12/11/20. Robert D. Hatcher, RF, Consulting Forester, Cartersville, Georgia
Is there a land bubble out there?
In 1962 (58 years ago) I sold Middle-Georgia Pine pulpwood for $6.00/cord or $2.24/ton. Today it is about $24/cord or $9.00/ton. This $9.00/ton has 11% of the purchasing power as in 1962. So this $9.00 has a $0.99 value in 1962 purchasing power dollars. In short, the purchasing power of a ton of Pine pulpwood shrank by 58% or 1% per year over the last 58 years.
Meanwhile a standard Ford pickup cost has increased from $2k to $30k (15 fold). It takes 3.8 times as many cords/tons of pulpwood today to buy a Ford pickup than in 1962!
Out of our measly sale price per ton of pulpwood, the landowner, the wood dealer, the logger & the trucker, plus the Consultant Forester, the tax collector & the banker all are having to split an ever smaller pie! Think Hole!
If our Timberland owners had converted their land into pasture & cows they’d be selling into a hamburger market that’s gone from $0.21/lb to $4.41/lb, a 21 fold increase since 1962, while our pulpwood has only gone from $2.24/ton to $9.00/ton, just a fourfold increase!
If you address the 3.78% cancerous inflation average since 1962 to now — inflation is eating away @ your income stream & it isn’t a pretty picture!
If you run the numbers on Pine saw timber they are ugly too!
I fear there is a bubble in the Timberland business. But an economy with a future $21 roll of TP might save our butts! Ethanol saved ($0.25/bushel to $4.25/bushel since 1962) Corn & Corn land with the current Corn price bubble!
If we think the current viral Pandemic is killing our economy — the forest products market has been eating our Timberland owners alive for years & we keep lining up to be next & without even a kiss!
Timberland is suffering from an inverse bubble—or Green Hole! I don’t see better days ahead!
Your thoughts?
Bob
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