The Forest Products Industry

• What is the outlook for the forest products industry?
• Timber prices are subject to cyclical changes and have recently had a negative impact on all facets of the forest products industry. Over the long term, however, the United Nations forecasts that by 2050, world demand for timber products will nearly double that of today.² Moreover, the U.S. is the world’s leading consumer of forest products, accounting for almost 30% of the world’s consumption.³
• How large is the U.S. forest products industry?
• The U.S. is the world’s leading producer of forest products, accounting for about one-quarter of the world’s production.⁴ In fact, wood products account for nearly half of all industrial raw materials manufactured in the U.S.⁵ In 2005, the American Forest & Paper Association reported that the forest products industry generated more than $230 billion in sales and was the eighth-largest domestic manufacturing sector contributing to GDP.
• What types of products are made from trees?
• Over 5,000 products are made from the various types and parts of trees. These may include products made from:
  • Lumber — such as home-building materials and telephone poles
  • Pulpwood — for the paper and paperboard used to make cardboard boxes, magazines, copy paper, etc.
  • Wood fiber and by-products — such as crayons, deodorant, and even ice cream!
  Click here to discover more about the many products made from trees.
• How many trees does the average American use?
• Each year the average citizen uses wood and paper products equivalent to one tree that is 100 feet tall and 18 inches in diameter. At the same time, more than five new trees are planted each year for every American!⁶
• How much of the wood harvested in the U.S. goes to home-building?
• Because more than 90% of the homes built in the U.S. use wood-framed walls and roofs, it’s not surprising that home construction, remodeling, and repair account for approximately two-thirds of the nation’s wood products consumption.⁷ In fact, an average 2,400-sq.-ft., single-family home in America contains approximately 15,800 board feet of lumber and up to 15,200 square feet of panel products.
  
  Trees provide the raw materials for many other domestic industries as well. The remaining third of the wood harvested in the U.S. is used primarily to make paper and paperboard, as well as fuel, cleaning agents, turpentine, and many other wood derivatives.⁸
• How does a tree’s value change as it grows?
• Trees grow in value as they mature, but there are noticeable “spurts” of rapid value growth along the way. Very young trees have no merchantable value until they reach pulpwood size. As they become large enough for chip-n-saw, they may grow to two-to-four times their former value, and they may double in value again when they reach sawtimber size. The age at which a tree fits these size categories will vary by species, climate, and other factors.
  
  Southern pine, for example, usually reaches pulpwood size between 11 and 15 years of age and might be sold for about $6 to $10 per ton. Between 16 and 22 years old, these trees are usually suitable for chip-n-saw, typically valued at $17 to $30 per ton. After growing for about 23 years, they should be large enough for sawtimber, which can sell for an average of $29 to $42 per ton.⁹
• How much timberland is owned by private companies vs. governmental agencies?
• Seventy percent of all U.S. forestland is privately owned, though only 11% is classified as commercial timberland. Public forestland is dominant in the Western U.S., while Eastern forestlands are predominantly under private ownership.¹⁰
  
  

Forest Management and Sustainable Forestry

• Will we run out of trees as a result of harvesting them?
• No. Responsible forest management involves replanting trees after harvest to ensure the sustainable value and productivity of timberlands. In fact, reforestation efforts in the U.S. have actually increased the size of our nation’s forests over the past century.¹¹ Since the 1940’s, Americans have been planting more trees than they’ve harvested,¹² and today, net annual tree growth on U.S. commercial forestland exceeds tree harvests by an impressive 33% each year.¹³
• How many trees are replanted each year?
• According to the U.S. Forest Service, nearly 1.75 billion trees are planted in America each year. That equates to more than five trees planted for every U.S. citizen each year. SFI program participants alone, including Wells Timberland, collectively plant on average more than 1.7 million trees every day.¹⁴
  
  While millions more trees may sprout naturally each year, industry does the best job of reforesting our timberlands. In fact, three-quarters of all the trees planted in America last year were planted by forest products companies and private timberland owners. As a result, commercial timberlands produce tree growth at an average annual rate of 70 cubic feet per acre, more than twice that produced on federal timberlands (35 cubic feet) and private land (30 cubic feet).¹⁵
• How does sustainable forestry work?
• Under this system, forests are managed much like a garden, with “crops” of trees being replanted after harvest. The forest manager strives to maintain stands of trees at various stages of growth so that harvests may be made at regular intervals for a potentially more consistent income stream. This helps to ensure that the timberland can be farmed indefinitely and that the forest ecosystem is preserved.
• Can forest management protect timberlands from natural hazards?
• Through silvicultural techniques such as fertilization, thinning, and weed control, professional forest managers may be able to make timberland more productive and guard it against natural risks. Silvicultural science involves selectively replanting trees that exhibit faster growth ability and greater resistance to disease and deformity, as well as conducting controlled burns to reduce inflammatory undergrowth and harmful insect infestations. As a result of such measures, privately managed lands are less likely to experience forest fires than federally managed public areas, with only a 0.8% risk of damage from natural causes.¹⁶
• Can timberland be used for something other than just growing trees?
• Yes. In addition to their natural beauty, timberlands may be used for hunting, fishing, and other recreational activities, as well as for mineral extraction. The rights to these activities may be leased as another potential source of income from timberland. In some instances, certain tracts of commercial timberlands may be better utilized for a “higher-and-better-use” (HBU), such as conservation easements or resort areas. In these cases, the land or the rights to develop it may be sold to a developer, conservation organization, or state agency.

Wells Timberland Portfolio

• What is Mahrt Timberland?
• Located in one of the most productive timber-producing areas of the U.S., Mahrt Timberland is a collection of approximately 309,000 acres of commercial timberlands in Georgia and Alabama that surround the MeadWestvaco Mahrt paper mill in Alabama. Mahrt Timberland became the first acquisition in the Wells Timberland portfolio in October 2007. Wells Timberland owns 223,300 acres of the property and holds long-term leaseholds for the balance of 85,260 acres, which are owned by third parties.
• What types of trees grow on your timberlands?
• The majority (60%) of Mahrt Timberland’s inventory is pine, with the rest consisting of various hardwood species, such as oak, gum, and poplar. The trees range in age from seedlings to more than 70 years, but are primarily younger than 25 years old.
• What types of timber products are made from your trees?
• Approximately 75% of the timber harvested at Mahrt Timberland is pulpwood, used for making paper and paperboard. The remaining quarter is primarily chip-n-saw and a small amount of sawtimber, used to make lumber and plywood.
• Who buys your timber?
• Currently, the timber produced at Mahrt Timberland is purchased by approximately 20 forest-products companies, including MeadWestvaco, Georgia-Pacific, Weyerhaeuser, and International Paper.
• Do you allow recreational activities such as hunting and fishing on your timberlands?
• Yes. Users must have a valid recreational license, available through Wells TIMO. Please visit our “Contact Us” page for information on obtaining a license.

¹U.S. Department of Agriculture – Forest Service, “U.S. Forest Resource Facts and Historical Trends,” September 2004.
²Hancock Timber Resource Group, “Timberland as a Portfolio Diversifier,” Research Notes 2003.
³The American Forest & Paper Association and Clemson University, “U.S. Forest Facts & Figures,” May 2001. Retrieved August 19, 2008, from http://www.afandpa.org/Content/NavigationMenu/Forestry/Forestry_Facts_and_Figures/Forestry_Facts_and_Figures.htm.
⁴The American Forest & Paper Association and Clemson University, “U.S. Forest Facts & Figures,” May 2001. Retrieved August 19, 2008, from http://www.afandpa.org/Content/NavigationMenu/Forestry/Forestry_Facts_and_Figures/Forestry_Facts_and_Figures.htm.
⁵APA – Engineered Wood Association, “Engineered Wood and the Environment: Facts & Figures,” 2008.
⁶American Forest & Paper Association, “Answers to Some Frequently Asked Questions About America's Forest Products Industry,” 2002. Retrieved April 7, 2008 from http://www.afandpa.org/Content/NavigationMenu/Forestry/FAQs2/FAQs.htm.
⁷American Forest & Paper Association, “Answers to Some Frequently Asked Questions About America's Forest Products Industry,” 2002. Retrieved April 7, 2008 from http://www.afandpa.org/Content/NavigationMenu/Forestry/FAQs2/FAQs.htm.
⁸Technical Association of the Pulp and Paper Industry (TAPPI), “How are Trees Grown for Paper?” 2001. Retrieved August 19, 2008, from http://www.tappi.org/paperu/all_about_paper/earth_answers/EarthAnswers_GrowTree.pdf.
⁹"South-wide Pine Stumpage Prices, quarterly averages over 10 years," Timber Mart-South Market News Quarterly, Q4 2008.
¹⁰U.S. Department of Agriculture — Forest Service, “Forest Resources of the United States, 2002.”
¹¹American Forest & Paper Association, “Answers to Some Frequently Asked Questions About America's Forest Products Industry,” 2002. Retrieved April 7, 2008 from http://www.afandpa.org/Content/NavigationMenu/Forestry/FAQs2/FAQs.htm.
¹²Technical Association of the Pulp and Paper Industry (TAPPI), “All About Paper,” 2001. Retrieved April 7, 2008 from http://www.tappi.org/paperu/all_about_paper/faq.htm.
¹³Technical Association of the Pulp and Paper Industry (TAPPI), “Are We Running Out of Trees?” 2001. Retrieved August 19, 2008, from http://www.tappi.org/paperu/all_about_paper/earth_answers/EarthAnswers_RunOutTree.pdf.
¹⁴American Forest & Paper Association, “Answers to Some Frequently Asked Questions About America's Forest Products Industry,” 2002. Retrieved April 7, 2008 from http://www.afandpa.org/Content/NavigationMenu/Forestry/FAQs2/FAQs.htm.
¹⁵Appalachian Hardwood Manufacturers, Inc. Retrieved April 7, 2008, from http://www.appalachianwood.org/forestry/quantity.htm.
¹⁶“An Overview of Fire as a Forest Damage Agent” and “An Overview of Insects & Diseases as Forest Damage Agents,” Dr. Jack Lutz and Dr. Donald MacKay, 8/25/08. Dr. Jack Lutz has been commissioned by Wells to perform timber research.