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Forest Service: Many Factors Created Surge in Cost of Wood Products During Pandemic

Multiple factors led to a surge in the cost of wood products during the COVID-19 pandemic, but the simple answer for the price surges, according to Forest Service Senior Research Forester Jeffrey Prestemon, is “basic economics.”

“When the supply curve shifts backwards and demand increases, prices will go up,” Prestemon said in a USDA Forest Service report concerning the increase in wood product prices. “Mills wanted to increase output, but they couldn’t find workers.”

Wholesale prices for plywood increased from $400 to $1,500 per thousand square feet during the pandemic, roughly equivalent to retail prices of plywood soaring from $12.80 to $48 per sheet.

The worker shortage triggered by the pandemic led to limited availability of wood products such as softwood lumber and structural panels. Supply chains were further disrupted by a lack of truckers to transport materials.

“At the end of the line were those of us who were homebound under travel restrictions, wanting to spend more money on home improvements,” the report states.

The lack of available workers sparked an increase in average industry wages, but the higher pay was not enough to attract enough workers to make up for the increased demand and limited supply, according to the report.

The increase in advanced machinery used at wood processing facilities further hampered the ability to meet demand quickly. “Because work in the wood products industry is becoming more mechanized, the workforce now needs to be more technically competent and highly trained,” Prestemon stated. “It takes time to develop these skills, so ramping up production in a short period of time is not as easy as it was in the past.”

Wood imports from Canada, already stifled by shipping constraints, were also limited due to a lowered amount of allowable harvests in some Canadian provinces, which were limiting cuts due to a Mountain Pine Beetle epidemic that has attacked half the total volume of commercial lodgepole since the 1990s, according to the report.

“The effects of U.S. tariffs on Canadian softwood lumber are not fully known, but they could have further constrained wood imports during the pandemic,” the report added.

The full USDA Forest Service report can be found here.

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