Green Horizons

Recently the Center completed an in-depth Eastern Red Cedar Market Analysis, which includes information gathered from landowners and cedar processors from 16 states. Copies of the Eastern Red Cedar Market Analysis and Directory are available at the Center’s web site at www.centerforagroforestry.org , under the UMCA Publications link, or by writing to Center for Agroforestry, University of Missouri, 203 ABNR, Columbia, MO 65211.

While it's as common as oak or hickory in Missouri forests, eastern red cedar often is regarded as a "trash" tree, one that is more likely to be thrown onto a burn pile than onto a truck headed to the mill. Yet despite this lessthan- stellar reputation, a University of Missouri analysis of the U.S. eastern red cedar market finds that Missouri landowners may be underestimating the value of their cedar stands and missing an opportunity to turn "trash" into cash.

"Many landowners don't like cedar because they see it as a nuisance," said Michael Gold, associate director of the University of Missouri Center for Agroforestry, who led the study. "Like multiflora rose, it's spread by birds and will take root almost anywhere. It's a very invasive, competitive species that's hard to control."

Though most landowners are satisfied simply to rid their property of cedar, Gold, MU agroforestry economist Larry Godsey and MBA candidate Mihaela "Ina" Cernusca looked at the state's predominant native conifer from a different perspective.

"Like other opportunities in agroforestry, landowners ask ‘How much money can you make?’ and ‘Where do you sell it?" Gold said. "Even though we knew cedar was bought and sold, we didn't have the data to answer those questions with certainty, so that's why we conducted the market analysis."

The Eastern Red Cedar market generates nearly $60 million in annual sales.

The agroforestry team surveyed red cedar businesses in 16 states, ranging from small operations with annual sales less than $10,000 to large firms with annual sales more than $16 million. Their major objectives were to identify market participants, determine the types of products currently marketed, and establish general trends for supply and demand.

"We also examined the forces that coordinate and control the market, and identified the resources and relationships needed to be successful," Gold added. "This included evaluating the threat of new entrants to the market, barriers to market entry, threat of substitute products, rivalry among existing companies, governmental policies, and the bargaining power of buyers and suppliers."

The analysis estimated that the U.S. eastern red cedar market generates almost $60 million annually in gross sales and is growing, Gold said. Almost 40 percent of survey respondents indicated that demand for red cedar products had increased in the past 5 years, and about half felt it would continue increasing over the next 5 years, he said.

Gold attributed the industry’s growth to the ever-increasing list of uses for cedar. "From mailbox posts and mulch to novelty gifts and paneling, the list keeps growing," he said. "Many high-value products can be produced from small-diameter stock, and cedar’s natural rot and insect resistance makes it an attractive substitute for pressure-treated lumber products, especially now that chromated copper arsenate (CCA) is no longer in use."

In terms of available resource, the analysis ranked Missouri among the top four states nationally, along with Arkansas, Tennessee and Kentucky. Gold said the bulk of red cedar suppliers are located in these states, but added that buyers reside across the Midwest. "There is a great deal of variability in prices paid for raw materials, with the highest prices paid in areas where resources are more limited."

The analysis also revealed that in comparison to other states, Missouri is undercapitalized and not yet taking advantage of the opportunity to add value locally.