Arkansas Business: Logging Big Gains in Arkansas Forestry
Our forests are more than just trees. They are homes for our wildlife, essential ingredients for our everyday household products, natural air purifiers and critical land management tools, mitigating the effects of floods and soil erosion. Perhaps more importantly, they are the lifeblood of our state’s rural communities, supporting more than 60,000 good-paying jobs and a $1.7 billion annual payroll in Arkansas alone.
With nearly 19 million acres of forestland, our state is a natural haven for timber, paper products and related companies. According to the Southern Forestry Nursery Management Cooperative at Auburn University, Arkansas is first in the South for the number of hardwood seedlings grown and fourth in the U.S. for the total number of seedlings grown. Each year, forestry contributes more than 5% to our state’s GDP and brings a value-added economic impact of $6.5 billion.
And there are additional growth opportunities for forestry on tap. The Arkansas Center for Forest Business says several factors are propelling the industry’s momentum. Currently, housing demand far outpaces supply, fueling the urgent need for additional construction materials like lumber. State-based sawmills like Canfor Corp., PotlatchDeltic and Resolute Forest Products are upping their capacities and capabilities. And high gas prices and global tensions are increasing interest in renewable biomass as an alternative fuel source. However, scientific experts at the center also caution that net timber growth exceeds harvest by more than 11 million tons annually in pine and 7 million in hardwoods, potentially softening future market prices.
Fortunately, we are taking proactive steps at the Arkansas Capitol to ensure the timber and forest products industry’s sustained expansion. Simply look to Highland Pellets, a biomass fuel producer in Jefferson County, as a recent example. In 2020, under our leadership, the Arkansas General Assembly passed the Logging & Wood Fiber Transportation Job Creation Incentive Act. Now known as Act 594, the legislation provides a tax credit to state manufacturers, such as Highland Pellets, based on the capital expenditure of their plants and an economic assessment by the Arkansas Economic Development Commission.
Recently, Tom Reilley, Highland Pellets’ founder and chairman, discussed the substantial expense of getting these types of manufacturing facilities up and running. He noted the importance of the Legislature passing Act 594 and how it was “critical in [their] decision-making process to expand [their] plant in Pine Bluff.” Since Highland Pellets leveraged the tax credit to get its project over the finish line, Reilley noted the facility now produces 675,000 metric tonnes of wood pellets per year from forest thinnings and sawmill residuals for an international power station. It also supports more than 300 local forestry jobs — and counting.
Significant economic development projects by companies like Highland Pellets — and the positive ripple effects they create — are a prime illustration of the benefits of supporting Arkansas’ timber industry. It’s why, during the last fiscal session, the state Legislature allocated new funding to help support the Arkansas Center for Forest Business at the University of Arkansas at Monticello. It’s also why members from both sides of the aisle recently joined forces to establish the Forestry Caucus, a bipartisan group committed to promoting legislation that will strengthen the forestry sector. And this is only the beginning of our work.
The U.S. Forest Service reports Arkansas is the No. 3 state for the economic impact of forestry and No. 1 among all Southern states. To attract and retain timber, paper products and related companies, now and in the future, we must stay focused on advancing commonsense initiatives like Act 594 at the state Capitol and within our communities. With steady, statewide support, we will ensure the Arkansas timber industry continues to take root.