that compliment holdings can be part of the business model.
• One implication of forest industry divestiture of timberland is that more wood is now sold on the open market. This trend has increased the role of consulting foresters in timberland management. Further, there are new market dynamics for both buyers and sellers. Supply chain instruments such as supply agreements and timber leases have become prominent parts of timberland transactions. Wood supply chain efficiency has changed but how the new relationships affect wood flow and costs are still under scrutiny.