2016 CANDIDATE BREAKFAST SERIES • Tuesday, Oct. 4 ‐ Gray, Cole Farms Restaurant, 7 a.m., sponsored by Weyerhaeuser and Farm Credit East. • Wednesday, Oct. 5 ‐ Farmington, Homestead Restaurant, 8 a.m., sponsored by Stratton Lumber and Wagner Forest Management. • Tuesday, Oct. 11 ‐ Old Town, Governor's Restaurant, 7 a.m., sponsored by Katahdin Forest Management and LandVest. • Friday, Oct. 14 ‐ Fort Kent, Swamp Buck Restaurant, 7 a.m., sponsored by Key Bank and Irving.
WHERE MAINE’S WOOD GOES Pulpwood 50% (for paper, s packaging and tis ue) Sawlogs 27.5% (for lumber) Firewood & pellets 2.6% (to heat Biomass 19.9% homes) (for electricity)
SUSTAINABLE FOREST CERTIFICATION IN MAINE • 9 million certified acres • Nearly half of state’s forestland • National leader in forest certification • First‐in‐the‐nation Master Logger Certification program has certified >100 loggers
We grow wood within a one day drive of 70 million of the richest people on the planet
About $1 out of every $20 of Maine’s GDP and about one out of 24 jobs in Maine are associated with the forest product industry, according to 2016 UMaine research.
PROFESSIONAL LOGGING CONTRACTORS OF MAINE Loggers Serving Loggers • In 1995 a group of Loggers created PLC to provide PROFESSIONAL LOGGERS with a voice in a rapidly changing industry. • Quality Harvest Operations • Business Innovation – Master Logger • Safety • Logger Advocacy • Community Impact – Log‐A‐Load • Contractor members – employ 2,500 • 75% of the Maine’s Annual Timber Harvest
MAINE’S WOOD HARVEST IS SUSTAINABLE
Harvest areas quickly produce new trees
Historic Trend in Net Growth to Removals Ratio 2.5 2.37 2 Growth > 1.74 1.55 1.5 1.44 1.34 1.35 1.12 1.06 1.12 1 0.98 0.97 0.80 Balance 0.5 Harvest > 0 1940 1950 1960 1970 1980 1990 2000 2010 Source: Department of Conservation, Maine Forest Service
Maine in‐state processing by product Data Source: MFS Wood Processor Report, 2014
Maine Biomass est. loss 12% in‐state processing Hardwood Biomass by pulpwood 8% 32% Pellets product 3% Expected Softwood sawlogs 16% Market Loss 2016 ‐ PJS Hardwood Hardwood Softwood sawlogs Softwood pulpwood est. loss pulpwood 8% pulpwood est. 3% 8% loss 10%
OUR CHALLENGES • Increased Operational Costs – Minimal Rate Increase • Reduced Markets • Low Profitability = Tight margins = Running on Equity • Longer hauls • High Workforce Demand = Low Workforce Supply • Contractors are going out of business and increased fiber costs are not a result of contractor wealth. ≠
Key principals for building Maine’s Roadmap and responding to the current challenges • Hire a leading international forestry consulting firm with specialized expertise in global wood markets and trends (Benchmarking). • Forest modeling : Phase I & II – Availability of fiber (ref. Wisconsin Wood Supply Assessment 2016) • Integration & Plan Development II – Synthesizing results from the previous stages into a comprehensive and achievable vision for Maine’s forest sector • Marketing plan that informs potential investors on the business resources and manufacturing site options that might fit their objectives is to be included.
Other action items • Maine forest industries believe that they can better utilize and deploy transportation systems to move wood from the forest to the mill to market. Review Penobscot River Valley wood shed changes and report to MeDOT with updated priorities. • Markets for residuals, particularly from sawmills, are critical to the continued operation of a number of manufacturing facilities. Develop biomass energy plan to promote CHP platforms and micro‐grid options in Maine • Build small landowner outreach capabilities. • R&D funding for Bio‐Based Market Development • Staffing and cost sharing in anticipation of SBW
Economic Development Assessment Team (EDAT)
Tree Growth Tax 2016
Legislative Breakfast Briefing Tom Doak, Executive Director Small Woodland Owners Association of Maine
A Profile of Maine’s Family Forest Owners • There are 86,000 family forest owners (owners of 10 acres or more) in Maine. • 39% of woodland owners are 65 years old or older; 74% are 55 years old or older. The average is 62. • Half of Maine’s family forest owners are retirees. • The average tenure of a family ownership is 25 years.
A Profile of Maine’s Family Forest Owners • The average holding of family ownership is 64 acres. • Family forest owners hold about 1/3 of all woodland in Maine, but own about 40% of all standing wood inventory, including a majority of some of Maine’s most valuable species – white pine and red oak. • Only 27% of family forest ownerships have a written forest management plan. Of those with a plan, 92% have implemented the plan.
A Profile of Maine’s Family Forest Owners • Only 28% of family forest owners used the services of a professional forester when conducting a timber harvest. • In the last five years, 25% of family forest owners have sold commercial wood products from their land. A similar percentage hope to sell trees in the next 5 years.
A Profile of Maine’s Family Forest Owners • 70 % of family forest owners allow unrestricted public use of their lands. Unlike most other states, access is free and not a source of revenue for landowners.
Key Legislative Issues 1. Tree Growth Tax Law Program • The Tree Growth Tax Law Program is critical to Maine’s small woodland owners. This program taxes land based upon its value for growing trees, instead of its development value. • A Landowner must have a minimum of ten forested acres and the primary purpose must be to grow commercial forest products. • Landowners apply, but only the tax assessor can determine if the land qualifies.
Key Legislative Issues 1. Tree Growth Tax Law Program • Landowners must pay for a management plan • Commit to following the plan • Hire a forester to certify to the assessor every ten years that the plan is being followed • Sign an attestation every ten years that their primary purpose of management is to produce commercial forest products • Pay to update the plan every ten years and agree not to develop the property (keep it as forestland).
Key Legislative Issues 1. Tree Growth Tax Law Program • Tree Growth status runs with the land. Landowners know the rules when they enroll, but the rules can be changed by the Legislature. And there is no opt out provision if the landowner cannot or does not want to comply with the new requirements. • Penalties for non‐compliance or to remove the land from the program are normally far in excess of any tax savings.
Key Legislative Issues 1. Tree Growth Tax Law Program • There are constant attacks on this program despite multiple reviews that have found that the program does what it is designed to do and there is a very high compliance rate.
Key Legislative Issues 2. Public Use of Private Land • Private landowners provide the vast majority of the land on which Maine’s outdoor economy is built. They do that without receiving any benefit. • In addition, Maine is one of the few states where it is assumed you can recreate on private land unless told otherwise. • The onus is on the landowner to post or otherwise tell people they cannot use the land.
Key Legislative Issues 2. Public Use of Private Land • 90% of Maine’s hunting, 14,000 mile of snowmobile trails and 6,000 miles of ATV trails are on private land. • Each session, landowners face bills to allow Sunday hunting. Most landowners keep their land open for hunting, but value that one day a week during hunting season to fully enjoy their property. Nothing will close off land and trails faster than enacting a Sunday hunting law.
Key Legislative Issues 3. Support for Maine’s Forest Industry • The lack of wood markets are hurting small woodland owners. • The lack of technical and financial assistance for small woodland owners is a serious problem in Maine. There are only ten state funded field foresters available to assist Maine’s 86,000 family woodland owners.
Key Legislative Issues 3. Support for Maine’s Forest Industry • We need to ensure the availability of adequate small‐scale logging equipment that is often best suited for harvesting on small woodland ownerships. • The speed of this tsunami (loss of markets) is unsettling
Thank you. Any questions?
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