New study designed to document the extent, cause and potential implications of accelerated changes in forest industry ownership in the southern region from 2002-2004.

“Changing Industrial Forest Ownership — Extent, Causes, Implications” is a study sponsored by the USDA Forest Service Southern Region, Southern Research Station and Southern Group of State Foresters.  It is in response to the Southern Forest Resource Assessment (SFRA), completed in 2002.  The SFRA highlighted the relevance of southern forests and identified several key forces that are changing or are likely to change the nature and extent of the regions forest resources and all the values and functions they provide. SFRA left no doubt that forest ownership patterns in the South have not only made the regions forests unique and contributed to their diversity and productivity, but also leave them vulnerable to adverse effects of change.

Since the release of SFRA, the trend of declining forest industry acreage has accelerated. Several companies have announced their intention to sell all of their landholdings in some states. Others are divesting themselves of significant portions, holding onto some lands for strategic purposes. A few are themselves developing company forest for other uses.

Commensurate with declining industry ownership is an increase in corporate ownership, particularly by Timber Investment Management Organizations (TIMOs) and Real Estate Investment Trusts (REITs). These organizations bring a unique management style and purpose to southern forestry; the long term implications of which are unclear.

An additional and possibly very significant outcome of large scale land transactions is its near-term treatment following sale. Anecdotal evidence suggests that timber harvests are being accelerated and occurring on large contiguous blocks on some of these lands, and that "real estate" cuts are supplanting traditional silviculture on others.

Some investigators have begun to link land markets to the likelihood of continued active forest management. Forces that drive up the value of forest land or the costs of owning and managing it work to encourage its conversion.

Evidence of accelerating change in forest industry ownership in the region mounted during 2002 — 2004, and the Forest Service Southern Research Station, Southern Region, and Southern Group of State Foresters agreed to initiate a study to document its extent, causes and potential implications.

A cooperative agreement has been entered into with UGA to carry out the analysis over the next year.

The study is expected to shed light on:

1. The number size and location of large sales transactions in the South since 1999.
2. Differences in timberland prices among different regions of the U.S. and among subregions of the South.
3. Economic and institutional factors that may be driving landownership changes.
4. Impacts of ownership tax status on amount paid for forestland.
5. A survey of buyers and sellers to discern motivations for changing ownership.
6. Identification of sub-regional "hot spots" of activity, and more detailed analysis of these areas, to understand specific management strategies, motivations, and implications for the resource, resource users, and agencies affected by such changes.
7. Potential effects on timber supply as a result of ownership and management changes. Other effects changes of this magnitude are likely to have on the regions forests, their quality and manageability.

A final report will be presented to Southern Group of State Foresters in June of 2005.