February 8, 2001 | By: Aimee D. Heald
LEXINGTON, KY.

Many Kentuckians depend on the timber industry for their livelihood. Perhaps forest land owners are watching the economic news a little closer than others, since the timber industry traditionally is the first to feel the results of a slowing economy.

"How and when does a slowing economy affect the timber industry?" asked Doug McLaren, University of Kentucky forest management specialist. "Normally very quickly and with a rippling affect."

McLaren said that during a slowing economy, people are more reluctant to spend available funds on durable goods. This means the first thing families may scratch off their wish-list is a new home.

"They are simply waiting for a stronger signal of a stronger economy. If you don't build or do alterations to homes, then less wood will be requested," he said.

Houses usually are framed with wood from conifers and not the hardwoods native to Kentucky. So, why would the Commonwealth's logging industry feel the effects of a decrease in home building or alterations?

In many instances new homes will require kitchen cabinets that are made exclusively of hardwoods. They may include hardwood floors, banisters, molding, doors, and interior trim, Hardwood is also used in furnishings that could be added to other rooms in a new home. When you think about all the inside wood requirements of a new home, it's easy to see why Kentucky would feel the effects.

"When the economy slows, normally, the logging industry slows," McLaren said. "So, what does the future look like for timber prices and forest landowners in Kentucky and what should the timber landowner do to guard against the effects of a slowing economy?"

McLaren suggests landowners observe several variables. First, timber prices traditionally increase in the spring due to a possible low- volume supply of logs as a result of winter weather. Wet, warm weather can cause a problem of getting logs out of the woods. Mud slows removal equipment down. If the supply of logs is low in late winter and early spring, saw mills will need logs to maintain their lumber production.

Another safeguard for landowners who wish to sell timber is that trees are not like livestock and annual row crops; it can be held until a later time. In many cases, you do not have to sell your timber during the current year or even the next year if quoted prices are not reaching your expectations.

"Holding timber on the stump will not decrease its value as would leaving tobacco or corn in the field when it becomes mature." McLaren added. "Economically mature timber has been able to remain on the stump for the duration of most recent recessions."

Having a forester evaluate your timber stands can predict the best times to sell, or in the case of a slowing economy, to hold your timber. Timber is a renewable natural resource that quickly rebounds in value as economies strengthen. The forested inventory of your farm should become part of your overall farm management plan.

Your local Cooperative Extension office can help with forest landowner issues, as well as give guidance on farm management strategies.

Contact: 

Doug McLaren 859-257-2703