Private Sector Applications of US Forest Service FIA & TPO Data

Brooks Mendellbmendell@forisk.com 770.725.8447

Topics

• About Forisk– What we tell/teach others about FIA/TPO data

• FIA and TPO data applications– Market studies and forecasts

• Marketing FIA and TPO data– What could help expand/support private sector users?

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About Forisk Consulting

• Forisk provides analysis and educational services to professionals and investors in the forest industry and timberland investing sectors.

• Publisher of:– Forisk Research Quarterly (FRQ)

• Timber forecasts and industry projections• Wood bioenergy analysis and forest industry capital investments• Timberland ownership and forest operations

• Deliver workshops on:– Applied Forest Finance– Timber (Wood) Market Analysis– Investing in Timberland and Timber REITs

• Conduct basin-specific market studies and forecasts.

Each quarter, Forisk forecasts timber prices for all major U.S. softwood and hardwood markets.

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We actively share, use and teach FIA/TPO data applications, strengths and limitations.

• “Timber Market Analysis” course– Includes overview of FIA history, data collection methodology,

Evalidator, available fields, etc.

• Market studies and SRTS results– Our debriefs include active, detailed dialogues on assumptions,

strengths, limitations, considerations of FIA-data dependent results.– Analyses usually center on “client specific” markets.

• These can/do cross state lines.

• Timber price/wood cost forecasts– Results informed by localized analysis of FIA and TPO data.

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Studies may also include regional comparisons that highlight fiber availability and accessibility.

Data: US Forest ServiceFigure/analysis: Forisk Research Quarterly Q1 2015 6

Forest Supply Considerations

• The “Big Three”– Availability: are owners selling and “in the market”?– Accessibility: can we get a log truck there?– Sustainability: does and will growth exceed removals?

• Species and specs– What are the relevant species?– What are the relevant timber products?– What are the relevant specifications?

• These vary by market and mill type: size, age and quality

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Key data sources: we typically consider 3 or 4 sources and compare to identify issues.

• U.S. Forest Service FIA data– Removals: data can be old depending on remeasurement plots.– Growth data: same issues as removals; SUPER important to industry/investors.– Forisk participated in public/private research consolidating FIA and private data.

• U.S. Forest Service TPO data– Pros: spatial, historical– Cons: not current, only a sample of mills

• Wood Demand Research Program at University of Georgia– Collects wood use data from participating mills on a quarterly basis.

• Program started by Forisk in 2006; donated to UGA in 2011.– Pros: current (quarterly); historic– Cons: not spatial; sample of mills; South only

• Forisk Spatial analysis– Generate market and mill-specific estimates from Forisk database.– Other private firms have similar approaches.

• Internal data (cruises) 8

Removals: some states offer more current data.

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Athens, GA Basin from SRS TPO: thru 2011 Oregon from ODF: annual thru 2013

Wood demand data clarifies market interactions; data available through previous quarter.

Data sources: Center for Forest Business, UGA; Timber Mart-South

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Forisk application: estimating supply effects on prices with “Removal Years”

Historic Current0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

InventoryInventory

Removals

Removals

Pine

Gra

de, t

ons

Inv/Removals=

Historic target of 16 "removal years"

Inv/Removals=

Currently 27 "removal years"

Sources: U.S. Forest Service FIA, TPO, Forisk Consulting

Example: State of Georgia

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Spatial application of growth and removals data

Top Firms & Net Growth of Pine Grade

Data as of April 201412

Priorities: what would help us the most?

• Clarify conversions;– (and notes of assumptions, i.e. with bark/without bark);

• Update TPO data as quickly as possible (SUPER helpful);• Strengthen growth and removals estimates in FIA data;

– Understanding the time lag of the growth and removals data is one of the most challenging aspects of communicating results/implications.

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