Reforestation of Timberlands Board Meeting Minutes
March 18, 2009
Potomac Supply Corporation, Kinsale, VA
The RT Board meeting began at 10:23 am with a welcome from Chairman Jim Kuykendall. Mr. Kuykendall also gave a special welcome to Mr. Robert S. Bloxom, Secretary of Agriculture and Forestry.
RT Board members in attendance were: Grant Cosner, Ann Duff, Chairman Jim Kuykendall, Ken Morgan, Earl Pickett, Charles Rose, Greg Scheerer, and Vice Chairman Cliff Somerville. Mr. Mark Martin was unable to attend and had notified the Department of his absence earlier that week.
Guests: Mr. Robert S. Bloxom and Mr. Kurt Christensen
Department of Forestry (DOF) Staff: Carl Garrison, John Carroll, Dean Cumbia, Todd Groh, David Slack,
BeckyWoodson, Ed Zimmer.
Mr Kuykendall reminded the Board of the Sherman Anti-Trust Act requirements forbidding discussion of prices and markets between attendees at the meeting.
After introductions, the floor was turned over to Mr. Kurt Christensen for brief presentation. Mr. Christensen presented an analysis that he made of DOF lobbying for restrictive zoning on private property. He noted that he is a Central VA Tree Farmer having converted 150 hardwoods to pine. He was dismayed that DOF Land Conservation Specialists are lobbying for property rights; he feels like this is mission creep and that DOF needs to focus on core issues such as landowner assistance, tree planting and fighting fire.
Minutes from September 2008: Mr. Kuykendall asked if there were any additions or corrections to the September 2008 minutes. There being none, Mr. Morgan motioned to approve the minutes; Ms. Duff seconded the motion. The minutes were approved unanimously.
Carl Garrison discussed the recent General Assembly Session: This was a very successful year for the DOF in the General Assembly. There were three agency bills and one co-agency bill submitted along with the Department’s budget.
The Department’s budget was hit in December with Governor’s package; the DOF embraced and addressed the issues presented. The budget was not touched at all during this year’s General Assembly session and it appears that the DOF budget will remain stable for the remainder of this year and the next fiscal year.
Three DOF Bills presented to the General Assembly: There was no opposition to the bills.
- State Land Clarification: this bill clarified the difference in DOF’s landholdings as they relate to revenues between the seedling nursery and the State Forests. Currently, 25% of timber sale revenues go back to localities in lieu of taxes. The Code of Virginia change clarified that only 25% of timber sale revenues from State Forests go to localities not 25% of all sales. This change clarified that seedling sales from the DOF nurseries were exempt.
- Right of Entry: this change gave the DOF the right to inspect logging operations. This is the second year for this bill since there was some opposition last year. DOF worked with various advocacy groups and made changes so that there was no opposition this year. The main change was in the location of Code as this is tied solely to the WQ/harvesting efforts.
- Use Permit Fees: this bill increased the permit fees for certain recreational activities on state owned lands (primarily State Forests). This permit fee increase for would provide additional funding for the maintenance of the State Forests roads and other resources. Permits are now needed to hunt, trap, mountain bike, fish and horseback ride on State Forest lands.
- Co-Agency Bill for Land Exchanges: Department of Conservation and Recreation (DCR) is interested in DOF owned land and the Southern Christmas Tree Growers Association wants the DOF to explore seed orchards to include Frasier Fir. This change will make it easier for the DOF to work with DCR to have collaborative exchange – land swaps.
Ann Duff asked Carl about DOF manpower and vacant positions. Carl said we are stretched thin; we have frozen positions and that we have little control of where positions are which has created gaps in DOF’s statewide coverage. DOF lost 23 positions to balance the budget but no current “boots on the ground” were lost. Due in part to the federal stimulus funding, Secretary Bloxom approved the DOF to fill several vacant positions. Currently, the DOF has three field technicians and one fiscal technician being advertised. There has been some internal discussion among the Regional Foresters to determine the “next step.” Area Foresters may shift counties from one forester to another to extend coverage and cover some gaps. Regional Foresters will propose a plan to Carl within the next 30-60 days.
Carl reminded the Board that the reorganization of Regions saved four to five positions overall. He is confident that DOF field personnel won’t see a lot of impact from Regional mergers. Mr. Morgan asked about any adverse effects of these changes and Carl explained that the work force plan shows that ~ 40% of staff has less than five years, which may add to the challenge.
Mr. Kuykendall inquired about potential trickle down effects from stimulus package, a package that could represent 35 million in funding. Guiding principles from USFS indicate all this money is pass-thru funds; not administrative. DOF could have three people added thru soft money for hazardous fuel reduction and other projects.
Nursery Update: John Carroll said that the planting season is winding down and the seedling lifting will likely finish this week. We planted 28 million seedlings this year and sold 20 or 21 million. Funds are down 340-400 thousand for DOF nurseries (non-general funds). Next year the DOF will plant a smaller crop but it is hard to plan for next year due to the economic conditions and the decrease in timber harvesting. Right now, we expect to produce 15-20 million trees next year. DOF is discontinuing the 1st, 2nd, 3rd generation identifications for seedlings and they will be deployed in families. The DOF will offer premium seedlings, the next three or four families and the lower family offerings. All seedlings will be priced accordingly. No first generation seeds will be used.
Tree Improvement: The seed orchards are now open pollinated but we are going to mass control pollination (Jerre Creighton, DOF Research Forester is heading this up.) This is the first time DOF has tried mass control pollination; Mead Westvaco has done this before and has seen huge returns. Prices for seedlings may have to be increased to cover the added expenses.
Mr. Morgan asked about timber harvesting acreage since it is reflective of economy and market. Mr. Morgan asked does DOF have statistics of abandoned/converted field plantings. It is suggested that we need to get word out in communities that there is cost-share available to plant these areas. Mr. Somerville said in the first couple of years after the tobacco buyout, planted acreages of old tobacco production land has increased but farmers since that initial push, the acreage has been in decline. Ed Zimmer mentioned that open field planting in southside Virginia is also down. Mr. Pickett said the volume of open field planting is down in his area also. Mr. Kuykendall spoke with Dean prior to the meeting about recommended trees per acre and how the current recommendations favor sawlog production. With the changing markets, Mr. Kuykendall was concerned that higher grade trees may eventually go into bio-fuels. Carl said bio-fuels market will be very specific, and landowners may be plant their land in anticipation of producing raw materials for bio-fuels.
Review Items
New Tax Form: Tax Dept has reported that they have been using the new form for two quarters and there have been a few minor complaints about the form. One being that there was no quick way to enter the county, a producer had to scroll through the entire list. Cathy Early with the tax Department estimated that about 50% of all tax payers were using the new form in MS Excel, 30% of the tax payers were printing out the form and completing it manually, and 20% of the tax payers were still using the old form because they did not have access to the internet or MS Excel. The Tax Department will be putting the tax information into their database within the next couple of months, so the real check will come once they begin this process.
Regional Allocations and Accomplishments: Todd updated the board on the current budget status and program accomplishments by referring the members to the tables and graphs within the meeting packet. In fiscal year 2009, over 2 million dollars went out to landowners as cost share. Currently, the DOF Regional funding allocations are 93% obligated with only about $150,000 remaining.
The herbicide spray program had an exceptional year spraying over 27,000 acres. The increase was due to the great spray price and the ample supply of cost-share funding. The white pine spray program in the western counties is conducted every other year, with over 600 acres being sprayed last year. The RT Program is an essential part of pine reforestation and release and is working well.
Mr. Christensen asked about spray price and new chemical company, remarking that there was a mistake in acreage billing that took awhile to work out. Todd mentioned that there was some confusion by the contractor at the beginning of the billing cycle, but it was corrected as time progressed. Spray Request for Proposal, DOF Contract, will be coming out soon, and the DOF expects good competitive bids and prices again this year.
DOF Regional Boundaries: The Board Members were directed to the colored map in their meeting packet for the new DOF Regional administrative boundaries.
Discussion Items
Shipping Roundwood Out of State: Todd opened the discussion with emphasizing to the Board that the DOF is continually working to insure that all primary wood producers are paying their rightful share of the forest products tax. Mr. Morgan commented regarding forest products tax and woody biomass processors that the DOF needs to educate the new biomass plants that are coming into Virginia about the forest products tax. Even though they may not be responsible for paying the tax, they need to know that someone must pay the tax.
Todd referenced the letter that was sent to in-woods chipper operators as to their responsibility for paying the tax. Mr. Morgan noted that the loggers are the key link in this forest industry chain. This responsibility is an added burden on loggers who are operating in-woods chippers. Mr. Morgan stated that there are no new logging companies coming on board and this link is weakening. All attendees were urged to think 5-10 years in the future in reference to the new forest products markets where roundwood may not be the primary forest product.
Todd will check with Charlie Becker about his contact with new forest products industries moving into the state and if they are being educated about the Forest Products Tax. Ann suggested that it may be the time to change the Code. Mr. Morgan said that he still thinks that there are people that are not paying the tax and that this is not being policed. He asked why the Tax Department does not want to have an ongoing strong dialogue with DOF about the tax collection. Ann said that the RT Program and Board members always need to plan for the future markets which lead to providing landowner incentives to plant trees. Mr. Kuykendall suggests that DOF and the RT Board needs to continue to press this issue. Ann says this RT Board has been good about pressing this issue past. John Carroll suggests that our relationship with the Tax Department is more cooperative now but enforcement is not good.
Todd will contact the North Carolina forestry agency to better coordinate both Virginia’s and North Carolina’s efforts in educating the forest industry. Mr. Rose mentioned that he lives close to state line, and has recently put seven tracts of timber on the market. Five of these bids were awarded to NC sawmills or logging companies. He suggested to the group to handout the Forest Products Tax information cards to loggers and on logging jobs or inspections. DOF will continue to work with Tax Department and other available educational outlets get the word out about the Forest Products Tax.
Forest Products Tax Revenue and History: Todd provided a graph of the history of the forest products tax revenue over the past four years. Currently, the tax revenue in fiscal year 2009 is ahead of revenues from last year, but the month of May has historically been a large revenue month. So, the DOF is hoping that even with the numerous cutbacks in the forest industry over the last several months, the forest products tax doesn’t go down substantially. Todd will keep the Board updated as information comes along. Mr. Morgan stated that pine lumber shipments are down 40%.
Spray Program and Accomplishments: The Board members were referred to the spray chart once again for specific details on the program.
Info Letter to Chipping Operators: Todd referenced the letter, in the back of the meeting packet, that was sent out to in-woods chipping operators located in the Commonwealth. This letter generated numerous phone calls to the local DOF office as well as the state DOF office.
Board Member Terms: Mr. Rose and Ms. Duff have completed their second 3-year terms and are rotating off of the Board effective July 1. Mr. Cliff Somerville is completing his first three year term and is willing to serve another three year term if the Governor chooses to reappoint him.
The DOF has received several suggestions for the Pine Pulpwood and Pine Sawtimber positions: Carter Flippo, William Carden, Tim Stevenson, Dick Yancey, Frank Sherwood, Mark Remaly (IP), Brad Fuller (Huber), Jimmy Jones, Ben Cole, John Hancock. Mr. Kuykendall asked Ann if she could suggest a replacement from Smurfit Stone. Ann suggested getting other representation from another entity rather than Smurfit Stone but would contact Amy Bigger to determine her interest.
Todd Groh presented plaques to Ms. Ann Duff and Mr. Charlie Rose, Jr. in recognition of their service to the RT Board over the past six years.
The DOF will submit the biographic information for Mr. Cliff Somerville for his reappointment and the other candidates to the Governor for appointment.
Decision Item
Practice Rates and Acreage Limits: Todd opened discussion on the Fiscal Year 2010 RT Practice rates and recommended that with the uncertain economic conditions, that the rates should remain unchanged until a time when the economy is more stable. These rates will be ready for Regional allocations and initial 2010 sign ups in May.
100 Acre Limit: Dean Cumbia brought up the possibility of increasing the acreage limitation that was continued from the September 2008 meeting. The Code allows up to 500 acres per landowner per year; several years ago the DOF lowered the limit to 100 acres. Over the previous two years, the RT Program had to carryover un-obligated funding. Two possible ways to fully utilize the money would be to increase practice rates and/or increase the acreage limit. Since 1972 the average acreage has been 40 acres. In anticipation of reduction in forest products tax and revenues in fiscal year 2010; Dean is recommending that the DOF keeps the 100 acre limit. Mr. Morgan made motion to keep acreage limit the same; Mr. Pickett seconded.
REMINDER: There are other federal cost-share programs available to plant pine. Costs of seedlings will increase this coming year but there will be several different selections. Mr. Morgan suggested that DOF and the Board revisit the cost-share rates and acreage limitation when there is a clearer vision of economy. There is still a need to encourage smaller landowners to manage their forestland. Mr. Pickett asked about the status of shortleaf seedlings and Dean said that the shortleaf seedlings are sold out this year. The DOF recorded 500 acres planted in fiscal year 2008 last year.
As a final statement to the Board and the DOF, Ann Duff encouraged the DOF to remain vigilant to be sure new forest product facilities are aware of the forest products tax and that they pay it if they are responsible for the tax.
NEXT MEETING: The next RT Board meeting will be on Thursday September 17– location to be announced. Jim Kuykendall suggests visiting Ann Beals farm although there is no good meeting place nearby.
Thanks to William Carden, Jr, Patricia Stith, Bill Passerell, Rich Gouldin of Potomac Supply Corporation for hosting the meeting and providing lunch. Many thanks were also conveyed to Secretary Bloxom for attending the RT Board meeting.
The meeting adjourned @ 12:00 for lunch, courtesy of Potomac Supply Corporation and ended after a tour of the sawmill and bio-fuels plant.
Submitted by:
Todd Groh, Assistant Director - Forest Resource Management Division
March 18, 2009
Approved: Dean Cumbia, Director
Forest Resource Management Division