The Status of the Maple-Birch Forest Type in Michigan by Karen Potter-Witter and Jeffrey T. Lacksen

Research Report 533 • Department of Forestry Michigan State University May 1993

THE MAPLE-BIRCH FOREST TYPE IN MICHIGAN

Maple-birch is the predominant forest type in Michigan. The U.S. Forest Service estimates that 6.2 million acres, or more than 35 percent, of Michigan's commercial forestland is in the maple-birch type (Smith and Hahn, 1986). The area of maple-birch forestland has been increasing in recent decades and timber growth is greater than removals by a ratio of 3.5 to 1. Maple-birch has more than six times the sawtimber stand acreage of any other forest type. This suggests that economic opportunities exist for the maple- birch resource in Michigan (Manthy and Potter-Witter, 1988). This report examines the supply and consumption of the maple-birch species in Michigan. Trends of growth and resource availability are examined and compared to production and use data for all forest survey units in the state. Price data from the Michigan Department of Natural Resources are compiled and analyzed to determine if real stumpage prices for the key maple-birch species are rising, reflecting economic scarcity.

LITERATURE REVIEW

Researchers have been interested in the price of timber commodities for many years. The U.S. Forest Service has consistently projected that timber demand will exceed supply, indicating that real price increases must occur for timber markets to clear (USDA Forest Service 1958, 1965, 1973, 1981). Examinations of trends of reported stumpage prices, therefore, provide information about economic scarcity of timber. Knowledge of how stumpage prices have performed in the past is also valuable in analyzing current and potential forest investments. Nationally, many timber commodities for decades have exhibited price increases greater than the rate of inflation. Barnett and Morse (1963) found that real prices of timber had risen consistently from 1870 to 1957. Manthy (1977) found that sawlog prices increased at a real rate of 2.12 percent between 1870 and 1973. Skog and Risbrudt (1982) documented rapidly rising real prices for softwood stumpage from 1920 until 1990. During that period, hardwood stumpage and delivered sawlog prices remained relatively constant. All the above studies rely upon highly aggregated data over both species and area; they do not necessarily reflect the situation of a particular region of species. Regional studies have shown generally rising real prices for conifers. Milliken and Cubbage (1985) documented southern pine stumpage prices rising at an annual rate of 0.8 percent from 1955 to 1983. Binkley and Vincent (1988) found that southern pine stumpage prices rose at a real rate of 4.6 percent from 1910 until World War II and at a 3.1 percent rate from World War II until 1985.

Studies of price trends for Michigan timber were recently completed. Grossman and Potter-Witter (1991a) observed red pine sawtimber real prices rising at a 2.7 percent annual rate between 1967 and 1987. Another study examining cedar prices (Grossman and Potter-Witter, 1991b) found northern white real cedar prices for sawtimber rising at an 8 percent annual rate for Michigan's Upper Peninsula during the period 1979 to 1989, but no increase in the northern Lower Peninsula.

Hardwood studies have exhibited mixed results. Hardwood stumpage prices in western North Carolina rose from 1977 to 1986 in spite of rapidly rising hardwood inventories (deSteiguer et al., 1989). A study of Illinois stumpage price trends by Campbell and White (1989) found upland hardwood prices registering real price increases, while basswood, hard maple and soft maple consistently depreciated for the 25 years ending in 1987. In a New Hampshire study covering 1964-1983 (Remington and Dennis, 1986), hard and soft maple and yellow birch prices all showed real increases. However, a follow-up study by Dennis (1989) found real prices for hard and soft maple had increased from 1964 to 1978 but declined from 1979 to 1988.

This price decline corresponded with an annual inventory growth rate of more than two percent. Sendak and McEvoy (1989) found that real stumpage prices for all hardwood species, except red oak, declined in Vermont between 1981 and 1987. Aspen pulpwood in Michigan's northern Lower Peninsula and Upper Peninsula increased between 4 and 5 percent annually from 1978 to 1988, but aspen sawtimber prices showed no significant trends over the same period (Potter-Witter and Ramm, 1992).

MAPLE-BIRCH TYPE COMPOSITION IN MICHIGAN

In maple-birch type forests, the stocking is primarily sugar maple, basswood, yellow birch, upland American elm and red maple, singly or in combinations (Smith and Hahn, 1986). Other species comprising the maple-birch type include white pine, elm, hemlock and basswood. Known locally as northern hardwoods, the maple-birch type consists of long-lived species. Approximately 51 percent of the volume of growing stock in the maple-birch forest type consists of maple or birch species (Figure 1). The other 49 percent includes most commercially important species in Michigan.

Figure 1. Maple-birch type components by percent of volume in Michigan, 1987.

Source: Smith and Hahn, 1986

THE MAPLE-BIRCH TIMBER RESOURCE

Maple-birch type acreage has increased in every forest survey since the 1930s. In 1935 there were 4.576 million acres (Lake States Forest Experiment Station, 1938) and by 1955 there were 4.651 million acres (Findell et al., 1960). Maple-birch acreage from the 1966 and 1980 inventories and 1987 estimates was 5.216 million acres, 6.075 million acres and 6.162 million acres respectively (Figure 2; Chase et al., 1970; Spencer, 1983; Smith and Hahn, 1986). From 1966 to 1987, maple-birch acreage increased by 18 percent and now accounts for 35 percent of total commercial forest land (17.3 million acres, Figure 1).

Figure 2. Acres of maple-birch commercial forestland by survey unit, Michigan.

Source: Findell et al. 1960; Chase et al., 1970; Spencer,

1983 and Smith and Hahn, 1986

The maple-birch increase compares to an overall decline of timberland statewide from 19.1 million acres in 1938 to 17.3 million acres in 1987. This is, in part, because the tolerant species that comprise the type thrive in Michigan's second forest - created as a result of massive logging and fires which deforested Michigan in the late 19th century. After deforestation the aspen type, a pioneer species, was the predominant forest in Michigan. In the mid-1950s, however, maple-birch surpassed it in acreage and has been the predominant type since.

Table 1. Areas of land in maple-birch type by forest survey unit in thousands, 1987.

Source: Smith and Hahn, 1986

The maple-birch forest type is scattered widely across the state, but occurs more frequently as one moves north. The maple-birch forest type contains 2.5 million acres of sawtimber stands, more than six times the sawtimber acreage in any other forest type. Nearly half of this sawtimber acreage is in the western Upper Peninsula, and the total Upper Peninsula accounts for more than two-thirds of all sawtimber stands in the maple-birch type (Smith and Hahn, 1986).

Between 1966 and 1987 the acreage in the maple-birch type increased for every age class from 40 to 120 years but declined in the 0 to 40. More than 1.4 million acres of the maple-birch type consist of stands older than 100 years (Figure 3). The recommended rotation age for maple-birch on average sites in Michigan is 90 years (Spencer, 1983). This suggests that the maple-birch resource has been underutilized. More than three million acres are in the 50-to-100-year age groups (Smith and Hahn, 1986). Most of these older stands are in the Upper Peninsula, with the greatest concentration in the western Upper Peninsula. The maple-birch forest type, therefore, besides currently containing large volumes of sawtimber, has development potential for the next several decades. After that, however, the current understocking in the youngest age classes will mean reduced availability of merchantable timber.

Figure 3. Acres of maple-birch commercial forestland by age class in Michigan.

Source: Spencer, 1983; Smith and Hahn, 1986

Nonindustrial private individuals own almost half of the maple-birch acreage in Michigan. Twenty-six percent of the type is miscellaneous private ownership and another 20 percent is on farms. In contrast, forest industry, the state, and the national forests own 18, 14 and 11 percent respectively.

VOLUME, GROWTH AND REMOVALS

For the maple-birch forest type as a whole, sawtimber volume in 1987 was over 25 billion board feet, or more than four times the sawtimber volume in any other forest type. Net growth from growing stock in the maple-birch forest type exceeded removals by more than 3.5 to 1 statewide from 1980 to 1987. In every forest survey unit, net growth substantially exceeded removals (Table 2). The Upper Peninsula accounted for 68 percent of all maple-birch removals from growing stock between 1980 and 1987.

Table 2. Maple-birch type estimated net growth and removals from growing stock in Michigan in million cubic feet, 1987.

Source: Smith and Hahn, 1986

Removal volumes for the major species of hard maple, soft maple, yellow birch and white birch have risen since 1965 (Figure 4). Most notably, soft maple removals rose 179 percent between 1965 and 1979. Paper birch removals also increased greatly - 86 percent from 1965 to 1979 and 97 percent from 1979 to 1988.

Figure 4. Growing stock removals from timberland for industrial roundwood 1954, 1965, 1979 and 1988.

The annual growth in inventory volume divided by the annual volume removed is the growth-drain ratio for a timber resource. This ratio is an initial measure of utilization of the timber. It can indicate opportunities for additional harvests (a growth-drain ratio greater than one) or a problem with the timber being cut at a faster rate than it is growing (a growth-drain ratio less than one).

Among the eight major species of the maple-birch type that make up 77 percent of the net volume, growth-drain ratios for 1986 were greater than one for all but quaking aspen and yellow birch. Quaking aspen removals barely exceeded net growth. Yellow birch removals, however, were nearly twice growth. Statewide, yellow birch growing stock is estimated to have declined by 3.5 percent, and sawtimber volume by 5.7 percent, between 1980 and 1987 (Smith and Hahn, 1986). Seventy percent of the growing stock volume is concentrated in the western Upper Peninsula.

OPERABILITY

Volume estimates include the total resource but fail to consider factors that may limit resource availability. In other words, volume statistics describe the physical supply but not the economic supply - they do not indicate how much timber of what kind is available at what price. Operability is a factor that helps bring physical supply closer to economic supply. Some factors that determine operability of a timber resource are distance from a processing facility, distance from a paved road, volume of timber per acre and the general difficulty of logging conditions.

Approximately 40 percent of Michigan's maple-birch acreage and 43 percent of growing stock were in the poor operability class in a 1987 study (Hansen and Hahn). Forty-two percent of maple-birch acreage and 51 percent of growing stock were medium operability. Less than one percent of both acreage and volume were in the good operability class. The remainder was in the sapling-seedling and nonstocked category. This suggests that nearly half of the maple-birch acreage is not economically accessible under current conditions, and has important implications for sawtimber prices. Changing public perceptions regarding timber harvesting and land use are also limiting the available supply of maple-birch sawtimber. This is especially true on public lands, although private companies are also being affected. While no figures have been published, substantial acreage of timberland (including maple-birch) is not available for harvest due to political and environmental considerations.

Withdrawals from timber production include lands set aside for threatened and endangered species habitat; preservation of large, relatively old stands; watershed protection; and aesthetic considerations. However, this acreage and the volume it carries are still included in the estimates of physical supply and may lead to overestimation of timber supply.

INDUSTRIAL USE

In 1988 at least 216 primary manufacturing firms used roundwood from one or more of the key species in the maple-birch forest type, defined here as hard maple, soft maple, basswood, yellow birch and elm. Sixty-eight firms also reported using hardwoods, but did not specify species (Michigan DNR, 1988). It is likely that many of these firms also used key species from the maple-birch forest type. While most of these firms are small, employing less than 30 people each, 30 firms employed more than 31 people. Fifty percent of these larger firms were in the Upper Peninsula (Figure 5).

Figure 5. Primary manufacturers in Michigan using maple-birch species, 1988

Source: Michigan DNR, 1988

VALUE OF PRODUCTION

On the basis of Forest Service production estimates (Smith et al., 1990) and price data from Timber Mart North (1988), the value of maple-birch production delivered to mills is substantial. The 1988 value for maple-birch key species delivered to mills was estimated at over $67 million dollars (Figure 6). The western Upper Peninsula accounted for approximately half of the production. Hard maple accounted for over half of this value, and hard and soft maple together made up eighty percent.

Figure 6. Value of maple-birch production delivered to mills in Michigan, 1988; in millions of dollars.

Source: Smith et al. 1990, and Timber Mart North, 1988

STUMPAGE PRICE ANALYSIS

Stumpage price trends for northern hardwood sawtimber in Michigan were analyzed using data from Michigan Department of Natural Resources timber sales. The timber sales were from state forest lands in the Upper Peninsula and the northern Lower Peninsula. Price data were also available for sales on all ownerships combined (Timber Mart North, various), but were not used since they have only been available since 1982.

The price series was compiled by species and region into a readily usable form by the U.S. Forest Service Economics Unit, North Central Experiment Station at East Lansing, Michigan. The price series began in 1955 and went through 1990 in most cases, with very few missing years. Stumpage prices were deflated to 1982 dollars using the producer price index for all commodities and then plotted by region.

Regressions were then run using LOTUS 1-2-3 Release 2.2 (Lotus Development Corporation, 1989). The model tested was:

ln(Pi) = B0 + B1*Yi

where Pi = real price in 1982 dollars
Yi = DNR fiscal year
B1 = estimate of the annual
percentage rate of change in price
B0 = constant

The coefficients estimated for B1 were tested for significance at the 95 percent level (alpha = .05) and at the 99 percent level (alpha = .01).

RESULTS

From 1955 to 1990, both hard and soft maple sawtimber stumpage in the Upper Peninsula showed statistically significant real price increases of 1.57 percent and 3.05 percent respectively (Table 3). This corresponds to the 1965 through 1988 continual increases in growing stock removals. Basswood and yellow birch trends in the Upper Peninsula were not significant.

In the northern Lower Peninsula, however, basswood rose at an annual rate of 1.69 percent, while yellow birch stumpage prices declined at an annual rate of 1.69 percent. This latter trend corresponds to the 24 percent decrease in yellow birch removals between 1965 and 1979 and a 50 percent increase in removals for 1979 to 1988.

Table 3. Annual rate of sawtimber stumpage price changes DNR, 1955-1990

* significant at alpha = .05
** significant at alpha = .01

The price charts reveal a significant trough occurring around 1970 for soft maple in the northern Lower Peninsula and basswood and yellow birch in both the northern Lower Peninsula and the Upper Peninsula (Figures 7-10). This suggests that significant changes may have occurred in the timber markets at this time. Another regression was run beginning with 1970 prices and continuing until 1990 (Table 4). This 21-year period included several business cycles and is long enough to be of planning interest for most timber owners.

Figure 7. Hard maple sawtimber real price trends, Michigan 1955-1990

Source: Michigan DNR, 1990

Figure 8. Soft maple sawtimber real price trends, Michigan 1955-1990

Source: Michigan DNR, 1990

Figure 9. Basswood real sawtimber stumpage price trends, Michigan 1955-1990.

Source: Michigan DNR, 1990

Figure 10. Yellow birch sawtimber real stumpage price trends, Michigan 1955-1990.

Source: Michigan DNR, 1990

Table 4. Maple-birch annual rate of sawtimber stumpage price changes DNR, 1970-1990

*significant at alpha = .05
**significant at alpha = .01

Hard and soft maple sawtimber stumpage again showed significant price increases in the Upper Peninsula. Price increases of soft maple in the northern Lower Peninsula and basswood in the Upper Peninsula differed more dramatically in the 21-year study than in the 36-year study. Soft maple stumpage prices in the northern Lower Peninsula had no significant price change in the longer study, but in the shorter study they increased at an annual rate of 3.24 percent. The rate of real price increase for hard maple stumpage in the Upper Peninsula was twice that for the longer term analysis. Soft maple prices in the Upper Peninsula also rose slightly faster in the shorter study. Basswood price increases of nearly 5 percent in both the Upper Peninsula and the northern Lower Peninsula suggest that basswood is becoming (economically) scarce.

Department of Natural Resources stumpage price data comprise the most complete data set. Their use, however, does limit this study. The data come only from timber sales on state lands and may not be representative of prices a private landowner might have received. Moreover, certain species may be represented by very light volumes for a given year. Finally, the conditions of the sales were not considered (i.e., whether they were conducted in a distress situation, contained onerous provisions in the cutting contracts or whether they were negotiated or put out for bids).

DISCUSSION

From 1955 to 1990, the area in the maple-birch forest type increased from less than 5 million acres to 6.2 million acres. In the last decade, net growth from growing stock has exceeded removals by more than 3.5 to 1 statewide. Despite the apparent supply increases, stumpage prices increased in real terms for hard maple, soft maple and basswood during both periods analyzed in the Upper Peninsula. In the northern Lower Peninsula, soft maple and basswood in the 21-year period since 1970 showed real price increases as well.

All the species considered have substitutes, and wood users certainly switch among these species as relative prices change. Changing technologies, such as the use of particle board for core stock in furniture and the development of oriented strand board, have affected the price relationships and demand for key maple-birch species.

Furthermore, changing consumer preferences play an important role in product demand and price. For example, yellow birch was once the preferred wood for the large kitchen-cabinet market. In the last two decades, however, oak has become the preferred species and one of the prime uses of yellow birch has practically vanished.

Michigan has aggressively promoted forest utilization investments in recent years and the observed price increases may be associated with increased demand. Real price increases could occur in spite of increasing physical supply, if demand were increasing even faster than supply.

Increased demand may be explained by greater foreign demand, particularly in the case of hard maple. Some of the most dramatic price increases have occurred in the last few years, a time that corresponds with a generally weak dollar. The weak dollar has made U.S. stumpage relatively cheap for foreign buyers, in particular the Germans. While rising real stumpage prices may mean greater revenues to the landowner, costs are increased to the industry. Economic theory indicates that industry may respond with substitutions of other species, technological improvements in processing, changes in processing to add more value, and improved forest management. Industry may or may not experience increased stumpage costs and pass these on to the consumer.

We recommend that forest industry, economic development agencies, forest planners and managers should make industry promotion, location, expansion, and management decisions with full recognition of the increasing scarcity of the resource in some parts of the state. Forest researchers should examine the feasibility of increasing timber quality and growth in the type, and develop state timber models to monitor and forecast the supply of the maple-birch resource.

LITERATURE CITED

Barnett, H.J. and C. Morse. 1963. Scarcity and growth. Johns Hopkins University Press, Baltimore.

Binkley, C.S. and J.R. Vincent. 1988. Timber prices in the U.S. south; past trends and outlook for the future. Southern Journal of Applied Forestry 12(1): 15-18.

Campbell, G.E. and D.C. White. 1989. Interpretation of Illinois stumpage price trends. Northern Journal of Applied Forestry 6(3): 115-120.

Chase, C.D., R.E. Pfeifer and J.S. Spencer Jr. 1970. The growing timber resource of Michigan, 1966. USDA Forest Service, North Central Forest Experiment Station, St. Paul, MN. Resource Bulletin NC-9.

Cubbage, F.W. and C.H. Redmond. 1985. Capital budgeting practices in the forest products industry. Forest Products Journal 35(9): 55-60.

Dennis, D.F. 1989. Trends in New Hampshire stumpage prices; a supply perspective. Northern Journal of Applied Forestry 6(4):189-190.

deSteiguer, J.E., et al. 1989. Southern Appalachian timber study. USDA Forest Service, Southeastern Forest Experiment Station, Asheville, NC. General Technical Report SE-56.

Findell, V.E., R.E. Pfeifer, A.G. Horn and C.H. Tubbs. 1960. Michigan's forest resources. USDA Forest Service, Lake States Forest Experiment Station, St. Paul, MN. Station Paper 82.

Grossman, G.H. and K. Potter-Witter. 1991a. Michigan's cedar resource: timber supply, value and related employment. pp. 35-49 in: Proceedings of the Northern White Cedar in Michigan Conference. Michigan State University Agricultural Experiment Station, East Lansing, MI. Research Report 512.

Grossman, G.H. and K. Potter-Witter. 1991b. Economics of red pine management for utility pole timber. Northern Journal of Applied Forestry. 8(1): 22-25.

Hansen, M.H. and J.T. Hahn. 1987. Operability and location of Michigan's timber resource. USDA Forest Service, North Central Forest Experiment Station. St. Paul, MN. General Technical Report NC-116.

Lake States Forest Experiment Station. 1938. Forest areas and timber volumes in the Lake States. USDA Forest Service, St. Paul, MN. Economic Notes No.10.

Lotus Development Corporation. 1989. Lotus 1-2-3 Release 2.2. Cambridge, MA.

Manthy, R.S. 1977. Scarcity, renewability and forest policy. Journal of Forestry 75(4):837-841.

Manthy, R.S. and K. Potter-Witter. 1988. Michigan's timberland: A status report. Michigan State University Extension Service. Bulletin E-2129.

Michigan Department of Natural Resources, Forest Management Division. 1988. Wood products in Michigan: mills and manufacturers. Lansing, MI.

Michigan Department of Natural Resources, Forest Management Division. Stumpage price data 1954-1990. Unbound.

Milliken, R.B. and F.W. Cubbage. 1985. Trends in southern pine timber price appreciation and timberland investment returns, 1955-1983. University of Georgia Agricultural Experiment Station. Athens, GA. Research Report 475.

Remington, S.B. and D.F. Dennis. 1986. New Hampshire's stumpage and roadside prices: characteristics and trends. USDA Forest Service, Northeastern Experiment Station. Broomall, PA. Research Note NE-332.

Sendak, P.E. and T.J. McEvoy. 1989. Recent trends in Vermont stumpage prices. Forest Products Journal 39(4):20-26.

Skog, K. and C. Risbrudt. 1982. Trends in economic scarcity of U.S. timber commodities. USDA Forest Service, Forest Products Research Laboratory. Madison, WI. Resource Bulletin FPL-11.

Smith, W.B. and J.T. Hahn. 1986. Michigan's forest statistics, 1987: an inventory update. USDA Forest Service, North Central Forest Experiment Station. St. Paul, MN. General Technical Report NC-112.

Smith, W.B., A.K. Weatherspoon and J. Pilon. 1990. Michigan timber industry - an assessment of timber product output and use, 1988. USDA Forest Service, North Central Forest Experiment Station. St. Paul, MN. Resource Bulletin NC-121.

Spencer, J.S. 1983. Michigan's fourth forest inventory: USDA Forest Service, North Central Forest Experiment Station. St. Paul, MN. Resource Bulletin NC-68.

Timber Mart North. 1988. Mill price mart. 8(104). F.W. Norris, Highlands, NC.

Timber Mart North. Various dates. Stumpage price mart. F.W. Norris, Highlands, NC.

U.S. Department of Agriculture, Forest Service. 1958. Timber resources for America's future. Forest Resource Report 14. Forest Service, Washington, D.C.

U.S. Department of Agriculture, Forest Service. 1965. Timber tends in the United States. Forest Resource Report 17. Forest Service, Washington, D.C.

U.S. Department of Agriculture, Forest Service. 1973. The outlook for timber in the United States. Forest Resource Report 20. Forest Service, Washington, D.C.

U.S. Department of Agriculture, Forest Service. 1981. An assessment of the forest and range land situation in the United States. Forest Resource Report 22. Forest Service, Washington, D.C.

 

This research was supported by the Michigan State University Agricultural Experiment Station and by McIntire Stennis Cooperative Forestry Research Funds.

The Michigan State University Agricultural Experiment Station is an equal opportunity employer and complies with Title VI of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972.5:93 - 2M - New - SDL - UP

If you have questions or would like additional information, please contact
Dr. Karen Potter-Witter, Professor, MSU Department of Forestry