Fall 2024 23 Markets Make the Difference THE LOGROLL Notes & News for Loggers By Scott Barrett, Ph.D. Extension Specialist – Forest Operations Virginia Tech Department of Forest Resources and Environmental Conservation For many logging operations, the past couple of years have been especially challenging. In addition to the everyday challenges of harvesting wood and getting it to the mill, many markets have been down and input costs have gone up. Some businesses have struggled more than others, but what are the differences between businesses that are doing well and those that are not? Our recent survey on the economic sustainability of logging businesses in Virginia gave us a little insight into this question. It is important to keep in mind that surveys are a snapshot in time and quickly can become outdated. Also, survey data is somewhat generalized, and specific impacts on any individual operation are harder to determine. However, we have found that this survey data can be useful in telling the story of what is going on with logging operations across a broad area. With this recent survey we asked owners about their businesses in the past year and whether they had been profitable, around break even, or not profitable. Additionally, we asked about several other characteristics of their operations including region, production level, harvest type, and along with many other factors. This allowed us to create groups and look at the operational characteristics for the profitable or not profitable groups. Then, we tested to see if there were any statistically significant differences between the different groups. Of particular interest, we found there was only one factor that was significantly different at the statewide level between groups that were profitable versus not. That difference was the proportion of their total production that was hardwood pulpwood. The not-profitable group harvested a higher proportion of hardwood pulpwood (29%) than the profitable group (15%). While not statistically significant, it also showed that the profitable group harvested a higher proportion of hardwood sawtimber (43%) than those that were not profitable (28%). It was interesting that, of all the factors we looked at, the only statistically significant difference between profitable loggers versus not profitable, had to do with the type of product they were harvesting, which is a result of the markets they were selling to. Factors such as number of years operating their business, total production level, number of employees and total amount of money invested in their operation were not significantly different between the profitable versus not profitable groups. One additional factor to note was that, while not statistically significant, the profitable loggers purchased a higher percentage of the timber they cut themselves as opposed to contract logging of timber that was purchased by someone else. These results show that it is not always just about being bigger and having more production, it’s about making a profit. The overall results also show that logging businesses in the mountain region reported a slightly higher outlook on the overall economic sustainability of their operations as compared to those in the Piedmont and Coastal Plain of Virginia. Operations in the mountains tend to be smaller and lower production, but they also tend to be located closer to hardwood log markets. Markets make the difference in good times as well as challenging times. This survey showed that times have been challenging for many loggers, but many remain hopeful for improvements in markets. Improvements in markets could help everyone in the forest supply chain whether you are a logger, landowner, or mill.
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