Timber Tracts

About one-half of the United States is wooded, and approximately 500 million acres of this forested land is classified as timberland, or land capable of growing 20 cubic feet of wood per acre per year. Federal, state, and local governments own 130 million acres; individuals own 300 million acres in relatively small tracts; commercial firms own 70 million acres. Oregon, Washington, and California are the country's largest timber-producing states, accounting for more than 75 percent of Western timber production. Timber also is the South's largest agricultural product.

Between 350,000 and 500,000 Christmas trees are grown on about 500,000 acres in the United States, managed by 15,000 Christmas tree growers. Christmas trees are grown in all 50 states, and more than 100,000 people are employed full- or part-time in the industry. According to statistics released by the National Christmas Tree Association in 2010, U.S. consumers purchased 28.2 million cut trees in 2008, down from 31.3 million trees in 2007 but up from 27.1 million in 2004. Retail value of cut Christmas trees in 2008 was $1.03 billion. The mean purchase price per tree had increased from $31.90 in 2001 to $36.50 in 2008. According to the Pacific Northwest Christmas Tree Association, Oregon was the leading producer, followed by North Carolina, Michigan, Pennsylvania, Wisconsin, and Washington.

Depending on the species, it takes between seven and 15 years for a tree to grow to an average cuttable height of six feet. The largest expense for farmers is pruning each tree every year so they maintain the classic, conical shape demanded by consumers. The Scotch pine is usually the largest selling tree, capturing more than 30 percent of the market annually. Other top selling Christmas trees include balsam fir, Douglas fir, Fraser fir, noble fir, Virginia pine, and white pine.

The live Christmas tree segment of the industry continues to face competition from artificial tree makers. In terms of quantity sold, artificial tree makers captured 29 percent of the Christmas tree market in 2008 with 11.7 million sold for a total retail value of $708 million. Mean retail price of an artificial tree in 2008 was $60.63. By the end of 2009, over 50 million American families owned an artificial tree. Most (85 percent) artificial trees are imported from China. The producers promote their trees as fire-resistant and perfectly designed, with no needles to be swept up. In addition, some argue that artificial trees are more ecologically responsible because they can be used more than once. Tree growers, in turn, contend that real trees are a renewable, recyclable resource, while artificial trees contain nonbiodegradable plastics and metals that eventually end up in a landfill.

The competition between live growers and sellers of artificial trees was fierce and very public, as each side fought for public opinion. In 2008, a study conducted by the research firm PE Americas found that over a 10-year period, owning an artificial tree caused lower carbon emissions than did buying a real tree each year, primarily due to the gasoline needed to transport the tree to consumers. However, in 2009, Bryan Walsh of Time noted, "The big caveats, however, are that the study focused on carbon and was sponsored by the American Christmas Tree Association, which works with artificial-tree makers. Ask environmentalists the which-is-greener question, and most will side with the National Christmas Tree Association (NCTA), which represents live-tree growers."

In response to environmental concerns posed by both live and artificial trees, a niche market was growing in the early 2010s. Specialty growers began providing potted Christmas trees that could either be rented and returned to the provider or purchased to be planted later. Growers were skeptical, however, saying that potted trees did not fare well indoors and thus the potted trees would likely not be able to easily tolerate the changing conditions of care.

Tree farms cover a wide range of businesses. After they have cut the original stumpage, giant corporations like Weyerhaeuser plant second- and third-growth on vast timber holdings, which they may keep for their own use or sell. Small tree farmers manage woodlands that range from a few to several hundred acres. Some may keep the timber for a small sawmill they own, but most sell the stumpage, either for use in mills or as Christmas trees. Several of the giant timber producers run programs that assist small landowners in exchange for first rights on the timber.

After demand for lumber in 2002 reached an all-time high of 56.3 billion board feet, new highs were established annually. Led by the booming U.S. housing market, the industry's capacity increased from 79.7 billion board feet in 2004 to 81.9 billion board feet in 2005. As the housing boom died down, however, so did demand for lumber. Following a decline pattern begun in 2006, demand in 2008 reached only 40.9 billion board feet.

By the late 2000s, the United States was faced with a credit crisis and the bottom dropped out from the housing market. As a result, the U.S. lumber industry was seriously affected. In 2009, lumber consumption reached its lowest level since data began being tabulated in its current form in 1950. Housing starts, which had reached 2.1 million in 2005, dropped below 1 million in 2008 and reached just over 550,000 in 2009. Lumber prices plummeted 50 percent between 2005 and 2009. Due to the lack of demand, production declined by more than 35 percent from 2008 to 2009 and by more than 50 percent from 2005 to 2009 to its lowest level in some 50 years.

Weyerhaeuser Company of Federal Way, Washington, was one of North America's largest lumber producers in the late 2000s with $8.0 billion in sales and 19,850 employees in 2008. However, hard hit by the downturn in the lumber industry, in 2009, Weyerhaeuser' revenues dropped to $5.2 billion in 2009. The company's common share price, which reached a market price high of $86.20 during the first quarter of 2007, fell to a low market price low of $19.36 by the first quarter of 2009. In mid-August 2010, the stock price hovered around $16.50 per share. The company, which reported net earnings of $739 million in 2007, reported a net loss of $1.18 billion and $545 million in 2008 and 2009, respectively. Weyerhaeuser's forest holdings were managed by its Timberlands division, which oversaw 6.4 million acres of company-owned U.S. timberland and 15 million acres of leased Canadian timberland.

International Paper Co., of Memphis, Tennessee, was the world's largest forestry products company. In 2009, International Paper had sales of $23.4 billion, almost two-thirds of which came from paper and packaging. In the late 2000s, the company sold most of its 6.3 million acres of U.S. forestland. By 2010, the company owned or managed just 200,000 acres of U.S. forestlands and 250,000 acres of forest in Brazil, and it also had harvesting rights in government-owned forests in Russia.

The United States imported 21 billion board feet of lumber from Canada in 2005, despite an ongoing dispute between the nations that began in 2001 after the expiration of the 1996 Softwood Lumber Agreement. The United States claimed the Canadian lumber industry was subsidized by the federal and provincial governments that set prices, rather than having prices determined by market conditions. The dispute was finally resolved in 2006. Canadian lumber providers from certain regions are required to pay a higher export tax; however, that tax is lower when the U.S. lumber industry prices reach a certain level. In 2009, softwood lumber imports from Canada had dropped to 7.26 billion board feet.

Exports of U.S. lumber also decreased in the late 2000s. Lumber exports from the two largest producing states, Oregon and Washington, were down 24 percent in the first quarter of 2009 as compared to the same period in 2008. Approximately 61 percent of lumber exported out of the Pacific Northwest went to Japan; 31 percent went to South Korea; and a smaller percentage went to China, Canada, and Taiwan.