Arizona Forest

Restoration Products Inc.

Oriented Strand Board Production

The major issue that has prevented the large scale implementation of ecologically sound forest restorative treatment is the lack of funding. The thinning treatment that is required in most ponderosa pine forests prior to the implementation of other treatments typically costs approximately $500 to $700 per acres. Treating the millions of acres that have accumulated hazardous natural fuel would cost the U.S. Forest Service literally billions of dollars. This money simply does not exist in the federal or state treasuries.

In order to remedy this situation, the Healthy Forest Restoration Act that was signed into law in December 2003 extended and expanded the U.S. Department of Agriculture Forest Service stewardship contracting authority with communities, the private sector, and others, allowing the Forest Service and Bureau of Land Management to enter into long-term contracts (up to 10 years) to meet land-management objectives such as reducing wildland fire risk and improving forest health in compliance with the guidelines established by the National Environmental Policy Act (NEPA) of 1969 as amended. Among other things, the new stewardship contracting authority allows forest products to be exchanged for ecological restoration services, and  stewardship contractors are able to keep part of what they remove as partial payment. Stewardship contractors' utilization of woody biomass includes its harvest, sale, offer, trade, and/or use.

Source: http://www.healthyforests.gov/projects/stewardship.html

However, the issue that arises with Forest Stewardship contracts is the general lack of economic viability of the business models articulated around the production of low value-added products such as biomass co-generated electricity, wood pellets heating fuel, landscape wood chips, etc. These business models typically operate on very thin, or negative, organic gross margins and are not sustainable without, not only the subsidizing of their raw material, but the cash payment by the Forest Service of several hundred dollars per acre treated. Essentially, in the framework of Forest Stewardship contracts the Forests Service pays private contractors a cash payment of typically $500 to $700 per acre to thin the forest, and in effect subsidizes their economic activity.

Arizona Forest Restoration Products has a different approach. By investing into world-class German engineering and technology, it will have the capability to process low-value small diameter ponderosa pine into high value-added oriented strand board (OSB).

The high value of its oriented strand board (OSB) production will allow Arizona Forest Restoration Products to:

• be fiscally independent from the U.S. Forest Service budget by not depending on the ability of the Forest Service to fund thinning operations;

• purchase large quantities of small diameter timber from the National Forests, thereby contributing a steady and robust revenue stream to the Forest Service;

• operate profitably and post a robust profit;

• reward its investors.

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Oriented Strand Board    OSB

Oriented Strand Board Production

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