Category Archives: Opinion / EdiTOADial

Today’s Takeaway

Canadian rail companies’ bidding war over US railway gets ugly

April 26, 2021
Category: Today's Takeaway, Opinion / EdiTOADial

Kansas City Southern will begin talks with CN Rail, as the slugfest between Canadian archrivals (CN and CP) gets ugly. In other Business news: new home sales jump again in the US, Gorman’s Nick Arkle on why lumber is so expensive; Brock Mulligan on the related boon for Alberta’s forest industry; the Wall Street Journal on why this market ride is more robust than past booms; and Cees de Jager on the Softwood Lumber Board 2020 ROI. Companies in the news include: Paper Excellence, Kandola Forest Products, and Biewer Lumber.

In Forestry/Climate news: Joe Biden’s Climate Summit fails to satisfy the critics, particularly on the biomass and media coverage front; and in mass timber news, BC to study economics of its use in affordable housing; and Wisconsin considers early adoption of codes permitting its use.

Finally, is a coveted guitar wood on the stairway to heaven?

Kelly McCloskey, Tree Frog Editor

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Opinion / EdiTOADial

Massive scale of top global lumber companies after recent acquisitions

By Russ Taylor, President, Russ Taylor Global
Russ Taylor Global
December 1, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

Assuming all the announced transactions are completed. …The top five companies are led by #1 West Fraser (which is also the largest OSB producer), followed closely by #2 Canfor (including its Swedish mills), #3 Weyerhaeuser, #4 Interfor (with its recent acquisition of EACOM as well as four G-P mills), and #5 Sierra-Pacific (with its acquisition of Seneca). Each of these behemoth companies have more than 5 million m3 (3 billion bf) of lumber capacity. Stora Enso at #6… with mills throughout nine countries in Europe as well as Russia. Moving up quickly in the ranks… is #7 binderholz headquartered in Austria with the strategic acquisitions of the two ex-Klausner sawmills in the US South and BSW’s seven sawmill sites in the UK, one in Latvia and seven other production sites in the UK.

Achieving the 3 million cubic meter threshold is #12 Segezha Group, a Russian company that recently acquired a major Russian competitor, LLC Inter Forest Rus, which in turn comprises 24 forest industry assets, including some world-class sawmills, and a substantial forest resource base in Siberia. The other new entry to the list is #25 GreenFirst Forest Products that acquired the six sawmills from Rayonier A.M in Ontario and Quebec, and previously had acquired one additional sawmill in Ontario. Thirteen of the top 26 companies are based in North America, with the three of the top four based in Vancouver BC. Eight of these North American companies have mills in both Canada and the US. In Europe, there are four to five companies just hovering at or below the 1.6 million m3 threshold and they should make the list soon. The top 12 companies’ capacities represent 18.4% of 2020 global lumber production, where the total list of 26 companies’ share was 25.7%

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Lumber, panel and pulp outlooks amid labour woes and remodeling strength

Kevin Mason, Managing Director
ERA Forest Products Research
November 1, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

Kevin Mason

Lumber markets have enjoyed a fantastic month. …However, with the seasonally slower demand period approaching, we see limited near-term upside for prices. A capitulation is not anticipated, but lumber prices should start cycling lower later in the quarter before rebounding again in the spring. OSB prices moved higher… [but] further gains should be limited. …In plywood, prices have nudged higher in both the West and the South, but cracks are appearing and further upside is unlikely. Pulp prices have come under increasing pressure following widespread Chinese power cuts that have reduced paper & board operating rates. China will — as always — lead price direction, but we expect other regions to follow through Q4/early 2022 at a faster pace than our prior forecast reflected.

Labour shortages have intensified since COVID-19 entered our collective discourse, and there is scarcely a corner of the global economy that hasn’t been impacted by labour-related challenges. …Virtually all of the companies we cover have seen labour shortages worsen over the past 20 months, and labour supply was already tight to begin with — particularly in the U.S. South, where much of North America’s forest products jobs are located and where future growth will be centralized. …The outlook for North American repair and remodel activity remains robust. …Focusing just on wood products (lumber, OSB, plywood), given our forecast for continued elevated commodity pricing into at least H1/22, the high-single-digit growth in R&R spending should translate into low-single-digit growth in solid wood volumes. We are currently forecasting solid-wood demand from the R&R channel growing by 2%–3% next year. 

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Thinking like a continent — the value of investing in forestry rather than softwood disputes

By Carlton Owen, retired CEO, US Endowment for Forestry and Communities
Tree Frog Editorial
October 11, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

Carlton Owen

Regardless of where one stands on the Softwood Lumber Agreement 2006 (SLA) and the funds that were granted to “meritorious initiatives” in the states, I believe there is much evidence that at least one of the funded entities – the U.S. Endowment for Forestry and Communities [the Endowment] – rose not just to the letter but more to the spirit of the agreement. …When the Endowment and other institutions were funded some stories in the Canadian press charged the monies would be used as “slush fund” to promote political agendas.  I believe history records nothing of the kind.

As a result of the Endowment’s work, we now have industry leaders from the Canada and the U.S. sitting at the same tables via the Softwood Lumber Board and the Paper Board making investments for the future.  Likewise, the Forest Health and Innovation Summits have the Chiefs of our respective federal forest agencies leading their entities into deeper and more effective cross-border collaboration. Both represent strong foundations upon which a brighter future is not just possible but palpably within grasp.  What more could be accomplished for the continent’s forests and their respective forest industries if instead of investing in legal disputes such as the ongoing softwood lumber wars, we instead invested in forest retention, forest health and forest products markets?

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The potential impact of vaccine mandates on forest products

By Paul Quinn, RBC Equity Analyst
RBC Capital Markets
September 29, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

Paul Quinn

We expect that the net impact of vaccine mandates would be neutral to slightly positive for wood product producers given that the positive pricing impact (from the loss of supply) would likely outweigh the impact of lost production. However, we expect that the impact will skew less positive for producers that are more heavily weighted to the US South such as Weyerhaeuser, West Fraser, and Interfor. Companies exposed to more highly vaccinated regions and Canada such as Resolute and Canfor could see higher pricing without the negative of lost production. …With many facilities already facing labor shortages, we think that the addition of a vaccine mandate could make running day-to-day operations even more challenging.

In lumber markets, we found that sawmills in the US South are most likely to be impacted by a vaccine mandate, with production-weighted average vaccination rates in the 44% range. While there is no vaccine mandate in Canada, vaccination rates were highest in Eastern Canada and the BC Interior. We believe that higher regional vaccination rates are likely to result in less missed time and forced time-off for quarantine. ….Assessing the potential impact on OSB markets – similarly, we found that the South East and South West had lower vaccination rates than Eastern and Western Canada. …In siding markets, we found that while overall risk to production is low, certain facilities could face greater risk.

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Lumber’s pause, panel’s fall, pulp’s drift and carbon’s rise

Kevin Mason, Managing Director
ERA Forest Products Research
August 23, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

Kevin Mason

It has been a mixed couple of months for North American lumber prices, with a modest recovery in SPF prices in late July giving way to further declines over the last couple of weeks… but we do not expect to see a meaningful rebound in prices until retail chains work through the last of their high-priced inventory. …OSB prices have been in freefall for the past six weeks. …A more positive tone has emerged in the last week, suggesting a price floor is not far off. But with new supply hitting the market, we do not expect a meaningful rebound. Plywood markets have followed a similar trend. …Pulp spot prices have continued to drift lower after an initial July correction. Demand is weakest in China, leading to somewhat better availability in Europe and North America

Overdue action on carbon emissions is being expressed through steep rises in carbon prices in both NZ and the EU. The NZ unit is close to NZ$50 after spending most of its history well below NZ$30. …In Europe, a targeted 55% emissions reduction by 2030 will be supported by explicit pricing of carbon pollution through their own evolving emission trading system (ETS). The recent €56 per tonne level is more than double the year-ago level. …Harvest deferrals for carbon present the greatest opportunity for Southern timberland owners, with limited impact on timber supply. In the Pacific Northwest, timber market prices are too rich for carbon prices to compete (at current levels). It is early days, but log/timber costs are going to be shifting for many reasons (European bark beetle peaking, Russian log export ban, carbon pricing, etc.). 

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Wasted Days and Wasted Nights – the Canada/US Softwood Lumber Dispute (Part 2 of 2)

Carlton Owen, retired CEO, US Endowment for Forestry and Communities
Tree Frog Editorial
July 20, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

Carlton Owen

(Part 2 of 2 — click here for Part 1)

While to some in the U.S. it might seem worthwhile to keep this fight going, I argue that it’s time to try something different with regards to the long-running softwood lumber dispute. …Here’s my “simple solution.” For example, let’s… agree to assess ten percent of the exchange rate value – in this case just 3% — of the sales price of lumber exported from Canada to the U.S. and invest those funds in a Canadian controlled North American Forest Futures Fund (NAF).  Those returns could then be used… by FPInnovations (for cross-border softwood lumber research projects); by the U.S. Endowment and USDA Forest Service Forest Products Laboratory (for cross-border softwood lumber/coniferous forest research projects), and to support conservation of working private forests in Canada and the US.

Among the first projects that the U.S. Endowment for Forestry and Communities took on under my leadership was the study and groundwork for establishment of a global commodity research and promotion program (a.k.a. “commodity checkoff”) for a forest product — softwood lumber. The resulting Softwood Lumber Board has established an enviable track record of what can result from sustained collective investment in market protection and growth. It’s time to bring the continent’s longest running trade dispute to a close and shift to a sustained investment vehicle that will benefit all in the greater forest sector. This work is too important to leave to governments alone or the shrillest voices at the extremes of the sector. The future of forests and forest products are in the balance.

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Wasted Days and Wasted Nights – the Canada/US Softwood Lumber Dispute (Part 1 of 2)

By Carlton Owen, retired CEO, US Endowment for Forestry and Communities
Tree Frog Editorial
July 19, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

Carlton Owen

After 20 years the United States is calling quits to its longest shooting war – Afghanistan. The two aptly named “World Wars” lasted an average of just over five years. Yet, our longest trade dispute – that between the U.S. and Canada over softwood lumber — has being going on for nearly four decades! Fortunately, trade disputes aren’t fought with bombs and bullets; but like most wars, there are few gains, and many loses just the same. …Having worked with two major U.S. forest products producers that stood on opposite sides of the dispute… and having spent a not-insignificant time in Canada, I understand the views of both factions. Yet I see almost no lasting gains to Coalition supporters with perhaps Canadians being the greater beneficiaries.

Generally speaking… dollars exacted under the various chapters of the softwood lumber dispute have either been retained in Canada and used to support its forest sector or have been rebated to the producers. Where duties served to shore up the selling price of lumber, Canadian producers benefited just as did U.S. producers. But, if the lion’s share of duties were ultimately refunded to producers in one form or another, can someone please explain how such has extracted lasting pain or loss to the Canadian sector? At the same time, the dispute has done much to distract from market growth and at times has had some of the sectors most important customers… attacking the U.S. industry and seeking Congressional intervention. …It’s time to look for new solutions.

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Panel prices hold firm despite lumber’s freefall, but Q3 pullback expected

Kevin Mason, Managing Director
ERA Forest Products Research
July 1, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

Kevin Mason

While North American lumber markets have spent most of the month in freefall, OSB markets have shown incredible resilience, with prices still nudging further into record-breaking territory through the month. Simply put, OSB is less exposed to softness in the repair and remodel channel, thus robust demand from residential construction has been enough to keep markets tight and producers in the driver’s seat. …However, with incremental new supply from West Fraser’s restarted Chambord, QC mill and the upcoming restart of LP’s Peace Valley, BC mill in Q3, the peak is likely approaching quickly, and we expect OSB prices to retreat in Q3 and continue trending lower through the balance of the year.

North American plywood markets have piggybacked on incredible strength in OSB over the last 12 months and are also sitting near record highs today. …While we do expect plywood prices to moderate in the second half of 2021 (along with OSB), the rate of decline could be slower than initially anticipated if the ongoing dispute over the grading of South American imports slows the flow of Brazilian panels into the U.S. …As the world moves toward a low to negative carbon future, industrial pellets are one of the many natural climate solutions available right now and at scale. …Companies in the U.S. South, with its vast (and growing) forest resources and relatively stable chip prices, are tapping this opportunity.

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Do we have enough lumber to meet North American Demand in 2021 and 2022

By Russ Taylor, president, Russ Taylor Global
The Truck LoggerBC Magazine
July 9, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

With the wild price run that has been in effect since about June of 2020, it is starting to become more obvious that the North American wood products supply chain is completely strained. …While a temporary shortage of lumber, OSB and plywood has occurred, it is more a function of short-term constraints [which] have impacted the supply side during this strong demand cycle, so hence the runaway commodity wood products prices. The simple math is this… If demand grows by more than about 2.5 billion bf this year and in 2022, then there will be a potential gap and that will create more ongoing price volatility. The only region in North America that has added any significant new lumber capacity in North America is the US South. 

Historically we would expect to see SPF prices more in the US$350 to $400/MBF range. In early June, at the time of writing, 2×4 SPF prices… were starting to move rapidly lower. We all know that when commodity prices go way up that they will eventually have to come down. However, I do not believe prices are going to crash and burn. I believe we are going to see a retrenchment to lower prices over the course of this year, but perhaps not below $1,000/MBF. Prices will eventually stabilize and will be selling at elevated levels over those of the 2010 decade. There is still good news ahead for sawmillers.

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W-SPF 2×4’s at $2,000? The ongoing surge in demand Is creating unbelievable prices!

By Russ Taylor, President
Russ Taylor Global
May 4, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

In late July 2020 I… posed the question if W-SPF 2×4 #2&Better lumber could achieve the US$1,000/Mbf threshold in the COVID-induced rally that had started. At that time, W-SPF was trading at US$678/Mbf – or just over two-thirds of the way from the $1,000 target. …Is a $2,000 price for SPF possible during this cycle? Prices have increased $400/Mbf in the last five weeks – if this sizzling pace (averaging $80/week) were to continue, we would be there in nine weeks, or the end of June! 

There are many demand factors that continue to favour the strong demand cycle and they still outweigh the negative factors, at least for now. …History suggests that whenever expectations get too lofty, things can change for the negative very quickly. And nothing cures high lumber prices like high lumber prices. …There are already spot market transactions of 9-foot studs at over $1,800/Mbf delivered to the US east coast and Texas. Getting to the $2,000/Mbf threshold for some products on a delivered basis is possible and, in fact, highly likely! Whether the W-SPF 2×4 R/L FOB mill price gets there is probably a stretch, but momentum suggests it will get close. …As always, the outcome will be played out in the lumber markets and no one can really predict what is going to happen in this crazy cycle until it happens!

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Missing the Forest for the Trees

By Kevin Williamson
The National Review
March 18, 2021
Category: Opinion / EdiTOADial
Region: Canada, United States

Kevin Williamson

It is mystifying that free trade remains a policy without a constituency, when there are so many natural constituencies for it — people who live in houses for example. …Join me for a trip down memory lane back to the heady days of 2017, when, under the very best thinking brought to you by… our government decided that one of the biggest and more urgent problems facing Americans was a splendid supply of inexpensive lumber — specifically, that those wily, inscrutable, nefarious . . . Canadians were selling the stuff too cheap in U.S. markets, thereby undercutting the critical economic position of — oh, I don’t know, Paul Bunyan, I guess.

…Even with lumber prices at a record high, the Biden administration is continuing the Trump administration’s policy of imposing a punitive sales tax on American consumers to punish them for buying Canadian lumber. …It’s pure special-interest politics. …Americans do not need to be protected from low prices and abundance, from high-quality building supplies provided at reasonable rates. Low prices and abundance: That is a policy that might appeal to some people. Those who live in houses and apartments, for instance.

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A healthy commodity industry is a prerequisite to a growing value added sector: Taylor

By Russ Taylor, President, Russ Taylor Global
Russ Taylor Global
December 9, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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. 

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A Flood Of Forest Policy Changes in BC

By David Elstone, RPF, Managing Director
The Spar Tree Group
November 26, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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.

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Catastrophic Floods in BC Drive Lumber Prices Higher

By Russ Taylor and Paul Quinn
Russ Taylor Global and RBC Capital Markets
November 22, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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.

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Best science and data not used to develop old growth deferrals

By David Elstone, RPF, Managing Director
The Spar Tree Group
November 12, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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.

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BC’s value-added manufacturers will bear a disproportional share of job losses from old growth deferrals

Brian Hawrysh, CEO
The BC Wood Specialties Group
November 4, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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.

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BC’s interior forest industry – an aura of calm or quiet desperation?

By Jim Stirling
The Logging & Sawmilling Journal
October 29, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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.

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The Best Science And Data Available On BC’s Old Growth Forests? Has the Public Been Misinformed?

By David Elstone, RPF, Managing Director
The Spar Tree Group
October 29, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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.

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Indigenous Winds Of Change – Modernizing BC’s Forest Policy (PART 2)

By Dave Elstone, Managing Director
The Spar Tree Group
October 27, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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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Indigenous Winds Of Change – Modernizing BC’s Forest Policy (PART 1)

By David Elstone, RPF, Managing Director of the Spar Tree Group
The Spar Tree Group
October 22, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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.

The current allocation and availability of forest tenure along with the process for managing allowable annual cut (“AAC”) are prominent elements targeted for change. …Tenure redistribution harkens back to the BC Forest Revitalization Act of 2003 when the BC Liberal government conducted a “take back” of 20% of the AAC from major licensees for redistribution. …Contemplating another take back of sorts is a significant move. To contextualize the goal of increasing First Nations held tenure, I have estimated the amount of forest tenure owned by First Nations. …I have counted nearly 300 First Nations-owned forest tenures of various sizes, with some First Nations owning multiple tenures. There is an estimated 10.5 million cubic metres of tenure/AAC or 17% that has some level of First Nations’ ownership out of a total estimated 63.4 million m3 of AAC.

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Land Use Planning Decisions Could Devastate the BC Forest Industry

By Jim Girvan, RPF, principal MDT Management Decision and Technology Ltd.
The Truck LoggerBC Magazine
October 4, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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. 

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Why do we still log old growth?

By Bob Brash, RPF, Truck Loggers Association executive director
The Truck LoggerBC Magazine
October 4, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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. 

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Canada’s very own US South

By David Elstone, RPF, Managing Director of the Spar Tree Group
The Spar Tree Group
September 24, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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.

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Global Lumber Prices Resetting – Market Power Shifts To Buyers

By Russ Taylor, President, Russ Taylor Global
View from the Stump
September 24, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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.

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Let’s Take a Deep Breath About the Old Growth Technical Panel

By Christine Gelowitz, RPF, Association of BC Forest Professionals CEO
The Association of BC Forest Professionals
August 30, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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.

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A Perplexing Puzzle – Provincial Stumpage Rates in Canada

By Russ Taylor, President, Russ Taylor Global
Russ Taylor Global
August 26, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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?

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BC Wildfires – Definitely a New Trend

By David Elstone, RPF, Managing Director of the Spar Tree Group
The Spar Tree Group
August 25, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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. 

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BC’s Forests Deserve Facts Not Fabrications

By Bob Brash, RPF, Truck Loggers Association executive director
Victoria Times Colonist
August 17, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

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. 

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What are the barriers and complexity to increasing the area treated by prescribed fire?

By Bruce Blackwell, RPF, Principal, B.A. Blackwell and Associates
Tree Frog Editorial
August 3, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Bruce Blackwell

VANCOUVER, BC — Very early on during this current fire season, and following the Lytton wildfire, there have been numerous calls to increase the use of prescribed fire to mitigate the current landscape fire risk that British Columbia faces. …While I agree there is great need to increase the application of this ecologically appropriate and cost-effective tool, there has been little dialogue about solutions to the many barriers that currently limit its application. British Columbia is Canada’s most ecological diverse province with over 200 biogeoclimatic subzones/variants. Prescribed fire is suitable in some of these ecosystems, and its application requires careful planning and implementation to ensure it’s used appropriately and achieves sound ecological objectives – it’s not just about lighting a match.

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.

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Time for logging protests to stop

By W.E. (Bill) Dumont, RPF
Cowichan Valley Citizen
July 29, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Bill Dumont

It is distressing and disrespectful that the Fairy Creek protesters have collected more than $1 million from the public using the Pacheedaht traditional territory and Pacheedaht resources to achieve that milestone. In addition to the urgent need for full transparency about what has happened with those funds the protesters should be delivering most of it to the Pacheedaht leadership and community who have continually and respectfully asked for these outsiders to leave their ancestral lands. With Trump-like misinformation about B.C.’s forestry practices the year-long Fairy Creek campaign has continued even though major logging deferrals were agreed to by the Pacheedaht, Teal Jones and the B.C. government months ago.

Lawlessness is escalating at Fairy Creek with illegal tree falling, continued civil disobedience, attacks on the hardworking RCMP enforcing a legal injunction, littering and vandalism including defacing road safety signs. Protester presence adds to already high forest fire risks in the area and there are significant human waste issues there. All taxpayers are being burdened by paying the huge costs of policing and protecting the public and the Pacheedaht people. The protesters and others supporting them are acting in a paternal and colonial manner by demanding the Pacheedaht people adhere to the protesters’ views of logging and resource development and promoting conflict in the Pacheedaht community. Time for this craziness to stop!

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Done right, modernizing forest policy in BC can benefit all of us

By Bob Brash, TLA Executive Director
The Truck LoggerBC Magazine
July 7, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

It’s a new decade, and we are now pondering government’s just-released initiative, “Modernizing Forest Policy in BC; Setting the Intention and Leading the Forest Sector Transition”. …First impressions? Obviously, the reference to completing the Contractor Sustainability Review process… was necessary and very welcomed. …More broadly, there are many elements we can agree on, be it through increased allocations to Indigenous peoples, increased volumes to communities, altering the BC Timber Sales program, or promotion of volumes directed to value-added manufacturers. …I’m doubtful about how exactly the intention of improving BC’s investment climate and our overall competitiveness will be achieved… taking away tenure from the majors (and potentially contractors) with an undefined compensation package.

Yet another important issue is the old-growth strategy. Government needs to make decisions based on facts, not the fictitious headlines that inundate media. Unfortunately, the math is a bit too simple: the more area government protects, the smaller the forestry sector will become. …Our expectation is that government will consult with those actively involved and responsible for delivering on most of the aspirations outlined, who include BC’s logging contractors, resource communities, and suppliers. We collectively bring a grounded reality and practicality to what can realistically and successfully be accomplished. We are amid yet another critical point in history. This time, if done right, the difference will be that such changes end up benefitting all of us in BC’s forest industry.

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The contradiction of uncertainty and investment in B.C.’s forestry sector

By Bob Brash, Executive Director, Truck Loggers Association
The Province
April 17, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Yet again, the forest industry is caught in an escalating cycle of those opposed to B.C.’s resource sector and those whose livelihoods rely on our forests. In all ways, we should be thankful that peaceful and lawful protests can occur in our democracy. So kudos to those local community groups expressing desire for change; while we may not be in agreement about the changes, we do agree change is needed, and look forward to working with them in forging a successful future together. These days call upon all of us to take a long, hard look at how B.C.’s citizens want its forestry sector and economy to prosper. And we need to do this with facts and balance, not hyperbole and rhetoric. We will continue to speak out on the need to protect and enhance B.C.’s working forests as an absolute necessity. Without such assurances, any new business will be hard-pressed to make major investments in technology and productivity. 

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The Contradiction of Uncertainty and Investment

By Bob Brash, TLA Executive Director
Truck LoggerBC Magazine
April 12, 2021
Category: Opinion / EdiTOADial
Region: Canada, Canada West

The latest [media] stunt being [played by] some ENGOs is the “failing report card” on the government’s handling of the old-growth logging issue. Cute, but not really constructive. These days call upon all of us to take a long hard look at where we want BC’s forest sector and economy to head. But first, some fundamental contradictions have to be tackled head on. For some, there seems to be a false sense of reality that the current state of our forestry sector is just fine. Unfortunately, those of us in the business know very well that our reality is full of uncertainty and is stifling BC’s investment climate. We’ve often commented on (and will continue to do so) the need to protect and enhance BC’s working forests. Without such assurances, any new business will be hard pressed to make major investments in technology and productivity. …New political leadership and the potential for a revamped ministry that better supports the forestry sector might be the catalyst.

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Seeking Truth Reading News – Telling Truth Writing News

By Roger Whittaker
Submitted Editorial
November 12, 2019
Category: Opinion / EdiTOADial
Region: Canada, Canada West

Roger Whittaker

When I open a story on my computer or spread the inky pages out before me, I have a certain level of expectations. …I do not expect to be walloped into stupidity by semantic sleight of hand and stealthy word placement the way I was when began to read the dreadful piece recently included in Tree Frog News daily email news aggregator, “Your hardwood floor was probably harvested illegally” subtitled “U.S. Forest Service test shows as much as 62% of U.S. wood products are mislabelled” by Rachel Koning Beals of MarketWatch. …Yet this piece you are now reading is not so much to call out Ms. Koning Beals about her twisty relativistic attempt to circumvent the truth. The commenters were on her like a swarm of South American Bees. This piece is to ask you, as a reader, if you also seek truth or if you are living in an echo chamber… Her morally superior high road is to not choose to use wood on your floor because you cannot be sure it wasn’t cut under nefarious circumstances, thus setting about to call into disrepute all who call the forest their office, the same way the No Fur folks destroyed the ingenuity and income of those who live in Canada’s North. …the point of this piece is to ask you, as a reader, to look at the use of linguistic sleight of hand as you read. 

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The Land Everybody Ought to Know: US Bureau of Land Management Turns 75

By Steve Wilent, Editor
Natural Resource Management Today
January 7, 2022
Category: Opinion / EdiTOADial
Region: United States

Steve Wilent

When it comes to managing land and natural resources in the US, no agency, company, or organization manages as large an area the US Bureau of Land Management (BLM). The only entity that comes close to the BLM’s 245 million acres—roughly one-tenth of America’s land base—is the US Forest Service, which is responsible for 193 million acres. Much of the land BLM manages were once thought of as “the lands that nobody wanted.” Few would say so today. In 2021, BLM celebrated its first 75 years as a federal agency; it is a branch of the Department of the Interior. BLM was created in 1946 when the Truman administration merged the General Land Office and the Grazing Service.

To learn more about the BLM’s first 75 years, I talked with Ed Shepard, former president of the Public Lands Foundation (PLF) …and James R. Skillen, an associate professor of environmental studies at Calvin University, in Grand Rapids, Michigan. …“When BLM was created in 1946, it basically took over responsibility for millions of acres, but at that time there was really no framework for managing that land… [until] Congress passed the FLPMA in 1976. …After keystone federal laws were passed during the 1970s, the US Forest Service was often embroiled in controversies and lawsuits over timber harvesting and other issues. For the most part, the BLM remained out of the spotlight. …Eventually the controversies over the northern spotted owl and old growth …began spilling over onto the BLM. Said Skillen: “I think one of the biggest challenges for much of BLM’s history is that, unlike the other three [main natural resources] agencies, BLM has never had a powerful, supportive constituency”. 

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All I want for Christmas… what’s left to buy?

By Paul Quinn, RBC Equity Analyst
RBC Capital Markets
December 21, 2021
Category: Opinion / EdiTOADial

Paul Quinn

It has been a record year for Lumber merger and acquisition (M&A) activity, with >$2.2 billion of transactions during 2021 alone (more than the prior five years combined). …Why more consolidation? We think the consolidation will make Lumber a more attractive business over time. In OSB markets, we have slowly seen increased consolidation result in higher average margins and a more rapid industry response to periods of low OSB prices. While it has taken longer to consolidate the lumber industry, we expect that West Fraser, Canfor, Interfor, and Weyerhaeuser will continue to play a key role in making the lumber business more attractive (although the last two years have left little to complain about).

For lumber producers, we think that geographic diversification is top of mind given that changing political and natural environments can negatively impact operations. Of the major producing regions, we view the US South as the most attractive region for growth followed by Alberta, the Pacific Northwest, and Eastern Canada. For producers with operations in British Columbia, the urgency to diversify production outside the high-risk province will be greater. We think that Canfor and potentially West Fraser could look to further diversify lumber production by expanding in Europe. Finally…What’s left to buy?

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Canadian rail companies’ bidding war over US railway gets ugly

April 26, 2021
Category: Today's Takeaway, Opinion / EdiTOADial

Kansas City Southern will begin talks with CN Rail, as the slugfest between Canadian archrivals (CN and CP) gets ugly. In other Business news: new home sales jump again in the US, Gorman’s Nick Arkle on why lumber is so expensive; Brock Mulligan on the related boon for Alberta’s forest industry; the Wall Street Journal on why this market ride is more robust than past booms; and Cees de Jager on the Softwood Lumber Board 2020 ROI. Companies in the news include: Paper Excellence, Kandola Forest Products, and Biewer Lumber.

In Forestry/Climate news: Joe Biden’s Climate Summit fails to satisfy the critics, particularly on the biomass and media coverage front; and in mass timber news, BC to study economics of its use in affordable housing; and Wisconsin considers early adoption of codes permitting its use.

Finally, is a coveted guitar wood on the stairway to heaven?

Kelly McCloskey, Tree Frog Editor

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