Tuesday, April 23, 2013

Transition to 2nd Growth Reality or Folly

Back in the heydays taxpayers paid a subsidy of $12,000-$36,000 per Tongass timber job. Based on more recent Forest Service accounting information, this subsidy has grown during the last decade to a staggering $224,000-$510,000/job a nearly 1,400% increase. How can this be? Simply, the Forest Service kept spending like the industry was in its heyday while the industry was in a persistent long-term decline. To the Forest Service s credit Tongass timber program expenditures have decreased in recent years, but the fact remains that the Forest Service is still chasing after fewer and fewer timber jobs. The result is that the subsidy/job remains extraordinarily high. However, the current subsidies will be pale in comparison to those to support a 2nd-growth industry. The 2nd-growth subsidies will be from cradle to grave: for mill construction, raw material procurement, manufacturing, transportation, and perhaps even marketing & sales. Ironically, the need for these vertically integrated subsidies is very well documented a letter from Senator Murkowski to USDA Secretary Vilsack, dated March 13, 2013. In her letter Senator Murkowski asks the federal taxpayers to build two biomass plants, three lumber mills, and even help start a guitar factory. But Senator Murkowski also relays a very big ask made by the Viking mill owners: Most recently Kirk Dahlstrom has made a new proposal saying that he could remodel a current small log processing line for a grant of just $1.5 million to cover some equipment costs, if the Forest Service would enter into a true partnership with his mill to prove the economics of young growth. He is now proposing that the Forest Service cover the costs of logging and transporting young growth to his mill . He [Mr Dahlstorm] is asking the Forest Service to cover his actual costs of processing, sawing and kiln drying of the timber and provide him a 20 percent profit on just those operations the Forest Service then keeping any profits from shipping and marketing the timber. That is about as cradle to grave as you can get. But in all honesty, reading between the lines indicates little confidence in transition to 2nd-growth any time soon...more

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