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Survey analyzes region’s logging sector

Private woodland owners provide the majority of timber harvested in Wisconsin and Michigan’s Upper Peninsula, and most owners choose to selectively cut, rather than clearcut, their woodlands, according to a study by researchers at the University of Wisconsin-Madison and Michigan State University. Changes in woodland ownership are going to change the way the region”s logging industry does business, they say.

Professional loggers are key players in the sustainable management of the forest resource. Through their harvesting activities, they shape the composition, health, and future development of the region’s forests. Loggers help property owners realize their land management objectives, whether they be improved wildlife habitat, increased recreational opportunities, timber revenue, or all of the above. And they provide the raw materials essential to the region’s multi-billion dollar forest products industry.

Despite its importance to forest productivity and local economies, relatively little is known about the region’s logging sector. To better understand this sector, the researchers surveyed logging firms in Wisconsin and Michigan’s Upper Peninsula. Based on survey results from firms harvesting 100 cords or more per year, they detailed the production, demographics and structure of the region’s logging sector, and examined the business climate in which the logging firms operate.

Firms reported that 80 percent of their 2003 harvests came from thinnings, improvement cuts, shelterwood treatments, individual-tree selection, and group selection. The remainder came from clearcuts. Private woodlands – forests owned by private individuals and families – were the main source of timber in the region.

The average logging firm harvested 5,900 cords of wood in 2003, but there was a wide range in production; chain-saw based operations averaged 2,300 cords per year, while the largest firm cut more than 56,000 cords in 2003. Pulpwood accounted for more than two-thirds of the region’s output; firms in northern Wisconsin and the Upper Peninsula produced about 70 percent pulpwood and 21 to 22 percent sawlogs, while southern Wisconsin firms produced 54 percent pulpwood and 39 percent sawlogs. Veneer comprised about 5 percent of the region”s timber output, with the balance consisting of firewood, posts, poles and other miscellaneous products.

Most timber sales in the region fell into the 21- to 40-acre and 41- to 80-acre class; about 25 percent of timber sales were greater than 80 acres. Small sales – 10 acres or less – accounted for just 12 percent of the regional harvests, according to study author Mark Rickenbach, an assistant professor of forest policy and management at the UW-Madison’s College of Agricultural and Life Sciences.

“These findings provide clear evidence that most logging firms focus their procurement efforts on large timber sales. This is expected, as large sales offer improved economies of scale for the capital-intensive, highly productive logging firms that harvest most of the region’s wood. As sale size increases, firms spread their fixed costs over more acres and more cords, improving their bottom line,” Rickenbach says. The researchers noted a distinct break at 20 acres, with nearly 80 percent of sales being 21 acres or more. “The distribution of timber sales implies that a minimum size of 20 acres may be necessary to attract the attention of most logging firms,” he says.

Foresters and woodland owners should keep that 20-acre threshold in mind. “Our survey results indicate that harvests of 20 acres or less may not be as readily marketable,” Rickenbach says. “Small sales with many high-value trees will always be an exception, but typical small sales, at least at prevailing stumpage prices, may attract few bidders or go unsold. This is not to suggest that small stands cannot be managed; rather, there appears to be a limited number of firms that are currently interested in or capable of harvesting small tracts.”

Forests cover more than 24 million acres in Wisconsin and the Upper Peninsula – more than half the land area. Forest ownership in the region has undergone two major changes over the past decade. The number of private woodland owners has increased, and the average size of their holdings has decreased. This raises concerns about the operability of these small holdings and the willingness of the new owners to manage and harvest timber, the researchers say. Industrial forest ownership has also shifted, with several timber companies divesting their holdings to land investment and management organizations. Both developments will influence future land use, forest management decisions, and timber supply.
For the region’s wood products industry to adapt to these changes, we’ll need to see greater information sharing across the value chain, according to Rickenbach.

“Loggers and mills will need to work together to reduce the cost of procurement and find ways to make logging attractive to small woodland owners – for example, by specializing in creating wildlife habitat as well as removing timber,” he says. “And the industry will need to find ways to promote aggregation. Getting small woodland owners in a given area together for a timber harvest will minimize logging costs and ensure continued access to this wood supply.”

Rickenbach and co-authors Tom Steele, superintendent of the Kemp Natural Resources Station, and Mike Schira of Michigan State University discuss their findings in a new Extension publication, Status of the Logging Sector in Wisconsin and Michigan’s Upper Peninsula – 2003. For a copy of the publication, call (608) 262-9975 or email forext@calshp.cals.wisc.edu. The publication is also posted on the department’s website at http://www.forest.wisc.edu/extension/Publications/LoggingReport.pdf They also reported their research in the December 2005 issue of the Forest Products Journal and in a forthcoming Canadian Journal of Forest Research article.

This study was funded in part by Landscape Change and Forest Productivity Integrated Programs of the USDA Forest Service, and through the Renewable Resources Extension Act.