From the Director’s Desk: Better Lucky Than Good - PFI In D.C., Forgettable February, Early Bird Pricing Ends TODAY
"Better Lucky Than Good" - PFI in D.C.
At the risk of diminishing the effort of our legislative affairs team and our retained counsel in Washington, D.C., we got incredibly lucky with our timing on this spring’s fly-in effort on Capitol Hill. Our board was committed to returning to D.C. in 2024, annualizing a federal fly-in and continuing our evergreen priority of educating policymakers there. In the recent past, our organization has used our fall board meeting as a natural pairing for a fly-in, putting us there in October. The heat of summer is long gone, summer vacations are over, and policymakers are typically in town. That all changes in an election year as both chambers recess so their members can hit the campaign trail back home and October just wasn’t an option for us this year.
Our legislative and regulatory affairs committee identified May as our next best option. Early this year, we decided upon a targeted fly-in working with agriculture committee members of the House and Senate that hail from pellet, or appliance, producing states. When we made the decision to go, our only real indication that the Farm Bill was the most relevant thing for us to talk about for the fly-in was the fact that once every 5-year piece of legislation was already overdue. Eventually, Congress would have to act. When we were in D.C. last October, however, optimism that a Farm Bill would get done (get enough votes to get a unified Farm Bill signed into law) before the election was non-existent. Staff and members alike seemed resigned to another one-year extension of the existing Farm Bill. Not willing to just not show up in DC, we committed to a fly-in focusing on our priorities in the Farm Bill.
As it turns out, we weren’t the only ones eyeing some Farm Bill efforts on Wednesday, May 1, as both Rep. GT Thompson and Sen. Debbie Stabenow released extensive summaries of their versions (House and Senate respectively) of the Farm Bill calling for “mark-ups” this month and a posture of getting a Farm Bill inked and done. A quick perusal of each of the extensive summaries reveal that the programs important to our membership remain in the farm bill. In the House version, these programs are straight reauthorizations. In the Senate version, the Community Wood Grant program is reauthorized for $50 million, double the annual amount in the last farm bill.
It will be interesting to see where the discussions and negotiations go from here. Please keep a close eye on the Pellet Wire for more Farm Bill news and analysis.
On our spring fly-in we met with the following offices, BOLD denotes a meeting with the member:
Sen. Sherrod Brown (D-OH)
Sen. Joni Ernst (R-IA)
Senate Agriculture, Nutrition and Forestry Committee
Sen. John Fetterman (D-PA)
Sen. Tina Smith (D-MN)
Rep. Doug LaMalfa (R-CA-01)
Rep. Marc Molinaro (R-NY-19)
Rep. Brad Finstad (R-MN-01)
Thank you to Representatives Marc Molinaro (NY) and Brad Finstad (MN) for making some time for our team, meeting with our group personally.
Forgettable February
Last week the Energy Information Administration published the February 2024 data for the Monthly Densified Biomass Fuel Report (link in Industry News section). The data confirms what the industry already knew about 2023-24 heating season; it was soft, and February was no exception.
The Numbers (5-year average)
Production
East – 78,942 tons (87,569 tons)
South – 14,942 tons(26,156 tons)
West – 34,777 tons (35,567 tons)
U.S. Total – 128,661 tons (149,292 tons)
Sales
East – 53,423 tons (70,293 tons)
South – 16,291 tons(23,761 tons)
West – 21,875 tons (34,947 tons)
U.S. Total – 91,589 tons (129,055 tons)
Inventory
East – 156,887 tons (69,382 tons)
South – 29,614 tons(24,300 tons)
West – 56,607 tons (20,115 tons)
U.S. Total – 243,108 tons (118,400 tons)
Notes: Anyone looking for a crash course in the dynamics of the wood pellet for heating world need look no further than this data set. With sluggish demand, producers rolled out of the production throttle but not so much that they avoided laying in significant inventory for the month. How much to throttle back is a tightrope that producers must navigate when sales are slow. Pellet plants are a little bit like motorboats in that they are at their best when they have been up and running awhile. Producers are reluctant to stop and start. Additionally, feedstock suppliers, if turned away too often, have little choice but to find a new off-taker for their residues which will be felt by producers the next time demand ramps up. It’s a similar story with labor. After getting good people hired and trained, producers avoid sending people home. The result is a good amount of inventory got built in February (about 50,000 tons). Producers have built inventory each year in February since 2019, but the last two years have been notable as inventory positions have surged forward to the tune of 50,000 tons or more. I suspect production data in the coming months will show a significant downward pressure as producers work to keep inventories within last year’s high-water mark of 264,517 tons in July.
Early Bird Pricing Ends TODAY
Have you still not registered for the 2024 Pellet Fuels Institute Annual Conference? If you haven’t and know for sure that you are going, today is the final day to capture the Early Bird rate, a $100 discount from the regular registration prices. As a reminder, this year’s PFI Annual Conference will be held in historic Charleston, South Carolina, on June 25 - 27. Here’s a thought, sign up today to capture that $100 discount and apply those savings to your golf tournament registration.
