FRA’s 2018 Policy Priorities

The U.S. wood supply system is the largest and most highly developed in the world, providing the raw material that furnishes our country’s seventh largest industrial sector:  forest products.  Overregulation threatens this system’s ability to continue to serve both its economic and environmental goals in a sustainable manner, especially in view of the large role small business plays in this system’s function and management.  FRA monitors and engages public policy processes that impose unreasonable costs and overly burdensome processes on the wood supply chain or that impede sensible reforms that might enhance competitiveness.

Paralysis by overregulation places in jeopardy the livelihoods of mills, employees, and dependent communities; harvesting and forest operations contractors and their employees; and the ten million private, institutional, and industrial forest landowners that support its resource base.  In the end, a dysfunctional wood supply system would not only be economically devastating but would expose the forest resource to wildfire and disease, leaving watersheds and wildlife habitat vulnerable and compromising the character of our country’s landscape.

What is overregulation?  The intrusion of government into the management of private business to an extent not justified by the duty to promote the general welfare or to achieve transparency in exercising that duty.

Reform Needed: Loggers' Access to Credit

Impact: The economic downturn and regulatory reforms of the financial industries have severely constricted small businesses’, and especially logging contractors’, access to credit.

Status: On March 2, 2015, The Credit Union Small Business Jobs Creation Act was reintroduced in the House as HR 1188, obtaining 87 co-sponsors as of April 7, 2016. On September 10, 2015, The Small Business Lending Enhancement Act (S 2028), with similar provisions, was introduced in the Senate, obtaining 7 co-sponsors as of January 18, 2015. Both proposals would increase the 12.25% cap on credit union assets available to small businesses to 27.5%, for credit unions meeting stipulated requirements.

In addition, Rep. Sean Duffy (R-Wisconsin) is advocating that the Farm Service Agency’s Farm Credit System “explore opportunities” to make Rural Development Business and Industry guarantees more available to underwrite loans to the logging sector, thus augmenting credit sources for “viable logging operations that otherwise are unable to meet lenders’ underwriting criteria.” FRA supports this course and is urging House Agriculture Committee members to raise the issue with FSA.

The Issue: Before the recession, and currently, a large segment of the banking industry consolidated and restructured, and banks have implemented more stringent lending policies. Small businesses of all kinds have found it difficult to obtain loans to maintain or grow their businesses, due to tighter lending restrictions, but conditions imposed upon logging businesses appear to be exceptionally severe, both because of these businesses’ structures (particularly the prevalence of short-term contracts) and their rural locations. Don Taylor’s one-page Financial Institutions and Logging Business Financing outlines the characteristics and scope of the situation, and his two-page The Logging Industry and Lending Institutions provides a region-by-region profile of difficulties logging businesses face in obtaining credit.