While 2020 will be a year many people would like to forget, for others in the forest industry it will be one to remember.
So far I have not heard anyone suggest they predicted the price of lumber would be three times the price of the previous year but there are also some that say there were signs that pointed to continued increases in the prices. These same people should be the first to admit in the early stages of the pandemic most mills were preparing for a slump due to the massive layoffs and closing of many business.
Some point out that many major economic regions of the world were undergoing somewhat of a world-wide construction boom. In the U.S., single family home construction increased seven per cent between January 2017 and January 2018 but it was a surprise that housing starts showed an increase of about 17 per cent between May and July of 2020.
In Canada the fast action of the government to get millions of dollars out to people impacted by the virus gave them the time and the money to do more home improvement projects, placing more demand on the lumber industry. Restaurants across the U.S. and Canada are using more lumber to build outdoor seating and dining areas.
As of March 12, a basic SPF (spruce, pine, fir) two-by-four cost $1,040 per thousand board feet, while the annual average in 2019 was $372, according to the Ministry of Forests, Lands, Natural Resource Operations and Rural Development’s weekly forest product price tracking.
How long the prices will stay this high is anyone’s guess but the general consensus it may take a couple of years before the prices come down any where near the pre-pandemic levels. So what are your choices if you were thinking of building? With the higher lumber prices the cost of single family homes has risen by $16,000 on average—but the good news is that with the hot real estate market buyers seem very willing to pay that higher price.
Governments around the world are interested in the impact on a wide variety of issues not just the price of lumber so the United Nations Forum on Forests requested a report for their upcoming session to take place on April 2021. A detailed report entitled “Initial Assessment of the Impact of COVID-19 on Sustainable Forest Management Canada and the USA” by John A. Stanturf looked at variety of issues and listed some predictions. The following are highlights of the 50-page report.
The changes in consumer behaviour that affect consumption of forest products, increased levels of online shopping and remote working and learning, were largely accelerated by the actions taken to counter the pandemic. While the question remains of whether these changes will be sustained, the immediate positive effect on the packaging industry (i.e. Amazon) and negative effect on graphic paper has been significant.
Remote working, increased demand for outdoor experiences and out-migration from cities and older suburbs, if sustained, will affect housing construction and ripple throughout the supply chain. Off-setting these trends are significant barriers arising from the pandemic and control efforts.
The debt load from the stimulus spending and ballooning deficits will be a political issue whichever political party is in power. In both the U.S. and Canada, anemic recovery from the current economic recession caused by the pandemic will affect the forest sector, along with lingering effects of the 2008 recession. High unemployment and permanent losses of jobs due to business closures and cutbacks will depress consumer spending and housing starts with effects throughout the forestry supply chain.
Declining public sector budgets will pressure discretionary funding, affecting research and international aid. Nevertheless, COVID -19 presents a once in-a-lifetime opportunity to shift the global development paradigm towards greater sustainability and a greener, more inclusive economy.
Canada has taken the lead in planning for this transition and has shown the political will to go down this path. Under the Trump administration the U.S. was moving in the opposite direction, supporting fossil fuels and relaxing environmental protections but this will likely change with the new Biden government.
Jim Hilton is a professional agrologist and forester who has lived and worked in the Cariboo Chilcotin for the past 40 years. Now retired, Hilton still volunteers his skills with local community forests organizations.
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