BUILDING UP AND UP: LUMBER HOT ITEM AS PRICE HEADING UP

Lumber has suddenly become a hot property -- it's short in supply, and pricing literally has gone through the roof during the past year and a half.

The great lumber scare of 1992-93, which saw lumber prices soar then collapse, is back again, thanks to a surge in new home building and remodeling.

The lumber industry in the United States employs thousands of people to harvest trees, transport logs to mills, convert the logs into lumber and sell the lumber.

The United States, one of the leading lumber producing countries in the world, uses more than 61 billion board feet of lumber every year, more than any other country.

Lumber prices until early 1992 had been stable for a number of years, say people in the lumber industry.

"There was little difference in the price of lumber in the early 1980s through 1991 or early 1992," said Earl Saupe, president of the Pocahontas Lumber Co., Jackson. "But since early 1992, lumber prices have been on a roller coaster."

One lumber executive says it's embarrassing to talk to old customers.

"They think I'm gouging them," said the Canadian lumber mill manager. "I used to be able to give customers a quote that was good for 30 days. Now, it's good for maybe 30 minutes."

"Prices have been up and down the past year," said Mark Beaudean of Southeast Missouri Builders Supply in Cape Girardeau. "Prices really took off just after Hurricane Andrew in August of 1992 and stayed up until about June or July of this year when they edged down a bit."

But with heavy home building activity over the past few months, lumber prices are edging up again.

Lumber industry veterans say the main reason for the increase in prices is a shortage of timber, especially in the United States, where more and more forest land is being set aside for environmental purposes.

In the Pacific Northwest, huge tracts of land have been removed from forest production to protect some endangered species of owls.

Ben Mayo of Bentonville, Ark., president of the Mid-America Lumbermen's Association -- a five-state trade association of retail lumber dealers -- said the volume of wood withdrawn because of the spotted owl in one year was enough to construct 360,000 homes, about a third of the houses built in 1992.

Weather, too, is a contributing factor in rising prices. Rains in forests can slow logging operations.

Another weather factor in 1992 was Hurricane Andrew, which in August blasted the U.S. mainland from Florida to Louisiana, destroying as many as 63,000 homes and damaging thousands of other homes and buildings.

Inclement weather in any area can hamper prices, noted Beaudean. Storms can slow home building, permitting wholesalers to build up inventories, which affects pricing.

Currently, strong markets for new home construction has pushed up demand for timber.

In the past, when lumber shortages have hit in the states, people would look to Canada to crank up production, edging prices up a bit. In the past two years, Canadian prices have more than doubled.

In the United States, prices for framing lumber have increased about 50 percent since July, according to a national trade publication, "Random Lengths."

As lumber prices increase, the cost of everything containing wood -- from do-it-yourself bookcases to new homes -- will climb. The National Home Builders Association is warning that a 50-percent increase in lumber costs will tack on about $3,000 to the cost of a 2,000-square-foot house.

To the buyer, the increase is greater, about $3,500 to $4,000 more for a $150,000 house.

"Plywood prices have stabilized," said Saupe. "But the yellow pine out of Arkansas, Mississippi and Louisiana, is higher than it has every been."

Beaudean also noted the scarcity of drywall and insulation items.

"Drywall prices have held pretty good," said Beaudean. "But it takes us twice as long to get it. We used to get drywall within four working days. Now it takes us weeks."

Insulation has increased about 8 to 9 percent in price, and delivery time is about six weeks. Other wood products -- doors, molding --take six to eight weeks for delivery.

Consumers paid $5.9 billion more for lumber and plywood in 1992 than they did in 1990.

With an average of 15,000 board feet of lumber per house, home buyers paid $1,200 more in 1992 than in 1990, according to the National Lumber and Building Material Dealers Association (NLBMDA),

About half of the lumber produced in the United States is used in the construction industry. About a fourth is used in remodeling and repairs, and the remainder is used to manufacture boxes, crates, furniture, toys and other wood products.

Some of the by-products are used for other purposes. Sawmills send small logs and wood scraps through a chipper. The chips then are used to make paper, hardboard, plastics, rayon and another products.

A promising alternative to trees has created some new hope for saving trees.

"Kenaf" (pronounced "kuh NAFF") is expensive but it could become the miracle fiber of the 1990s.

Kenaf, a member of the hibiscus family, is a wood plant that grows up to 15 feet tall in five months, and promises to become an alternative to trees in making wood pulp.

The plant produces a high-quality paper strong enough to be run through a photocopy machine with no deterioration. It is an ideal material for newsprint because it doesn't yellow. And it requires less ink because it isn't as porous as wood fiber, and the ink tends to not come off on hands.

Kenaf won't work well in fax machines, however, because its creates too much friction.

There is a problem with kenaf. It costs more than twice as much as virgin or recycled stock.

But a spokesman of Kenaf International, headquartered at McAllen, Texas, explained that its high cost is a simple case of supply versus demand.

"Only 4,300 acres of kenaf were harvested in the United States this year," said the spokesman. "Most of that was in the South and Southwest. More farmers need to get on the bandwagon before prices can become competitive."

Another reason for the high cost is lack of processing mills, which has been the biggest obstacle to increased kenaf production.

In short, the fiber needs a PR campaign.

"Most people, including farmers who might grow kenaf as a viable cash crop, don't know that it exists," said the spokesman. The plant has been cultivated in the Middle East for thousands of years, but the Western Hemisphere is only now discovering its usefulness.

As a crop, kenaf yields about the same amount of usable product as pine trees -- seven to 10 tons per acre. Its outer layer, equivalent of bark in trees, is highly insect-resistant, making pesticides unnecessary.

While kenaf may do away with the need for some trees and chipping mills, it can't save the old-growth forests of the Pacific Northwest.

Massive logs from ancient trees have long been a mainstay in construction. Environmentalists and the timber industry have been deadlocked for years over whether to use the trees or leave them alone.