https://www.wsj.com/articles/thousands- ... ding_now_2
Some relevant quotes for those unable to handle the pay-wall:
“We figured we’d plant trees and come back and harvest it in 30 years and in the meantime go into town to make a living doing something else,” he said.
Three decades later the trees are ready to cut, and Mr. George is learning how many other Southerners had the same idea.
“If you work and you didn’t want to put all your money in the stock market, you’d buy 40 acres and plant trees and they’d be ready to cut by the time your kid went to college,” said Skip Stead, a timber broker in Lincoln, Ala. “It’s like a 401(k).”
A glut of timber has piled up in the Southeast. There are far more ready-to-cut trees than the region’s mills can saw or pulp. The surfeit has crushed timber prices in Mississippi, Alabama and several other states.
The California Public Employees’ Retirement System spent more than $2 billion on Southern timberland, and harvested trees at depressed prices to pay interest on money borrowed to buy. Calpers sold much of its land this summer at a loss.
Article also includes examples of folks who planted over their farms 30 years back as a "retirement investment" only to now discover they can barely cover the cost of clearing the land with the timber they harvest. A significant factor is that there just aren't enough mills in the area to cut the lumber and it is prohibitively expensive to transport uncut logs to locations with more mill capacity. So despite the fact lumber consumption is up overall these trees are hardly worth anything because there isn't mill capacity nearby to process them (sort of like oil stuck in the ground because there are no pipelines nearby). Another issue is that since many of these stands were planted around the same time the trees will soon become too old to harvest for quality wood. That means there may not be an incentive for lumber companies to make the capital investment in opening mills nearby.In the South, timber prices haven’t stopped sliding. Adjusted for inflation, the price of Southern pine is down about 45% since 2007, according to Daowei Zhang, an Auburn University professor of forest economics. So-called saw timber, for making lumber, is at a 50-year low, adjusted for inflation.
So the big lesson here appears to be an old one - don't accept uncompensated idiosyncratic risk (e.g. lumber in one location). For reference Calpers has about $250B in assets so their southern timber investment was a bit less than 1% of their portfolio.