Can We Manage Without Pulp Mills?
The closing of Maine pulp and paper mills has been in the news recently. The last six months have seen two shut down permanently while a third had its production cut in half. The effect of such abrupt closures has been nothing short of dire for the timber industry here in New England.
Without a strong market for pulpwood it becomes extremely hard if not impossible for the forest products industry to continue functioning in its current form.
What do the mills in Maine have to do with forestry and the forest industry in Vermont and NH.?
Quite a bit. Out of the pulpwood produced in both states roughly 50% is shipped directly to pulp mills in Maine. In the northern regions of both states that percentage trends as high as 85 %. In short both states rely heavily on the pulp mills in Maine as a market for their low -grade wood.
Are There Other States Nearby With Pulp and Paper Mills ?
Yes. But only one – New York. They have two pulp mills. Both are located on the eastern edge of the state – bordering Vermont. They do buy pulpwood from both NH and VT . This wood is purchased either directly as round -wood or indirectly as chips - from open market chip plants located in the south/central portions of both states.
Why Are The Mills In Maine Struggling?
The biggest reason is the fact that nearly all of them are making a paper product that has very little demand. The product these mills are manufacturing is known in the paper making industry as “coated paper “. Its used in magazines , newspapers fliers and catalogs. Since the advent of the internet, this sector of the paper market has seen market share decline by double digits. Other factors are the high electrical costs found in New England, ( thanks to all of the NE states signing onto RGGI), poor rail access into the state and high wood fiber costs. Lastly outside of the SAPPI mill in Skowhegan, the mills tend to be very old, and run by companies deep in debt.
Do The Mills In New York Have The Same Problems?
Somewhat – but nowhere near the degree that the mills in Maine do. A big reason is that the mills in New York manufacture “uncoated free sheet paper”. It is a product that still has demand high enough to justify keeping the mills running at full production. The NY mills are also located adjacent to top of the line rail service, interstate system and lower cost wood fiber than their Maine counterparts. Lastly, both mills parent companies have strong balance sheets and decades of paper making expertise. However, their electrical costs are also very high. The state of NY has realized this and taken steps to help address it – realizing how vital these mills are to the economy of that region.
Why Is A Market For Pulp So Important For Good Forest Management?
As professional foresters, we are always looking to improve the long term health and value of our client’s forests. This involves weeding out the lower quality, poorly formed stems, in turn allowing for the trees we retain to have room to grow more efficiently. In reality this type of proper management cannot be done without a strong market for pulpwood.
As An Example:
Stillwater Forestry recently conducted an improvement harvest on a 20 acre parcel in Vermont. It generated 224 tons of pulp. The logging contractor paid a price of $7.00 per ton for the hardwood pulp. This generated a total income of $1568.00.
$ 1568.00 (total income) \ 20 (acres) = $78.40 p/acre.
A very respectable per/acre income from a harvest that will improve the long term value and of our client’s forest. Remove the pulp mills as a market and suddenly this high income is gone. In their place ,you might see the wood turned into biomass chips where the best you might see is a per/acre price of $ 6.00.
How Important Are The Pulp Mills To The Rest Of The Industry?
Extremely. The weekly income that is generated by the production of pulpwood produces consistent cash flow for the owners of logging businesses. This enables the owners of these businesses to
invest in the equipment necessary to have a highly efficient productive operation. The owners of both grade hardwood and softwood sawmills also rely heavily on pulp mills as a market for the chips produced from the manufacturing of lumber. They factor the high market price they receive for these chips into their overall profit margin. In turn this dictates what price they can pay for their logs. With the pulp market missing these mills are forced to dump their chips into the biomass market at a substantially lower price. In turn they pay the landowners and loggers less for purchased logs. It turns into a negative vicious cycle. In short the pulp mills are like a motor that drives the whole industry. Without their presence the forest industry is analogous to a car that’s sitting there without an engine under the hood. It still looks like a car but it certainly isn’t functioning like one.
Can Biomass and Wood Pellet Manufacturing Replace Pulp and Paper ?
Not entirely. Both biomass and wood pellets are markets that are meant to supplement -not replace - the low grade wood markets. The biggest concern about the “renewable” energy markets, such as biomass and industrial wood pellets ( pellets exported to Europe for electrical production) , is that they are not truly market driven. They have sprung up as result of government mandates requiring that electricity producer’s manufacture/purchase a significant portion of their electricity from “green” sources. This is all being done in the name of combatting “ global warming”. The irony is that these sources of electricity, are much more expensive than clean coal or # 6 Fuel Oil and ultimately have driven up electrical costs in New England to financially unsustainable levels for those industries, like pulp and paper, that rely on high amounts of electricity to function. Another example where government mandates exact devastating damage to the private sector.