Category Archives: Opinion / EdiTOADial

Kelly McCloskey

Building on the success of panel sessions in January—held to initiate meaningful discussion on the impacts of policy directions taken by the NDP government— the Truck Loggers Association (TLA) followed-up last Thursday with panels on industry’s social licence and competitiveness, old-growth logging, and media and politics in BC. Moderated by TLA Executive Director Bob Brash… the first session was titled How industry can reconcile social licence and improve competitiveness of BC’s Forest Sector. Rob Wood of Holbrook Dyson Logging opened with his perspective on why the forest sector is at a cross-roads, despite record lumber prices of late. …Kevin Sommerville of the San Group, said his company’s efforts to secure and retain social licence starts with support for the First Nation reconciliation efforts of the provincial and federal governments. …FPAC’s Derek Nighbor said that recent polling on industry’s reputation shows progress is being made and that the forest sector is “the envy of other industries”.

The second TLA panel was on the management of old growth, featuring RPFs; Garry Merkel, participant of the BC government’s Old Growth Review Panel, and Cam Brown of Forsite Consultants. According to Merkel… “We need to think like an ecosystem and manage for ecosystem health… while Brown presented on the different old growth strategies that are required for different Natural Disturbance Types. According to Brown, “we can and should improve how we manage old growth. The deferrals are useful but we need to incorporate local knowledge and practical realities.” …The final session was a journalists political discussion with Vaughn Palmer of the Vancouver Sun and Keith Baldrey from Global News. Key observations made include… The pandemic has provided the NDP with a lot of cover but politics-as-usual is returning, [and] forestry’s future lies in First Nations partnerships, tenure and revenue sharing.

British Columbia’s forest industry is losing a battle against those who would prefer the sector be reduced to a small cottage industry. The evidence of such loss is real – major changes to forest policy have been implemented by the BC government, without much apparent regard to the industry. The industry has barely shown up to the fight due to an unwillingness to engage in a public campaign designed to illicit emotions. All the while the effective use of social media by the industry’s antagonists has been a game changer for the public’s perception of forestry. Some industry folk believe the public perceives the industry as “bad” so it’s better not to put ourselves out there. In my opinion, that’s wrong.

The BC forest industry underutilizes social media and leaves messaging to associations or grass-roots advocacy groups, which do their best on limited budgets. There needs to be more in the form of genuine connections from the individual companies – the employers, the forest managers, the manufacturers and the leaders. Just because a company has well-paying jobs, does not entitle it to sit back. That should be obvious with how the industry is being treated/regarded today. The forest industry must up its social media game. BC forestry has a great story to tell that desperately should be told… again… and again. 

Also in the View From the Stump: BC Budget 2022 – What it Says About the Future of Forestry in BC

The natural rhythms of the mature forest are often comfortably familiar. Every year, for example, wild flowers reappear on the forest floor in the same places they always have. But new plans influencing how B.C. forests are managed and harvested have the potential for long lasting and widely spread changes to familiar patterns. …This musing is prompted by the British Columbia government’s recent decision to not make a decision surrounding the issue of harvesting ‘old growth’ forests. Instead, the provincial government opted to foment uncertainty by deferring for at least two years any harvesting decisions on about 2.6 million hectares of B.C. Crown-owned forest land. The area joins at least a further 10 million hectares of Crown forest land already protected for other uses. 

Don Kayne, Canfor’s President and CEO said the manufacture of lumber in sawmills is the backbone of B.C.’s forestry sector. “Without a solid primary industry in British Columbia that has got the hosting conditions to invest … then we have no pulp and paper industry, we have no pellet industry, we have no secondary manufacturing industry, we have no (cross laminated timber) plants—we have none of that,” declared Kayne. “We need to figure out how to have a sustainable, globally competitive primary industry here in British Columbia to support all the rest of our ambitions.” Right now, that’s not happening. …The risk is continued government inaction could permanently dim more lights in communities across the province.

Saskatchewan has always been a sleeping giant in terms of its contribution to the Canadian forest industry, despite its massive and mature—though seriously under-utilized—forest resource. But it seems that the giant has now finally awakened. In a flurry of press releases over the span of a week, the province announced a reallocation of its forest resource primarily located north of Saskatoon that will result in significant forest industry investment. It includes a huge sawmill expansion by Dunkley Lumber in Carrot River, Carrier Forest Products ramping up production in Big River, a OSB plant for Prince Albert by new business venture, One Sky Forest Products, and the re-opening of the geographically iconic pulp mill located north of Prince Albert, now owned by Paper Excellence. All told, it will result in over $1 billion in new investment over two years.

It’s worth noting that all of the investments being made in Saskatchewan are by companies headquartered in BC… where the mountain pine beetle severely reduced the merchantable wood basket. …There is a lot of wisdom behind Saskatchewan’s forest reallocation. By approving a new OSB plant, encouraging the reopening of the pulp mill, and making expansion and greater efficiency possible at two of the province’s largest sawmills, softwood lumber producers will now have a local market for their wood chips. Also, both softwood and hardwood resources will be harvested, resulting in better forest management as well as greater logging efficiency. Suffice to say that not only will new jobs be created at these wood processing plants, but also in logging, trucking and all the services needed to support a vibrant forestry sector.

Bob Brash, Don Wright, Stewart Muir, Brian Menzies

The final Truck Loggers Association panel on modernizing BC’s forest policy was led-off by Stewart Muir of Resource Works. “At stake,” according to Muir, “is retaining the significant role the forest industry plays in BC’s economy but also the huge potential of the forest bioeconomy.” …In describing the origin of the technical panel that recommended the old growth deferrals, Muir referenced his recent article in TruckLoggerBC. An article informed by a Freedom of Information request. The key findings being that the forest industry was little involved and an external party (the Sierra Club) defined the public process to a great degree and the composition of the committee. …Muir noted the effectiveness of the ENGO “hybrid advocacy strategy”, which involves indirect pressure from negative messaging …and direct pressure on government officials.

Next up was Brian Menzies of the Independent Wood Processors Association of BC, who characterized his membership as “value-added wood product creators and innovators.” …According to Menzies, it was Premier Horgan’s stated vision on a forest industry focused more of high-value rather than high-volume manufacturing—that spurred his organization to engage supportively. …And then all of sudden this happened” exclaimed Menzies. …But what scares Menzies the most is that these so-called  “potential deferrals” are impacting his members now, and supply is running out”. This is because more than 50% of their fibre input is from old growth forests …and the BC Timber Sales program immediately stopped any related-area timber sales. “We’re talking months before businesses start shutting down, not years from now.

Finally, Don Wright, former DM for Premier Horgan, said he believes the old growth and other policy changes occurred because “the forest industry has lost its social licence by not effectively making the case that it is essential to BC prosperity”. …According to Wright, BC is currently spending $25 billion more than it earns, financed by “selling off the right to reside in BC” …monies from the outside being brought in by real estate purchases and related consumption. “But this is living in a fool’s paradise,” according to Wright, “as it’s not sustainable”. It’s also where the forest industry has an opportunity to rebuild its social licence. “This is because the standard of living in a jurisdiction comes from the wages and net government revenue that its tradeable goods and services sector can afford to pay. …In BC, forestry represents 18% of this base.”

Bob Brash

The TLA firmly believes there are progressive solutions out there, that enable the unique and world class skills of our workforce, that won’t put 20,000 people out of work, decimate businesses and harm communities. …Government has the responsibility for setting broad goals and objectives, however, successful implementation lies in collaboration with those in the business, who know what will work and what will fail. Towards that objective, the TLA will work with others in the sector—vigorously, purposefully and collaboratively—towards seeking those solutions over the next few months. This will mean finding the common ground that the majority of British Columbians can endorse as a reasonable path to success. This will also mean, not challenging the government’s broad objectives but rather finding the means within those goal posts to move the sector forward.

Kicking off Day 2 of the TLA’s panels on the BC government’s efforts to modernize forest policy was David Muter, ADM, Resource Stewardship Division, BC Ministry of Forests. …According to Muter, “putting a temporary pause in place on priority old growth areas provides the time and space to better understand what old growth we have left and how best to manage it.” Although the Technical Committee operated independent of government, Muter noted that “Ministry experts worked closely with the committee so as to understand the basis of their technical work and its credibility.” With respect to how the government’s commitment to First Nations is progressing, Muter said that, “some Nations feel confident in their current management regime (usually because of their deep partnerships with industry) and said they may not need deferrals. Some Nations said they need more time and others see the need for deferrals and want to proceed.”

Next up was Gary Merkel, co-chair of the Old Growth Review Panel, who spoke to his and Al Gorley’s work preparing the strategic review on old growth. …According to Merkel, “there was an incredible amount of alignment from all sectors on the idea that we need to change the system. Managing for timber subject-to-constraints is a model that isn’t working for anybody. And many of the recommendations in our report recognize that society is undergoing a paradigm shift, and public policy related to forest management will need to adapt according.” …In closing, Merkel said, “this is transformative change that requires a paradigm shift in how we think about our forests. It will take time and the transition period is the hard part, but the end result is a very positive future for all of us. Importantly, it requires all of us working together, not a top down effort.”

Jim Girvan, principal at MDT Management Decision Technology, chose not to focus on the government’s decision to defer old growth, but rather—in the event that the deferrals become permanent—would identify some of the winners and losers. His list of losers included:

• BC Forest Industry –14 mill closures, two of which have already happened
• Carbon Sequestration – young forests have a higher net carbon capture rate
• Value added – impacted by the loss of fibre and the primaries who supply it
• Rural Communities – 18,000 jobs lost, often the main or only employer in town
• Public Funds – $288 million lost annually, equates to 3,800 elementary teachers
• First Nations – reduced opportunity to participate in the sector

Bob Brash, Charlene Higgins, Susan Yurkovich and Melissa Sanderson

Delving deeper into the merits of the specifics, was the second TLA session on perspectives related to Modernizing Forest Policy in BC. Melissa Sanderson, ADM, Forest Policy and Indigenous Relations, BC Ministry of Forests, described the government’s vision and context—which is that the current policy framework is inadequate to address today’s challenges. According to Sanderson, the Intentions Paper was “greatly informed by engagements that have taken place in the past, notwithstanding the challenge of overlapping crises [covid, fires and floods], and that the engagement will be ongoing”.

Charlene Higgins, CEO of the BC First Nations Forestry Council, described what she’s been hearing from First Nations related to the modernization policies as “one of frustration… and that frustration is growing”. According to Higgins, this is because the polices were developed with no First Nations involvement. …Given government’s alignment with many of the First Nations Forestry Strategy goals, Higgins called the effort a “missed opportunity”. As such, she is seeking a full reset on the engagement process. Higgins concluded by saying, “the public wants a different approach to the use of BC’s forests, with real collaboration with First Nations regarding the use and management of forest land and resources.” And “First Nations involvement in the sector as full partners is the new paradigm that will create the climate for investment needed to support a thriving forest sector.”

Susan Yurkovich, President and CEO of the BC Council of Forest Industries, noted “the importance of this conversation because of  breadth and depth the industry has on the economic and social fabric of the province.” From industry’s perspective, the modernization of BC’s forest policy must start with a fact-based, balanced, and inclusive approach (agreed set of facts and then look at balancing the values); an inclusive group of people (meaning everyone is at the table); have Indigenous Nations as full partners (a say and meaningful revenue sharing); and champion BC’s low-carbon forest products as part of the climate solution.”

“But”, says Yurkovich, “predictable access to fibre at a reasonable cost is the key for all participants, regardless of size. …We need policy choices that are going to create predictability to encourage innovation and reinvestment.” …”There are a lot of challenges but also a lot of opportunities. BC has great people, great fibre, and the expertise, knowhow and technology to capitalize on the opportunity to be the preferred supplier of low-carbon, sustainable management forest products that will fight climate change. But we have to get it right, and we can’t get it right if we aren’t all working together.”

Spurred by recent and significant policy directions and actions by government, the Truck Loggers Association is hosting a series of panels to initiate meaningful collaboration and clarity on the “real impacts of these decisions and the best options to move forward,” said Bob Brash, Executive Director of the TLA. Introduced by TLA President Bill Nelson and moderated by Brash, the first session focused on BC’s markets and investment climate.

Russ Taylor, of Russ Taylor Global, opened with an overview of market trends, concluding that “very favourable prices are expected in 2022 [forecast by Taylor is $700 /Mbf] and into 2023.” Speaking to several of the government’s policy changes, Taylor emphasized the circular nature of the sector and thus the need for a healthy primary logging and lumber industry to provide lumber inputs to value-added businesses, particularly old-growth lumber.  Based on his observations over three decades, Taylor says the value-added strategy is “likely flawed”. “The risks are particularly high for start-ups and under-capitalized firms and the old-growth reductions will mean there is less of the most important fibre to work with, and more competition for what’s left.”

Next up was RBC analyst Paul Quinn, who titled his talk, BC – What Went Wrong and What Needs to Happen Now. As for what went wrong, Quinn says it’s “those policy changes that add even more costs to BC’s new status as North America’s high cost producer”. In effect, Quinn described the government’s efforts to modernize the forest sector as “the problem”. “Capital and investment are risk adverse and money flows away from uncertainty or it requires a premium return to offset the increased risk”, according to Quinn. “Unfortunately, the BC industry is producing below average returns while demonstrating a high and rising risk profile. BC has moved from the lowest cost jurisdiction in North America in 2010 to the highest cost in 2021, and recent policy changes will exacerbate the situation. Simply put, BC is becoming uninvestable”.

Can anyone remember a more tumultuous time in BC forestry? Changes are afoot but the question is whether these changes are built on the solid foundation needed for success. The truth is, probably not. Let’s start with the old-growth issue and government’s decisions to “start” deferring substantial areas from harvest forever. …The truth is, BC has world leading levels of outright protection of land and forests, truly sustainable harvesting, stringent regulatory requirements, and the highest proportion of independently certified forests in the world. …The truth is about 30 per cent of BC’s old-growth forests can grow the “big” trees most of the public associates with their definition of old growth. …The truth is, BC’s value-added sector heavily depends on continued old-growth harvesting.

 The truth is, the government’s truths and objectives are becoming increasingly difficult to decipher. Recent and significant legislative and regulatory changes have been rammed through with negative impacts that will move the sector backward. …The truth is, real engagement and consultation are non-existent and broad decisions to effectively reduce the annual harvest by at least 10 per cent (and likely far more) have been made, incomprehensively, putting up to 20,000 people out of work without any real parallel social and economic analysis. Concrete compensation and transition plans do not exist. And that’s the short list. The far more unfortunate truth is that all of this was avoidable through real engagement with the forestry sector towards a collective strategy and not capitulation to special interest groups.

Many new and substantive forest policy changes in British Columbia have just been announced by government. …One disruptive change is an announced policy to defer timber harvesting in 2.6 million hectares of old growth forests. …The second involves an involuntary redistribution of long-term forest tenures. …These two policy announcements will collectively be a significant impact to the industry with a potential loss of between 10,000 to 12,000 jobs (my loose estimate). …It is my opinion that the BC government’s new forest sector strategies have flaws. They do not seem to be based on science, socio-economics or even good forest data, as the proposed policies show a lack of process and understanding about how the existing forest industry really works.

…A healthy commodity industry is still a prerequisite to allowing success to slowly build in other small or specialty businesses over time. By flipping a switch to reduce the forest tenures for established mills with the hope that unproven and under-capitalized smaller sawmills and value-added businesses can grow is a high-risk strategy. …Even before all these announced policy initiatives, the government can also be credited for allowing BC to be positioned as one of the highest cost commodity lumber producing regions in the world, tied to an ill-designed stumpage formula. Social engineering of the forest industry by the government never really works since you need to have the confidence of investors. Quickly devised social programs that benefit one part of an industry and the expense of another will cause investors to flee. 

The BC forest sector is being overwhelmed by a series of major changes to forest policy. …In the span of less than 30 days, the NDP government has made six announcements that will massively reshape the sector. Taken individually, some of these changes notionally are not necessarily bad ideas. …Unfortunately, delivering these changes as a package all at once will be very problematic. …Primary manufacturers are a strategic component to the rest of the industry, and if they shut down there will be huge holes that will not be filled for years, or maybe never. While rebalancing the sector as a concept has its positives… the series of major policy changes has cast a pale of toxicity onto the industry. It has reaffirmed institutional investors’ view of BC under the NDP as un- investable. Boards of the major companies are now likely directing their operations to reduce unnecessary expenditures and cancel any upgrades. Already, and sadly, contractors are seeing their amount of work diminish.

The Bill 28, Forest Amendment Act is the NDP government’s legislative reform of the Forest Act. Bill 28 provides the Crown mechanisms for making old growth deferrals, implementing tenure redistribution, major revisions to the compensation process for lost harvesting rights, new requirements for forest inventories which will be necessary to support compensation, and a few other issues. Collectively, these are not minor changes and will reshape the forest sector. …The cloud of uncertainty is not going to clear in a few months or even a few years. Without understanding the goal posts of these tenure redistribution reforms, it is hard to draw conclusions, other than there is a potential for a real big mess and a much smaller industry.

Per Russ Taylor: A super rain and windstorm, the so-called “atmospheric river” hit BC and Washington State with catastrophic results last weekend. Main roads and bridges that are integral to the infrastructure throughout BC were breached, including on all major highways and rail lines. …Full details in pictures and videos can be found in the excellent summary prepared by the Washington Post. …The reality from the storm is that business and logistics operations will not be back to even close to normal levels until well into December and perhaps not until after the New Year. This will mean that the lumber supply from BC, and to some degree from Washington State, will be reduced as supply chains remain in disarray. With the Port of Vancouver currently cut off from road and rail service, lumber export deliveries to the port could be limited as the priority should shift to moving more critical cargos through the port – that may not include lumber, so it will need to be redirected into North America.

Per Paul Quinn:

• The impact from BC and Washington State is that lumber supply could be reduced for an extended period.
• The service disruption sets up for a challenging winter transportation season.
• Even prior to the flooding, the lack of containers was a material constraint on export volumes.
• The increase in US softwood duties are a weak reason to increase prices, but buyers are more likely to pay higher prices if mills ask for it
• This leaves risk firmly skewed to the upside heading into 2022.
• Traders are mostly seeing a tighter supply scenario resulting and believe that the price risk is skewed to the upside.

Last week, the BC government announced intentions to defer timber harvesting for 2.6 million hectares of BC’s old growth forests. …Estimates for job losses range from 4,500 to 18,000 jobs. Given there is so some much at stake I would expect Premier Horgan and Minister Conroy to have gone above and beyond to ensure the deferrals announced, along with the science and data behind them was rock solid. …They owed those who would lose their jobs respect and confidence in the decisions given the workers would be paying the price. To my great dismay, I do not see respect or confidence and here is why. …Forsite Consultants recently found that 3.3 million hectares or 29.3% of old growth forests were on sites capable of producing large trees – a sharp contrast to the less than previous 3% estimate. …When the results of the Last Stand report, Forsite and TAP’s Priority Deferrals are compared, I do not see “the same results.”

One of the most absolutely astounding parts about the deferral announcement was the 30-day request to First Nations to indicate support for these deferrals, or not. …[Further] is the misleading nature of the 2.6 million hectares.  As pointed out, the maps show deferrals within protected areas, so those areas are not part of the 2.6 million hectares but we have no way of telling what is. …This is not a transparent or open process and appears designed to confuse (or worse, made up literally in the moment). …First Nations deserve better.  Workers and business owners of the BC forest sector deserve better. We all deserve better. Halt this process, be transparent and get it right – not for the Sierra Club, not for votes, but for the people of this province.

Brian Hawrysh

This week’s announcement from BC’s government on old growth harvesting deferrals was at the same time confusing and potentially devastating to BC’s Forest products industry and more than a hundred forestry dependent communities throughout the province. Equally concerning, is that BC’s value-added wood products manufacturers will likely bear a disproportional share of the job losses that will result. …What is frustrating to the value-added sector is that after months’ of listening to the governments’ public commitment to increasing the value generated from the province’s timber harvest, the old growth announcement appears to be a significant reversal of this stated policy.

Equally concerning is that the plan seems to have been developed without any prior consultation with Indigenous Nations, forestry dependent communities, labour, forest professionals, or representatives from BC’s primary and value-added industry.  In recent years, BC’s value-added wood products sector witnessed a period of strong growth marked by new investments and employment growth.  We are certain that BC has the potential to be home to an even larger value-added wood products sector. …Should the government move ahead without a well thought-out phase in approach, our manufacturers will not be able to adapt and we will lose some of the most innovative and dynamic companies in the industry. Forest policy in the province must and will continue to evolve. BC Wood calls on the government to take a leadership roll and initiate serious discussions… to achieve the goal of establishing a healthy, profitable and sustainable forest industry.

An aura of calm envelops British Columbia’s interior forest industry as the winter log harvesting season approaches. It seems misplaced. There is no lack of concerns. It is true the region is well accustomed to riding the peaks and valleys of an export-reliant forest sector. And perhaps that apparent calmness is attributable to familiarity: several of the issues confronting the industry represent the usual suspects. For example, friction remains with the United States’ duties on Canadian softwood imports. …As of this writing, the B.C. government has been mute in releasing details of promised changes to forest policy in the province, which could influence everything from forest land use and tenure reform to stumpage rates. The government’s inertia leaves the forest industry in limbo and inhibits its planning.

An additional concern is the COVID-19 pandemic. It refuses to abate. …Links in international supply chains have become unreliable or are missing altogether. Markets are understandably skittish but the volatility being demonstrated on a regular basis is unprecedented. The dramatic decline in lumber prices coupled with the B.C. Interior’s status as a high cost lumber producing region has already re-introduced a familiar foe. …production curtailments. …All the latest changes and challenges facing the B.C. Interior forest industry come as the sector is attempting to rationalize its operations in the post-lodgepole pine beetle epidemic era. …A similar situation faces the logging contractors. …Maybe that apparent calmness within the B.C. interior forest industry is actually a quiet desperation.

The Last Stand report, published as input to the Old Growth Strategic Review conducted by the NDP government in 2020, concludes: There is less than 3% (or 415,000 hectares) of old growth forests with large trees remaining in the province.” The notion of “less than 3%” was immediately embraced by prominent environment organizations… [and] the government has since committed to implementing its Strategic Review of How British Columbia Manages for Old Forests”. …According to Katrine Conroy, Minister of Forests, the government is committed to ensuring the use of the “best science and data available.” The commitment stands out because… Forsite Consultants, a highly respected firm known for its expertise in forest inventory analysis has recently published a new perspective.

Forsite’s report found… 3.3 million hectares or 29.3% of old growth forests were on sites that met The Last Stand report’s definition for producing large trees – a sharp contrast to the less than 3% estimate. Bottomline – Forsite used better, more current data and a more appropriate methodology. …Now we have better data – does that not change things? Did the government know better information existed? If the government was aware, why has it not been presented to the public? And why has the 3% estimate not been challenged? …As a forester and a British Columbian, I just want to know the truth. …My comments are not meant to question the abilities of The Last Stand report’s authors, rather my concerns rest with their estimates generated. Forsite has demonstrated there is better data and… the accuracy of estimates is a very serious issue given the implications to the livelihoods of people of this province.

Arising out the BC Government’s Modernizing Forest Policy intentions has come some recently introduced legislative changes, with amendments to the Forest and Range Practices Act. …One important positive change is the introduction of shared decision making with government and First Nations in the development of forest landscape plans. This change represents further steps to reconciliation and greater (and direct) assertion of the Indigenous voice at the forest landscape planning level. Looking at the big picture, the following is my offering of considerations:

• MEANINGFUL RELATIONSHIP building by industry participants with First Nations will be critical to ensure a steady supply of fibre to mills.
• NO GUARANTEES that First Nations owning tenure and harvesting timber will help achieve economic self-determination. Tenure management is not easy and is costly. 
• CAPACITY is a critical element for success. Finding experienced staff to work for government will be a major pinch point as it increases its role in forest management.
• UNCERTAINTIES are part and parcel of operating in the natural resource sector today.
• INEVITABLE CONSEQUENCES WILL BE A SMALLER INDUSTRY – landscape level planning, old growth deferrals, wildfires, at risk wildlife species habitat management – all will likely contribute to reductions in AAC.
• COLONIALISM & RETURN MAXIMIZATION  I would like to see and help more First Nations move further along the value chain with their harvested timber, maximizing returns to their communities.

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While I would never presume to see the industry through the lens of Indigenous people, I have spent the last two years almost exclusively working on First Nations-related projects. I have found the work complex, dynamic and rewarding. Embracing and understanding the Indigenous voice is the path forward. …The voice of Indigenous peoples is rising loudly and with it comes the winds of change to the BC forest sector. These winds are being carried forward by a multitude of policy initiatives and legislation instigated by the NDP government. …While I suspect many in the sector are worried about the uncertainties of the government’s initiatives, I believe these are exciting times to witness First Nations (re)gaining greater control of lands within their traditional territories and seeking to strengthen their economic self- sufficiency.

Jim Girvan

On the heels of the mountain pine beetle epidemic, a number of new threats in the form of land use planning decisions may again threaten the solid wood and pulp and paper sectors. …Key land use decisions pertaining to old-growth preservation and caribou habitat protection are the big hitters. Other factors include fires, spruce beetle infestations, First Nations tenure transfers, landscape level planning and harvest deferrals to generate carbon credits. In order to understand the impact that old-growth deferral may have, an analysis was undertaken to assess the remaining old-growth timber by provincial landscape unit.

…On the coast, preservation of old growth at the 30 per cent threshold would result in… a whopping 40 per cent reduction of the AAC. For the Interior, the results were similarly shocking… a 30 per cent reduction in the AAC. A caribou habitat protection plan… suggesting protection of at least 65 per cent of all forested area by landscape unit… and the BC Interior would see another 10 per cent reduction. …With all of the assumptions made… on the Coast… we would see the closure of another four sawmills and a third of the Coast’s shake and shingle industry. In the Interior… we would expect to see the closure of another five sawmills and two veneer plants. On the pulp and paper side… it is likely that at least two or more Interior pulp mills and potentially a coastal paper mill would be forced to curtail. …Job loss across BC in the logging and trucking sectors together with all of the closures would devastate many rural communities. 

Over the past several months, I had the honour of engaging… with many of BC’s resource communities’ leadership. The one consistent question I continued to hear was, “why do we still log old growth?” It’s a fair question asked by those who want to support forestry, but also want to better understand the issues. …The simple answer is, it’s very complex. And the challenge in answering this question is it doesn’t fit into today’s digital demand for a 15-second sound bite. To start, we need to address the economic reasons to continue old growth harvesting. Today, about 27 per cent (50 per cent on the Coast) of BC’s annual harvest remains dependent on old growth. And the reality is the reliance on harvesting old growth is significant to BC’s viability to the tune of 100,000 jobs, 140 dependent resource communities, $15 billion in GDP, and $4 billion in tax revenues.

Currently, the vast majority of the sector depends on old growth for its products. There will be opportunities for value-added using second growth but the enhanced development of these opportunities will take significant capital in terms of new machinery and technology along with years to develop the markets for any such envisioned products. In other words, we need time to transition along with an investment climate that will be stable and considered favourable to those making such business decisions. …Despite varying perspectives, the reality is that all old growth is not created equal simply due to where it grows and its history. …And many of the stands are in a state of decay and mortality rendering them ineffective in the climate objective of sequestering carbon. 

In the second week of September something happened which has not occurred for a very long time with any Canadian provincial government – the Saskatchewan government announced new timber allocations. …All four companies receiving these timber allocations have capacity investments of almost $1 billion. …Saskatchewan’s announcements make me want to call this province the “US South of Canada” because I cannot recall in the last decade when else such a large active expansion of the Canadian industry has taken place.

…One might conclude that the geographical limits of economically feasible timber supply in the BC interior were tested with this last price rally given the record margins earned by sawmills. …Major capacity investments will go elsewhere as BC government policy cannot just physically increase timber supply in the short term, unlike Saskatchewan where provincial forests were underutilized. Furthermore, BC has some of the highest delivered log costs in North America in part due to its stumpage system.

Reduced options due to a constrained timber supply also explains the reasoning behind why the BC government continuously pushes for “value-added manufacturing” (it is just too bad, no one really knows what value-added means). The challenge for the BC government will be to develop unique policy that supports the industry while timber supply is shrinking (and to hopefully not make further arbitrary supply reductions i.e., politically motivated old growth timber deferrals). Ironically, all four companies receiving timber allocations in Saskatchewan are BC-based companies.

Russ Taylor Global: The global pandemic has created a wild lumber market since April 2020. …Following the peak of US lumber prices in late May 2021 at US$1,630/Mbf… lumber prices have slowly clawed their way higher to US$472/Mbf (as of Sept 17)… [and] the outlook is for improving US prices into fourth quarter before a likely correction occurs later in the year. In looking into 2022, prices could be in the US $600/Mbf range at times in Q1 and Q2 before a more balanced supply and demand situation occurs with lower prices. Considering that the peak US lumber prices prior to 2018 was US$470/Mbf… projected price levels should look extremely attractive to most North American lumber mills. However, not in BC.

In Europe, the situation is like the US but with a different price cycle. While US prices took off very quickly at the start of the pandemic, European prices lagged and grew slowly as domestic as well as offshore market conditions took longer to crystallize. …In Asian markets, a somewhat similar trend to Europe is evident in Japan, where are prices peaked two to three months after the US market peak. …The cost structures of the BC interior sawmills are the worst in North America right now. …As a result, BC mills may be facing further curtailments in 2021-Q4 unless prices rise by up to US$100/Mbf, or until stumpage corrects to much lower levels starting in 2022-Q1. BC Coast mills are also negatively impacted by higher government stumpage rates.

Christine Gelowitz

The Association of BC Forest Professionals (ABCFP) has received a range of concerns from registrants in recent weeks about the individuals appointed to the provincial government’s old growth technical panel. These concerns range from questions about the qualification of the panel members to… concern about registrants who are critical of the government’s selection of candidates. …Some perspective is needed. First, the role of the ABCFP under the Professional Governance Act (PGA) is to ensure that only competent, registered forest professionals practice professional forestry. …This does not mean that the ABCFP governs the opinions of forest professionals or their freedom to express different viewpoints publicly. Second, the government is entitled to choose its advisors on matters of public policy.

These are challenging and polarizing times… and regardless of personal views about the management of public forests, forest professionals have to step back and re-examine the public interest at this pivotal time in history. …And while personal opinions of forest professionals can help shape the dialogue and direction, they must always remain cognizant that determining the outcome about how BC forests will be used or managed is the role of government. …The diverse, informed voices of forest professionals are integral to developing sustainable long-term solutions in forest management. Despite the challenges speaking out can present, I encourage you to find meaningful ways to wade into or lead discussions, to not get caught up in opinion-based rhetoric, but rather bring data and knowledge… to best meet the evolving public and First Nations interests.

BC, Alberta and New Brunswick, have different methodologies of setting stumpage rates for provincial sawlogs that can disproportionately impact sawmill operators.

When it comes to trying to analyze how public timber stumpage prices are set by some provinces in Canada for companies holding forest licences, this can be a real puzzle. Three provinces, British Columbia, Alberta and New Brunswick, have different methodologies of calculating and setting stumpage rates for provincial sawlogs that can disproportionately impact sawmill operators, as summarized below. New Brunswick has held its rates at the same level as was set six years ago. …Consequently, the provincial government may have foregone millions of dollars in public timber revenues in the last four quarters. …Alberta has taken the other extreme where timber stumpage prices are tied in a formula to monthly lumber prices for the previous four weeks. …In contrast to New Brunswick, Alberta appears to have captured its fair share on the value of its crown timber. In the middle is British Columbia with a third approach, and one that has turned out to be messy at times for forest operators when lumber prices are volatile.

Pricing timber on public forests does not have to be complicated for forest operators and sawmills, as Alberta and New Brunswick demonstrate. Why these three provincial stumpage systems are so widely different – and why BC’s timber formula lags the reality of lumber market prices – is a real puzzle. How then are the Americans supposed to assess these different provincial stumpage formulas as all being equitable, especially when the negotiations on the next US-Canada softwood lumber agreement take place?

The last few years of wildfires in BC… are a concern for all. In 2017, wildfire burnt a record 1.2 million hectares, which stunned everyone, including a fledgling NDP government. …Little did anyone know then, that 2018’s wildfire season would surpass 2017’s. With 2.6 million hectares burnt in these two years, was this a new trend in wildfire activity? The following two years, 2019 and 2020, were essentially no shows in terms of wildfire activity… Then came 2021, with 862,992 hectares estimated as burnt so far – the third greatest amount of area burnt, at least in the last 30 years. Astoundingly, these three standout years had a total area burnt that was approximately 1% of the entire province for each year – three occurrences so close together, now that makes for a bonafide trend. 

With this new trend established, the Province should be modeling impacts to timber supply and communities on a regional basis, reviewing how wildfires are budgeted for, reviewing how wildfires are fought, reviewing how they are dealt with afterwards, and to seek a massive boost in investments for mitigative treatments and infrastructure. With regards to the supply chain… The potential for wildfires to impact sawmills is anticipated every year and as such are usually prepared with built-up log yard inventories. Unfortunately, in areas with repetitive intense wildfire activity, sawmills will have their long-term timber supply reduced and may become the ones with some of the highest probabilities of closure in the province. 

Balanced solutions to B.C.’s old-growth forests protection that best serves all British Columbians is possible — but it seems out of reach. For example, the provincial government’s recently announced Old Growth Technical Advisory Panel that will dictate government’s decision-making on logging deferrals is very troubling. Not because of its intent, but for the blatant unbalanced representation of its members. This committee — absent of any forest-sector professionals, forestry-dependent communities or First Nations leadership — will recommend and lobby for new areas needed to be protected without any understanding of the consequences of their opinions. …But dig a bit deeper and you’ll find the composition of its members dominated by Sierra Club affiliates and other individuals … vocally against any continued old-growth harvesting.

…In the Fairy Creek standoff, sophisticated and wealthy environmental groups distort facts, disrespect First Nations leadership, recklessly ignore fire hazards, steal and vandalize equipment, leave their trash and encourage illegal blockades, but yet seem to be rewarded for such behaviour by being given the opportunity to comprise an unaccountable committee that will ultimately determine the future state of our forest industry. …There is a path forward that will work, but it requires people to actually talk to each other as opposed to an apparent encouragement of separate polarized camps of opinion. …The world’s need and desire for wood will not diminish. Shutting down old-growth logging in BC will only move the supply to unregulated regimes. 

Bruce Blackwell

Some of the most pressing and challenging issues that pose significant barriers to prescribed fire application include: our broad land management framework… gaps in legislation and policy and even definitions… legal liability for fire escapes… protection of human health and current smoke management guidelines… current high fuel loads… and capacity limitations as it relates to training and skills to execute sound, ecologically appropriate prescribed burns. …Before we can increase the landscape application of prescribed fire to a scale that is required to address the current fuel problems, we must work to reduce the barriers listed. As a collective group of practitioners, we need to do a better job of finding solutions to the barriers.