Huge Chunks of Land, Changing Hands
The collapse of the housing industry hasn’t been good to log prices. According to a report (pdf) published in June by Northwest Farm Credit Services, log prices are as low as they were in the 1980s and can barely cover the cost of logging. Across the Northwest, timber companies are delaying harvests and mills have either stopped buying logs or put log producers on quotas.
With the prices of both logs and real estate in the gutter, it seems reasonable to think that the price of timberland would follow suit. But according to the NFCS report, forestland prices have been “disconnected” from log prices, and are holding steady despite the recession. And that’s great news for Weyerhaeuser, which, in the past year, has sold thousands of acres of Oregon and Washington forestland. The Associated Press reported
in July that Weyerhaeuser beat Wall Street earnings expectations by selling off “non-strategic timberland.” By “non-strategic,” company officials mean pine and hemlock forests, as opposed to the more profitable Douglas fir forests.
On August 14, the company announced that it had a $300 million deal to sell 140,000 acres in northwestern Oregon to an international timber investment management organization, or TIMO, called The Campbell Group. Weyerhaeuser spokesmen have also hinted that they may sell up to 82,000 additional acres in Washington. (Find detailed lists and prices here here ).
Unlike an old-fashioned timber company, which owns mills and other timber-based infrastructure and cares what happens to them, TIMOs aren’t invested in the local community and will do whatever needs to be done to get the best return on their investment. TIMO “capital is more flighty,” Bettina von Hagen of Ecotrust told the Daily Astorian. “It can go anywhere. It doesn't have to stay in the community."
Mark Twain famously suggested that we should “buy land, because they aren’t making any more of it.” As we learned earlier this year, applying this logic to overpriced spec houses leads to disaster. When it comes to houses, we can indeed make more. The same can’t be said for thousand-acre tracks of unbroken forestland, and TIMO ownership makes converting forestland to “highest and best use” easier, if not inevitable.