Supply Base

Michigan is more than half forestland1—18.6 million acres; and 51 % of Michigan can be classified as commercial forestland, capable of producing a commercial timber crop (USFS 1994). Michigan is the state richest in timberland of the 21 Northern states (Powell et al. 1993) and only New York has more forestland. Michigan's timberland is extremely productive, carrying more timber volume than any other state in the region. It carries more than 10% of the timber volume in the North and 24% of the timber volume in the North Central region of Michigan, Wisconsin, Minnesota, Ohio, Illinois, and Indiana. Michigan's forest industry lands carry over half the North Central industry's timber volume.

There are 3.0 million acres of timberland in the southern Lower Peninsula (SLP) and 7.2 million acres in the northern Lower Peninsula (NLP). Timberland makes up 21% and 63%, respectively, of all the land in these regions. The eastern Upper Peninsula (EUP) has 3.8 million acres of timberland and the western Upper Peninsula (WUP) has 4.6 million acres. Because timberlands make up 77% of the eastern half and 84 percent of the western half of the UP, they exert an especially strong influence over the economy of this region.

During the past decade, timberland acreage has actually increased, reversing the trend of decline which took place from 1955 through 1980 (Potter-Witter 1994). The U.S. Forest Service 1993 preliminary inventory figure of 18.6 million acres of timberland is an increase of 6.6% since 1980. The largest increase—524,000 acres—has been in the SLP, with the NLP also showing an increase of 521,000 acres of timberland.

Ownership of Timber Supply Private

Private
Timberland ownership in Michigan is roughly two-thirds private and one-third public. The largest ownership class, non-industrial private and farms, contains 56% of the state's timberland. This class is composed of land held by the approximately 384,700 private owners who are not in the forest industry or who are farmers. Regionally, non-industrial private ownership is concentrated in the Lower Peninsula, where it is 61 % of the timberland, while in the Upper Peninsula it accounts for 41% of timberland acreage. Farmers own 4% of Michigan's timberland, mostly in the Lower Peninsula.

Forest industry ownership is 8% of timberland and is mostly in the Upper Peninsula, where 18% of the timberland is in this ownership class. Mead Corporation and Champion International, the largest industrial owners, are located in the central and western Upper Peninsula, respectively. Forest industry and public ownership have a greater influence there than in the lower peninsula. The WUP is 35% public, 24% forest industry and 41% private non-industrial. The EUP is 46% public, II %'forest industry and 43% non-industrial private.

Public
Thirty-six percent of Michigan timberland is in public ownership. The state of Michigan is the major public timberland owner, with 20% of the timberland statewide, 19% of the Upper Peninsula timberland and 22% of the Lower Peninsula. This land is administered by the Forest Management and Wildlife Divisions of the Department of Natural Resources. The DNR administers the 3.9 million acre State Forest system, 3.6 million acres of which are timberland. The six state forests are in the Upper and northern Lower Peninsulas. Additionally, it administers 294,000 acres in State Game Areas, largely in the southern Lower Peninsula.

Federal lands, primarily managed by the U.S. Forest Service, are 14% of Michigan timberland. The 2.6 million acre National Forest System makes up the majority of this ownership. Two National Forests, the Ottawa and the Hiawatha are in the Upper Peninsula; the third, the Huron-Manistee National Forest, spans the northern Lower Peninsula.

Producer Base

Primary consumers of stumpage are the harvesters, truckers, and brokers. They may form small separate enterprises or large vertically integrated firms. Production of pulpwood sticks and logs (roundwood) from stumpage (standing timber) is performed by timber harvesters who cut the timber. The roundwood is transported by truckers to the primary manufacturer. The timber brokers' primary function is to locate and purchase stumpage, and they may or may not also be the harvester of the sale. There are approximately 1000 timber producers—harvesters, truckers, and brokers—in Michigan. Half of Michigan's producers are in the Upper Peninsula, and most employ one to five people.

The Michigan Association of Timbermen (MAT) and The Timber Producers Association of Michigan and Wisconsin (TPA) provide some organization to the timber-producing sector. The objectives of MAT are to conduct programs that will reduce the operating costs and provide an assured timber supply for its members. MAT also administers a self-insuring fund, which is an unincorporated trust of MAT with its own Board of Trustees. It represents timber producers in policy issues (pers. commun. P. Grieves, Michigan Association of Timbermen, 1994).

The objectives of TPA are to:

  • Promote the use of Lake States forest products by conducting programs designed to create and maintain public good will and understanding.

  • Encourage wise management of all forestlands.

  • Initiate, support, or oppose legislation in the best interests of the timber industry.

  • Support, conduct and keep the members informed on research.

  • Maintain relations with governmental agencies and regulatory units.

  • Provide a medium for communications and serve as the center for collective action and exchange of information.

  • Provide a medium for better understanding and develop mutual cooperation between various segments of the timber industry.

  • Cooperate and affiliate with appropriate regional associations and national organizations (Timber Producer 1994).

TPA also administers a group health insurance program.

Timber Production, 1954-1990

Michigan producers harvested 348 million cubic feet of timber in 1992—almost twice that for 1965 (Table 1). Fifty-four percent of the production was in the Upper Peninsula and 41 percent was in the northern Lower Peninsula. Michigan produces over two-thirds of its total timber volume as pulpwood—raw material for pulp and paper, wafer and particle board, and other products using reconstituted wood or wood fiber. In the southern Lower Peninsula, however, sawlog volume produced is twice that of pulpwood. Most of this volume is in high value species such as red and white oak, which are used by the furniture industry.

Harvest or production data by ownership classes are not available. Timber sale volume data, however, are only for federal and state lands. In the 1993 reporting year, timber sales from state lands were 40,944 MBF of sawtimber, 674,956 cords of pulpwood and 1563 MBF of bolts. Sales from Michigan's national forests were 263,000 MBF (personal communication K. Shalda, USDA Forest Service, Region 9 Office, Milwaukee, 1994).

Removals of timber from timberland do give an indication of harvest activity, although such removals may include clearing of trees not for timber production. Average annual removals over the period 1980 to 1993 were 266 million cubic feet per year from 1980 to 1993(US Forest Service 1994). Non-industrial private lands are the location for over half of this activity (Table 2).

Timber Sale and Harvesting transactions

Non-industrial Private Sellers
Non-industrial private and farmer timber sellers make few sales. Timber sales are not their primary activity or source of income, nor are they well informed regarding timber prices, timber markets, or harvesting processes. The average length of non-industrial private ownership ranges from 7-10 years. Sequential timber sales from a non-industrial timberland are, therefore, likely to be made by different owners. Most non-industrial private timber sales take place without professional or technical assistance, although it is available in several forms and from a variety of sources. Consulting foresters supply direct technical and professional services to landowners for a fee. Voluntary institutional structures such as the Michigan Forest Association, Tree Farm Association, National Woodland Owners Association, and others provide market and marketing information to their members. MSU Extension, the Michigan Department of Natural Resources Forest Management Division, USDA Soil Conservation Districts produce educational programs and provide (limited) technical assistance to non-industrial timber sellers.

Industrial Sellers
Industrial timber sellers make sales frequently and are well informed regarding market conditions and timber supply. Sales from industrial lands are controlled by contracts with buyers or producers. Timber selling is their primary occupation and is the primary source of income for the woodlands divisions of their corporations. Mead Corporation and Champion International dominate industrial timber ownership.

Public Sellers
Markets for public timber are well organized. The Department of Natural Resources and the USDA Forest Service specify the manner in which and under what conditions timber from state forests and national forests may be sold. Sales are conducted by written contract. Timber sales are the primary occupation for both buyers and sellers or their agents, and all have full information on the timber being traded.

Buyers
Buyers from non-industrial forests are employees of, or represent, primary wood products manufacturers and have extensive information on past, current, and future timber markets. They have knowledge and experience in judging timber quantity, quality, and value. Many purchases of non-industrial timber are not made on a competitive basis. Unless the land owner has sought assistance or hired a consulting forester, sales from non-industrial private lands are likely to be made on the basis of a single bid from a single buyer. When buyers do bid for non-industrial sales, consulting forester records show that bids usually vary widely, sometimes by as much as 325%.

Consulting Foresters
Consulting foresters are employed by the landowner or stumpage owner to administer timber sales. In addition to prescribing and measuring the quantity of timber to be harvested and sold, consultants solicit bids from buyers to gain the best possible price for the seller. Like industrial timber buyers, consulting foresters have excellent knowledge of timber markets. There is significant evidence that sellers get more money for their timber when they hire consultants.

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1Defined as land at least 16.7% stocked by forest trees of any size, or as land formerly having had such tree cover and not currently developed for nonforest use. Timberland, defined as forestland capable of producing a commercial timber crop, covers 51% of the state. Woodland, defined as forestland incapable of producing commercially important trees because of poor site conditions, is 1.4% of the state, and forestland reserved for uses that preclude commercial timber harvest is 3.4% of the state.