RISI comments on new BCAP draft rules

Feb. 9, 2010,
Boston, MA – The Wood Biomass Market Report comments that a new draft of rules
announced by the Farm Services Agency (FSA) for the Biomass Crop Assistance
Program (BCAP) comes closer to providing assurances that wood for higher-value
products will not be diverted for use as biomass. Since the BCAP's inception
last year, there has been concern among traditional forest products players
that it would drive up prices for composite panel furnish, oriented strand
board raw material, pulpwood, and even some low-grade sawlogs.

The report states
that payments made through the BCAP program are just now flowing to the market from
a $517-million allocation that is good through March 31, 2010. Although these
payments do not appear to have had adverse effects to date on pulp and panel
producers, this is almost solely because of market conditions and should not be
an indication of the true effect the BCAP could have if new rules are not
enacted.

William Perritt,
executive editor of the Wood Biomass Market Report, says, "It appears the FSA is
finding a deeper understanding of the possibly damaging cross-currents BCAP may
have in wood markets. The recent draft rule at least makes an attempt to
establish a wall between true wood biomass and the fibre sources more suited to
higher and better use at both wood-based panel and pulp mills."