1. Western Hardwood Association Symposium III October 7, 2003 The Future of Hardwood Tree Farming

2. General Outlook for Hardwood Tree Farming Poplar Tree Farming Red Alder Tree Farming International Developments Key Topics Covered

3. Source: The Global Timber Supply/Demand to 2030 (1998) Outlook for Hardwood Tree Farming 3 fold increase over the next 30 years

4. History Acreage developed in the region Poplar tree farm silvicultural activities Poplar tree farm production Markets Future Poplar Tree Farming

5. History Originally envisioned as an energy crop during petroleum crisis of the 1970s DOE provided much of the early research on genetics and silicultural activities First commercialized by the pulp and paper industry in the early to mid-1980s as opportunity to moderate the fluctuations in fiber pricing

6. Acreage Developed in the Region Columbia Tree Farm ~6,000 acres Boise ~18,000 acres Potlatch ~17,000 acres Sandpiper Tree Farm ~3,000 acres Norseka Canada~8,000 acres Landowner Assistance Programs ~ 3,000 acres

7. Poplar Tree Farm Silvicultural Activities Site selection and preparation is critical to successful establishment Plant material selection and diversity required Spacing: originally designed for 600 to 700 trees per acre with a rotation of 6 to 8 years targeting the chip markets; alternative focus is on 300 to 400 trees per acre with 10 to 15 year rotation for the solid wood markets Intensive crop care activities for weed control and pest control required Important to ensure adequate water availability and drainage New markets have led to new management regimes involving thinning and pruning New harvesting techniques

8. Hybrid Poplar - Eastside Hybrid Poplar - Westside Loblolly Pine Douglas Fir Tree improvement – 20 years of history in tree improvement; expansion into new hybrid pedigrees; focus on yield enhancement, pest resistance, and climatic adaptability (resistance to cold, windthrow, etc.); improvement in wood quality targeting specific markets Growth and yield – current hybrid clones have resulted in yield increases of over 50% from the native stands managed in tree farms; new clones are targeting 10 to 15% yield improvement Poplar Tree Farm Production

9. Markets Chips for pulp and paper Solid wood lumber for cabinetry, furniture, window coverings, moulding and millwork, doors Log home construction material Veneer for plywood (core and possible face grade applications) Engineered wood products (OSB and LVL) Poplar characteristics is similar to other species and has opportunity in both hardwood and softwood markets

10. Future outlook Continue to foster and build the market awareness for solid wood applications and understanding the customers needs Continue improvements to plant material through nature breeding techniques for various markets New wood treatment techniques Continue to reduce production costs through new clones, new innovative intensive management techniques, and harvesting approaches Conversion efficiencies at the mill level Certification will be more important and effect future decisions around tree farming approaches

11. Future outlook (cont.) New sources of investment capital through timber investment funds will help create expansion for poplar tree farming Companies looking to secure long-term sustainable supply of wood for core business are looking at these types of tree farms Energy sector is expanding into green energy developments and are looking at closed-looped biomass projects more closely Potential for farmer based partnerships to help farmers in their crop diversification strategy and overall land management approaches will lead to expansion opportunities Growth in environmental applications

12. Red Alder Tree Farming History Current Situation Future outlook

13. History Decades of burning, spraying, and considering a weed tree Little or no replanting after harvesting due to focus of regeneration of natural stands to Douglas fir tree farms. Strong markets developed for red alder in the application of cabinets, fine furniture, millwork, etc. Highly desired by the pulp and paper industry Key to a healthy watershed through proper riparian zone management

14. Current situation Question of reliability of long-term native alder supply due to lack of re-planting, uncertainty in chip export market, and effects of new riparian management laws Increase awareness in optimizing the management of native alder stands (Hardwood Silviculture Cooperative) Increase awareness on plantation establishment and economics Markets well established

15. Future outlook Increasing cost effectiveness in alder production through better understanding stand management techniques related to growth and yield Exploring the potential for high yield alder tree farming through intensive silvicultural techniques similar to poplar tree farming (breeding strategies, propagation strategies, weed control, etc. ) Potential move towards replanting of red alder in previous sites converted to Douglas fir tree farms Move towards land management decisions that lead to planting the right tree at the right site New sources of capital

16. International Developments There are unique opportunities and developments surrounding hardwood tree farming in China and Chile (poplar tree farming)

17. China Central government support for high yield/fast growing tree farming The Chinese Government has committed to reforesting 12% of China’s landmass. More than 33 million acres of land are scheduled to move into afforestation programs and up to 40% of this area is likely to be planted with hybrid poplar that is suited for the temperate zone Much of this focus is to address China’s balance their current importing of wood for domestic consumption, especially in the pulp and paper industry

18. Chile Move away from radiata pine monoculture in the south and central region of Chile. Looking for diversification in their tree species and are exploring poplar as a third tree crop after eucalypts and radiata pine Current holdings estimated around 7,000 to 10,000 acres of poplar Government support for testing of new clones and developing a marketing strategy

19. Summary There is a growing interest in hardwoods and hardwood tree farming in the Pacific Northwest that rivals hardwood tree farming anywhere in North America Significant opportunity to expand hardwood tree farming strategies in both poplar and red alder and will be lead through continue improvements in planting stock and growth and yield, innovative land management approaches, new techniques in silvicultural management, improvements in harvesting and product conversion, expansion of market niches, and sources of new capital