There are two wood processing sectors in BC, tenured and non-tenured.
The tenured sector has exclusive rights to non-competitive public timber where the price of fibre is determined administratively using a formula. This sector tends to be large, consolidated, publicly owned multinationals that have access to global markets that focus on producing commodity products.
The non-tenured sector purchases fibre at arm’s length on the open market. They compete for and pay market prices for fibre and tend to be small, family-owned, and community-based businesses. Their largest market is the United States and their focus is on value added specialty products and services. This policy is intended to support numerous forestry dependent rural communities by improving access to and correcting pricing of timber for small or value-added producers.
Background
The BC Interior Timber industry is facing job losses due to declining Annual Allowable Cut and consolidation of control of the public’s non-competitive timber resource. The BC Coast Timber industry is facing further job losses due to consolidation of the public’s non-competitive timber resource and the movement of value-added work to the US.
The Chamber believes there is a need to grow value-added industry as it creates jobs and contributes significantly to local economies.
Fifty-four of one hundred and seven International Wood Products Association businesses have closed their doors since 2001, with currently very little opportunity to build more value-added capacity due to a loss of access to fibre and a loss of access to the market.
To develop the province, the BC Government granted certain companies the exclusive right to harvest the public’s timber on the condition that they build and operate mills in the vicinity of the timber.The consolidation of the Tenured Sector into regional monopolies has reached the point where open markets for logs and lumber no longer function or no longer exist. This has dramatically reduced the diversity of our industry as well as reduced manufacturing employment levels throughout the province. Communities are being left without any means for a local forest industry and employment from their surrounding forests.
Since 2003 there has been no agency of the BC Government with the mandate to ensure that value-added wood processors have adequate and secure access to a share of the BC Public’s wood resource.
To support rural communities throughout the province, we must find alternative solutions that are vital to many of these rural communities. It can be challenging for the Province to address the multitude of special circumstances and unique challenges and opportunities for each community. The use of more Community Forest Agreements and First Nation Woodland licences is a key opportunity to facilitate balanced local decision making to achieve maximum local benefits. This is a localised method of creating jobs, improving forest management and utilization of timber, diversifying their economies through supplying local enterprises with ongoing supply at correct pricing levels.
Access to timber supply in various regions of the Province can also be impacted by stumpage and pricing policies. Stumpage – also known as the Market Pricing System (MPS) because of the reliance on auctioned timber to set the market rate of the tree – is the price that the provincial government sells timber to a licensee. The MPS is meant to factor in condition such as limited forestry activity, isolation, and distance from a support center. For an area such as Fort Nelson, when one factors in these variables, there should likely be only a minimum stumpage. However, if a licensee operating in Fort Nelson uses the table rate they will pay more. The North East table $17-$18 per cubic meter. Given this divergent set of circumstances, it would be beneficial for the provincial government to review stumpage and pricing policies for the whole province and all types of tenure and timber classifications with a focus on replacing the Forest Zone rates in the tabular rate system.
Furthermore, small scale independent harvesters and mill operators salvage and utilize windthrown timber and post-harvest (missed logs from major licencee cutblocks) until the access roads are deactivated. A solution is needed to balance deactivation timing while also managing fire risk and costs of replanting. More emphasis needs to be incorporated into improving recovery and utilization of our remaining forest resources which includes retaining access for ground-based forest fire access.To support this effort -and the economic activity that can be realized from it – the provincial government should look at streamlining the Small-Scale Salvage Program.
The BC forest sector is as complex and diverse as the people who make up our Province. Support for the sector and all the various components of it needs to be equally diverse.
The Chamber Recommends
That the Provincial Government:
- Keep logging access roads open under a separate contract for three years after replanting is complete; and
- Transfer, as much as possible, the volumes held by BCTS to Community Forest Agreements to then be the locally based vehicle to supply local, small and value-added producers.
- Review Stumpage and Pricing Policies as applied across the entire province to all types of tenures and timber classifications. Replace the current Forest Zone rates used in the Tabular Rate system (made up of several TSAs being averaged) and instead calculate and establish separate rates specific to each and every TSA (a TSA being the “Smallest Geographic Unit” as defined in the IAM, Table 6-3).
- Streamline the Small-Scale Salvage Program and reduce salvage and fire damaged stumpage rates to improve utilization and economic activity
- Remove the Silviculture Levy from all owned/permanent use lands where there is no future obligation by the crown to reforest.