‘Super cycle’ of demand sows seedling shortage
Nursery manager Mike Taylor expects to stay busy for the foreseeable future.
Increasing timber harvest, log exports to China and recent forest fires appear to be contributing to a “super cycle” of demand for tree seedlings, said Taylor, who runs the IFA Nurseries seedling production facilities in Aurora, Ore.
With reforestation activities on the rise, some forestland owners are getting caught off guard and may find themselves short of seedlings, experts say.
“I’m sure there are going to be situations where people are not getting trees,” said Kathy LeCompte, owner of Brooks Tree Farm north of Salem, Ore.
Small forestland owners could have a hard time finding trees if they decided to log recently, compared to those who planned to harvest years ahead of time and contracted for seedlings, said Steve Akehurst, regional marketing manager for IFA Nurseries.
“Oftentimes, people don’t have that luxury,” he said.
The current shortage is largely an aftershock from the recent upheaval in the timber market, said Robert McNitt, owner of the Forest Seedling Network, an online market for seedlings.
During the severe downturn in the housing market, depressed log prices discouraged forestland owners from cutting trees, he said. “The attitude of small woodland owners especially is if the price is low, let them grow.”
The investment organizations that now own large swaths of land tend to emulate this practice, unlike traditional timber companies that kept logging so their mills stayed operational, he said.
Less logging equated to less reforestation activity.
Seedling nurseries responded by reducing or eliminating their production of “on spec” trees, which are planted speculatively without a buyer contract, McNitt said.
“Nobody wants a four-foot tree to plant out in the woods, especially 200,000 of them,” he said.
A recovering housing market has since buoyed the timber industry.
Lumber production in the West grew 8 percent last year, to 12.6 billion board feet, and is on track for another 8 percent increase in 2013, according to the Western Wood Products Association.
Demand for seedlings has rebounded, so nurseries have filled much of their space with contracted trees, McNitt said. “They’re too full for spec.”
Despite the improved market, nurseries are still too nervous about the economy to invest in new capacity, he said. “They have kept their foot off the gas pedal.”
Many forestland owners are looking for seedlings that are initially grown in greenhouses — these trees are often associated with hardiness in tough conditions or a faster growth rate, said Akehurst of IFA Nurseries.
“There’s only so much greenhouse capacity,” he said, noting that current capacity is stretched.
Greenhouses are expensive, however, and nurseries are reluctant to spend money based on short-term market conditions, Akehurst said.
“It’s not going to be any rush to build new nurseries,” he said. If the timber industry stays healthy for the longer term, though, there could me moderate investment in greenhouses.
The tree seedling industry has relatively low profit margins, said LeCompte of Brooks Tree Nursery.
Restrictions on fumigation have made production more difficult, while the looming impact of Obamacare health insurance reforms also create uncertainty, she said.
“I don’t think it will inspire more people to start in this business,” Le Compte said.