Economic Impact of Tennessee Forest Product Exports in 2022

Andrew Muhammad, R. Jamey Menard, David Hughes, Harrison Clark and Adam Taylor

No 339038, Extension Reports from University of Tennessee, Department of Agricultural and Resource Economics

Abstract: The U.S. is the world’s largest source of industrial wood production (FAO, 2019), with the U.S. South accounting for half of total production (Howard and Liang, 2019). Most of this production is from the “pine belt,” which includes states like Mississippi, Alabama, and Georgia. Unlike these pine-belt states, Tennessee is primarily a hardwood state (deciduous trees), which are rela- tively high value and make an important contribution to Tennessee’s economy (Pelkki and Sherman, 2020). Tennessee’s forestry activity tends to be in rural areas and is often smaller scale than other industries, so the economic and social importance of the wood products industry are often underappreciated. It is estimated that forestry in Tennessee provides over 85,000 jobs and has an annual economic impact of over $21 billion (Menard, English and Jensen, 2021). Tennessee is among the top ten states in terms of the relative importance of forestry, alongside Maine, Wisconsin, and Oregon (Pelkki and Sherman, 2020). Tennessee’s forestry industry is globally connected, and many sawmills in the state are dependent on global sales. About half of the higher-grade hardwood lumber produced in Tennessee is exported (Luppold et al., 2018). Consequently, changes in global markets can have a significant impact on Tennessee’s forest economy. In this report, we discuss the economic impact of Tennessee’s forestry exports. We examine the export changes in 2022 (relative to 2021) across destination countries (e.g., China, European Union) and by product (e.g., oak lumber, hardwood logs, barrels), and further assess the full economic impact of export sales on income and jobs at the state level. Forestry exports are not just important to Tennessee but to the entire country. U.S. sales of forest products to foreign countries were $10.5 billion in 2022. In the context of agriculture and related products (as defined by the U.S. Department of Agriculture),1 forest products are an important share of total U.S. exports, with global sales comparable to America’s top agricultural exports: beef ($11.8 billion), dairy products ($9.5 billion), cotton ($8.9 billion), and wheat ($8.3 billion). Forestry exports in Tennessee ($194 million in 2022) ranked third among agricultural and related exports behind distilled spirits and cotton (USDA, 2023). Exports of forest products were negatively impacted by the U.S. trade war with China in 2018 and 2019 and the COVID-19 pandemic in 2020. This was the case for both the U.S. and Tennessee. The pandemic had a significant impact on global sales due to supply and demand disruptions in the global market for finished wood products (e.g., furniture) and the interrelated market for raw materials and inputs (e.g., logs and lumber) (Muhammad and Taylor, 2020). These effects were in addition to the negative impacts of China’s retaliatory tariffs on U.S. timber, which are still in place (Muhammad et al., 2022). Exports of forest products from 2019 to 2022, nationally, regionally, and for Tennessee are reported in Table 1. From 2020 to 2021, U.S. exports increased by $2.1 billion. In 2022, exports continued to increase by $756 million (nearly 8%) when compared to the previous year, reaching 10.5 billion. This increase was mostly in Southern states, followed by Western states. U.S. and Tennessee exports further recovered in 2022 by 8% and 4%, respectively, when compared to 2021 (USDA, 2023). The increase in exports sales in 2021 and 2022 was a welcomed turnaround given the declines experienced in previous years.

Keywords: Demand and Price Analysis; International Relations/Trade; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 7
Date: 2023-12-13
New Economics Papers: this item is included in nep-agr, nep-env and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:ags:utaeer:339038

DOI: 10.22004/ag.econ.339038

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