Timberland Investment

The Forest Department under the Ministry of Natural Resources and Environmental Conservation has been planning to permit the export of logs harvested from private timber plantations, U Tin Tun, director of the Forest Department, told The Myanmar Times.

To protect the environment and prevent deforestation, Myanmar in April 2014 banned the export of whole logs and raw timber, leading to a substantial decline in export revenues over the past few years.

In July this year, the government proposed allowing the export of logs grown by private investors such as sawmills. “Our aim is to attract investments in private timber plantations. Allowing exports is one way to incentivise investors in this segment,” said U Tin Tun.

***

In Myanmar, private forest areas consist of teak, hardwood and industrial crop plantations. Some 300 private timber plantations have been allowed to harvest timber over 250,000 acres of private forest. Over 140,000 acres had been developed as at March this year, according to the Forest Department.

Before 2015, Myanmar allowed local businesses to develop commercial timber plantations on 500 acre of private forest lands for teakwood plantations, 200 acres for industrial plantations and 100 acres for hardwood plantation.

Since then, the Forest Department has permitted larger scale plantations of over 1000 acres to be developed on private forest land by both local and foreign investors. Land is awarded to private plantations via an open tender process.

So far, there have been a total of six local and foreign investments in large-scale plantations.

According to the Myanmar Investment Commission, foreign investors such as sawmills are required to produce and grow their own supply of timber. Approvals for such investments are to be obtained from the Ministry of Natural Resources and Environmental Conservation.

Faced with the worst summer fire season in 10 years, Gov. Jerry Brown is proposing broad new changes to California’s logging rules that would allow landowners to cut larger trees and build temporary roads without obtaining a permit as a way to thin more forests across the state.

The proposal — which has the support of the timber industry but is being opposed by more than a dozen environmental groups — would represent one of the most significant changes to the state’s timber harvesting rules in the past 45 years.

The legislative session ends for the year next Friday. On Thursday, the details were still being negotiated by legislative leaders and the governor’s office behind the scenes and had not yet been formally introduced in a bill or put up for a vote.

“They are trying to get to some kind of a deal,” said Rich Gordon, the president of the California Forestry Association, a timber industry group. “They are looking at what can get done politically.”

Under Brown’s proposal, private landowners would be able to cut trees up to 36 inches in diameter — up from the current 26 inches — on property of 300 acres or less without getting a timber harvest permit from the state, as long as their purpose was to thin forests to reduce fire risk. They also would be able to build roads of up to 600 feet long without getting a permit, as long as they repaired and replanted them.

Timber industry officials say the changes are needed to cut red tape and increase incentives for landowners, particularly in the Sierra Nevada, to thin pine and fir forests that have become dangerously overgrown after 100 years of fire fighting.

The European Union (EU) is preparing to fully generate 20% of its electricity by 2020 using only renewable sources. As such, fuel switching from coal to biomass or natural gas is enabling some power plants in the EU to stay open and profitably generate power despite ever-tightening emissions limits. One of the other major pressures driving fuel switching is Europe’s $38 billion-a-year carbon market. Now a decade after the policy was enacted, it’s finally having an effect on regional generation as more plants turn to biomass. Under EU rules, biomass is considered carbon neutral—and a growing number of large coal burners are finding it a viable option.

Coupled with rapidly falling installation costs for renewables, industry is aggressively finding ways to phase out the worst pollution sources—although unevenly across the continent. While to the east, coal is still the biggest fuel source, western Europe is moving quickly away from it—with Germany, not surprisingly, straddling the fence, essentially building a second renewable system on top of a carbon-intensive one.

Taking it further, several western European nations have formally announced a deadline to end all coal burning. The UK was the first large user to set a drawdown, scheduling the last fires to go out by 2025, propelled even faster by an increased carbon tax. France, a small coal burner, will phase it out altogether by 2022. The Netherlands and Italy have also proposed plans to close their coal-fired power plants by 2030 and 2025, respectively.

Germany, the EU’s largest economy and a perceived champion of clean energy through its Energiewende program, remains Europe’s largest coal burner. The question of a “coal exit” is being hotly debated by the country’s new coalition government, and most experts don’t expect a phase-out to fully take place until 2030 at the earliest. Just the same, recent figures show that hard coal-fired generation in Germany fell by 53.2% in the year ending in January, while lignite coal generation dropped by 6.6%.

Gov. Mark Dayton this week called on the Minnesota Legislature to support funding for several additional budget priorities this session.

The proposals, outlined this week in a letter to legislative leaders, involve an $8.72 million incentive program to increase timber harvesting on private lands and bolster Minnesota’s forest products industry, and would invest $969,000 in a grant program that would continue state support for the Suicide Prevention Lifeline in Minnesota.

Minnesota’s forest products industry is struggling due to a timber shortage, said Dayton in a news release Thursday. In response, he has proposed a new $8.72 million program to motivate private landowners to harvest and sell timber to mills in Minnesota.

“Minnesota’s forest products industry supports 64,000 jobs and contributes over $17.6 billion to our economy every year,” said Dayton. “This new timber harvest incentive will help address the timber shortage that is straining this important Minnesota industry, while continuing responsible and sustainable forest management. I urge the Legislature to approve the incentive this session, for the benefit of tens of thousands of Minnesota workers whose jobs and livelihoods depend on it.”

According to the Minnesota Department of Natural Resources, Dayton’s proposed incentive program would increase the amount of timber harvested on private land by approximately 350,000 cords, or 20 percent, over the next two years. The proposal would increase timber availability to the forest product industry, encourage sound forest management on private lands, and help support tens of thousands of forest industry jobs in Minnesota.

The incentive comes on the heels of a new timber harvest target plan recently announced by the DNR which reduces the aspen harvest on DNR-managed timberlands by 40,000 cords. Local and forest products industry officials voiced concern about the reduction and how it would impact local mills.

Wood pellets used for biomass energy, an alternative to fossil fuels, are produced right outside of Athens, but do not expect to see biomass energy adopted here. Those pellets are shipped straight to Europe, and new University of Georgia research shows why.

“With global warming, we really want to reduce carbon emissions,” said Dr. Richard Bin Mei, co-author of a study on biomass-produced electricity. “In the United States, unfortunately, we do not have the mandate or government subsidies, so our study looked at whether it is economically feasible to co-fire wood pellets with coal to produce power, and the answer is no, unless the government does the same thing as the EU.”

Bin Mei , a professor in the UGA Warnell School of Forestry and Natural Resources, and researchers from Purdue University, examined the economics of transitioning to biomass use in a recent study published in the journal Energy Economics.

They determined that it is economically prohibitive to convert coal firing plants to biomass in the United States without government subsidies.

According to Bin Mei, Europe has widely adopted biomass energy as a replacement for coal in energy plants in order to cut harmful fossil fuel emissions. European nations receive nearly five million tons of wood pellets each year from the U.S. for their energy plants, but the U.S. itself has not adopted the cleaner method because of the cost. Under the U.S.’s Clean Power Plan, in the next 25 years, power plants are expected to lower their carbon emissions by 32 percent from 2005 levels.

While burning wood for energy can have negative consequences for deforestation and air pollution, biomass is generally considered to be less harmful than burning coal or other fossil fuels. Growing trees for the pellets offsets emissions from burning wood, and if fast growing tree species are selected, deforestation can be avoided.

According to Bin Mei, it would be unrealistic for U.S. companies to totally abandon their coal firing plants, so the study examined the cost for coal firing plants to switch to a co-firing setup where biomass is burned alongside the coal.

 However, according to Bin Mei, the costs to convert plants to a co-firing method would either require the government to subsidize the conversion or customers would have to pay a cost.

Effectively, plants will remain only coal burning due to no incentive to convert. Bin Mei said the required subsidies would cost the government roughly the same amount as it currently spends on subsidies for other alternative forms of energy like solar and wind.

“All else equal, the government could consider wooden biomass as an alternative fuel to feed traditional coal based power plants,” Bin Mei said. “By design, a coal power plant is designed for 30 to 50 years. It is not economically feasible just to abandon the coal plant, but if you convert it to co-firing, you just add a small percentage of pellets to the furnace. It is not that hard, you just pay a conversion cost and achieve a certain reduction in carbon emission production.”

Members of the timber industry were in the state capitol today, arguing for the passage of a bill that would support the state’s struggling biomass industry.

New Hampshire has 6 biomass plants.  The plants convert wood waste products to energy, and they have trouble competing against the cheaper cost of natural gas.

Senate lawmakers were already working on a bill to help the industry when they got the news last week that the state’s smallest biomass plant, in Alexandria, was going to close.

Bob Guida is one of the bill’s sponsors.  The Alexandria plant is in his district.

"I call it the canary in the coal mine," he says. "All the sudden we have one, we’ve got five others now that, given the economics of the market for spot electricity, and the inability of these folks to pay any less for their fuel, then we’ll see others of the 6, if not all of them, ultimately close as well."

Senator Guida says the effect would be staggering – not just for the 100 or so people who work for New Hampshire’s biomass plants – but also for the North Country’s forestry industry.  Sawmills can’t sell off their excess wood to paper mills anymore, and biomass has given them a new market. Advocates say that economic relationship also helps with forest management.

The U.S. International Trade Commission says it has found there was a reasonable indication that softwood lumber products from Canada materially injured American producers, setting the stage for the imposition of preliminary duties that softwood producers fear could impact Canadian jobs.

The trade commission announced Friday that it made an initial determination of harm from Canadian lumber that is “allegedly subsidized and sold in the United States at less than fair value.”

It said the U.S. Commerce Department will continue anti-dumping and countervailing duty investigations launched Dec. 16 into the imported products.
***
The preliminary finding could force U.S. importers of Canadian lumber to pay cash deposits to cover preliminary countervailing duties in early March, followed in mid-May with deposits for any anti-dumping duties, unless the deadlines are extended.
***
The decision to investigate is in response to petitions filed in November from the U.S. Lumber Coalition, which alleges that provincial governments, which own most of Canada’s vast timberlands, provide trees to Canadian producers at rates far below market value, along with other subsidies.
***
Paul Quinn of RBC Capital Markets said the Americans will likely initially impose a high duty to get Canada to negotiate a deal over a long period that’s favourable to the U.S.

Montana’s Senate delegation co-signed a letter to President Barack Obama asking for continued pressure to get a new Softwood Lumber Agreement with Canada.

“We are disappointed that Canada appears reluctant to follow through on this commitment, which has significantly undermined (the U.S. Trade Representative’s) efforts to reach a final agreement,” Sens. Steve Daines and Jon Tester wrote on Friday, in a bipartisan message joined by 24 fellow senators.

The Softwood Lumber Agreement was originally signed in 2006 and set limits for Canadian lumber imports to the United States. It expired in 2015, but had a one-year “stand-still” clause allowing time to negotiate a new deal. That expired on Oct. 13.

The United States has proposed that Canadian imports be limited to an agreed share of the U.S. lumber market. Canadian counter-proposals have suggested setting a duty charge on imports crossing the border, but not a quota for how much wood can be sent over.

“Hundreds of thousands of U.S. jobs and thousands of U.S. rural communities depend on fairness in trade in softwood lumber,” the senators wrote. “That is why we will continue to urge you, and any future Administration, to seek a fair, effective, and sustainable agreement with Canada on softwood lumber trade, and in the absence of such an agreement, to fully enforce U.S. trade laws.”

U.S. negotiators maintain the Canadian timber industry benefits from government subsidies that give an uncompetitive advantage to cutting trees on Canadian provincial and federal land. The Canadians have successfully argued in international trade court that the U.S. import limits violate free-trade agreements.

One of the architects of a federal program that pays farmers to plant cropland with trees or grasses says the decades-old subsidy is his “biggest professional regret,” partly for the way it has distorted markets for Southern timber.

Trees planted in the late 1980s and early 1990s with help from the program are now ready to harvest and flooding the market, adding to a glut and depressing prices for Southern yellow pine. The Wall Street Journal examined the tumbling fortunes of farmers-turned-forest-owners in an article last week.

Mike Gunn, who served in the Reagan administration as legislative director for the Soil Conservation Service, said in an interview that he led efforts to include the Conservation Reserve Program in 1985’s Farm Bill, which was drafted in response to plunging crop prices.

The conservation program promises farmers with qualifying land annual rental payments for every acre of cropland they replace with trees or grasses. The aim was to prop up prices for agricultural commodities by taking fields out of rotation while also stemming erosion in ecologically sensitive areas.

“What was meant to be only a temporary reset turned into a boondoggle,” said Mr. Gunn, who went on to be a state legislator in Mississippi and is now a real-estate investor. “Like everything else in government that starts out with honorable intent, the CRP gained entrenched political support; then turned into a crony capitalist welfare system for well-heeled farmers.”

Starting in 1986, droves of Southern landowners signed up for the program. By 1994 they had planted some 2.2 million acres with pine trees, which are harvested for lumber and paper. The subsidy program paid them about $30 to $50 an acre, for up to 15 years.

It ordered the review in part after persistent complaints that increased harvesting on Crown land in western Nova Scotia drove down demand for wood from private woodlots.

Rankin said the freeze on long-term leases to harvest on Crown land will stay for now. "Until we are fully able to digest the report and each recommendation we are not prepared to sign any long-term leases until we actually consider all those recommendations," Rankin said.

McNeil said an initial response will be delivered this fall.

The most recent Crown lease for Pictou-based Northern Pulp expired in July and was renewed for one year.

Conservation groups in Maine on Wednesday urged state officials not to expand the distance limit that determines where subdivisions and commercial projects can be built in the state’s Unorganized Territory.

The Land Use Planning Commission is considering a change in policy that would allow zoning changes to occur in unorganized areas of the state within at least 10 linear miles of the boundary of a designated “retail hub” community — an area that encompasses 1.8 million mostly undeveloped acres, not including land protected from development by conservation restrictions.

Under the commission’s current policy, any new subdivision or commercial development in unorganized townships has to be within one road mile of existing similar development.

The commission has said that the so-called one-mile rule is overly blunt and can result in a “leapfrogging” effect in which each development can serve as a springboard for another development a mile or less down the road, without concern to how close it may be to any of more than 40 retail hubs identified by the commission. And it doesn’t differentiate between types of commercial development, or whether some types of commercial development may be suitable in the area where they are proposed.
***
“We believe the [proposed] rule changes threaten the scenic beauty” of the Unorganized Territory, Claire Polfus of the Appalachian Trail Conservancy told the commission Wednesday during a meeting in Bangor. “This type of development could cause habitat fragmentation and public safety concerns.”
***
Under the proposed policy, any land less than two miles from a public road and less than 10 aerial miles from a retail hub — or in such a hub — would be considered “primary” locations for subdivision or commercial development. Land that is less than five miles away from a public road and which abuts a retail hub community would be considered “secondary” locations for potential development.
***
Some opponents at the meeting said the proposed changes could affect scenic byways, allowing development along forested stretches of public roads where it currently is not allowed.
***
Some at Wednesday’s meeting voiced support for the proposed changes. John Kelly of land management firm Prentiss & Carlisle called the current one-mile rule “arbitrary and a bit inflexible.”
***
The commission expects to schedule more public hearings on the proposed changes before possibly taking a final vote sometime this fall.

Gov. Paul LePage told lawmakers he opposes a pair of bills that would have taxpayers fund a $45 million subsidy to help Maine’s foundering biomass industry.

In a rare appearance before the Legislature’s budget-writing Appropriations Committee, LePage said the Legislature should focus instead on ways of creating industries that bring greater value from the state’s more than 18 million acres of forest lands.

The bills to support investments and a low-interest revolving loan fund come less than two years after the Legislature passed a $13.4 million taxpayer-funded bailout of the industry that LePage reluctantly supported at the time.

“They took the state subsidy for two years and now at the end of two years if you don’t give them a subsidy they are going to close,” LePage said of the previous bailout that largely went to help one company and the loggers who supplied it. “I call that corporate welfare at the worst, it can’t get any worse than that because they are coming in and they are telling you up front the only way they can survive is by you giving them a subsidy.”

LePage urged lawmakers to instead consider a bonding proposal he has offered in the past that would pump $50 million toward developing new products from Maine’s forests. He gave the example of a hardwood plywood mill that could then manufacture rifle and pistol stocks for gun makers who currently import their plywood from Russia.

The governor said that during his private career helping to save struggling businesses, he was twice involved with biomass projects. “Let’s not keep going back doing the same thing we done and know we are going to lose money,” he said.

A law requiring foreign investors to report transactions of farmland to the U.S. Department of Agriculture has been on the books for almost 40 years.

But as the amount of foreign-controlled farmland doubled in millions of acres between 2004 and 2014, the USDA has lapsed in enforcing the law, a review of USDA documents has found.
***
About 27.3 million acres of agricultural land in the United States are controlled – either owned or under a long-term lease agreement – by foreign investors, according to a USDA database of foreign investment in farmland. The land, roughly the size of Tennessee, is worth $42.7 billion.

But, since 2011, the USDA has only assessed 10 fines under the law, worth $115,724, according to records obtained by the Midwest Center for Investigative Reporting through the Freedom of Information Act. And no fines were assessed in 2015, 2016 or so far in 2017.

Lesa Johnson, the manager of the USDA program, acknowledged her office does not review the filings for completeness or accuracy. She said her office also does not investigate to see if companies with foreign ownership file these forms because of a lack of staff and resources.

Even before the recent downturn in enforcement, the USDA only assessed 187 penalties between 2004 and 2010, valued above $667,000. But the largest fine of $111,266 during that time, which made up a sixth of the total, was the result of a company self-reporting its lack of compliance with the law.
***
Under the act, every foreign person or entity that acquires at least 10 percent interest in agricultural land must file what is known as an FSA-153 form. Agricultural land is defined as a parcel of land at least 10 acres in size or that could produce $1,000 in revenue from agricultural activities.

The form requires disclosure about a broad number of things, including how the project is financed, who the owner is and where the owner is from.

Penalties for not filing within 90 days can be as severe as a fine of up to 25 percent of the fair market value of the land.
***
Because the USDA has little capability to review filings of foreign investors, the result is that the USDA relies on companies to report errors.

For example, in 2010, a team of attorneys at Atlanta law firm Morris, Manning & Martin realized they had failed to file a $98.9 million purchase of 55,000 acres of Alabama, Mississippi and Tennessee timberland. The firms’ corporate and realty teams had miscommunicated, and no one had filed the FSA-153 form with the federal government, according to Rebecca Vandiver, then an attorney at the firm.
***
Records show the form was required because their client, RMK Select Timberland Investment Fund I, LLC, a timber investment management organization, had ownership interest from Denmark.
***
Morris, Manning & Martin decided to voluntarily file late, which would result in an $111,266 fine, covered by malpractice insurance, rather than be in noncompliance.

But Vandiver said that it didn’t appear the federal government would have ever known the fund was in noncompliance if the firm hadn’t self-reported. And records and comments from the USDA confirm her perception.

The fine for RMK Select Timberland Investment Fund I, LLC, was the largest fine since at least 2004, enforcement records show.
***
“With a lot of these LLCs, finding out who the investors are would not be easy, to be honest,” Vandiver said.

Because of that difficulty, getting around the filing requirement— either by negligence or intention — would not be that hard, Vandiver said.

A NAFTA panel has sided with Port Hawkesbury Paper in directing the U.S. Department of Commerce to reconsider issues on which the department based imposing border duties, including the electricity rate paid by the mill.

A North American Free Trade Agreement (NAFTA) panel recently ruled in favour of the Point Tupper paper mill in the latest step of the lengthy process that began in 2015.

The five-person panel was comprised of three officials from the U.S. and two from Canada.

“The allegations that were made by the Department of Commerce and our defence of them were shared with the panel and then the panel reviewed all of the facts … the decision was certainly in support of our defence that the allegations were in our opinion not accurate,” Marc Dube, business development manager with Port Hawkesbury Paper, said in an interview Monday.

The trade action came as the result of a petition filed by two American producers of supercalendered paper that say the Canadian paper goods are unfairly subsidized. In the case of Port Hawkesbury Paper, at issue was the aid package it received in 2012 valued at about $124.5 million from the province to reopen the mill after a year-long sales process, as well as a special electricity rate that it receives.

“In the opinion of the panel, it was a process that was done in the appropriate way,” Dube said. “It’s a very positive step in the process but now the Department of Commerce has a period of time to review the facts from the board and decide on their next steps.”

Wisconsin officials are earmarking nearly 40,000 more acres of state forestland for intensive logging — a move pushed by the Legislature to provide a fresh source of timber to the forest products industry.

But opponents, which see the change as a major shift in the management of public forests, question the need for such action and are worried about the potential ecological harm that could come from more logging.

They also criticized lawmakers for limiting public involvement in the process, including the role of the citizen-led Natural Resources Board to review changes in how timber is harvested in state forests.

In 2015, lawmakers working on the state budget directed the DNR to increase acreage eligible for the most intensive timber cutting to 75% of northern state forests. That’s up from the current level of 66%.

The change means that  about 39,000 acres in newly reclassified timber stands will be subject to a generally more aggressive cycle of logging. Some forestland will be cut starting next year; trees on other parcels will be scheduled for harvest in future years.

Timber sales from all DNR-managed land in 2014 and 2015 totaled more than $11 million in each year, DNR figures show.