1. The Impact of Global Log Markets By Mike Seidl Indiana State Department of Agriculture/DNR

2. It’s a Global Economy!

3. The Global Economy Consumer and legislatively driven demand shifts in one market impact producers & consumers on other continents who may not even serve or purchase in that market. Consumer and legislatively driven demand shifts in one market impact producers & consumers on other continents who may not even serve or purchase in that market.

4. Examples U.S. sub-prime market U.S. sub-prime market Reduced U.S. Hardwood demand Reduced U.S. Hardwood demand Chinese furniture into Asian market Chinese furniture into Asian market

5. Growing Worldwide Demand for North American Wood Products- why?

6. Exchange Rates – Weak Dollar Middle Class Growth Increased Tropical Forest Preservation and Illegal Logging Laws

7. Exchange Rates Who’s buying and what?? Canada The Middle East The Middle East Resort regions - Caribbean China

8. Luxury Furnishings for Home Hardwood Flooring U.S. Furniture Custom Cabinets

9. The Middle Class

10. China China 20% of total population – 250 million (assets of $18,000 -$36,000) Chinese Academy of Social Sciences predicts this to increase 40% by 2020!

11. From Made in China to Sold in China Urban consumer spending to reach $2.3 trillion annually over next 20 years. Urban consumer spending to reach $2.3 trillion annually over next 20 years. Currently China’s consumer economy is about the size of Italy’s. However, in two years time it will add an Italy every year. * Currently China’s consumer economy is about the size of Italy’s. However, in two years time it will add an Italy every year. * Removal of trade barriers - WTO Removal of trade barriers - WTO *Andrew Grant -McKinsey & Company

12. Forest Preservation & Illegal Logging Laws

13. Tropical forests in South America, Africa, and Southeast Asia are increasingly being set aside from timber harvests due to pressure from environmental groups or because poor stewardship in the past has left forests decimated or unproductive.

14. South America - Brazil The Brazilian state of Para created the world’s largest forest preserve in 2006 – 58,000 square miles. One third of this preserve is strictly off limits to development and logging. The remaining two-thirds will be strictly regulated by the Para government. Brazilian Imports of U.S hardwoods have more than tripled in 2007.

15. Indonesia The Indonesian government plans to reduce log harvests by almost 70% in an effort to rehabilitate and conserve its forests which have been some of the most overexploited in the world in recent years. Already the Aceh province prohibits logging.

16. Illegal Logging World Bank estimates that annual revenue losses amount to $10 billion for business and $5 billion for governments. U.S. exporters lose approximately $460 million per year in business and lower prices. Many governments are passing tougher laws and have stepped up enforcement to stop this practice.

17. World Markets for U.S. Log Exports

18. Red Oak - Millions BF Red Oak - Millions BF

20. Cherry- Millions BF

22. W.Oak – Millions BF

24. Walnut – Millions BF

26. Hard Maple – Millions BF

28. Ash – Millions BF

30. Average Prices / M’ Ash - $1157/m’ Cherry – $2119/m’ Hard Maple - $2555/m’ Red Oak - $984/m’ White Oak – $1538/m’ Walnut – $1770/m’

31. Indiana Log Exports – World $USD

32. Red & White Oak – Totals $USD

33. Remaining Species – Totals $USD

36. Logs and Competition Continued international demand will keep sawlog and timber prices higher than domestic markets would support absent of the international demand. High grade logs – 3SC or better along with veneer will remain the most wanted in the marketplace.* *Hardwood Review

37. Conclusion U.S. log exports in 2008 will reach approximately 575 million Bf about 10% more than 2007 U.S. log exports in 2008 will reach approximately 575 million Bf about 10% more than 2007

38. References Hardwood Review Hardwood Review Foreign Agriculture Service Foreign Agriculture Service Trade Stats Express Trade Stats Express U.S. Census Bureau U.S. Census Bureau