148 



THE OUTLOOK FOR TIMBER IN THE UNITED STATES 



Stumpage prices for Douglas-fir 

 and southern pine 1910 - 72, 

 with projections to 2000 



200 



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1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 



Figure 57 



(2) In recognition of the likelihood of future 

 price increases, a second set of demand projec- 

 tions was based on the assumption that through 

 the projection period relative wholesale prices of 

 lumber and plywood would be 30 percent, mis- 

 cellaneous products and fuelwood 15 percent, and 

 paper and board 10 percent above 1970 average 

 prices. 



The assumed level for lumber and plywood 

 approximates the actual increases in relative soft- 

 wood lumber and plywood prices between 1970 

 and 1972. 



(3) A third set of projections was developed 

 under the assumption that relative wholesale 

 prices of timber products would rise from the 

 1970 trend level through the projection period 

 much as in the past. For lumber the assumed 

 average annual increase for these "rising" prices 

 was 1.5 percent. For plywood, miscellaneous prod- 

 ucts, and fuelwood a 1.0 percent rise per year 

 was assumed, and for paper and board 0.5 percent. 



Since 1800 the relative wholesale price index for 

 lumber increased at an average annual rate of 

 1.7 percent. There have been periods when this 

 index showed little change, as in the period 

 1950-67 (fig. 55), but the longrun rising trend 

 has been fairly steady. 



Relative prices of pulp, paper, and board also 

 leveled off in the 1952-70 period, but during the 

 longer period from 1926 to 1970, price increases 

 averaged about 0.5 percent annually. Relative 

 prices of softwood and hardwood plywood declined 

 sharply after 1950 in response to major improve- 

 ments in technology in these rapidly growing 



industries but it was assumed for this projection, 

 largely on the basis of prospective timber demand- 

 supply balances, that future prices would rise as 

 indicated above. 



These three sets of price assumptions are sum- 

 marized for the major timber products below: 



Relative wholesale price indexes 



Product and price assumptions 1970 1980 1990 8000 

 Lumber : 



(1) 1970 level 100 100 100 100 



(2) 30 percent increase 100 130 130 130 



(3) Rising prices 110 128 148 172 



Plvwood: 



(1)1970 level 100 100 100 100 



(2) 30 percent increase 100 130 130 130 



(3) Rising prices 110 122 134 148 



Paper and board: 



(1) 1970 level 100 100 100 100 



(2) 10 percent increase 100 110 110 110 



(3) Rising prices 105 110 116 122 



Variables affecting prices of timber products. — 

 Past increases in relative prices of timber products 

 presumably have resulted from a combination of 

 factors such as increasing competition for the 

 available timber, and in some cases, rising costs of 

 timber harvesting and manufacturing due to 

 slower rates of technological progress than in other 

 economic sectors. 



Variation in price trends among timber products 

 are attributed in part to different trends in pro- 

 ductivity. The differences also reflect the relative 

 importance of stumpage costs. In recent years, 

 stumpage costs have made up roughly 35 to 45 

 percent of the f.o.b. mill prices of softwood lumber, 

 for example, compared to 5 to 10 percent of the 

 mill price of the lower grades of paper and board. 



Stumpage price trends. — Stumpage prices have 

 risen more rapidly in recent decades than prices 

 of lumber and other processed timber products. 

 For example, between 1910 and 1970 relative 

 prices of Douglas-fir stumpage rose an average of 

 3.5 percent annually, while southern pine stumpage 

 increased about 3.2 percent annually (fig. 57; 

 Append. V, table 2) . 



The faster percentage increase in stumpage 

 prices in comparison to product prices suggests 

 that growing economic scarcit}^ of timber has been 

 of greater importance than increases in costs_ of 

 harvesting and manufacturing in determining 

 product prices. Also, in recent years closer utiliza- 

 tion of timber for a combination of products such 

 as lumber, plywood, and pulp chips, and better 

 allocation of timber for highest value products, 

 have tended to increase stumpage values, as well 

 as increase recovery of timber per acre logged. 



Regardless of the cause, the differential rates 

 of growth in stumpage and product prices mean 

 that much of the increase in product prices has 

 been passed on to stumpage owners. Based in 

 part on past trends in relationships between 

 stumpage and product prices shown by a number 



