Forestry and EquityBy Tom Hatley
Vol. 5, No. 4, 1983, pp. 19-23
If you travel along a state highway during the Southern winter, your eyes follow unavoidably the constants of the land: field openings of red, brown, and dun-colored soil breaking against the highway, and never far off, green seams of forest against the horizon. The intervals of green in the Southern landscape, more, often than not, signal the presence of pine and other fast-growing softwood trees. The land is also green in another sense, however, for the sixty million acres of softwood forest in the South today are financially valuable. The harvest of trees in an agricultural product second only to the value of tobacco cropping in North Carolina, and twenty percent of that state's land area is covered with pine trees. The South supplies nearly half of the nation's softwood timber today and can grow even more wood in the future. Across the South, softwood trees such as pine, sweetgum, and sycamore provide a main part of the employment base for 1.3 million forest industry workers, in occupations ranging from falling trees to making paper.
Corporations and, increasingly, banks, insurance companies and pension funds are investing in timberland in the South with the expectation of dependable investment returns from four to six percent over inflation. Boosters of this financial promise point to Georgia-Pacific Company's decision to move its corporate headquarters from Portland, Oregon, to Atlanta and the forty-million-
Page 20dollar pulpmill being built by a Finnish-American joint venture in New Augusta, Mississippi, as bellwethers of a new age. Much more than a simple discovery of the South's potential to become the new "woodbasket of the nation," corporate decisions to invest in the South often have to do primarily with changes and dislocation in the global market for wood products. For instance, the Baltic region of Scandinavia cannot continue to meet the West European demand for paper pulp, which it has supplied since late mediaeval times, off of its own cold and wet land alone. Whatever the underlying reasons for the shift to the South, the increasing worldwide wood demand, whether for cooking fuel, paper pulp, lumber, or methanol, means that the changes taking place in the Southeast will be long-lasting.
On the Southern forest today, small-sized land ownerships remain the rule. This particularly holds true for the valuable mature or near-mature pine stands across the South. Forty million acres of pineland are in private hands. In North Carolina, 250,000 owners held eighty percent of the state's private land. Each of these individuals owns a tract which is on the average less than one hundred acres.
Black people in the South hold a substantial share of this wealth in land and trees. Yet an unfortunate combination of economic and social forces is pushing these blacks toward landlessness. Dependable statistics concerning black land ownership--how many acres, how many owners--are very difficult to come by. The Census Bureau itself estimates that the number of black farmers was undercounted by fifty-three percent in the 1974 Census. Similar problems appear in the counts of many agencies concerned with rural trends. In a sense, this statistical fuzziness reflects the indeterminate (or even unrecognized) standing of minority landowners and their problems for many government programs.
Some alarming trends show themselves in spite of the imprecision of the statistics on certain points. Over the past decade the number of black farms diminished at two and one-half times the rate of white agricultural holdings. Today roughly 85,000 farms are being operated by blacks; there were 130,000 in 1969. Of course, not all black landowners are farmers. Department of Agriculture figures suggest that there is a large group of blacks (perhaps fifty percent of the size of the number of active farmers) who own rural acreages but do not actively farm them. The rate of decline in the holdings of black farmers proper probably crosses over to this group as well, as it does for the relatively small holdings of native Americans.
The trend toward land loss by minorities, particularly in the South, where their holdings are concentrated, is not new, but, instead, of slowing, it is increasing. The 1982 report of the US Civil Rights Commission, "The Decline of Black Farming in America", warns early on that "At [the present] rate of loss, there will be virtually no blacks operating farms in this country by the end of the next decade."
The situation which the Commission addressed in its report is often labelled a crisis in farmland ownership. But the problem extends beyond the image of cultivated fields and pastures that the word farmland calls to mind. Valuable and appreciating minority-owned forests, whether on a section of a family farm's acreage or on non-farm holdings, are also vanishing. Of farmland owned by blacks in the South, certainly more than half is forested; non-farm rural land is even more wooded. In the changing economic landscape of the South, the small landowner, particularly the black landowner, is losing substantial present and future forest assets to corporations and individual investors seeking tax shelters.
E.F. Hutton Group, Inc. offices in medium-sized cities across the nation are at this moment offering shares in a second limited partnership of twenty million dollars to purchase woodland in Georgia, Alabama, and Florida. Promising a turnover time of as little as seven years, a return of eight percent during the life of the partnership, and significant tax shelter aspects, Hutton fully subscribed the first offering in less than four months. This arrangement (and others like it offered by Merrill Lynch and First National Bank of Atlanta) capitalizes on the very large standing stock of mature pine timber in the South today. Though the promotional literature for these plans stresses the long-term potential for a bull market in the Southern forest, each plan is basically designed to harvest both trees and tax credits. As Hutton's promotional brochure notes: "Southeastern timberland is avail-
Page 21able." Sadly, the long-term loss of minority-owned land in the South has contributed to the tragic 'availability' of woodland formerly held by small owners.
The billion-dollar-plus land and timber asset owned by minority landowners in the South remains a significant potential equity resource of Southern blacks. Yet putting an exact price tag on this land is difficult. Land prices are highly variable throughout the South. One hundred acres within the asphalt reach of a city like Charlotte or Jackson may have a high development value; a similar piece of land in a rural section may bring only a fraction as much. The share of land value contributed by the forest is also difficult to pin down. Perhaps as much as one-half of the total value of black-owned forestland (again, representing roughly fifty to seventy percent of the total black land-holding) can be attributed to the value of the trees growing on the land. Because of their high value in today's market, pine stands disproportionately contribute to this total value.
Markets for forest products are highly changeable. Yet the financial advantage of selling pine timber relative to other species seems very likely to continue for the next ten to thirty years. During this same period, local or regional markets (such as in North Carolina's furniture belt) may also be strong for hardwood species such as oak, walnut and maple. But the greatest forest asset of small owners today, and the best promise for financial return, remains pine softwood stands--many of them on minority lands--growing across the region.
Pine stands demand special management techniques, and both the need for such techniques as well as the potential scale of forest income are peculiarly rooted in the historical origins of the pine forest. Exploring the social and ecological past of the Southern pine forest can bring the current situation of forestland in the South--its opportunities and problems--into sharper focus.
Of the forty million acres of pineland in private ownership in the South, most are the unexpected inheritance of agricultural change during the years from 1930-50. Stephen Boyce of the US Forest Service has told this story best in a series of fine technical articles on wood supplies in the South. The generation of Southern farmers of this period realized that with the help of new tractor and chemical fertilizers, they could make their production goals on much smaller acreages. New farm policies seeking to restrict production encouraged them in this adjustment, and this, along with direct dislocation, contributed to the acreage of land left unplowed and fallow. When the land was left uncultivated, pine seeds, windblown from trees along field edges, took root and grew into a new extensive pine forest. Today these twenty-five to fifty-year-old pines constitute much of the regional forest asset that investors are now discovering. True to their beginnings, the Southern pinelands remain largely in the hands of farmers and small landowners black and white.
An aerial photograph showing green. old field patches of pine in the corner of a Piedmont or Coastal Plain county can be read like a still-shot of land change. Five or so major species of pine are the dominant old field species in the South because they germinate and come to maturity under full sunlight better than other trees. They are not tolerant of the shade cast by a neighbor. Common ecological threads tie together all of the pine stand patches. The trees are often growing on less productive soils that follow the farmers' logic: steeper, drier slopes and eroded fields were the first abandoned. The pines can slowly heal some of the damage done to this ground.
Once it takes hold, the pine forest has a lifespan stretching to 150 years. The early life of the pine stand sees seedlings gradually crowd out the yellow of broom-sedge and asters to form a thick canopy. By middle age, the number of trees in the stand drops off sharply, and those that are left grow taller and more valuable. Eventually the growth rate of these trees tapers off, and longer-lived trees such as oaks or elm and hickory begin to grow faster than the pines and finally outlive them. Forest management can be effective in improving the value of pine stands during the middle years--roughly from thirty to sixty--of their life.
Most of the millions of acres of pine forest growing on small, privately-owned tracts across the South are now entering this critical period. Though these thousands of individual stands are not all equally promising, the larger acreages have a particularly strong potential to make forest management pay off through building long-term income. As the trees on private land age, this possibility will begin to diminish. Around the end of the century, about the time that the post war generation of Southerners reaches retirement age, a decline will be in full swing.
Today so many of these old-field pine stands, now entering maturity in the financial sense, are being cut that forest economists are predicting a dip in the Southeastern softwood supplies. At the same time, small landowners are not renewing these stands through tree planting or other measures. What is showing up in the
Page 22graphs as a small tilt today will become a serious shift twenty or thirty years down the road, when the current southern softwood surplus has been opportunistically consumed. Even though corporations have begun extensive planting programs to try to insure a portion of their future wood supplies, they cannot make up the deficit on their lands alone. A serious and unfortunate consequence is that corporations are responding to this dilemma by turning toward establishing intensive forest plantations on Southern wetlands such as peatlands and alluvial river bottoms. Serious environmental damage results from converting natural forest ecosystems to simplified, single species landscapes. The consequences of wetland conversion range from losing genetic diversity as native plants and animals are pushed out by uniform monocultural plantings, to short-circuiting the complex pathways by which wetlands regulate water flows and buffer pollution. In light of this, it makes environmental sense to continue and even intensify the harvest of trees off oldfield stands with a history of disturbance like those commonly on small land-holdings. The alternative is, all too plainly, to allow corporations to continue to gamble with large scale modification of natural systems valuable to all Southerners.
Intensifying the management and harvest of trees off private lands makes good economic sense for the small landowner as well. However, just as there are makes opportunities to make this choice worthwhile, minority landowners are being pushed out of a market that they, along with other small holders, have dominated for years.
Part of the problem has to do with the way in which small landowners view the financial potential of their forests. Most are accustomed to treating forest land as a nest egg or savings account with a small investment return. Yet anyone who has counted the annual growth rings on a stick of firewood has witnessed the rate of which trees add to their "principal". And the market price for wood has increased steadily over this century Given this, long-term forest income can more closely resemble an annuity with continued growth beyond inflation. However, active forest management is nearly always necessary to make this promise a reality.
Most of the pine forests owned by private individuals in the South grow and are cut without the benefit of sound forestry practices. When these lands are not properly managed, or are sold or foreclosed, another corridor to a stronger rural economy is closed off for blacks. On the mature pine stands, the manner in which trees are harvested has a great deal to do with the future income that can result from the forest. For example, clear-cutting/he family property all at once will often result in a second forest of far less value than that initially on the land, particularly if the original forest was an old field pine stand. Over the past decade, only twenty percent of the pine stands cut in the South have returned to pine through natural reseeding from nearby trees. Another twenty percent, mainly on larger holdings, was replanted. For financially hardpressed landowners, the investment in purchasing and setting out seedlings makes planting a difficult step to take. As a result, cashing in on a nest egg of old-field pines may well be impossible the second time around.
Foresters have developed middle-of-the-road cutting techniques that may offer a way out of the cycle of clear-cutting and neglect that is today's rule. Two methods of cutting and regenerating the forest--"group selection" and "shelterwood"--are promising. These techniques work with the existing mature forest to renew the stand as the forest is harvested over a period of years. Under shelterwood management, thinnings are carried out early in the life of the forest; then, when the forest stand reaches middle age, two or more substantial cuttings are made. As the canopy is opened, light falling on the forest floor will allow a second generation of pines to grow under the old stand of trees. When the original stand is removed, a new vigorous pine generation will be ready to take its place. The group selection technique creates a forest of patches of different-aged trees by making many small openings in the forest canopy from year to year.
Shelterwood and group selection management styles may hold financial advantages for the small owner as well. Since frequent cuttings are made, income will be received on a regular schedule rather than all at once. When a stand is finally harvested, another stand will be approaching a point at which it too will be financially productive. These techniques are not useful on all lands--particularly less fertile ones. However, they are currently being used on only a small fraction of the Southern forest on which they could be effective.
The difficulties of bringing minority-held forest land under productive forestry practices also lie outside of, as well as in, the woods. The average size of forest tracts held by black owners is small, probably less than fifty acres. On land-holdings of this size, it is difficult to obtain management advice while the stand of trees is growing, and to
Page 23schedule sound patterns of harvest for profitable sales. However, as the trees mature, there are many possible strategies for overcoming these handicaps. Organizing marketing and management cooperatives among small landowners may offer one way out of this problem. The chief advantage is that, by combining ownerships, co op members can gain more leverage and demand better prices from buyers of timber and pulpwood. Yet cooperatives without a loyal membership and good technical advice have a hit-or-miss record of success.
Small landowners also must find a path through the tangled thicket of forest law. Timber sales, contracts, and the determination of tax liability all require special knowledge. Because forestry policy making is a very specialized domain, isolated from scrutiny by the general public, much of what is on the books is pitched toward corporations and larger owners. Yet there are opportunities here as well, particularly with regard to taxation and direct subsidies. Owners of forestland or timber are afforded favorable long-term capital gains status on the sale value of their trees, and on management costs that improve forest growth. Also on the positive side, a joint state-federal "Forestry Incentives Program" can pay up to half of the cost of reforesting cutover land, or caring for the forest. In many areas forest lands qualify for special ad valorem property tax status, which can reduce the cost of owning land. However, all of these programs remain under-subscribed by small land owners. Most do not know of their existence.
In every Southern state there are federal and state agencies that could be key players in offering forest management assistance to minority landowners. These public service organizations are split between groups concerned specifically with the forest--such as State Forestry Services--and groups like the Farmers Home Administration (FmHA), the Soil Conservation Service, and Agricultural Stabilization and Conservation Service--that are concerned mainly with farmers and farm owners. The latter group of agencies, especially the FmHA, has come under sharp criticism for failing to directly address the problems faced by black farmers. The Civil Rights Commission report found that the FmHA "has not given adequate emphasis or priority to dealing with the crisis facing black farmers today . . . The level of assistance provided [to minorities] is insufficient to correct the effects of past inequalities or to reflect the urgency of the problem at hand." One reason for lack of involvement by the FmHA is the small size of most black farms. American agriculture, and American forestry as well, emphasize bigness, leaving behind the small scale family farm for an integrated, corporate, tomorrow. Yet there is persuasive evidence that small farms are not in themselves less efficient in terms of crop productivity or energy expenditure. Instead, the problem largely lies in the language of regulations, in market structures, and in the perceptions of loan bankers and some agency personnel.
The same biases and problems carry over to small-scale forest owners and the agencies they could call on for help. State forestry services are often closely allied to forest industry, and, in spite of this alliance, many are relatively poorly funded. These agencies have also failed to focus imaginatively on the problem of underproductivity of small landowners in particular, much less on the especially urgent problems of minority holders. Yet in forestry there remains a widespread allegiance to the worth of small forests, and this belief could provide an underpinning for building programs targeted to aid minority property owners.
Realizing the full potential of forests to contribute to the financial health of small landowners will require effort. State and federal agencies concerned with forestry and conservation will need to work hard to reach minority landowners. Links to wood and lumber markets will need to be forged, and small landowners must be open to a new way of viewing their forest land--as an asset to be carefully cultivated. This is a long and difficult agenda, but a basic resilience in the Southern land, which engendered today's productive pine forest out of agricultural dislocation, gives room for optimism.
A sense of this strength in the land comes through in Ellen Glasgow's turn-of-the-century novel Burren Ground. The post-Reconstruction southside Virginia is resistent to the efforts of farmers at cultivation: Although "Spring after Spring the cultivated ground appeared to shrink into told fields' where scrub pine or oak succeeded broomsedge and sassafrass as inevitably as Autumn into Winter," still. "Now and then a fresh start would be made." Like these lines, the succession of chapters--"Broomsedge, Pine and Life Everlasting" in the book also signal regeneration. Good management of the natural tendency of land toward forest can be turned to the advantage of small landowners, and give them an edge on survival. Forestry practiced in a way responsible to the land as well as to the ledger can help minorities to remain in possession of their rural Southern heritage.
Tom Hatley, native of North Carolina, forester and writer, is spending the summer at the International Institute for Applied Systems Analysis in Laxenburg, Austria.