Value-Added Forest Product Sectors Minimally Affected by Katrina, Rita; Wood, Paper Diverge In Economic Importance

Matt Fannin, Merrill, Thomas A.  |  5/10/2007 3:17:26 AM

News Release Distributed 05/10/07

Louisiana’s forest product sectors have remained vigorous despite the lingering effects of hurricanes Katrina and Rita, according to Dr. Matthew Fannin, an agricultural economist with the LSU AgCenter.

"While value-added food and fiber sectors, such as the food product manufacturing sector, were adversely affected by the hurricanes, forest product sectors were only minimally affected" Fannin said.

Paper product manufacturing decreased only 3.24 percent – only half the overall food and fiber value-added loss of 6.44 percent – between 2004 and 2005. Wood product manufacturing weathered the storm activity even better, showing a decrease of only 0.24 percent over the same period.

"The short-term impacts from the hurricanes, however, are not expected to change longer-term trends in the forest product sectors," Fannin said, explaining, "Paper product manufacturing has maintained a steady downfall in both the contribution of value-added to the state as well as employment."

During the eight year period between 1997 and 2005, the paper product manufacturing sector in Louisiana dropped from $1.4 billion in value-added to $1.2 billion – or from 18 percent to 16 percent of Louisiana’s total food and fiber system.

LSU AgCenter forest economist Dr. Mike Dunn said Louisiana’s paper product troubles are likely a product of globalization.

"Increasing competition from international markets has made it more difficult for local paper mills to be profitable," Dunn explained. "Paper product manufacturing in Louisiana will come under increased pressure as international economies continue to develop and tariffs are lowered to promote trade."

On the other hand, wood product manufacturing is staging a comeback in the state. Wood product manufacturing grew 23.77 percent between 1997 and 2005 – going from $587 million to $727 million in value-added. Further, the sector added 435 jobs between 2003 and 2005, according to official government statistics.

Despite a loss in the number of sawmills in the state during the period, employment in higher value-added wood product manufacturers is increasing. New facilities such as oriented strand board plants in Central Louisiana are examples of jobs being created in this sector, the LSU AgCenter economists said.

Another opportunity that wood product manufacturers are benefitting from in Louisiana is the "clustering effect" near other similar manufacturers.

"A window and door manufacturer recently chose to locate a new plant in North Louisiana less than a mile from a plant that makes glue used to construct the same windows and doors." Fannin explained. "The nearby location of the glue plant lowers the cost of glue to the window and door manufacturer – thereby making the manufacturer more cost efficient."

To learn more about how agricultural commodities are being transformed into higher value-added food and fiber products, visit www.lsuagcenter.com. (Type B-886 in the search box to see the research bulletin from which this material is drawn.) You also can see information on a variety of topics ranging from 4-H youth development to caring for your lawn and garden on that Web site, or you can contact an agent in your parish’s LSU AgCenter Extension office for more details.

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Contacts:
Matt Fannin at (225) 578-0346 or mfannin@agcenter.lsu.edu
Mike Dunn at (225) 578-2376 or mdunn@agcenter.lsu.edu
Editor:
Tom Merrill at (225) 578-5896 or tmerrill@agcenter.lsu.edu

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