Fewer trees, higher costs blamed for devastating downturn in B.C. forestry

Largest driving factor is the province’s complex stumpage system that results in high fees, expert says

Fewer trees, higher costs blamed for devastating downturn in B.C. forestry

High log prices and dwindling timber supply are driving the crisis in British Columbia’s forestry industry that has devastated communities and kneecapped the provincial economy, observers say.

Companies have announced shutdowns or curtailments in more than two dozen mills in the province, putting hundreds out of work and slashing economic growth predictions. Advocates are calling for urgent government action to stem the bleeding.

“Something needs to change immediately or these small communities that don’t have other employers are going to wither and die,” said Marty Gibbons, president of United Steelworkers Local 1-417, based in Kamloops, B.C.

The local represents hundreds of forestry workers who have lost jobs in Interior communities including Merritt, Clearwater, Vavenby and Clinton.

The largest driving factor is the province’s complex stumpage system that results in high fees, he said.

“These are private businesses. If they can’t turn a profit, there’s no reason for them to run. Right now, it’s not the markets that are the issue. It’s the cost of the logs,” he said.

Stumpage is a fee businesses pay when they harvest timber from Crown land. The B.C. government calculates stumpage annually, so the system is less responsive than in Alberta, where monthly adjustments are made, Gibbons said.

ALSO READ: B.C. forest industry looks to a high-technology future

The Forests Ministry said stumpage fees are based on market demand and the current rates reflect the scarcity of timber supply that has resulted from the mountain pine beetle outbreak and been exacerbated by several severe fire seasons.

Intervention in the stumpage system would weaken the legal case in the appeals of the duties imposed by the United States on softwood lumber from Canada, the ministry said in a statement.

“It is well-known that any interference in B.C.’s market-based timber pricing system would lead to an increase in softwood lumber duties levied by the U.S.,” it said.

Most of B.C.’s forest land is publicly owned, so companies have long-term tenure rights and the government charges them stumpage to harvest trees. In contrast, most land in the U.S. is private and companies face costs associated with replanting.

“That’s what the stumpage fee is all about,” explained Ken Peacock, chief economist of the Business Council of B.C. “It tries to equate, if it was privately owned, what the cost would be to operate and manage and reforest the land.”

Peacock said the high cost of logs is the major cause of the industry’s decline in B.C. He also blamed the mountain pine beetle and record-breaking 2017 and 2018 fire seasons for decimating supply.

The policies of Premier John Horgan’s government are also breeding uncertainty, Peacock argued.

The government is developing a caribou habitat protection plan that the industry expects will further restrict access to northern timber, he said, and it’s promised to implement the United Nations Declaration on the Rights of Indigenous Peoples without explaining how companies are meant to fulfil its requirement of “free, prior and informed consent” from First Nations.

The NDP government has also introduced Bill 22, which would control tenure transfers. Currently, a company that is scaling back or shutting down a mill can transfer its tenure to one that is operating, but the government wants oversight over these transfers to protect the “public interest,” a term not defined in the legislation, Peacock said.

“The picture here in B.C. is we are a very high cost jurisdiction. It’s actually less costly to operate in Alberta and companies can make a profit milling lumber and producing two-by-fours in Alberta.”

On top of all that, market conditions in North America are softening, he noted.

Forestry is the number 1 engine that drives B.C.’s economy with nearly $15 billion in annual exports, representing one-third of the province’s international merchandise exports and the largest segment by far, said Peacock.

While other sectors may employ more people or produce more GDP, Peacock believes forestry is the top driver of B.C.’s economy because it is the province’s leading export industry. He argues export industries are key to the economy because they access external markets and spread B.C. goods far and wide.

The Business Council of B.C. just trimmed its 2019 economic forecast in part because of the forestry downturn, from 2.2 to 2 per cent growth, he said. The B.C. government also just cut its forecast to 1.7 per cent, citing mill closures in part.

The Forests Ministry said the challenges the province is facing have been in the making for many years and the previous Liberal government ignored them and failed to help the sector and communities adapt.

“We have laid out a process … to bring together industry, First Nations, labour and communities to address the challenges and build a sustainable sector to protect jobs.”

Opposition Liberal forestry critic John Rustad has blamed the current government’s policies for “killing the industry” and resulting in more layoffs and closures.

Laura Kane, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

U.S. Senator Bernie Sanders sits in on a COVID-19 briefing with Dr. Bonnie Henry, provincial health officer, and Adrian Dix, B.C. minister of health. (Birinder Narang/Twitter)
PHOTOS: Bernie Sanders visits B.C. landmarks through the magic of photo editing

Residents jump on viral trend of photoshopping U.S. senator into images

Black Press file photo
Investigation at burned Vancouver Island cabin reveals human remains

“it’s believed that the owner of an SUV vehicle found parked nearby is the deceased”

The Rein Forest Riders fence in Hyde Creek was damaged by a vehicle on the night of Jan. 15. (Lynn Iskra Facebook photo)
Port McNeill RCMP looking for suspect who damaged Rein Forest Riders property in Hyde Creek

“it’s certainly unfortunate, and it’s going to be a tough one because nobody saw anything.”

PROFILE PHOTO COURTESY OF KIMBERLEY KUFAAS PHOTOGRAPHY 
Tyson’s Thoughts is a column posted online at northislandgazette.com and in print on Wednesday’s. Have some thoughts about my thoughts? Email editor@northislandgazette.com
If fish farms are phased out, what does the future hold for Port Hardy?

“I hate seeing the town I grew up in take serious economic damage”

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the legislature, Jan. 11, 2021. (B.C. government)
Vancouver Island smashes COVID-19 high: 47 new cases in a day

Blowing past previous records, Vancouver Island is not matching B.C.s downward trend

U.S. Senator Bernie Sanders sits in on a COVID-19 briefing with Dr. Bonnie Henry, provincial health officer, and Adrian Dix, B.C. minister of health. (Birinder Narang/Twitter)
PHOTOS: Bernie Sanders visits B.C. landmarks through the magic of photo editing

Residents jump on viral trend of photoshopping U.S. senator into images

A 75-year-old aircraft has been languishing in a parking lot on the campus of the University of the Fraser Valley, but will soon be moved to the B.C. Aviation Museum. (Paul Henderson/ Chilliwack Progress)
Vintage military aircraft moving from Chilliwack to new home at B.C. Aviation Museum

The challenging move to Vancouver Island will be documented by Discovery Channel film crews

A video posted to social media by Chilliwack resident Rob Iezzi shows a teenager getting kicked in the face after being approached by three suspects on Friday, Jan. 22, 2021. (YouTube/Rob i)
VIDEO: Security cameras capture ‘just one more assault’ near B.C. high school

Third high-school related assault captured by Chilliwack resident’s cameras since beginning of 2021

FILE - In this Feb. 14, 2017, file photo, Oklahoma State Rep. Justin Humphrey prepares to speak at the State Capitol in Oklahoma City. A mythical, ape-like creature that has captured the imagination of adventurers for decades has now become the target of Rep. Justin Humphrey. Humphrey, a Republican House member has introduced a bill that would create a Bigfoot hunting season, He says issuing a state hunting license and tag could help boost tourism. (Steve Gooch/The Oklahoman via AP, File)
Oklahoma lawmaker proposes ‘Bigfoot’ hunting season

A Republican House member has introduced a bill that would create a Bigfoot hunting season

Economic Development and Official Languages Minister Melanie Joly responds to a question in the House of Commons Monday November 23, 2020 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Federal minister touts need for new B.C. economic development agency

Last December’s federal economic update promised a stimulus package of about $100 billion this year

FILE - In this Nov. 20, 2017, file photo, Larry King attends the 45th International Emmy Awards at the New York Hilton, in New York. Former CNN talk show host King has been hospitalized with COVID-19 for more than a week, the news channel reported Saturday, Jan. 2, 2021. CNN reported the 87-year-old King contracted the coronavirus and was undergoing treatment at Cedars-Sinai Medical Center in Los Angeles. (Photo by Andy Kropa/Invision/AP, File)
Larry King, broadcasting giant for half-century, dies at 87

King conducted an estimated 50,000 on-air interviews

Comox Valley RCMP are looking for witnesses after the theft of a generator worth thousands of dollars. Photo supplied
RCMP asking Vancouver Island residents to watch for stolen generator

Vehicle may have been travelling on Highway 19

BC Coroners Service is currently investigating a death at Canoe Cove Marina and Boatyard in North Saanich. (Black Press Media File)
Drowning death in North Saanich likely B.C.’s first in for 2021

Investigation into suspected drowning Monday night continues

Kimberly Proctor, 18, was murdered in 2010. Her family has spent many of the years since pushing for a law in her honour, that they say would help to prevent similar tragedies. (Courtesy of Jo-Anne Landolt)
Proposed law honouring murdered B.C. teen at a standstill, lacks government support

Ministry of Mental Health and Addictions has concerns with involuntary detainment portion of act

Most Read