The Hardwood Federation Newsletter

Hardwood Federation May 2019 Newsletter

From the Executive Director:  Trade.  Trade.  And More Trade.

Trade.  It seems to be on everyone’s mind these days and has become the almost singular focus for the Hardwood Federation day to day.  The Hardwood Federation has had an incredibly busy month of May staying on top of the twists and turns and tweets and turmoil of the U.S. trade war with China.  The global market place impacts us all more than we probably realized and the last several months have made us all more informed and aware than we probably ever thought we would be. There is no need to rehash each and every twist and turn of U.S. trade policy over the last year or so, but we do want to review what is has happened in the last few weeks and where we are going from this point.

After months of extensive trade talks between high level players in both the US and China everything appeared to be moving towards some sort of resolution.  The US felt that enough ground had been gained regarding the longstanding Chinese postures on IP theft, forced technology transfers, as well as a number of other trade and market related positions.  Both sides apparently felt they were holding the other over a barrel and getting exactly what they wanted.  However, when the Chinese side appeared to walk back many of these concessions and refuse to put them in writing with enforceable conflict resolution mechanisms – it is also said the Chinese were reluctant to make any agreement that would require China’s legislature to approve changes to current law – everything blew up and on Friday May 10^th the Trump Administration increased what were tariffs lowered on good faith to 25% on all listed Chinese goods.  This includes the 5% and 10% tariffs on US hardwood logs and lumber moving to 25%.

This is the gist of where we stand.  To fight back The Hardwood Federation has been proactive and taken a much stronger stand than we previously had.  With direction from the HF Board a position statement was prepared that relayed the devastating impact the US-China Trade War is having on our industry.  Indeed, some operations and sectors of the industry have benefitted from the proceedings, but in general domestic mills have suffered sharp sales declines of export sales, lost jobs and in some cases shuttered operations.  The long-term health of the industry relies on these mills and their production capacities.  The impacts the industry and our markets are suffering are devastating to the communities reliant on good paying hardwood jobs up and down the supply chain, and when they are lost, they will be lost forever.

The HF and HFPAC Boards sent a letter (which can be viewed here ) to US Department of Agriculture Secretary Sonny Perdue outlining this stance supported by the robust US economic numbers from our recent hardwood Economic Impact Study.  This letter also asked that hardwood producers be included in any and all agriculture industry relief measures.  In addition, an HF Action Alert to members of the hardwood industry urging their Members of Congress to reach out to USDA regarding these relief measures garnered far and away the best response we have ever had.  In total the tremendous response saw 360 individual hardwood members send a total of 1,083 messages to a total of 183 Congressional offices.  This is an amazing response in a short time and really shows how large a voice the industry can wield.  Unfortunately, and far out of any of our control, hardwoods were not included in the announced $16B relief package as only the growing community (and cotton) rather than producers received any consideration at all.  HF followed up with messages to USDA relaying our disappointment and concerns with these decisions.

In hopes of still building attention to the difficult predicament the industry is facing HF and our member associations sent out a press release ( you may view it here ) to the Business Wire, which was quickly picked up by Yahoo News, among other outlets.  And in other media news a joint effort between AHEC and HF led to a CNN interview featuring HF Board Member and President of Baillie Lumber Jeff Meyer, which you can view here. 

In addition, HF staff sent out a “recess memo” asking the hardwood community to engage with Members of Congress back home in their states and districts during the end of May Congressional Recess and we are actively setting up two Hardwood Trade Days on June 11^th and 12^th to get the hardwood industry in front of targeted, influential, Senators who may be able to relay our messages to the Administration. 

We anticipate June will be another extremely busy month and that this issue is far from settled.  Please don’t hesitate to reach out if we can be of assistance and thank you for all of the support as we ask you to reach out to Congress.  These messages may seem like a trickle as you hit the send button, but hundreds and thousands of them together create a powerful statement from the people that Members of Congress care most about, their constituents.  Please continue to share your thoughts, concerns and ideas with YOUR elected officials through our outreach tool available here.

Issues

Secure Rural Schools Program – The Reintroduction of a Bill to Provide Much Needed Aid to Rural Communities Using Timber Receipts from Federal Lands

On Thursday May 23^rd Senators Ron Wyden (D-OR), Mike Crapo (R-ID), Jeff Merkley (D-OR), and Jim Risch (R-ID) reintroduced legislation intended to provide financial assistance for rural counties to ensure they have long-term funding for schools, roads, law enforcement and other essential services.  The “Forest Management for Rural Stability Act” makes the Secure Rural Schools Program, which expired at the end of 2018, permanent and creates an endowment fund to provide stable, increasing and reliable funding for county services.

The original “Secure Rural Schools and Community Self-Determination Act” (SRS) was enacted in 2000 to financially assist counties with public, tax-exempt forestlands.  Critical services at the county level have historically been funded in part with a 25 percent share of timber receipts from federal U.S. Forest Service lands and a 50 percent share of timber receipts from federal Oregon and California Grant Lands managed by the U.S. Bureau of Land Management. As those revenues have fallen or fluctuated due to reduced timber harvest and market forces, SRS payments helped bridge the gap to keep rural schools open, provide road maintenance, support search and rescue efforts and other essential county services. Since enacted in 2000, SRS has provided a total of $7 billion in payments to more than 700 counties and 4,400 school districts in more than 40 states to fund schools and essential services like roads and public safety.

Resilient Federal Forests Act – A Hardwood Champion Reintroduces a Forestry Bill

Arkansas Representative – and the only trained forester in Congress – Bruce Westerman (R-AR, 4) reintroduced the “Resilient Federal Forests Act” on Wednesday May 8^th.  The legislation encourages more thinning of fire-prone forests, bigger categorical exclusions from the National Environmental Policy Act (NEPA) and limitations on lawsuits that delay forest management projects.  The provisions in the bill are those that did not get included in last year’s Omnibus Appropriations Bill or Farm Bill.  A similar bill from Rep. Westerman introduced last year had enough support to pass the Republican led House of Representatives, but was not able to get through the Senate.  With a Democratic led House this go round the Bill is not expected to advance, as they are generally more in favor of conservation and fire-resistant construction, rather than forest-thinning and increased logging efforts. 

Ex-Im Bank – The Bank Returns After a Lengthy Hiatus to Aid Small Businesses

After a four year hiatus the Senate voted on Wednesday May 8^th to confirm three nominees – Kimberly Reed as President and Spencer Bachus and Jugith DelZoppo Pryor as Board Members – and restore the Export-Import Bank to full operating capacity.  The Ex-Im Bank is the official export credit agency of the US with a mission towards supporting American jobs by facilitating the export of US goods and services.  This is great news for many manufacturers, but could be short lived unless Congress also reauthorizes the Bank before its current authorization runs out in September 2019.  The Bank has supported 1.7 million jobs over the past 10 years and more than 90% of the Bank’s transactions directly support small businesses, on average.

Biomass – Renewable Fuel Standard Addressed in New Legislation

Just before Congress recessed for Memorial Day week, Senators Ron Wyden (D-OR), Jim Risch (R-ID), Mike Crapo (R-ID), Angus King (I-ME) and Jeff Merkley (D-OR) introduced legislation that addresses a long standing flaw in the federal Renewable Fuel Standard (RFS).  That flaw is the fact that the RFS discriminates against most forest-based biofuels

The RFS is a national mandate that requires certain volumes of renewable fuel to replace or reduce the quantity of petroleum-based transportation fuel, heating oil or jet fuel.  Currently, the biomass definition in the RFS is limited to only biomass derived from tree plantations.   This restriction disqualifies most biomass fuels in many regions of the country where tree plantations are rare or do not exist at all.  The legislation introduced last week strikes the tree plantation qualifier, which will open up the universe of biomass material that can qualify for the mandate and create new markets for low-value timber.  

Particularly noteworthy for the hardwood sector is that the bill also ensures that mill residuals, like sawdust and shavings, which are derived from fiber sourced from both federal and non-federal lands may be used to produce biofuels and qualify for RFS credits.  Again, under current law, mill residuals can only count for RFS credits if the residuals come from timber off of tree plantations.  As we know, in many instances, mills use fiber sourced from both public and private lands, which means sawdust and shavings are commingled and therefore ineligible for RFS credits. The bill eliminates this distinction by qualifying all mill residuals. 

Happening in the Hardwood World

Funding for the Study of Hardwood CLT at Virginia Tech

As reported by AHMI earlier this month a team of researchers from Virginia Tech have been awarded funding from the Forest Service to build and test cross-laminated timber (CLT) from yellow poplar for introduction into U.S. Building Codes. 

Dr. Henry Quesada and Dr. Brian Bond from Virginia Tech were approved May 7 for the proposal “Multi-State Effort to Overcome Barriers to Low-value Hardwood Lumber for CLT Manufacture.” The goal of the research is to build panels from Yellow Poplar, test to APA standards and complete the application for inclusion in U.S. Building Codes in 2020.

The lack of research on hardwood CLT has limited market potential and prevents architects from specifying the materials. The grant will enable the lumber to be structurally graded, panels constructed and tested to standards that meet code. These tests will help architects better understand the hardwood material.