Paper trail.

Byline: JOE HARWOOD The Register-Guard

CAROLYN MORAN'S Living Tree Paper Co. lives up to its name.

The tiny Eugene-based firm is on the cutting edge of forest-friendly paper making: Instead of using virgin wood pulp to make its printing, writing and specialty papers, Living Tree mixes imported industrial hemp and flax fibers with recycled office paper.

The result is a tree-free, chlorine-free product virtually identical in appearance and quality to standard white office paper.

"We don't use any new trees to make it," said Moran, the company's CEO. "And we don't use chlorine to make it white."

While use of recycled paper has soared in recent years, only a small handful of companies in the nation make and sell paper that contains industrial hemp.

Moran, who has a background in environmental activism, founded the company in 1994 with the aim of producing a "nonwood" paper that didn't require the denuding of forests and the use of caustic chemicals to turn wood chips into the opaque, soupy pulp that is dried and rolled into paper.

"The whole concept is to save trees," Moran said.

After struggling for several years to sell its products on a large scale, Living Tree now is on the verge of a breakthrough. Within the next four or five weeks, the company's printer and copier paper will appear on the shelves of the roughly 1,100 Staples Inc. office supply stores across the United States. The new product is part of Staples' push to expand its environmentally friendly offerings, a spokesman said.

"This is huge for us," Moran said.

Whether consumers respond is the big question. A ream of Living Tree printer paper retails for $6.99, compared to about $5 or less for similar paper that contains virgin wood.

Moran is hoping that a growing number of customers will pay that premium.

With Staples selling its paper, Living Tree is projecting sales of $3 million to $5 million for the fiscal year starting April 1. That should help the company turn a profit. At its current sales level of about $2 million a year, the company is just breaking even, Moran said.

Living Tree has been growing steadily since its inception, gradually winning big corporate clients such as Nike, manufacturing conglomerate Mitsubishi and outdoor clothing manufacturer Patagonia. These corporate customers are willing to pay extra for environmentally correct paper.

But convincing retail chains such as Staples, Office Depot and Office Max proved difficult. "It is incredible for us to get into Staples," Moran said. "We had to be very persistent."

"High quality, darn good"

The retail chains don't like the price difference, Moran said.

"They think the consumer wants cheap paper at the expense of the environment," she said. "But that is not the case."

Tom Nutile, a spokesman for Massachusetts-based Staples, said the company for years has stocked recycled items as part of its commitment to the environment. A year ago, the company conducted a study of its products and found about 400 items with recycled content, he said.

"Since then, we've been trying to increase the percentage of those products in our stores," Nutile said. "It's the right thing to do."

Staples decided to sell Living Tree's printer paper because "it's high quality, darn good paper," he said.

Moran said the 24-pound printer paper Staples will offer is 90 percent recycled office paper and 10 percent hemp-flax fiber. The hemp-flax content gives the paper its strength.

"We get one shot at this," Moran said. "If it moves off the shelves, maybe Office Depot and others will realize it's a hot product that consumers want."

Staples plans to sell a ream (500 sheets) of the paper for $6.99, about $2 more than comparable, wood-fiber brands. Moran contends that if consumers know the paper is available, they will seek it out.

The paper carries a "green premium" largely because so few mills are equipped to produce it and so little of it is made. It's the same principle that makes organically grown food more expensive than conventionally grown food - although organic prices have dropped as production has increased due to skyrocketing consumer demand.

Only a tiny faction of mills have the facilties to turn industrial hemp, flax, kenaf and other nonwood fibers into pulp. Pulp and paper mills the world over are almost exclusively geared to convert wood into pulp and then paper. Though the pulping processes are similar, flax or hemp (with their longer fibers) cannot be fed into a pulp mill that is set up to use virgin wood fiber.

Economies of scale

Since the 19th century, the bulk of technological innovation - and capital spending - in paper making has been focused on wood pulp. Forests were plentiful, wood was cheap, and people didn't worry about clear-cutting.

The abundant wood supply coupled with economies of scale means industry stalwarts such as International Paper Co. and Georgia Pacific Co. can provide consumers a ream of fine white paper for $3 or $4.

That's left a small handful of niche mills to do nonwood pulping for items ranging from tea bags and cotton paper to currency.

Moran insists that as nonwood papers become more popular, more mills will step into the niche and the price will drop.

"If people pay a couple of dollars more for it, maybe they'll use less," she said. "If people can't pay $2 more for this, I think we're all in trouble."

Moran essentially stumbled into the "nonwood" paper-making business. In 1989, she launched "Talking Leaves," a widely distributed pro-environmental magazine that promotes sustainabilty.

In 1993, Moran said she started searching for a tree-free paper on which to publish Talking Leaves. After studying her few available options, Moran received a grant to import paper made in China of industrial hemp and flax. The quality was poor and the paper wreaked havoc with printing presses, so Moran traveled to Eastern Europe and Russia looking for a better nonwood paper.

She eventually met up with Frank Riccio, co-founder of Danforth International Trade Associates, a supplier of specialty fibers and pulps made from nonwoods including industrial hemp, flax, kenaf and the like. Riccio, an expert in nonwood specialty pulping processes, encouraged Moran to start her own paper company and offered her technical assistance.

She founded Living Tree in 1994, and by late 1995 she was selling her first nonwood paper products.

Finding a partner

In 1996, Moran invited Harry Bondareff aboard as a partner. Bondareff, with a background in business and finance, had recently earned a master's degree in environmental studies from the University of Oregon. Bondareff, now based in Portland, serves as the company's vice president and national sales manager.

In the ensuing years, Moran and Bondareff have developed partnerships with small pulp and paper mills in Massachusetts, Maine and Toronto, Canada, which make the specialty paper for Living Tree.

Because industrial hemp and flax pulp is not readily available in the United States, the company imports the pulp from France and Spain, where industrial hemp and flax is grown in fields as an annual crop.

Before shipment to the United States, the hemp and flax pulp is pressed into sheets and dried. Once it arrives at the mills, it is rehydrated and mixed with pulp made from recycled office paper.

The United States outlawed the production of industrial hemp in the 1930s amid the scare over marijuana use, despite that fact that industrial hemp contains only insignificant amounts of the psychoactive chemical that gives marijuana smokers their high.

Industrial hemp and marijuana look much the same, but industrial hemp is useless as a drug.

Industrial hemp production is legal in numerous countries, including Canada.

Importing adds costs

Having to import the industrial hemp from Europe adds costs, Moran said. Recent actions by the U.S. Drug Enforcement Administration to restrict products containing industrial hemp could affect Living Tree's use of hemp as a fiber source.

"I'm not dependent on it, but I'd like to continue using it because its long fibers really add strength to the paper," she said.

Thus far, however, the DEA has only targeted consumer products such as cosmetics or foods that contain industrial hemp.

Moran said there needs to be more research and development of alternative fiber sources for paper making, such as straw, to move the paper industry away from using trees.

"There's plenty of straw here in the Northwest. It's an agricultural by-product," she said. "We just don't have any pulping facilities for straw right now, but I think it's going to happen in the next three to five years."

In the meantime, Moran said she will continue to spread the word about the ecological benefits of nonwood paper.

"Consumers have to play a vital role in reshaping the pulp and paper industry," she said. "Consumers have to let the industry know they want tree-free paper."

Contact Joe Harwood at 338-2364 or [e-mail].

LIVING TREE PAPER CO.

Business: Produces tree-free paper made from flax, hemp pulp and recycled paper pulp

Owners: Carolyn Moran and Harry Bondareff

Employees: 5

Annual sales: About $2 million

Founded: 1994 in Eugene

Living Tree's steps to making tree-free paper:

1. Contracts with mills in Massachusettes, Maine and Toronto to make the paper.

2. Imports hemp and flax pulp from France and Spain.

3. Pulp arrives as dried sheets at the mills. There, water is added to sheets and they are mixed with postconsumer paper waste (recycled paper), then pressed to form Living Tree's paper products.

4. From the mills, the paper is shipped directly to customers, to distributors or to Living Tree warehouses in Eugene and New Jersey.

- Living Tree Paper Co.

Printing Industry

LIVING TREE PAPER CO.

Business: Produces tree-free paper made from flax, hemp pulp and recycled paper pulp

Owners: Carolyn Moran and Harry Bondareff

Employees: 5

Annual sales: About $2 million

Founded: 1994 in Eugene

Living Tree's steps to making tree-free paper:

1. Contracts with mills in Massachusettes, Maine and Toronto to make the paper.

2. Imports hemp and flax pulp from France and Spain.

3. Pulp arrives as dried sheets at the mills. There, water is added to sheets and they are mixed with postconsumer paper waste (recycled paper), then pressed to form Living Tree's paper products.

4. From the mills, the paper is shipped directly to customers, to distributors or to Living Tree warehouses in Eugene and New Jersey.

- Living Tree Paper Co.

CAPTION(S):

Back at the Living Tree Paper Company headquarters, Duchess the cat keeps Carolyn Moran on task. NICOLE DeVITO / The Register-Guard Carolyn Moran started her own paper making firm after a fruitless search for a tree-free paper on which to publish an environmental journal.