Dr. Matthew Pelkki

Dr. Matthew Pelkki is professor and George H. Clippert Endowed Chair of the College of Forestry, Agriculture, and Natural Resources at the University of Arkansas at Monticello.

Even if you leave out the effects of the COVID-19 pandemic, the year 2020 was a busy one for timber-related news, both good and bad.

Industry expansions and investments in Arkansas in 2020 included Green Bay Packaging expanding its Morrilton facility's virgin fiber facility to use more standing pine timber from company lands in north Arkansas.

After closing one paper facility in Crossett in 2019, Georgia-Pacific announced a $37 million investment in Crossett's remaining paper mill. Koppers, a Pittsburgh-based wood treatment company, expanded its Little Rock operations.

Montreal-based Resolute Forest Products acquired mills in El Dorado and Glenwood with plans to upgrade and expand each.

Canada's StucturLam announced a new cross-laminated timber, or CLT, facility in Conway, with a commitment from Wal-Mart to build a CLT corporate headquarters in Bentonville. On the downside, Domtar, based in South Carolina, announced the closure of the last paper machine at its Ashdown facility, though it will continue to make fiber. And the vast Sun Paper project in Clark County was canceled -- the loss of a $1.5 billion investment for the state.

The opportunities for forest carbon and bioenergy markets appear good for Arkansas.

Highland Pellets is upgrading its Pine Bluff facility and has plans to build in Union County. Exports are primarily to the European Union, but Asian markets are poised to grow substantially. Seventy-six percent of the U.S. capacity for wood pellet construction is located in the southeast.

Carbon sequestration initiatives

As energy producers turn to wood pellets to reduce their carbon emissions, forest landowners are seeing the creation of more carbon markets where carbon-emitting industries are paying landowners for sequestering carbon in growing trees. The Family Forest Carbon Program is a joint venture by The Nature Conservancy and the American Forests Foundation to bring carbon markets to family forest landowners who typically own timber in relatively small parcels.

Public and private partnerships

Cooperation is the name of the game for federal, state, and private forests in 2020.

Initiatives include the Rural Forest Markets Act, designed to help family forest landowners buy and sell carbon credits and create other environmental revenue streams for clean water and biodiversity protection.

The Good Neighbor Authority is a cooperative program of the U.S. Forest Service that allows the Arkansas Forestry Division to perform forest management activities on federal lands.

The Joint Chiefs' Restoration Program and the Ozark and Ouachita Highlands Projects are conducting forest restoration programs on federal and private lands by using local cooperators, including commercial logging, to accomplish ecosystem restoration goals.

Regulatory changes

Other notable federal initiatives include the final rulings on the Waters of the United States -- WOTUS -- that curtailed federal regulatory jurisdiction under the Clean Water Act. Additional changes were the inclusion of forestry workers as critical workers in the U.S. economy, the relaxation of H2-B visa restrictions for forestry workers, and the Trillion Trees Initiative announced at the World Economic Forum in January. The initiative seeks to have one trillion trees re-grown, saved from loss, and better protected worldwide by 2050.

Landowner concerns

Some 345,000 family forest landowners own nearly 11 million acres of the 19 million acres of Arkansas forests. The primary concerns of these landowners are access to markets and invasive species.

Hardwood timber markets were significantly affected by China's trade war, and the pandemic has worsened the situation. Family forest landowners also have trouble accessing markets because of the abundance of timber and excess production of timber throughout Arkansas and the South. There simply is not enough production of timber products, and stumpage prices are lower than they were 25 years ago.

Re-opening global markets to Asia, investment in new lumber products such as mass timber construction and wood-bioenergy is needed to support good forest management by family forest landowners.

These landowners face some serious forest health threats by invasive species. Most notable in Arkansas are feral hogs and the emerald ash borer. Feral hogs are very destructive to native wildlife and even reduce water quality by destroying vegetation near streams and ponds. The Emerald ash borer is an exotic beetle that will likely kill vast amounts of white and green ash, important timber species in Arkansas.

COVID-19's effects

Finally, the COVID-19 pandemic has caused major upheavals in the economy in 2020.

During the early spring, the pandemic resulting in a historic loss of employment. The demand for many vital wood products such as tissues, disinfectant wipes, masks, and filters was extremely high, but the pulp and paper industry structure could not catch up with the demand for several months. Simultaneously, the housing market declined precipitously, but home remodeling and residential consumption of wood spiked upward.

Then, as the pandemic's first wave subsided in the summer, and with interest rates cut to bolster the economy, the housing market rebounded strongly, causing price spikes in lumber and plywood costs. Like the paper industry, lumber production cannot increase quickly to demand. The industry has been very hesitant to add capacity, anticipating the pandemic's second wave this fall and winter.

Dr. Matthew Pelkki is with the Arkansas Forest Resources Center, University of Arkansas System Division of Agriculture. He is professor and George H. Clippert Endowed Chair of the College of Forestry, Agriculture, and Natural Resources at the University of Arkansas at Monticello.

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