Record Lumber Prices Present Opportunity, and Risk, for Domestic Industry

By Nick Smith

With lumber prices reaching record highs, the time is now to make a case for our domestic forest products industry.

Given the chance, our homegrown milling and logging companies can meet more of the country’s strong demand for lumber and other wood products. The red-hot market also provides an opportunity to reconnect Americans to the resource and remind them of the many benefits of active forest management.

But this moment is not without danger. Record prices can lead to increased competition from foreign producers and more imports entering our market. The United States already is a net importer of wood products. The gap between U.S. wood consumption and domestic wood production is an astounding 17 billion board feet, according to the Forest Economic Advisors. There is also the risk of losing ground to producers of non-wood materials, as builders and contractors feel compelled to seek cheaper alternatives.

Reaching Out

It has been widely reported in national media outlets that lumber prices have increased the price of the average new, single-family home by over $24,000. Trade associations representing builders and contractors are lobbying the Biden Administration to intervene. They say the White House should urge domestic lumber producers to ramp up production while easing limits on Canadian imports.

Members of Congress have also gotten involved. In their letter to President Biden, Representatives Jim Costa (D-California) and Jodey Arrington (R-Texas) write that “this unprecedented price increase on new homeowners, as well as home builders, will persist until new sawmills come online and current mills re-open and operate at full capacity.”

Those of us who work for, or with, wood products manufacturers understand this is easier said than done. Opening or reopening sawmills requires significant investment. Many of our lumber companies are doing everything they can to fill orders and meet demand. In fact, the American Wood Council reports that production of wood products is already the highest it’s been since 2007.

Yet producers continue to be held back by workforce constraints and uncertain timber supplies. There are several ways the Biden Administration, the U.S. Congress, and state governments can help our producers expand their capacity to manufacture more lumber here at home.

Ways to Expand Production

To expand lumber production, businesses across the supply chain need support because many are still struggling. The Biden Administration and the U.S. Department of Agriculture can start by ensuring full implementation and funding for the Logger Relief Package that was approved in previous Covid-relief legislation, so all impacted logging companies can receive the assistance they need. It is also important for governments to help expand markets for wood products besides lumber, particularly those made with log and mill residuals.

Policymakers should also resist adding more regulation, red tape, and taxes, as well as measures that further increase fuel prices. We are already the most strictly regulated industry compared to any other in the world. This year we have seen a proliferation of policy and tax proposals that would further squeeze landowners, loggers, truckers, manufacturers, and others, many of which continue to operate on thin margins despite record lumber prices. Our domestic industry can’t compete in a global market when our own policymakers continue to tilt the market toward foreign producers.

An uncertain timber supply is the primary obstacle to expanding lumber production, especially in the Pacific Northwest. There is no way to significantly manufacture more lumber without improving management of the region’s federally owned forests. Millions of acres of these lands are not being managed for timber, forest health, or wildfire mitigation — instead they are burning up in catastrophic wildfires.

Federal lands must be part of the solution. For much of the 20th Century, these forests helped power the nation’s post-war economy. They provided affordable lumber to meet domestic housing needs. They also provided a robust network of forest roads for logging, firefighting, and outdoor recreation. And they provided a source of good-paying jobs and economic opportunities for many of our rural, forested communities.

Accelerating forest management on federal lands can provide multiple benefits. By reducing fuels we can reduce the intensity of today’s mega-fires, protect communities, and save millions of taxpayer dollars in wildfire suppression costs. A reliable and sustainable supply of federal timber would benefit the whole supply chain, while encouraging lumber producers to increase investments in their manufacturing facilities and workforce, thus increasing supply.

Finally, the red-hot lumber market should be an opportunity to reconnect Americans to the resource. Much of the demand has been fueled by retail sales and do-it-yourself projects throughout the pandemic. We should encourage consumers to seek out and purchase lumber that is domestically sourced and sustainably harvested from our own public and private lands.

Sending a Message

We should remind environmentally conscious consumers that buying domestic lumber is a better alternative to importing wood products from countries that may not share our values and forest practices. Plus, we should explain the climate benefits of actively managing our forests, and the potential to lock up more carbon in wood products.

Demand for wood products is expected to remain strong, even if prices gradually cool. By making the case for our domestic forest products industry, we can better position ourselves for the future and ensure we can continue to supply products that meet the needs of all Americans.

Nick Smith is Executive Director of Healthy Forests, Healthy Communities and provides public affairs services to the American Forest Resource Council in Portland, Oregon.