For the next year or two, forestry in northwestern British Columbia is in for a rough ride, as an opposition politician told a meeting in Granisle.
Nechako Lakes MLA and forestry critic John Rustad spoke at a village meeting in Granisle on Oct. 16 but apologized that he had little good news to report on forestry.
While there are many factors contributing to the sawmill curtailments and shutdowns, Rustad summed it up by saying, “The reality is pretty simple: we’re uncompetitive. We’re the highest cost jurisdiction in North America.”
Rustad pointed out that the problem spurring on the curtailments is the high costs faced by the forestry industry, such as tariffs from the United States.
“No company is making money. As a matter of fact, one of the major companies told me they’re losing about $1 million per month per mill. And when they’re losing that kind of money they look at everything they can do to reduce costs. They do things like curtailments and reducing production so that they can try to reduce where the red ink is coming from. It’s a real challenge,” he said.
The problem is about 60 per cent rooted in the stumpage fee system and about 40 per cent in government regulations and cost.
“With the decline in the cut and with a spike in [lumber] prices where they went up to $650 per 1,000 board feet, stumpage went rocketing. Our stumpage system has a 12 to 18-month delay. Lumber prices today are a little over half of what they were back then. So the stumpage system itself is out of tune with current market conditions”
In June, Rustad wrote a letter to premier John Horgan, asking that the stumpage fee be reduced. But Doug Donaldson, Minister of Forests, Lands, Natural Resource Operations and Rural Development responded that cutting the fees would interfere with the pricing system and cause an increase in softwood lumber duties set by the United States.
But even though the current stumpage system was brought in during the early 2000s to help resolve the softwood lumber dispute, Rustad said it wasn’t anticipated that there would be such wild swings in prices.
The MLA foresees there will be more curtailments in sawmills and that this winter and next year will be challenging for forestry in the north, unless lumber prices rise in the U.S.
“My concern in talking with some of the companies is that I’m thinking that lumber prices might soften next year and that would of course mean that 2020 is a write off and they’re hopeful there might be a turnaround in 2021.”
As a solution, Rustad thinks the industry needs to change its thinking so that it becomes more efficient and follows a structure oriented more towards farming trees instead of harvesting them.
He used Sweden as an example that B.C. might be able to follow.
B.C. has a timber harvesting landbase of around 23 million hectares and he estimated that about 60 million cubic metres will be harvested next year.
“In Sweden, which has similar growing sites and terrain to what we have and similar types of weather, their timber harvesting landbase is at 21 million ha. Next year they anticipate to harvest between 91 and 92 million cubic m of fibre on a sustainable basis. What are we doing wrong?”
It took the Scandinavian country a few decades to change its forestry practices, Rustad said, but the shift help generate a lot of secondary industry, helped with fibre utilization and improved the landbase management.
“We need to do something similar in B.C. if we want to see a healthy forest industry for the next generation.”