Category Archives: Opinion / EdiTOADial

Opinion / EdiTOADial

In Washington, the softwood lumber case is seen as a poster child of US trade law enforcement

By Kevin Mason, Managing Director
ERA Forest Products Research
November 11, 2024
Category: Opinion / EdiTOADial
Region: Canada, United States

Kevin Mason

At the Global Wood Summit last week, Zoltan van Heyningen, Executive Director of the U.S. Lumber Coalition, shared the U.S. perspective on the softwood lumber file. Zoltan emphasized that duties are a legal process stemming from administration of U.S. trade law and are distinct from tariffs, which are policy driven trade action. As such, the imposition of duties on Canadian lumber imports is not a policy debate, it is a legal process. Functionally a “Trump tariff” could be in addition to duties. From the U.S. perspective, the softwood lumber trade case has been extremely effective. According to the Coalition, since the case was filed in 2016: Canadian mills have accounted for 74% of curtailments and 60% of mill closures by capacity… and U.S. operating rates are now consistently higher than in Canada, a deviation from historical norms. …In Washington, the softwood lumber case is seen as a poster child demonstrating the positive impact of trade law enforcement on domestic industry.

Our Take: Mr. van Heyningen was very clear regarding the disposition of duties that have been collected—the majority won’t be treated any differently than other duties collected by U.S. Customs and would be liquidated into the Treasury. Trade deals, such as the prior Softwood Lumber Agreement, are very rare, but the door remains open for a negotiated settlement. However, there has to be “something in it” for the U.S. Coalition (and its members). We suspect that 10 cents on the dollar will not suffice this time around as Canadians have a weaker hand this time if/when negotiations commence. …We do not foresee pricing remaining in this upward trend through year-end and into 2025, and a seasonal slowdown in demand after U.S. Thanksgiving should precipitate a pullback in pricing later this quarter. However, supply and demand are clearly better matched today than they have been at any point over the past couple of years.

Read More

Is It Time for Canadian Forest Products Firms to Focus on Political Risk Management? (Part 2 of 2)

By Robert McKellar
Harmattan Risk
August 19, 2024
Category: Opinion / EdiTOADial
Region: Canada, International

Robert McKellar

Part 1 of this series on political risk management and the Canadian forest products sector speaks to the problem with assuming political risk only applies to multinationals with operations in volatile and dangerous places. If we are aware of political risk, we can still use a tacit approach where it works, but we will know when and how political risk is a significant factor and will have the option of ramping up political risk management capabilities accordingly. With that preamble, two broad political dynamics affecting the Canadian forest products sector are discussed—the ‘China-West rivalry’ and ‘climate change confusion’—in preparation for the question—is it time for Canadian forest products companies to develop an explicit sense of political risk and how to manage it? Part 2 of this series continues with the political dynamics of ‘Canada-US trade friction’ and ‘emerging market challenges’ and concludes with what a political risk management capability could mean in practice.

…If the answer is Yes, what then? A political risk management capability generally includes: senior management and board buy-in; a strong concept of political risk in the company’s context; a corporate intelligence process that identifies relevant trends and dynamics and derived potential implications (or risks); straightforward but practical guidelines for how managers could apply political risk intelligence; and a seat of coordination and institutional learnings. These elements could manifest in a number of different organisational forms… but there are four things that probably would not work in most cases: treating political risk management as something different from what managers already do; creating a political risk department and expecting it to somehow lead to effective political risk management; managing political risk only within enterprise risk management functions and processes; and creating a few policy documents and then ticking a box beside “political risk managed”. 

Read More

Is It Time for Canadian Forest Products Firms to Focus on Political Risk Management? (Part 1 of 2)

By Robert McKellar
Harmattan Risk
August 16, 2024
Category: Opinion / EdiTOADial
Region: Canada, International

Robert McKellar

Canada is safe, stable, far away from any hot spots, and the great bulk of its “international business” is still done next door. Thus, for many Canadian businesses political risk seems like an exotic challenge that only applies to global multinationals with operations in volatile and dangerous places. …However staid the Canadian forest product sector’s experience with political forces has been, there are two basic problems with this perception. One is that political risk is not just about arcane and dangerous problems in faraway places. What it really means is potential challenges from exposure to the political domain, wherein ideologies, values, power contention, social identities, governance and inter-state relations give rise to rationalities and imperatives that can be very different from those of legitimate businesses. …The second problem is that by not explicitly taking the political dimension into account, companies can easily fail to notice when its political, or more broadly socio-political, operating environment has become more volatile and risky, and continue with business as usual even when it would lead to serious vulnerabilities.

If we are aware of political risk, we can still use a tacit approach where it works, but we will know when and how political risk is a significant factor and will have the option of ramping up political risk management capabilities accordingly. Is it time for the Canadian forest products sector to develop an explicit sense of political risk and how to manage it? The answer depends on the specific products produced and markets served but also the company or owner’s propensity for risk aversion. …The approach here is to look at a four broad political dynamics that are either affecting Canadian forest products sector firms or significantly increasing uncertainty, by way of illustrating the potential relevance of political risk awareness and management. The four political dynamics are: the China-West rivalry; climate action confusion; Canada-US trade friction; and emerging market challenges. 

Read More

Canada’s passive approach to forest maintenance is helping to fuel wildfire scourge

By Derek Nighbor, Forest Products Association of Canada
The Financial Post
July 6, 2024
Category: Opinion / EdiTOADial
Region: Canada

Derek Nighbor

While Canada’s 2024 wildfire season has been less severe than last year… there’s no escaping the fact that Canadians — and our governments — need to rethink how we address and mitigate these risks. This rethink requires nothing less than a paradigm shift toward more proactive management of our forests, focused on practical solutions. We can no longer afford to be reactive, stubborn, or dogmatic, hoping the problem will simply go away. And the federal government has an important role to play, particularly in fostering partnerships and coordination between various rights holders and stakeholders across the land base. Leaving forests alone with little or no effort to manage aging stands, vegetation, pests, or other ecological processes is a recipe for further devastation and will greatly add to Canada’s forest carbon emissions problem. …Wildfires also pose a serious risk to human health and air quality, community safety and critical infrastructure, and the economic viability of our forests.

My colleagues in the forest sector have long felt frustrated — and frankly, puzzled — about how active management is often overlooked as a tool for mitigation. What does proactive management mean? It means hands-on intervention into our forest ecosystems. …It means harvesting timber with the aim of promoting forest regeneration and reducing overcrowding. It means preparing communities with the right tools to mitigate risks. It means regular assessments of forest conditions. It means a greater role for indigenous peoples and more cultural burning on the land base. Look at Sweden and Finland. By embracing forest management as a crucial component of their climate strategies, Nordic countries have demonstrated that more intensive management has resulted in losing less forest to fires and pests and less overall emissions. In contrast, Canada’s annual timber cut has declined by roughly 25% over the past two decades, and our forests are suffering. Our passive approach is fuelling the very fires that are ravaging our lands. …We must manage more of our forests, not less. The ongoing devastation is costing us dearly.

Read More

EU Deforestation Regulation enforcement could come with an extended (Brexit-like) adjustment period

By Kevin Mason, Managing Director
ERA Forest Products Research
July 3, 2024
Category: Opinion / EdiTOADial
Region: Canada, United States, International

Kevin Mason

The European Union’s Deforestation Regulations (EUDR) are set to come into force by the end of this year, but many market participants feel that too many questions remain unanswered. The regulations would apply to seven commodities, including timber (fibre/pulp/paper/board). Producers must be able to prove that their production did not contribute to deforestation at the source (including within Europe) and must include specific geolocation data for raw-material inputs. Participation in existing certification schemes (e.g., FSC, PFEC) can provide some, but not all, of the required documentation and assurances.

There has been a range of reactions to the EUDR deadline across the companies in our universe, from “non-event” to “unworkable,” with far more in the latter camp. Huge hurdles to implementation remain, including the lack of a sufficiently robust European Union IT system to receive information (the test systems crashed with data from a single company!), insufficient auditors and potential conflicts between very granular geospatial data and privacy regulations. One aspect of the regulation has already been pushed back, with all countries initially classed as “standard” risk rather than the ulimate high/standard/low rating system (which will initially disadvantage low-risk countries). Senior U.S. administration officials have asked for delayed implementation, citing “critical challenges” for timely compliance.

Most of our contacts expect some form of the regulation to eventually be put in place, but timing—at least regarding enforcement—is likely to be pushed back. There will be costs for compliance, but there may be benefits too, with spot suppliers and/or producers with a weaker focus on sourcing and documentation simply choosing not to ship to Europe. Given the scope of the regulations, we see an extended (Brexit-like) adjustment period.” [END]

Read More

We came into 2024 with high hopes but how things have changed: ERA Analysis

By Kevin Mason, Managing Director
ERA Forest Products Research
May 3, 2024
Category: Opinion / EdiTOADial
Region: Canada, United States

Kevin Mason

We came into 2024 with high hopes: The COVID pandemic and its aftereffects were finally confined to the rearview mirror; energy shocks following Russia’s invasion of Ukraine were behind us; Fed rate cuts were seemingly imminent; and, after a year of “hurry up and wait,” the next U.S. housing up-cycle would commence. How things have changed! Expectations around Fed rate cuts have shifted dramatically in recent months, reflecting myriad negative macroeconomic developments. …If we enter a period of stagflation, wood products producers would be one of the more obvious losers in the Forest Products sector. Elevated interest rates stymie housing demand, negatively impacting consumption. Timber REITS will also remain out of favour with investors in a higher-interest-rate environment, while sluggish demand for housing/lumber/panels will hit timber demand. For pulp producers, challenging economic conditions in China are a bigger near-term risk, but stagflation would hurt demand for all pulp end users.

It’s been a dire month for North American lumber markets, and, as has been the trend year-to-date, Southern Yellow Pine (SYP) continues to underperform S-P-F. SYP 2×4 prices slumped to $285 last week, their lowest level since November 2011. We suspect that even in the low-cost U.S. South, many sawmills are losing money at these prices. …For S-P-F, 2×4 prices are now in freefall after holding up relatively well through the first three months of the year. Prices have declined by $81 in the past four weeks and are trading at just $382 today. Prior sawmill downtime announcements, coupled with steady demand from new residential construction, supported S-P-F prices through Q1; however, this supply/demand balance has changed in recent weeks. …The incredible run in OSB appears to be over; prices in all major producing regions posted significant ($20–40) declines last week. …Despite not experiencing the same pricing uplift as OSB over the past several months—plywood pricing has been steady, if unspectacular—plywood prices are also moving lower, and the rate of decline accelerated markedly last week.

Read More

Canada’s forest management has to adapt to climate change

By Tony Kryzanowski
The Logging & Sawmilling Journal
April 25, 2024
Category: Opinion / EdiTOADial
Region: Canada

Tony Kryzanowski

An early fire season is upon us in many parts of Canada already, and in some regions, fire fighter shortages abound. This alone demonstrates that forest management in Canada must change. Otherwise, expect huge swaths of forests to burn every summer from now on, as well as escalating costs for fighting fires, until the Canadian forest industry becomes a mere shadow of what it once was—or could be. But there is another way. It’s time to change our paradigm and view ourselves as gardeners rather than exploiters of the forest. Year round logging that includes a significant amount of variable retention as well as commercial and pre-commercial thinning to maintain a sustainable timber supply is not only necessary, it is inevitable as Canada transitions from natural forests to natural managed forests or plantations.

Continuing to spend vast amounts of money fighting forest fires is an insanely expensive, band-aid method to conserve Canada’s forests over the long term. Where government investment needs to happen now is in re-purposing a significant portion of money budgeted for fighting forest fires to forest resilience activities. …It is unfair to expect companies to adopt these expensive practices because of the length of their forest management agreements. It makes no sense to invest in these practices if there is no guarantee that the company will eventually reap the benefits down the road. So first and foremost, governments must consider longer forest tenure and management agreements of maybe a century or longer, carefully worded so that companies cannot escape liability for poor or negligent forest management practices. …Change or die. That may sound alarmist but the consequences of climate change are upon us. Intensive forest management or ‘gardening’ is our only hope.

Read More

Sluggish start to US markets may delay product price recovery

By Kevin Mason, Managing Director
ERA Forest Products Research
March 5, 2024
Category: Opinion / EdiTOADial
Region: Canada, United States

Kevin Mason

After an encouraging finish to 2023, the U.S. housing market took a step backward to start the year, with weak starts in January and middling sales data offering no indication that the beginning of the next U.S. housing upcycle is imminent. U.S. home sales data for January were a little more encouraging than starts data, with seasonally adjusted new-home sales ticking up 1.5% month-over-month (MoM) and 1.8% year-over-year (YoY) to 661,000 units after the December data were revised lower to 651,000. It took longer than expected, but, after a sluggish start to the new year for North American lumber markets, we have seen a wave of sawmill capacity curtailment announcements this quarter. ……The capacity announcements will help tension lumber markets over time (perhaps Q2), while a seasonal uptick in demand around the spring building season should see prices migrate higher in the next couple of months.

In a significant deviation from more recent trends, the announced shuts in past few quarters have been spread across several major lumber producing regions, including the U.S. South and the Pacific Northwest, and have not been focused exclusively in high-cost British Columbia this time around. While it can take several months for a capacity closure announcement to actually impact market supply, these shuts will help to better balance North American lumber supply and demand over time (particularly if they coincide with green shoots appearing in the housing market).Against a backdrop of declining U.S. residential construction activity, North American OSB markets enjoyed a surprisingly strong year in 2023… [and] several North American pulp producers have announced new softwood price increases for March.

Read More

It’s been a sluggish start to 2024 and the Middle East conflict is bringing more challenges

By Kevin Mason, Managing Director
ERA Forest Products Research
February 2, 2024
Category: Opinion / EdiTOADial
Region: Canada, United States, International

Kevin Mason

Notwithstanding expectations for slowing global growth in 2024, the new year has brought with it more challenges, including the extension of the Middle East conflict to the Red Sea. The re-routing of ships around the Horn of Africa is adding 10‒14 days to any Europe–Asia transit and impacting 10‒12% of global seaborne trade. Volumes through the Suez have dropped ~40% since the conflict began. …For many exports of pulp and paper & board, the change adds $20‒$60 per metric tonne to container costs in the near-term. Second-order impacts may include keeping more pulp (and paper) in Europe, depressing prices in that market, and keeping more paper & board in Asia, reducing pulp demand there. In other forest products, an interruption in log and glulam shipments from Europe last year drove Pacific Northwest log prices through the roof for the Japanese market; the same may happen again in this context. …If the disruption lingers, there will be significant first- and second-order impacts on the shape of markets in 2024.

It’s been a sluggish start to 2024 for North American lumber markets. …Lumber prices continue to languish. Supply reductions to date have been insufficient to tighten the market, but a short-lived spring rally is likely. OSB prices have held at profitable levels, but cracks are forming and new supply is coming to market (with delays). Rate cuts by the Fed are the overarching focus, with disappointment a possibility. We prefer lumber over panels for the next year or two but expect volatility across the spectrum.Pulp prices have been facing challenges in their biggest market (China), although prices have nudged up elsewhere. Closures remain a risk for the softwood market. Shipping issues are adding costs and complexity. Tissue producers should benefit from any price slippage, but their own topline prices are under pressure. 

Read More

Trudeau’s pivot on carbon pricing shows need for rural policy lens

By Derek Nighbor, Forest Products Association of Canada
The Hub
November 28, 2023
Category: Opinion / EdiTOADial
Region: Canada

Derek Nighbor

Prime Minister Justin Trudeau’s recent decision to relieve home heating cost pressures in Atlantic Canada has initiated an important conversation about the challenges faced by Canadians living in rural parts of the country. …The groundswell of anger there would look familiar to anyone living in many other rural communities across the country. If anything, Trudeau’s announcement was a reminder of how smaller communities and their residents often get overlooked in the national conversation, and how we lack a coherent national approach to rural Canada. …We need to put more of a rural lens on the impacts of policy that’s created in Ottawa, much as we do for sustainability and other objectives. This isn’t just a matter of fairness. It’s in our national economic interest to ensure that rural Canada thrives. Most of the critical resources that make Canada a valued trading partner originate in rural parts of the country, not in cities. 

The same holds true for Canada’s green transition, with rural Canada at the centre of climate action efforts. For example, these communities see first-hand the impacts of worsening fires and are committed to protecting residents and critical infrastructure by actively managing forests. Politicians must think beyond urban voter bases to tap into the value that rural Canada brings to the wealth of our country. …It all starts by making rural communities viable places to live. Second, it’s imperative we get the policy frameworks right to ensure rural regions remain economically healthy. …Rural Canada—home to key industries like forestry, agriculture, mining, fisheries, and energy—makes up about 30% of the country’s GDP and an even bigger share of our exports. To seize the potential of a prosperous rural Canada of tomorrow that delivers for all Canadians, we need to start by recognizing the tremendous value these regions bring to our country and take strong actions to keep them vibrant and viable.

Read More

Forest Management in Finland – Learnings for BC Forestry

Cam Brown, Strategic Planning Forester / Manager
Forsite Consultants Ltd.
November 9, 2023
Category: Opinion / EdiTOADial
Region: Canada, International

Cam Brown

Imagine a forest industry championed by its government and people – a source of great pride, deeply valued and ingrained in the culture and character of the country. Guided by a clearly stated and regularly updated vision that embraces a changing world and new information. An industry integrated with the systems and infrastructure of public services, and at the forefront of technology and innovation. An industry sustainably managing forests while reducing the risk of wildfire and pest outbreaks. An industry functioning as a part of a holistic and sustainable bioeconomy. A group of BC Foresters recently travelled to Finland on a study tour led by UBC Forestry to better understand the history, practices, motivations and objectives which have led to Finland’s world-class forest sector, supporting a proud and vibrant society. [Although] many aspects of Finland’s forest sector are different (extensive private land ownership, greater resolution of indigenous ownership, more homogenous ecosystems, gentle topography, extensive road and bioenergy infrastructure, etc.), there are still many ideas that are relevant in the BC context.

…Short-term wins can be achieved in BC simply by increasing thinning across a range of forests to enhance multiple values. This includes partial harvesting focused on fire risk reduction, improved Dry-belt Fir management, and accessing fibre in visually constrained landscapes. Implementing partial harvest strategies can help solve many of the key friction points in BC forestry right now – community safety/wildfire risk, fibre supply for mills, ecosystem health and biodiversity, and a focus on stand value over volume. We need policy solutions to encourage this type of investment. Indigenous reconciliation and climate change adaptation (i.e., fuel reduction) are primary forces driving the need for fundamental changes. We must create a more economically robust, socially acceptable and vibrant forest sector built on a solid foundation of healthy and resilient forest landscapes. Embracing some of the wisdom behind Finnish forestry is part of the solution.

Read More

It’s been a rocky ride for the US housing market in 2023 and the lumber market remains stuck in the mud

By Kevin Mason, Managing Director
ERA Forest Products Research
November 7, 2023
Category: Opinion / EdiTOADial
Region: Canada, United States

Kevin Mason

US housing data were a mixed bag for September; a modest month-over-month recovery in seasonally adjusted starts (to 1.36MM units) and an uptick in new-home sales were the bright spots, but existing-home sales have capitulated and sentiment around housing remains highly negative (driven primarily by worsening affordability). …There has been a bifurcation of the single-family (SF) and multifamily (MF) markets, with SF construction activity showing signs of modest improvement (+3% m/m, +9% y/y) while MF activity has slowed dramatically (+18% m/m but down 31% y/y). Permitting data followed a similar trend last month, totalling 1.47MM, with singles ticking up ~2% m/m 965,000 while multis slipped from 593,000 in August to 508,000 in September. Existing-home sales declined to their lowest level in almost 13 years. New-home sales stepped in to partially fill the gap… as homebuilders continue to find ways to keep selling despite extremely challenging macroeconomic conditions!”

The North American lumber market remains stuck in the mud. S-P-F 2x4s are trading at $370 today, levels at which many BC mills will be losing money. SYP 2x4s are holding up a little bit better at $402, but SYP 2x6s and 2x8s are trading below $300. Lumber demand continues to be hampered by an affordability-driven slowdown in residential construction activity. Reports on demand from the repair and remodel sector are mixed, but some softening is expected in the quarters ahead. We anticipate that lumber prices will remain rangebound around current levels through the winter (with more upside for S-P-F than SYP). After several weeks of declines, OSB prices did an about-face in mid-October and have posted modest increases over the past two weeks. …Over the medium-term, price risk is downside-weighted given challenges in U.S. housing (including seasonally weaker demand in Q4) and a raft of new supply coming to market. Plywood prices have slipped but remain elevated by historical standards. The recent upturn in OSB prices should support plywood in the near-term.

Read More

RBC expects “mixed” Q3 results for paper & forest products

By Paul Quinn, RBC Analyst
RBC Capital Markets
October 23, 2023
Category: Opinion / EdiTOADial
Region: Canada, United States

RBC analyst Paul Quinn is expecting “mixed” third-quarter financial results from North American paper and forest product companies, seeing “more supportive building materials prices but somewhat lower prices across several other commodities. “Pulp prices seem to have bottomed, led by a resumption of purchasing activity by China, although significant capacity additions and elevated inventory levels are likely to slow the pace of a recovery,” he said. “Paper prices have moved only modestly lower, but operating rates are weak. Supply-demand tension in containerboard is improving somewhat with recently announced closures, and prices have stabilized, but we expect market-related downtime to offset new mill start-ups to continue for the near-term. Timber prices remain weak across North America due to weak lumber and other end use consumption.

“During the Q3 earnings season, we think investors will be focused on the trajectory into 2024, particularly as it relates to wood products demand against a backdrop of elevated interest rates, and demand for graphic paper and paper packaging. While we wait for an inflection point in the economy, interest rates and overall confidence, we note that valuations remain near historic lows.” Heading into earnings season, Mr. Quinn predicts lumber prices are likely to “struggle to gain meaningful momentum” through the remainder of the year, “barring any transportation issues or unforeseen events, driven by both seasonality and higher interest rates weighing on new construction and R&R activity.

Read More

As always, lots of mysteries, surprises and drama in the North American lumber market

By Russ Taylor, Russ Taylor Global
The Truck LoggerBC Magazine
October 4, 2023
Category: Opinion / EdiTOADial
Region: Canada, United States

The North American lumber market has been stalled for much of 2023… [but] the longer-term fundamentals of the US and Canadian housing markets look good, as there is still an apparent pent-up demand for homes. As new residential housing represents 35 per cent of US lumber consumption, any upside in housing demand should increase lumber demand, especially after mortgage rates start declining next year. …Repair and remodelling activity (40 per cent of US lumber consumption) is slowing and expected to decline (but remain positive) for the rest of 2023 and then become negative, at least into the first half of next year. 

The typical lumber demand and price cycle sees a spring rally followed by a slowdown in July and August before picking up through September and then bottoming out at the end of October. Starting in November, lumber prices tend to rally for the rest of the year. However, not all years are normal, and this year has been quite abnormal where no spring rally happened. …In looking ahead to 2024, there seems to be considerable optimism out there by some expecting a good year. However, I am not so optimistic. …There is ample sawmilling capacity available to the North American market (especially SYP) at current demand levels and any shortages could be filled by non-Canadian imports, especially from Europe. This means that lumber prices could remain stalled until conditions for an increase in housing, R&R and overall lumber demand are back in place. The good news is that lumber prices will not be as low in 2024 as they were in 2023 and most forecasters remain bullish here.

Read More

This Year’s Fire Season Demonstrates the Need to Develop More Resilient Forests

By Tony Kryzanowski
The Logging and Sawmill Journal
August 29, 2023
Category: Opinion / EdiTOADial
Region: Canada, United States

The summer of 2023 will go down as the year of smoke in North America, and while it would be easy to panic and predict the end of days, history teaches that this could easily be a one-off year, followed by a cool and rainy summer. …But there is no denying that 2023 will go down as the worst year for forest fires in recorded Canadian history. What was particularly noteworthy was how widespread it was, with nearly every province within the boreal forest scrambling to fight fires. It truly was a national event—and not a good one. It would be easy to blame Climate Change for this dire situation, and there is no doubt that it is causing more extreme weather patterns like long periods of drought. This contributed to the size of the fires that burned in 2023.

But we can do a better job of forest management to potentially minimize the size and spread of wildfires by creating more resilient forests. We’ve known about these forest management practices for decades, but have resisted making the change because it is more economical and easier to plant monocultures of same-age trees. Now we see the consequences, particularly in areas that naturally regenerate as mixedwood forests or conifer stands that regenerate with mixed species and ages. …We know these practices work to mitigate forest fires because thousands of years of forest management by Nature proves it. Fire is nothing new in the fire-origin boreal forest—in fact, it’s natural. What is new are changes to the natural forest succession that we have adopted in current reforestation practices, including fire suppression on a massive scale, and now we are starting to realize the consequences of this interference. It’s time for change if we don’t want gaps in the forest resource available to harvest in future

Read More

North American lumber prices reverse after fire-induced rally meets seasonally sluggish demand

Kevin Mason, Managing Director
ERA Forest Products Research
August 21, 2023
Category: Opinion / EdiTOADial
Region: Canada, United States

Kevin Mason

Lumber prices have reversed course lately after the fire-induced rally met with seasonally sluggish demand. High-cost mills will again be tested and downtime will be needed. A painful quarter or two await. OSB prices appear to have peaked, with oversupply expected in 2024. Share prices are fading but lumber companies are expected to have more upside over the next year than panel producers.

Pulp prices are still falling for most grades and regions, save for a bounce off the bottom in China. The majority of prices are expected to bottom in Q3 and prices will trend near trough levels until mill curtailments and/or closures expand. Demand remains horrible as downstream inventories are whittled away. Prices are falling slowly as North American producers embark on significant downtime to keep stocks in check. Prices will continue falling through 2023–24. 

Read More

CODE RED Not Orange & Green For BC Forestry

By David Elstone, Managing Director
The Spar Tree Group
December 18, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

As most may have heard by now, Premier Eby has announced an agreement in principle between the BC NDP and Greens. …Of key significance to the forest sector, the agreement commits “to undertake a review of BC forests with First Nations, workers, unions, business and community to address concerns about sustainability, jobs, environmental protection and the future of the industry.” Such broad encompassing reviews typically take several months, if not over a year to complete and even longer before acting on recommendations. To propose such a review now is a prime example of just how forestry in British Columbia has truly become all about politics and not common sense. The two parties in their wisdom, have agreed to a review while the BC forest industry is literally in its death throes.

People, please we are in a CODE RED situation when it comes to solutions and immediate action for the survival of BC forestry. Trump’s proposed 25% tariff on Canadian goods and the US softwood lumber duties of 14.4%, which are expected to double mid-next year will bring the BC forest sector to a stop. …One of the most painful aspects of this proposed review is that it implies more uncertainty as the outcome(s) of a review are awaited. If there is one thing the BC forest sector most definitely does not need is more uncertainty, in fact, it is the absolute worst idea at this moment in time. …Putting aside my grumblings about this pending review, and in support of Minister Parmar’s “getting to work” attitude, the following ideas are suggested for the Minister to explore as solutions in anticipation of tough times ahead in 2025. …I agree with Minister Parmar on getting to work because it is immediate action that is needed now.

Read More

Another review of forest policy in BC should not be a priority right now: Linda Coady

Linda Coady, President & CEO
BC Council of Forest Industries
December 16, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Linda Coady

VANCOUVER – Linda Coady, President & Chief Executive Officer of the BC Council of Forest Industries (COFI), issued the following statement in response to a commitment to undertake a “review of BC forests” that is part of the cooperation agreement announced by the BC NDP and the BC Green Party. “Another review of forest policy in BC should not be a priority right now”. “Premier Eby has already publicly acknowledged that rising US duties and tariffs on forest products would have a ‘devastating’ impact on thousands of jobs in resource communities across the province. In light of this very real threat, now is the time for urgent action on the commitments the government has already made to maintaining a competitive and sustainable forest products manufacturing sector in BC. In recent years, several major reviews, reports, and new initiatives have already focused on forestry in BC.

Last week, the new BC Forests Minister Ravi Parmar said that “now is the time to be bold…you are not going to see a bunch of frameworks and vision statements and grandiose plans. I think we’ve done all of that work and am very thankful to my colleagues for getting us to this place. For me, it’s now (about) focusing on those clear objectives on what we need to accomplish to have a robust, sustainable industry for the next decades.” Before yet another review is launched, Minister Parmar should be given time to put forward his plan for the completion and implementation of existing initiatives before any more new ones are introduced. …Forestry is at the forefront of advancing Indigenous reconciliation through real, on-the-ground practices and partnerships. Implementation of new land use planning processes and initiatives on conservation financing have been at least two years in the making, and are still not happening at scale. 

Read More

Another BC Forest Products Company In Trouble – Does This Trend Have An Ending?

By David Elstone, Managing Director
The Spar Tree Group
December 4, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

The list of British Columbia forest product companies in financial trouble grows. San Industries and associated companies have sought financial restructuring under CCAA, according to a court filing on November 29, 2024. …San Industries Ltd. et al, otherwise known as the San Group, have a reputation for pushing the envelope on the value-added manufacturing file, attempting to change the conventional approach to forest products manufacturing in coastal BC. …The San Group has no forest tenure of its own and relies on BCTS timber sales and commercial agreements to source its logs.

Regardless of the management decisions of this company and others that have contributed to their financial troubles, the trend is nonetheless alarming. When combined with the knowledge that companies like Interfor have made the strategic decision to exit the BC coastal forest sector, while Canfor and others are closing sawmills in the interior – there is an undeniable reality that what is occurring is unique to British Columbia – there is a common thread underlying all of this.

Is it best to let sawmills and other manufacturing plants fall to the wayside, and let our forests go unharvested? Should British Columbians including those in rural communities continue to tolerate deteriorating investment conditions for BC’s forest products manufacturing sector, or for that matter, the natural resources sector, in general? Absolutely no! The trick is to find the balanced solutions needed to generate prosperity while achieving other values. Unfortunately, efforts by the provincial government of the last few years have failed as this dismal trend continues. Immediate and meaningful action is needed. More troubles are coming.

Read More

Common ground emerging for B.C. forestry sector reform

By Linda Coady, president & CEO, BC Council of Forest Industries
Business in Vancouver
October 27, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Linda Coady

Much of the commentary since B.C.’s split election result has focused on how divides between political parties in the next B.C. legislature could result in nothing getting done. When it comes to addressing the urgent challenges now facing the province’s forest sector, doing nothing would be a prescription for disaster. There is a pressing need to move beyond differences and focus on building on the things that most British Columbians already agree are critical to a successful reboot of this vital sector. …The B.C. forest sector is no stranger to political debates and conflict. But history shows that starting from points of agreement is the most proven path to lasting solutions. So, what are those points of common ground right now? Here are three: Indigenous stewardship and reconciliation, innovative practices for forest management and conservation, and predictable access to fibre supply. 

The best news is that movement in any or all these areas does not require radical change. Many of the meetings, consultations, reviews, checklists and frameworks required to initiate action have already been completed. The challenge that remains is to actually make things happen on the ground. …Each major party in the recent B.C. election put forward a detailed plan on forestry. And each forestry platform made tangible commitments to support manufacturing, community well-being and biodiversity. While there are some ideological divides in the approaches, there is also a lot of common ground. Moving quickly and applying every tool in the implementation toolkit—targets, metrics, funding and new partnerships—the incoming government in B.C. has an unprecedented opportunity to secure a future for working families, communities and businesses—and for the forests themselves.

Read More

BC is mere weeks from a provincial election. The TLA says vote for a standard of living.

By Bob Brash, Executive Director
Truck LoggerBC Magazine
October 1, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

BC’s forest industry stands at an important juncture and crossroads of its future prosperity and the high standard of living it imparts to individuals, communities, and society. Much has been written, documented and analyzed about its massive contribution to the gross domestic product, taxes and revenues to all levels of government, the 100,000 jobs dependent on its success, and the absolute reliance for so many of BC’s resource communities. In fact, BC’s forest sector is one of a few “profitable” job segments that drive our economy and government services through above average wages and consequential higher tax revenues. …Today we find a forest sector under significant (or severe) stress with uncertainty being the predominant constant from initiatives at the federal and provincial levels. This uncertainty arises from the flood of programs, policies, and initiatives each arising without any apparent consistency, coordination, or weighing of economic impacts among them.

As British Columbians, we must recognize the importance of a viable resource industry in our province and must demand clear and consistent objectives when new land use, environmental, and Indigenous reconciliation policies are undertaken. …As all these considerations are being examined, there needs to be a concurrent process that dramatically reduces the regulatory complexity and delays we currently face in running our businesses. The permitting processes must be straightforward, timely, predictable and fair. Obviously, we are biased towards the success of BC’s forest sector given we have a vested interest in its prosperity and hopefully a continued standard of living in BC. I encourage you to ask the right questions and be informed on voting day. Look for the answers from all candidates that will lead to the success of our forest sector and towards the general prosperity of our communities and province.

Read More

Renewing our approach to natural resources can support shared economic prosperity

By BC Resource Sector Coalition
Business in Vancouver
September 27, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

BRITISH COLUMBIA — It’s not just the water, trees, and mountains that make B.C. special—it’s our ability to experience and benefit from them. The minerals in the ground don’t just create well paying and sustainable jobs—they helped build this province, starting with the gold rush. B.C. stands at a crucial crossroads. The federal and provincial governments have introduced a myriad of complex and overlapping policies affecting the natural resource sector, including the B.C. Old Growth Strategy, Biodiversity and Ecosystem Health Framework, Clean BC, Marine Protected Areas, the Watershed Security Strategy, Declaration on the Rights of Indigenous Peoples Act, the plan to “conserve 30 per cent of Canada’s land and water by 2030”, modernizing land-use plans and forest landscape planning. Taken together, these initiatives are cumbersome and create significant challenges to investment and job creation in British Columbia.

…To be clear, the need for Indigenous reconciliation and environmental stewardship are widely accepted and necessary. However, British Columbia now has a growing, overlapping patchwork of heavy-handed and top-down policies. …The potential consequences are severe: Lost jobs, reduced economic activity, decimated small towns and less tax revenue to fund vital infrastructure and social programs. And the effects won’t be confined to rural areas—urban centres like Metro Vancouver and Victoria will also feel the impacts, with fewer jobs, strained services, higher costs and a greater reliance on imports. …The issues surrounding this tangled web of policy initiatives may be out of sight for most British Columbians, but their repercussions will be felt soon enough if we don’t address them. B.C. can renew our economic prosperity in a socially responsible manner, but it requires careful planning and foresight.

Read More

Are We Willing to Change in the Face of Wildfire?

By David Elstone, Spar Tree Group
The Logging & Sawmilling Journal
August 25, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Those who work in the woods know all too well that wildfires are undiscerning in what they burn: working forest, parks, old growth forests, wildlife habitat—if there is fuel, it will burn. No matter what your view on how our forests should be managed, it is hard to avoid the reality that wildfire is a threat to our businesses, our livelihoods, as well as to our health and well-being. …To gain a better sense of community perspectives regarding wildfire resiliency, the BC Council of Forest Industries worked with Abacus Data to survey 1,500 British Columbians last spring. The survey found the public perceives wildfires as a problem that is getting worse. Polling showed that 75% of the public follows the news about wildfires closely; in other words, it is a top-of-mind subject; 35% reported that wildfires have already had a large impact on their lives with 74% having experienced smoke from wildfires. 

Fortunately, for a province covered in forests, we are not without options. A recent study from the USDA Forest Service reviewed scientific literature from over 40 studies and concluded “proactive ecological forest management can change how fires behave and reduce wildfire severity, under a wide range of conditions and forest types… in reducing surface and ladder fuels and tree density through thinning, coupled with prescribed burning or pile burning could reduce future wildfire severity by more than 60%, relative to untreated areas.” The good news is that public opinion is aligned with the science. The polling showed almost everyone thinks forest fire severity can be reduced, that proper forest management is a good idea and that there is an acceptable solution available. …So let’s get busy and make the necessary investments and collaborations to turn that public support for forest management solutions for forest fuel reduction into reality!

Read More

Increasing wildfire risk requires new thinking on conservation

By David Elstone, Managing Director
The Spar Tree Group
July 18, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West
 

Lately, I have been reflecting on the practice of forestry and how some long-held beliefs that influence it have changed over time. For instance, look at how the industry has historically viewed red alder as a weed species. …Another example is the perspective that  commercial thinning is an uneconomic practice in BC. Last May, I visited recently thinned sites near Prince George which were cash positive. Other treatment objectives for thinning such as for wildfire mitigation are now becoming just as important or more so than financial returns. As I have learnt more about wildfire resiliency of late, my perspectives on other conventional standards are changing as well. …Indeed, almost one hundred years of active fire suppression in BC’s forests has led to more conifers. We are also learning that exclusion of fire from our provincial forests has ironically actually made them more vulnerable to fire.

Now as we are adding old growth deferrals, 30×30 protected areas, Indigenous Protected Conservation Areas and other areas set aside for protecting biodiversity by excluding human activity, are we proliferating yet another belief that needs to be challenged? Many of these areas are just as likely to succumb to wildfire, defeating the purpose of their original protection. The Forest Practices Board said in their June 2023 special report on wildfire that “…unmanaged reserves are especially vulnerable to burning because of the amount of forest fuels that have accumulated over time.” Given the reality of an increasing wildfire threat, traditional beliefs on conservation need to shift from “preserve and walk away” to one which embraces active forest management in these areas. A new vision could be one where a sustainable forest industry consumes fibre collected from fuel reduction treatments to ensure enduring conservation values across the landscape, no matter the designated land use.

Read More

Resilience—a means to positive change for the forest sector or a cloak for protectionism?

By Bob Brash, TLA Executive Director
Truck LoggerBC Magazine
July 2, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Every few years, we witness new vocabulary emerge into the BC forest sector’s world.  The most recent term to emerge is resilience. …The question is, will it become another passing buzzword, lead towards true, positive changes to advance our sector, or will it be a cloak for protectionism? BC’s forest sector has long been a cornerstone of the province’s economy and culture deeply intertwined with the natural environment, providing livelihoods for thousands and sustaining communities. However, the sector is currently facing unprecedented challenges that require innovative and resilient approaches. In this context, building multi-dimensional resilience means considering comprehensive environmental, economic, and social factors to ensure the forest sector can adapt and thrive in the face of these stresses.

…There are many things resilience cannot mean. It should not be a surrogate for even more protectionism or unreasonable constraints. The discussions leading to implementation of any forest management plans need to be objective and not subjectively guided. The prescriptions on a stand level must be achievable and financially viable. The moves toward their utilization cannot be abrupt or ignore the practical need for a real transition strategy. Uncertainty on interpreting the impacts of new policies cannot continue ad infinitum because tangible investment decisions will simply not happen. In the opinion of many, which we share, our forests need more management, not less to become more resilient on all fronts. By adopting a strategy addressing all necessary elements, BC can ensure that its forest sector remains a vital, prosperous, and sustainable part of its economy and heritage. The challenges are significant, but if environmental, economic and social resilience is properly considered, the BC forest sector can adopt a pathway to thrive amidst the complexities of the 21 century.

Read More

Five steps to reboot B.C.’s forest industry

By Linda Coady, CEO, BC Council of Forest Industries
The Vancouver Sun
June 13, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Linda Coady

Mill closures and curtailments in B.C. last year led to the loss of 5,000 direct jobs in the forest industry, and another 5,000 indirect jobs in supply chains and services that support the industry. Current conditions in the sector are not only negatively impacting jobs and operations, but also exports, government revenue, and investment in the province. Reasons for the historic level of disruption have been well-documented. Insects, fire, markets, and policy shifts figure among them. …But getting the sector back on track to deliver the benefits that communities across B.C. rely upon requires more than understanding what the problem is — it requires a willingness to do something about it. …Here are five [solutions] that would help create more predictable timber supply in B.C. while meeting other important goals for forest health and environmental protection, and First Nations reconciliation.

  • Fix current permit development processes to ensure that an environmentally sustainable and economically viable harvest can be consistently achieved. 
  • Secure agreements with First Nations that advance progress on critical issues. Embrace new approaches to consultation, forest tenure, revenue sharing, and First Nations land use planning.
  • Expedite new regional tables for Forest Landscape Planning. 
  • Establish new targets and financing strategies to expand the role that research and forest management can play in wildfire resilience, community and biodiversity protection, and fibre utilization.
  • Develop a long-term roadmap or economic strategy for the B.C. forest sector. …The vision needs to drive stronger performance on carbon management, sustainability, and Indigenous-led forest management and conservation.

Consensus is growing on what can be done to reboot one of B.C.’s most important industries. The time to act on that consensus is now.

Read More

Still Dreaming – Honest Commentary On British Columbia’s Efforts To Grow Value-Added Wood Products Manufacturing

By David Elstone, Managing Director
The Spar Tree Group
May 12, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Premier Eby and his Ministers Ralston and Mercier are often heard saying “more jobs from trees harvested” when talking about the BC forest industry. Such a phrase resonates easily with the public as a common-sense vision for the British Columbia forest sector, the essence of which has also become part of the NDP government’s official industrial policy for the forest sector. …What does “more jobs from trees harvested” mean to manufacturers (and their investors)? To be honest, absolutely nothing. It does not send a signal about surety and stability of fibre supply or about the province’s attitude on hosting conditions. More jobs is a nice political slogan, but sounds increasingly misguided as an expectation, especially when current forestry jobs are being lost in the thousands. As rational economic entities, manufacturers (small and big) do not strategize to increase jobs as an objective, rather they invest to minimize costs and maximize returns – sometimes that adds jobs and sometimes it eliminates them.

Efforts so far to promote value added manufacturing have largely been to help existing businesses to sustain themselves with equipment upgrades. A wave of widespread transformation has not occurred. Missing in efforts by the BC government has been the re-establishment of a predictable and affordable fibre supply – a situation that is only getting worse. …The BC government needs to collaborate to shed the reputation of being the highest cost forest products manufacturing jurisdiction in North America. If not addressed, mills will continue to close. Conversely, improved competitiveness will bring more jobs and if guided correctly, more higher value manufacturing. Just imagine if Premier Eby were to say, “hey we want more jobs from trees harvested by helping to create the most competitive and productive forest sector in the world!”… now that would change the conversation to one which the industry and its investors could relate.

Read More

Planning for the Future of BC’s Forest Economy

By Alice Palmer
Truck LoggerBC Magazine
April 7, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Alice Palmer

What industry provides 18% of BC’s economic base, $12-14 billion to its economy, and $4 billion in government revenues? Forestry, of course. Therefore, one might think British Columbians would want to safeguard it. Yet, over the past five years, BC’s forest industry—one of our province’s biggest economic drivers—has been under increasing pressure. …Some of the harvest declines have been due to natural factors. …The driving force behind the remaining harvest reductions? Forest policy. BC intends to increase its protection of old-growth forests and their associated biodiversity values and has committed to protecting or conserving 30 per cent of its land base by 2030. This represents a near-doubling of the current amount under protection (17%). But this is just the start.

…With its ecosystem-based approach to forest management, the draft BC Biodiversity and Ecosystem Health Framework philosophy appears to be that humankind should minimize its commercial use of forests. Forest-based activities should instead emphasize restoration activities. An alternative interpretation of “taking care of the land” could be “carrying out different management activities in different places.” For example, under the three-zone system recommended by the Old Growth Strategic Review (OGSR), the converted zone could include intensive silviculture. By zoning some of the land for industrial production and taking care of it for that specific purpose, British Columbians could continue to enjoy the economic benefits of logging, even while setting aside more land for conservation. Conservation of key ecosystem elements can also be achieved (and may be enhanced) while carrying out forest management activities on the land. …The OGSR’s recommended consistent zone—land managed to simulate the patterns of natural disturbance—could even count as part of the conserved and protected lands included in BC’s 30 per cent.

Read More

BC’s Land Act mess creates opportunity to figure out tough questions on DRIPA (Declaration on the Rights of Indigenous Peoples Act)

By David Elstone, Managing Director
The Spar Tree Group
March 1, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

David Elstone

By now most have heard that the proposed amendment to the Land Act was cancelled, at least until after the October provincial
election. …”For me, the proposed amendment to the Land Act itself was not the problem, rather it was what it represented – yet another proposed policy change without the operational details to understand what it meant. The constant flow of changing policy to meet aspirational intentions has been crushing the BC forest sector. …Unfortunately, the opposition rallied against this amendment by stoking fear the Declaration on the Rights of Indigenous Peoples Act would give a veto to First Nations on 95% of the province, despite the move towards shared decision-making not intended to be a blanket change. …Did anyone pause to think what the alternative to DRIPA could be? I would surmise it would likely mean even greater uncertainty for the forest industry!

With the amendment cancelled for now, it’s time to start figuring out answers to some of the tough questions on DRIPA, such as what happens when an impasse occurs? That’s the challenge with shared decision- making – one cannot really call it “shared” when one side always gets its way. Ironically, if the BC government can override opposition, which is actually a veto – something that First Nations have existed under for the last 150 years. …Obviously, there is much work to be done based on the recent polling that found seven-in-ten feel that the then pubic consultation was moving too quickly and that 94% of British Columbians see the proposed amendment as “a major transformation of the rules governing public land use…” The sooner we can collectively figure out operational level shared decision-making, in terms that the public can grasp, the sooner some of the current challenges facing the forest industry will likely find some relief.”

Read More

BC forest sector – a view to 2024 (and a look back on 2023)

By David Elstone, Managing Director
The Spar Tree Group
January 16, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

David Elstone

Will 2024 be another year of turmoil? It’s a provincial election year, which is typically when advocacy magic happens, but in the case of BC, will the politicians be listening more to the woes of the forest sector or that of the ENGOs? Here’s my quick prognostication on what to expect:

  1. Softwood lumber trade agreement? – Given the distraction of the US election, do not hold your breath waiting.
  2. Direction of North American markets in 2024? Market direction largely will depend on what the US Federal Reserve does with the federal funds rate. China does not look to be a major market mover. All in, we are likely to experience a sideways to modestly positive market.
  3. BC forest policy will remain the slow-moving train wreck that it is. …If you thought the implementation of old growth deferrals has been disruptive, you had better buckle up given the Province’s Biodiversity and Ecosystem Health Framework (although implementation could come after the election).
  4. BC’s Crown (public lands) timber harvest will continue to decline in 2024, although maybe not by as much as in 2023.
  5. The BC forest sector will continue to shrink – Challenging economic availability of log supply (including lack of permits) will cause sawmills and other forest products manufacturers to curtail or outright close. Interior collective agreements expired in 2023 without much progress.
  6. Will a new cross-laminated timber (CLT) type, value-added wood products mass timber plant be proposed? Probably not, but if there is, it will likely be in partnership with a First Nations.

Read More

Forestry is the foundation of the BC economy and we are investing to ensure it remains strong

By David Eby, BC Premier
Truck LoggerBC Magazine
January 3, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

David Eby

Forests are at the heart of our identity as British Columbians. All of us in the province depend on the forests to provide the materials to build homes and businesses. …Forests sustain people by providing good jobs for tens of thousands of us in the woods, in the mills, and on the roads as truck loggers. Others create products from forestry that we use every day. Those are jobs that sustain many families and sustain wood products that are part of how we will reduce carbon pollution and fight climate change. But there are real challenges. We know forestry operations are having trouble getting access to fibre. The allowable annual cut has significantly decreased in many regions owing to devastating wildfires and the end of the beetle-kill harvest. The unfair and unfounded imposition of a softwood lumber duty by the United States, as well as unfavourable market conditions, have also contributed to challenging times.

We need to build on our longstanding strengths if we’re to overcome these challenges. Forestry is a foundation of the BC economy. We will continue to make investments to ensure it remains a strong and sustainable industry. …We are helping to diversify local economies to make them more resilient through the transition from high-volume to high-value production. We introduced a $180-million BC Jobs Manufacturing Fund to do just that. …In September, I spoke at a Global Buyers Mission conference, the first premier of the province to do so. Among the attendees in Whistler were buyers from all over the world. The reason for the interest is clear—BC has world-class forests, a world-class forest sector, and produces world-class forest products. Our province has deep roots and a proud history in forestry. All British Columbians have benefitted from the bounty of this natural resource, and we intend to do all we can to ensure these benefits are long-lasting.

Read More

BC needs a vision for where the forest sector is headed with definitive targets for annual harvest

By Bob Brash, TLA Executive Director
Truck LoggerBC Magazine
January 3, 2024
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Bob Brash

Suffice it to say there is an abundance of headlines about the environmental climate challenges facing us. …However, there remains a chore in convincing policy decision- makers… to deal with the current climate of uncertainty, instability, and lack of investment facing our sector. Today’s forestry world in BC is encountering many storm clouds in terms of the volume of policy and legislative changes impacting our sector in such a short period of time. Adding to the concern are the many unknowns about how such changes will actually be implemented across the landscape and how decision-makers will interpret them. …When viewed cumulatively, the effects upon our forest sector and businesses are decidedly negative contrary to the many announcements spun to a different narrative than those working in the woods are dealing with daily. 

Our sector has evolved over time to be one that is highly efficient at ensuring the harvested logs are fully utilized in all the various manufacturing facilities. It is a complex and integrated system requiring all components to be working properly. …Today’s work environment is not functioning as such. Across all components, uncertainty and instability dominate both the discussions and reality. Business decision-makers are typically drifting towards not making or deferring those needed investments to improve their business to the detriment of all in the sector. …Solutions abound to manage our forests for various objectives, mitigate the risks from wildfires, tackle climate change, provide the most sustainable product in the world, and meet the general expectations of both society and government. A good starting point would be government’s recognition of the immediate need for a collaborative and endorsed road map and vision for where BC’s forest sector is headed, including definitive targets for the overall annual harvest and land base in which we can be assured of operating upon.

Read More

Wildfires have taken too big a toll on British Columbia

By Joe Nemeth, BC Pulp and Paper Coalition
The Province
December 11, 2023
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Joe Nemeth

When the wildfire season mercifully ended in November, 2,217 wildfires had been counted, 2.8 million hectares of land had been burned, including forested and non-forested land. …The premier has appointed a task force to study this year’s fire season and develop ideas about what can be done. The pulp and paper sector applauds the premier for making wildfire risk reduction and salvage a priority, but challenges the need for another task force to add recommendations to those of previous studies and analyses. We know what to do and we need to act now. The top four steps we can take include: Streamlining the cutting permit approval process for fire-damaged trees; Creating fire breaks with roads and small openings; Removing fuel sources around small communities through brushing and thinning; and Making better use of First Nations historical practices such as cultural burning.

What happens to the millions of fire-damaged trees left in the wake of these big fires? …There is a ready use for that burned fibre in the province’s pulp and paper mills and sawmills. In fact, the pulp and paper sector is keen to be part of the solution by taking up to five million cubic metres of burnt wood every year. …But the industry has a problem. We are currently operating at about 80 per cent capacity, mainly due to a fibre shortfall of about two million cubic metres annually — a tiny percentage of all that fire-damaged wood left across B.C. It shouldn’t be that hard to access that fibre and get it into these mills so that jobs and communities and international markets can be sustained. …We just need a little will from government to speed up permitting decisions, direct funding to allow the use of wood waste and fire damaged stands to continue and grow, and to introduce a program to support thinning around communities to safeguard them from fire risk.

Read More

Wildfires laid siege to BC in 2023 — time for a different approach

By Jim Stirling
The Logging & Sawmilling Journal
October 31, 2023
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Wildfires have laid siege to British Columbia in 2023. Residents outside the province’s Lower Mainland region have endured a prolonged and surreal environment of fear and uncertainty, filled with toxic smoke and flurries of evacuation alerts and orders. …Land lost to wildfires in 2017, 2018 and 2021 set records—but the terrible trio’s toll was eclipsed by July in 2023, the beginning of what is traditionally the start of the worst two forest fire months of the season. …The warming climate’s interconnected impacts on the forest industry are the focus of a new report by the B.C. Forest Practices Board. The report says there’s an urgent need for a different and coordinated approach to forest fire management on B.C.’s Crown land. It points out fire can be a friend and not always the wildfire foe. Fire, when used judiciously, can help sustain a productive and healthy B.C. forest landscape as it did historically.

The report noted the policies that were applied in B.C. during the 20th century resulted in densely forested areas and an increase in the amounts and distribution of forest fuels. …“There is an urgent need to shift forest and fire management, policies, objectives and policies toward co-existing with fire on the landscape,” says the report. “Restoring landscape resilience is required and the first step toward that is to introduce landscape fire management into the land management framework in B.C.” The report continues: “Bold and immediate action is required by the provincial government to align policies and programs across all levels of government with a vision of landscape resilience and human co-existence with fire.” …The document’s recommendations are pertinent and timely. Suggestions for working practically with nature can help restore a badly damaged landscape diversity in B.C. That in turn will indicate paths forward for the forest industry to continue its renewal and vigour.

Read More

Time For Action To Save British Columbia’s Forests

By David Elstone, RPF
The Spar Tree Group
October 17, 2023
Category: Opinion / EdiTOADial
Region: Canada, Canada West

David Elstone

There has been plenty written on this year’s horrendous wildfire season. It’s justified, since it has been the worst year for hectares burnt, record value of insurance claims for destroyed property, and most sadly, the lives lost by those working to fight wildfire. Merchantable timber and non-timber natural values were burnt including old growth forests, wildlife habitat and parks – the fires were non-discerning to what we value. …The evidence is abundant that the status quo on wildfire management is no longer a viable path. In many respects, we may be quickly arriving at a pivot point on forest management driven by wildfire. The BC government recently announced a task force on emergency management during wildfire, but the task force will not address what is desperately needed. … BC has a long history of fire suppression [and] much of what we need to know has all been documented by successive reviewers, and yet not much has been done.

To substantially enhance the resilience of our forested landscapes to fire, it will require substantive change by government and by industry on how to manage our forests, and just as equally, it will require changes to our traditional notions of conservation. …This suggests areas we have protected from commercial timber harvesting will still need forest management if we want such areas to endure. …The provincial government hopefully will have the funding, but the industry is key to implementation. Unfortunately, industry capacity is shrinking and will continue to do so if something is not done to address this trend. …To some it may be counter-intuitive to believe that to promote and protect both conservation and economic values of our forested landscapes, intervention through more harvesting activities (thinning etc.), not less, will be the solution. The alternative is the status quo, no change nor action; we are already bearing witness as to how that’s working out.

Read More

What Will The Future BC Forest Industry Look Like?

By David Elstone and Jim Girvan
View from the Stump
October 5, 2023
Category: Opinion / EdiTOADial
Region: Canada, Canada West

David Elstone

To say that the BC forest industry has seen change over the past 20 years would be an understatement. There have been several editorials and analyses done quantifying how many mills have or will close; how many trees have been killed; and how many jobs have been lost. Interestingly, few have looked where the BC forest industry might end up as timber supply continues to decline. …In 2005, the forest industry was running on all cylinders with a Crown AAC of just under 86 million m3. …In the BC Interior, there were 14 veneer plants and 82 sawmills with a combined lumber production capacity of over 16 bbf operating, …On the coast, there were 3 veneer plants and 29 sawmills with a combined lumber production capacity of over 3 bbf operated. On the residual fibre/biomass side, the province had 16 pulp mills, 8 paper plants and the beginnings of pellet and biomass power businesses. The industry was flourishing with direct employment of close to 70,000 people.

When we look out to 2035, a full 30 years after the industry peak, the picture is sobering. Using a forecast for a province-wide Crown AAC of 38 million m3, only 33 or 40% of sawmills operating in the BC Interior in 2005 will remain and lumber production capacity will fall to a mere 38% of that peak. On the coast, 14 sawmills are expected to continue operating, with 56% of the capacity of 2005. On the pulp and paper side, more closures are forecast… with pulp capacity forecast to settle at 54% of that in 2005 with paper capacity at a mere 11%. For other forest products manufacturers there may be 10 veneer production facilities, 14 shake and shingle mills and potentially just a few specialty operations remaining. …Despite the ever-present prognostications of doom and gloom there are those still willing to invest in this province. Most recently, Canfor’s new state-of-the-art 350 million board feet sawmill in Houston. …The BC government wants more investment to transition the industry, and specifically to add more mass timber manufacturing. Unless a plan can be developed to cut short the current trends, a much smaller industry is forecast by 2035. 

Read More

Consequences To BC’s Old Growth Forest Policy Are Real

By David Elstone, Managing Director
The Spar Tree Group
September 19, 2023
Category: Opinion / EdiTOADial
Region: Canada, Canada West

David Elstone

Job losses and reductions in work have been confirmed as real consequences of BC’s initiatives on old growth forest policy. Spar Tree Group’s May 2023 BC forest sector survey found three quarters of timber harvesting and road building contractors were experiencing some amount of work reduction due to old growth deferrals. Furthermore, the survey results indicated at least 1,000 jobs may have been displaced because of the deferrals in timber harvesting alone (not including forest product manufacturers nor the other segments of the forest sector’s supply chain). …After a mild rebound from the start of the Covid-19 pandemic in 2020, the provincial Crown timber harvest has since decreased by 16 million cubic metres or over -30%. For 2023, timber harvesting is down -23% year-to-date to August. …Staying on this path will mean more closures. …To be fair, other factors such as the now-past mountain pine beetle epidemic and ongoing wildfires have definitely contributed to these decreases.

Anti-forestry advocates are calling for more and faster action on old growth forests. Giving into to such pressure is what got us into this trouble in the first place. It is incumbent on local governments and all members of the provincial government to ask what are the potential impacts of the next steps? Perhaps some analysis should actually be done on the outstanding fourteen recommendations of the A New Future For Older Forest report. …Yes – we should improve our efforts in managing for old growth, but it is a complete myth to believe we are harvesting the last of our old growth when at least 75% of the existing old growth forests in this province are not threatened by harvesting. We need to be open to new ways of managing forests in BC that are dynamic and active to promote forest resilience instead of creating static area set asides to achieve a target which meets some environmental or political agenda. 

Read More

Time for a proactive approach to wildfire — we know the solutions and we have the expertise

By Christine Gelowitz, CEO, Forest Professionals BC
The Province
September 18, 2023
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Christine Gelowitz

Wildfires are part of the natural ecosystem — have been for thousands of years and will continue to be in the future. While the scale and impact of wildfire in B.C. appears to be increasing exponentially, there are more steps we could take to protect our communities and the forest, and to improve our ability to respond to and minimize the impact of wildfires. But doing so will not be easy or simple. It takes co-operation among the public, landowners, forest professionals, First Nations, firefighters, emergency responders and, most importantly, elected government representatives. …The core ingredients for a new vision and approach to wildfire is readily available in BC if governments are ready to make the investment and drive the required policy changes. Good ideas abound.

Earlier this year, the B.C. Forest Practices Board released a special report urging the provincial government to align policies and programs across all levels of government to enable landscape-level fire management. …Dr. Mike Flannigan of Thompson Rivers University, estimates that every dollar spent on prevention and mitigation saves $5 to $15 spent on fighting wildfires. The time for waiting and conducting more studies is over. In many communities, the planning is completed and solutions have been tabled. Now they need to be implemented by policy and government funding at a scale comparable with the efforts devoted to wildfire emergency response. B.C. has skilled and competent people who can help move wildfire prevention and mitigation activities forward. …We know the solutions. We have the expertise. Now we just need the will to act.

Read More

Time To Start Managing Forests For The Future

By David Elstone, Managing Director
The Spar Tree Group
August 17, 2023
Category: Opinion / EdiTOADial
Region: Canada, Canada West

David Elstone

Past calls for power by the BC government drove the expansion of energy production by the private sector (IPPs). Many projects including pulp mill power, run-of-river and biomass projects were built over the last two decades to sell power to BC Hydro. However, a strong lobby campaign against IPPs led to dramatic policy change… and as a consequence, the government ended its standing call for power in 2020. This all occurred despite awareness of growing energy demand, and the province did not have enough capacity. . …Now with the goals to electrify the province and net zero emissions for LNG, the government has once again turned to IPPs for solutions. How does this shift in energy policy serve as a comment about forestry? 

Forest product markets may be tough now, but according to the UN FAO’s forest sector outlook to 2050, consumption of lumber, panels, and pulp will increase by 37% beyond 2020. …Unfortunately, just like the misguided end to the calls for power back in 2020… the Old Growth Strategic Review has brought about new and pending policy that will reduce our ability to manage forests for our needs. We should be expanding active forest management which would address our very Canadian reality that harvesting (and thinning) actually helps protect forests (and our communities) by reducing wildfire intensity as well as carbon emissions from forest fires. …It took three years for government to come to its senses on energy. How long will it take the government to do the same on forestry?

Read More

Offshore log and lumber markets may be worse than you think

By Russ Taylor, Russ Taylor Global
Russ Taylor Global
November 21, 2023
Category: Opinion / EdiTOADial
Region: International

Russ Taylor travelled in Europe and China in October to obtain a first-hand view of market conditions.

My personal view is that the real situation is probably worse that what is being reported. European demand will be about 11% lower in 2023 vs. 2022 and lower again in 2024. China’s consumption levels are completely stalled from a construction market in chaos. Consequently, it is going to take until some time next year for a recovery to occur. …Overall consumer sentiment in China is at a 12-month low as there continue to be lingering concerns over the future of the Chinese construction market. This has been not only a key driver of the economy (up to 24% of GDP but now closer to 19%), but a key driver in the wealth of Chinese citizens. With the construction industry awash in massive debts and no clear path ahead, this is having a negative impact on end users’ demand for imported logs and low-grade lumber for use in construction.

Inventories of logs and lumber at ocean ports and distribution yards are very low in China, especially when compared to previous years. …Most importers in China are worried about what happens after Chinese New Year in 2024. They remember very clearly what happened in 2023, as everyone thought there would be rising demand and higher prices after the COVID lockdowns were removed. The opposite occurred, and many overbought high-priced lumber in all grades in first quarter 2023 and have been licking their wounds ever since. …If there are more shocks to consumer confidence, then all bets are off for any increases in imported logs or lumber or prices until well after Chinese New Year in 2024. …This all means that lumber exporters to China should be also careful on their shipment volumes, as their future business in China could be negatively impacted if prices decline from weaker demand and/or there are excessive inventories after Chinese New Year.

Read More