The long fight to pass the large $290 billion farm bill is almost over. Passage of the bill was held up first by President Bush’s May 21 veto and then due to the discovery of a printing mistake which sliced 34 pages from the bill sent to the President. The veto of the truncated bill was overridden by both houses with overwhelming margins, but congress is expected to pass the entire bill once again under a separate number in order to avoid any constitutional questions. The flagging timber industry will receive some relief through a number of provisions designed to better position the industry for global competition, as well as advanced biofuels legislation that could help infuse the industry with new revenue sources.
The bill reduces the maximum corporate tax on timber sales from 35 percent to 14.4 percent and modernizes the rules governing tax treatment of timber real estate investment trusts (REITs) to better reflect operating procedures applicable to timberland. It also includes $500 million in conservation bonds to allow non-profits to purchase private forest lands near Forest Service areas and establishes new rules to prohibit imports of illegally harvested wood and wood products.
Increased funding and support for bioenergy and advanced biofuels, such as cellulosic ethanol and biodiesel, are likely to expand and open new markets for wood chips and other wood residual materials. The bill includes $320 million in loan guarantees for biorefineries and $300 million in mandated funding for production of advanced biofuels. It also increases the current tax credit from $0.51 to $1.01 per gallon produced.
Suz-Anne Kinney
Forest2Market: July 14, 2023
