Forest Industry Opportunities in Management and Assistance 
Donald F. Smith (1) 
| appreciate the chance to discuss with you 
forest industry opportunities in forest management 
and assistance in the South. 
The base case of the southern timber study 
indicates there is an opportunity to increase soft- 
wood growth and yield on industry lands and a 
need to expand assistance to nonindustrial private 
landowners so that they can also increase forest 
productivity. 
Based on my review of the study, | have reached 
several conclusions: 
e First, there are no incremental economic oppor- 
tunities relative to the base case for industrial 
timberlands. 
@ Second, like steel, automobiles, television, ap- 
parel, shoes, woolens, cigars, and musical in- 
struments, the pulp and paper industry has a 
high potential to migrate away from the United 
States, and there is nothing in this report that 
says that this potential will be reduced. 
e@ Third, the most economically efficient "program" 
for working with nonindustrial private landown- 
ers is forest industry and other private landown- 
er assistance programs. 
Industrial Timberlands 
Now, let's go back and talk about opportunities 
for industrial timberlands. To begin with, a real "op- 
portunity" must be both (1) economical, and (2) in- 
cremental. Then the question is, “Incremental to 
what?" The incremental opportunity numbers re- 
ported in chapter 5 of the draft report can be misun- 
derstood. They are only incremental to the 1985 
inventory. 
| looked at the incremental opportunity question 
for industrial timberland two ways. First, | compared 
it to the base case in the draft report; second, | 
(1) Donald F. Smith is Region Manager, Boise Cascade, Flo- 
rien, LA. 
compared it to my idea of the average industry “pro- 
gram" of intensive forest management. 
For the base case, it doesn't take much analysis 
before you will come to the conclusion that the level 
of management of industry lands is different, and 
higher, than that shown in chapter 5. My back-of- 
the-envelope calculation shows a conservative level 
of intensive management that already covers at 
least 87 percent of the base case. This means that 
if industry follows its normal level of management 
with only those treatments listed, the numbers re- 
ported in the economic opportunity section will cov- 
er around 87 percent of the reported "potential." 
Additionally, the base case is more conserva- 
tive for industrial timberland than for any other own- 
ership category. This is because (a) there are no 
genetic gains based on anything except first- 
generation improved stock; (b) there are no fertiliza- 
tion gains; and (c) there are no vegetative control 
gains. If 87 percent is already "programmed" poten- 
tial, then the remaining 13 percent would be 
marginal in some manner or not part of the opportu- 
nities shown in the analysis of intensive manage- 
ment. An example of this would be deliberate natu- 
ral regeneration where the base case opportunities 
assumption is for plantations. Another example 
might be an assumption that plantations are to be 
thinned when some industry landowners do not 
thin. 
Adjusting for these differences relative to the 
base case, | believe there are no additional "eco- 
nomic" opportunities on industry lands because 
they are already "programmed." In other words, the 
base case plus the reported potential is equal to or 
below normal levels of management on industrial 
lands. 
Industrial Management Incentives 
What about the real incremental economic in- 
centives on industrial timberlands? We should start 
by realizing that the management of industry lands 
is "normally" distributed. There are companies that 
practice very intensive and sophisticated manage- 
ment on their lands. And there are those on the 
other end of the spectrum that practice very exten- 
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