Sawmill Willingness to Pay Price Premiums for Higher Quality Pine Sawtimber in the Southeastern United States

Abstract

The southeastern United States is widely regarded as a leading region for intensively managed, short rotation pine forests. One drawback of this intensive approach is the production of more juvenile wood with lower quality properties that are less desirable for solid end uses. Improved construction sectors (e.g., housing) demand larger diameter sawtimbers. Delaying the final harvest allows for the production of larger diameter higher quality solid wood; however, this approach may incur additional costs to the landowner, which may disincentivize extending the rotation without additional monetary compensation. Sawmills are a primary consumer of pine sawtimber and exert a strong influence on stumpage prices. Therefore, understanding the importance of wood quality to sawmills is important for understanding price dynamics. To explore this aspect, we conducted a mail survey of softwood sawmills in the southeastern United States to determine willingness to pay price premiums for higher quality pine sawtimber. Most sawmills (57%) were willing to pay price premiums. The mean willingness to pay, estimated using a tobit regression, ranged from USD 4.22/ton to USD 12.98/ton. Sawlog size, procurement radius, sawlog grade, and the number of employees positively influenced sawmills’ willingness to pay a price premium for higher quality sawtimber, while sawmills’ processing capacity and the number of years in business had a negative impact. The results will be useful to landowners considering delaying the final harvest to grow large diameter sawtimber.