The impact of rapid fuel costs inflation on Arkansas’ logging sector

Main Article Content

Ana Gutierrez Castillo https://orcid.org/0000-0003-1861-9859
Nana Tian https://orcid.org/0000-0002-6457-0489
Matthew Pelkki https://orcid.org/0000-0002-4588-1310

Keywords

logging, timber hauling, fuel cost, inflation, Arkansas

Abstract

The logging sector is vital to the wood supply chain supporting both the sustainable management of forest resources and the prosperity of the forestry industry. This study analyzed the immediate impact of rapid fuel cost inflation from February to May of 2022 on the logging sector based on a survey sent to 430 logging and/or hauling firms in Arkansas. We made a direct comparison between the January and May operating costs and production quantities. Results showed that on average logging and/or hauling firms paid about 50% more per liter of diesel fuel in May as compared to January; however, their purchasing frequency remained unchanged, and purchasing quantity for off-road and on-road diesel increased slightly. More than half of the firms received additional compensation from sawmills, averaging $1.4 per metric ton. The overall timber production declined in May with respect to January, but the firms displayed different reactions. Whereas 31.6% of the firms harvested more and 18.4% kept their production constant, 50.0% of the firms significantly lowered their production by 16.1%. There are several potentially confounding factors explaining the loggers’ different responses during the high fuel price context.

Abstract 134 | View Full Text Downloads 0 Download PDF Downloads 99

References

Archival Federal Reserve Economic Data. 2022. New privately-owned housing units started: total units. Accessed 5 December 2022. Available from: https://alfred.stlouisfed.org/series?seid=HOUST

Allen TT, Han HS, Shook SR. 2008. A structural assessment of the contract logging sector in the Inland Northwest. For. Prod. J. 58(5), p.27.

Andersch A, Montague I, Buehlmann U, Wiedenbeck JK. 2015. U.S. Hardwood sawmill log procurement practices. BioResources. (10)1: 1224-1244. https://doi.org/10.15376/biores.10.1.1224-1244

American Loggers Council. Surging fuel prices! Who is hurting? Why is it hurting? Where is it going? 2022. Accessed 25 August 2022. Available from: https://www.amloggers.com/news/surging-fuel-prices-who-is-it-hurting-why-is-it-hurting-where-is-it-going

Arkansas Forestry Commission. 2022. Severance Tax Database. Arkansas Forestry Commission State Office, Little Rock, AR.

Baker SA. 2022. Forest operations: wood supply chain costs and constraints [conference presentation]. In: Wood Flows and Cash Flows Conference. Forisk Consulting, August 25, 2022, Athens, Georgia.

Baker SA, Greene WD. 2008. Changes in Georgia's logging workforce, 1987-2007. South. J. Appl. For. 32(2):60-68.
https://doi.org/10.1093/sjaf/32.2.60

Baker SA, Mei B, Harris TG, Greene WD. 2014. An index for logging cost changes across the U.S. South. J. For. 112(3): 296-301.
https://doi.org/10.5849/jof.13-055

Cubbage FW, Carter D. 1994. Productivity and cost changes in southern pulpwood harvesting, 1979 to 1987. South. J. Appl. For. 18(2):83-90.
https://doi.org/10.1093/sjaf/18.2.83

Conrad JL IV. 2014. Adapting to a changing landscape: how Wisconsin loggers persist in an era of parcelization. For. Prod. J. 64(7/8):273-280.
https://doi.org/10.13073/FPJ-D-14-00042

Dillman DA, Smyth JD, Christian LM. 2014. Internet, phone, mail, and mixed-mode surveys: The tailored design method. John Wiley & Sons.
https://doi.org/10.1002/9781394260645

Egan AF. 2005. Training preferences and attitudes among loggers in northern New England. For. Prod. J. 55(3):19-26.

Egan AF, Hassler CC, Grushecky ST. 1997. Logger certification and training: a view from West Virginia's logging community. For. Prod. J. 47(7-8):46-50.

Forisk Consulting. 2022. Forisk Research Quarterly 2022 Q4.

Greene WD, Biang E, Baker SA. 2014. Fuel consumption rates of southern timber harvesting equipment. In: Proceedings of the 37th Council on Forest Engineering. June 22-25, 2014, Moline, Illinois.

Greene WD, Jackson BD, Culpepper JD. 2001. Georgia's logging businesses, 1987-1997. For. Prod. J. 51(1):25-28.

Greene WD, Cubbage FW, McNeel JF. 1988. Characteristics of independent loggers in Georgia. For. Prod. J. 38(7/8):51-56.

Greene WD, Marchman SC, Baker SC. 2013. Changes in logging firm demographics and logging capacity in the U.S. South. In Proceedings of the 36th Annual Council on Forest Engineering Meeting, Dodson, E. (ed.). Missoula, MT. 7 p.

He M, Smidt M, Li W, Zhang Y. 2021. Logging industry in the United States: employment and profitability. Forests, 12(12), p.1720.
https://doi.org/10.3390/f12121720

Kelly MC, Germain RH, Bick S. 2017. Impacts of forestry best management practices on logging costs and productivity in the Northeastern USA. J. For. 115:503-512. https://doi.org/10.5849/JOF.2016-031R1

LeBel L. 1993. Production capacity in the southern logging industry. MS thesis, Virginia Tech, Blacksburg, VA. 127 p.

Leon BH, Benjamin JG. 2013. A survey of business attributes, harvest capacity and equipment infrastructure of logging businesses in the Northern Forest. Univ. of Maine, Orono, ME. 29 p.

Loving E. 1991. Components of logging costs. MS thesis, Virginia Tech, Blacksburg, VA. 205 p.

McKeever DB, Elling J. 2015. Wood products other building materials used in new residential construction in the United States. Tacoma, WA: APA - The Engineered Wood Assoc. 2015; 131 p.

Mei B, Clutter ML, Harris TG. 2013. Timberland return drivers and timberland returns and risks: A simulation approach. South J. Appl. For. 37(1):18-25. https://doi.org/10.5849/sjaf.11-022

Miyata ES. 1980. Determining fixed and operating costs of logging equipment. General Technical Report NC-55. St. Paul, MN: U.S. Dept. of Agriculture, Forest Service, North Central Forest Experiment Station. https://doi.org/10.2737/NC-GTR-55

Miyata ES, Steinhilb HM, Winsauer SA 1981. Application of work sampling technique to analyze logging operations. Research Paper NC-213. St. Paul, MN: U.S. Dept. of Agriculture, Forest Service, North Central Forest Experiment Station. https://doi.org/10.2737/NC-RP-213

Moldenhauer MC, Bolding MC. 2009. Parcelization of South Carolina's private forestland: Loggers' reactions to a growing threat. For. Prod. J. 59(6):37-43.

Montgomery RA, Pelkki MH, Mehmood SR. 2005. Use and cost of best management practices (BMPs) and related Sustainable Forestry Initiative guidelines to Arkansas timber producers. For. Prod. J. 55(9):67-73.

Nasdaq. 2022. Lumber (LBS). Accessed 5 December 2022. Available from: https://www.nasdaq.com/market-activity/commodities/lbs

National Weather Service. 2022. Monthly total precipitation for Little Rock area, AR. Accessed 15 November 2022. Available from: https://www.weather.gov/wrh/climate?wfo=lzk

Pelkki MH. 2012. The financial health and response of Arkansas's loggers to depressed timber markets and severe operating conditions of 2009. South. J. Appl. For. 36(2), pp.92-97. https://doi.org/10.5849/sjaf.10-033

Pelkki MH, Sherman G. 2020. Forestry's economic contribution in the United States, 2016. For. Prod. J. 70(1), pp.28-38.
https://doi.org/10.13073/FPJ-D-19-00037

Qualtrics. 2022. Accessed from: https://www.qualtrics.com

Smidt MF, Blinn CR. 1994. Evaluation of continuing education needs in Minnesota. For. Prod. J. 44(3):57-62.

Stuart WB, Grace LA. 1999. Wood supplier productivity and cost survey. American Pulpwood Association, Tech. Pap., Washington, DC. 46 p.

Tian N, Pelkki MH. 2022. Report on economic contributions of Arkansas forest industries. Accessed 25 August 2022. Available from: https://www.uamont.edu/academics/CFANR/pdfs/reports/EconomicContributions2022Report.pdf

TimberMart-South. 2022a. Biomass, Logging Rates, & Species Detail: 1st Quarter 2022.

TimberMart-South. 2022b. Biomass, Logging Rates, & Species Detail: 2nd Quarter 2022.

US Energy Information Administration. 2022. Gasoline and Diesel Fuel Update. Accessed 25 August 2022. https://www.eia.gov/petroleum/gasdiesel/