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"ru, EXECUTIVE SUMMARY The Rio Grande National Forest is revising its forest plan. This study is prepared as part of the revision process to assist the forest persoMel in their revision. This study addresses the sawtimber economy of the Rio Grande forest and its timbcrshcd, from fiscal years 1982 through 1991. The study assesses sawtimber supply, sawtimber clcmand, the sawtimber economy and its likely future under'alternative Rio Grande forest supply levels that could result from the plan revision. Tbc study focuses OD the sawtimber economy although fuelwood, posts, and Christmas trees arc also bric1lyaddressed in an.appendix. The sawtimber economy is assessed from the viewpoint of the Rio Grande National Forest and its timbershcd. The timbcrshed was identified because many sawtimber purchasers opel'atc OD a wider local economy than just the Rio Grande forest. This timbershed to include historical bidding patterns and their relation to the Rio Grande forest. Timbersbcds are dynamic this ODe will change with time. USDA Forest Service 2400-14 records were used to assess timber supply and its cbaracteristics OD the forest and in the timbershed. We found that the Rio Grande forest is the primary supplier to its timbershed with a stable share of about S8% of the volume sold over the study period. The Rio Grande forest has averaged about 28 MMBF of supply annually. Timber supply from the timbershed is about SO MMBF per year. This implies that significant changes in Rio Grande supply levels that might arise from the plan revision could significantly impact the timbershed. Timber supplies have been stable (especially as compared with other forests in the region) and much of this stability has come from the Rio Grande forest sale program. Timber supplies are primarily comprised of spruce-fir and this has been desirable for many . processors. Forest Service officials and industry representatives confirm that Rio Grande sales have not been cutting out at an average rate of about 20% over the last several years and this affected our comparison of supply with demand levels. Sa.....timber demand was assessed using information on the processing infrastructure;timbershed cut levels, substitute supplies and more. Stumpage demand is derived from many processors, but just six account for 85% of the annual 50 MMBF demand in the timbershed. Stone Forest Industries is the major processor. Stone operates a high speed stud mill and has made several important improvements in the last five years that have increased their timbershed demand to about 29 MMBF per year. Stone has been purchasing more stumpage off the Rio Grande forest and we expect this to continue. Oth.er important changes include improvements at WolfCieek Forest Industries, and purchaser Ernest Young is no longer active, As of FY '91 the sawtimber economy was in a state of long term equilibrium with no major structural changes occurring, except for declining volumes under contlact on the Gunnison. Other modest changes include a shifting away from processing dead spruce for house logs, and modest upgrades to processing facilities. The 10 MMBF that clcmand exceeds supply has begun to make purchasers more asgressive in acquiring stumpage. It will also make purchasers more sensitive to potential reductioDS in supply from the Rio Grande forest as the plan is revised. . We assessed three potential future timber supply levels and their inipacts OD this economy; 33 MMBF, IS MMBF and 7.8 MMBF per year. At 33 MMBF per year with a 28% SBA share, and sales not cutting out we expected the economy to continue with only modest changes and these are outlined in the body of this report. At 15 MMBF per year, vie expect a 2.3 year period of difficult adjustments for the industry with Stone eventually changing significantly or leaving. This would be enough volume for a moderate sized board mill, but not a high speed stud mill. At 7.80 MMBF per year there is no role for Stone, but we expect the smaller processors to remain with only modest adjustments. (<;2531 't... :.:~ " , "" ... ~. ... E -';f _to 0#. -i. '" ~ -j 'F> - -'~. i. ~ ~-' ~~ .~. ~. ." ~,. - -, ~ -~ -":: ~.. 1 '", , .. "'1. .' .~ ~ ~ - '" *-, ~.... .;,. :-:-. :, ~ ,., .- .~~ " ~ 7" '-i' -. . -' ..,;; .... "".;... .. -,,-. ::. - ...- <' , ii ~ -; -