Testing for variation in the western Oregon softwood log price structure

Abstract

Timber owners in western Oregon have been concerned about the erosion of price premiums for higher quality grades of Douglas-fir (Pseudotsuga menziesii (Mirb.) Franco) sawlogs over the past decade. Time series tests indicate that the ratio of 3Saw (lower quality) to 2Saw (higher quality) sawlog prices did rise over the 1990-2000 period, suggesting convergence between the prices. To identify causes of this trend, we estimate reduced form equations for Douglas-fir sawlog prices with time-varying coefficients using flexible least squares. Log grade prices were related to prices of lumber by grade, prices of chipped residues, labor wage rates, and volumes of public timber supplied. Changes in the relation of log grade prices are reflected through changes in both reduced form coefficients and levels of the exogenous variables. Changes in the coefficients, in turn, may derive from shifts in the distribution of log qualities within grade categories and from grade-specific changes in sawing and log production technologies. Coefficient trends showed that higher quality lumber grades became more important for 3Saw logs during the sample period, while lower quality lumber grades and chips became more important for 2Saw, moving the log grade prices closer together. Comparison of simulated 2Saw and 3Saw prices with and without historical time patterns in the exogenous variables had little impact on their relationship, suggesting that factors shifting the coefficients may have been the primary drivers of price convergence.Résumé : Les propriétaires forestiers de l'ouest de l'Oregon sont préoccupés par l'érosion de la valeur des billes de sciage de douglas (Pseudotsuga menziesii (Mirb.) Franco) de qualité supérieure qui est survenue au cours de la dernière décennie. Des tests de séries chronologiques indiquent que le rapport du prix des billes de qualité 3Sciage (qualité inférieure) sur celui des billes de qualité 2Sciage (qualité supérieure) a connu une augmentation durant la période allant de 1990 à 2000, ce qui laisse croire à une convergence des prix. Dans le but d'identifier les causes de cette tendance, nous estimons la forme réduite des équations du prix des billes de sciage de douglas en fonction de coefficients variables dans le temps, en utilisant des moindres carrés flexibles. Le prix des différentes qualités de billes est relié au prix des différentes qualités de bois d'oeuvre, au prix des résidus transformés en copeaux, au coût de la main d'oeuvre et au volume de bois provenant de la forêt publique. Des changements dans la relation entre le prix des différentes qualités de billes se reflètent dans des changements tant des coefficients de la forme réduite que dans le niveau des variables exogènes. Les changements dans les coefficients peuvent en retour découler de changements dans la distribution de la qualité des billes dans chaque classe de qualité et de changements spécifiques aux classes elles-mêmes résultant des technologies de sciage et de production des billes. Les tendances dans les coefficients indiquent qu...

A stochastic frontier analysis of technical progress, efficiency change and productivity growth in the Pacific Northwest sawmill industry

“…The trend toward smaller sawlogs has led to increased productivity because the milling of small logs is less labor intensive and more amenable to mechanization. Consistent with decreases in the size and quality of sawlogs over the past few decades has been a decrease in lumber quality (Størdal and Adams, 2005). This is not captured in the present analysis.…”

“…Constantino and Haley (1988) use a quality index in their study to control for temporal variation. In the Northwest, average sawlog diameter decreased through the 1970s, 1980s, and 1990s, and it is likely that sawlog quality declined over this period as well (see, Størdal and Adams, 2005, for discussion). The trend toward smaller sawlogs has led to increased productivity because the milling of small logs is less labor intensive and more amenable to mechanization.…”