Daniel Cassens & W.I. Mills, .Jr., Purdue University

Pike Lumber Company, Inc., Akron, Indiana

The Issue

While the total volume of timber is increasing on Indiana's timberlands, the volume of high quality, high value species is declining due to over harvest and lack of management. How can the existing primary wood industry maintain its competitive position if raw material supply declines in volume and quality? Pike Lumber Co. Inc. was identified as a firm that has a great interest in this issue. Principal owners, Howard and Helen Utter, have taken a fairly uncommon position of timberland ownership for Indiana primary wood industries. Pike's experience with managing company lands and in dealing with many hundreds, even thousands, of timberland owners over the years provides a unique view of the opportunities and obstacles in Indiana timberland management. Mr. Dean P. Baker, Vice President, Pike Lumber Company, Inc. with input from Channing Utter, Jim Mulligan and Phil Carew responded to the following questions. With a collective 93 years of professional industrial forestry experience, the responses are meant to be considered more generic and representative of the industry.

1. What are some of the major problems or obstacles encountered in establishing and maintaining a forestland ownership program?

Forestland ownership is capital intensive and the returns on investment are intermittent, long-term, and difficult to quantify. The increase in federal capital gains tax rates in 1986 made long-term profitable forestland management more difficult. This obstacle is countered by good markets, favorable taxation under the Indiana Classified Forest Act of 1921, and minimal annual cost once the land is purchased.

Forestland is a scarce commodity with many mutually exclusive demands placed on it; examples are housing subdivisions versus timber production.

The forest asset is subject to uninsurable insect and disease damage and losses due to wind and fire. Wind and fire losses are treated as a casualty loss for tax purposes, but are difficult to document. Pre-commercial seedlings and saplings and poles fall into the same category when damaged or killed. Also, the fragmented nature of Indiana's forest resource and some difficult local ordinances are problems to forest owners.

2. Where should forest management in Indiana be 10 years from now?

NIPF (Non Industrial Private Forest) owners are showing a greater awareness and receptivity to forest management advice from all quarters (private, state, industry, federal and university) and these agencies must fill the demand with program and action. More professional resource managers should be in the field giving NIPF owners specific help with the management of their forests.

3. Besides direct ownership, are there other ways in which buyers of hardwood timber and landowners could work together to improve existing management levels?

Yes, many companies have substituted foresters and other forestry-trained personnel for the sometimes well-intentioned, but often untrained traditional timber buyer. Landowners will have to learn to merchandise trees that have reached physical and/or economic maturity rather than insisting on selling the select, most valuable trees while excluding the less valuable. Sellers practice this form of high grading by insisting on top dollar for the buyer's choice of their best trees. No owner of a herd of choice beef cattle would take bids and sell his top breeding stock while retaining his culls if he intended to stay in business.

4. Are there other opportunities for income from forestland?

We have heard of leasing non-timber forestland commodities, such as hunting rights and other recreational uses. However, current liability law makes this practice risky.

5. Is the professional knowledge base of hardwood timber management adequate?

There is adequate knowledge to profitably manage hardwood forestland under current market and environmental conditions. However, no science is ever complete, and we cannot imagine fulfilling the promised increased yields through genetics alone, in less than a century. Silviculturally, we have lots of questions. For example, some assured techniques of natural reproduction of oak is needed. Diseases have devastated chestnut, elm, butternut and now ash, but not one has been resolved. Government, through well-directed university, private and federal research grants, could go a long way toward solving these problems. Industry can do its share as well. The softwood industry is an example of more complete forest management knowledge as a result of more intense research. Obviously, the larger overall size of that industry draws more attention for research.

6. Do you feel that enough is known on how to reproduce hardwoods in natural stands and plantations?

No. Our industry collectively has made progress, but is far from full success. We understand the trends in research funding toward subjects that are microscopic in size and their possible contribution to the bigger picture. By example, apparently our forefathers, in their abuse of the land as they tamed the county-side, created conditions favoring establishment and survival of oak forests. They probably did not use microscopes. In an industry (forestry) which is still rather primitive in knowledge and practices, research must be practical to be valuable and, as such, will have its greatest impact.

7. How effective have the different public agencies and programs (IDNR, ASCS, FIP/SIP) and industry sponsored organizations and programs (Tree Farm) been in promoting (via publications, meetings, individual contacts, etc.) "good" forest management? Do you have any suggestions for improvements?

Education and promotion successes are very difficult to measure. We do know that the public, particularly absentee landowners, are more receptive to forestry ideas and practices than ever before. We believe it is the collective effort of the aforementioned organizations that is appropriately meshing with the great public demand for environmental changes that will make the big difference over the next five to ten years. The media has undoubtedly piqued the interest of the private forest landowner concerning resource management and the various programs and organizations have flowed into the niche created by heightened interest. Obviously, any coordinated efforts are better than uncoordinated efforts by these groups. The "message" is out, but has to be constantly repeated and refreshed. The important thing now is to provide the one-on-one management that each landowner requires. Each organization has its one-on-one capability and needs to exert it. Industry is no exception.

8. How do you feel about professional forestry education and associated curriculum in Indiana? Is more or less education needed?

Forestry graduates engaged by the subject company frequently are adequately educated in biology and forest science, but lack business and economic skills. Unfortunately, there has been a dramatic decrease of available Indiana-trained students, and the company has had to go out of state in recent years. Some employ forest products graduates in manufacturing and sales, and they are in short supply. Forest managers and procurement foresters come from the forest management curriculum. A curriculum that focused on training managers of deciduous forests of the Central States and Midwest would be most helpful.

A) Working with the huge number of non-industry private forest (NIPF) owners in an efficient manner is a challenge.

B) Providing cash-producing markets for the lower value products of the forests, which traditionally have been treated as non-commercial thinnings removed by slow attrition (nature's way) or at cost through TSI. In other words, there is a well developed market system that provides landowner income throughout the rotation will encourage investment in management. One begets the others.

C) Clearing land for agriculture devastated the original crop of timber between 1820 and 1920 and, in the central and north part of the state, well into the 1970's. That threat has, at least temporarily, subsided, although a lengthy, robust cash grain market could start the bulldozers again.

Urban sprawl has replaced agriculture land expansion as the big threat. Housing (the house in the woods), shopping malls, and easements by highways, power lines, pipe lines, dams and riparian forest destruction by channelization projects put the forest out of business. The easements are invariably a result of acquisition by eminent domain or the threat thereof. One in-state utility shows signs of wanting to cooperate with forestland owners in reducing intrusion on the forestland. Another is indiscriminate and abusive with its engineering and actions.

10. Are there any state level policies which should be adopted to encourage better or more forestry management?

The Indiana legislature made wise decisions for the forest this century when it passed the Classified Forest Act in 1921, eliminated patronage assignments and replaced them with tenured career personnel positions in the Department of Natural Resources in the 1940's and 1950's. More recently, the legislature has funded the DNR and Division of Forestry activities reasonable well over the past 40 years. This contrasts with the forest-blessed state of Michigan that, at a time when its much vaunted auto industry is sagging (10% unemployment for over a decade) has gutted its DNR and has given mostly lip service to encouraging forest landowners and forest industry. Indiana Department of Natural Resources Forestry Division has encouraged forest worker training through its Soren Erickson Training Program. Industry should encourage and assist in more training for workers, especially logging crews. This could result in a high level of forest management through more silviculturally and ecologically correct execution of timber harvesting.

Indiana still has not adequately staffed field positions nor provided one-on-one advice and assistance to its NIPF citizens. It is a legislative prerogative. The trend toward restrictive legislation concerning forestry activities could be devastating. However, a "Right to Practice Forestry Act" could keep the door open in this state for continued investment and development in the forest industry.

Purdue, the critical state institution involved specifically with forestry, has exhibited a declining forestry policy and activity over the past decade. This is a school of agriculture and state legislative prerogative.

11. Are there any industry level policies which should be adopted to encourage better or more forestry management?

Industry was generally apathetic about forest management for the first two-thirds of the 20th century. Even a minor attempt at ownership and rudimentary management, particularly after the passage of the Classified Forest Act in 1921, would have given some of the larger primary veneer and sawlog users an enormous edge, presuming they could survive the Great Depression, which many didn't. Any substantial forest holdings at the end of the Depression would have been in demand during World War II. The depletion of the resource, which apparently bottomed out in the early 1930's and may have been reaccentuated during World War II and the Korean Conflict, finally began to be dealt with by industry after World War II. State and federal forestry departments emphasized forest management and the forestry schools filled up with ex-soldiers on the Gl Bill getting their education. It's possible that industry finally saw the light on a national level as we cut our way to the Pacific Ocean in the Northwest and as paper companies moved into the Deep South and established the second and third forest on worn out crop fields, leading the way in forest management. The trickle down theory worked and even Indiana's smaIlish fragmented primary forestry products industry decided forestry was good for its own health. Economics lead the way as it invariably does and Indiana industry forestry policy began a glacial change.

The policy that needs to be adopted is "more of the same, i.e., helping and encouraging the NIPF owners".

Lastly, industry, in cooperation with the Indiana Forestry and Woodland Owners Association and university and agency groups must work to influence the legislature:

A) To encourage and assist NIPF owners with forest management. The economic benefit to the landowner and sate economy is exponential through jobs, goods sent out of state and country and economic justification to keep the land in that most desirable condition, environmentally, which is forested.

B) To resist locking up vast tracts of forestland for single purpose usage.

C) To resist mandating forest practices. Economics and education will lead us to good forest management without a suffocating government mandate hanging over forest landowners' heads.

D) To pass a "Right to Practice Forestry Act".

E) To elevate Forestry on a par with manufacturing and agriculture as foundations of a strong Hoosier economy. The state, on a grand scale, can have the same experience as the private owner of productive forestland enjoys; periodic income for modest management input, recreation and aesthetic freedom, wildlife and, most importantly, clean air and water that only the forest can provide and protect.