In the tug-of-war for coastal logs, Lower Mainland sawmills are increasingly losing out to overseas exports – and recent changes to log export rules will only intensify that trend, says the NDP’s forestry critic.
“Under the Liberals … we have moved from an average of about a million cubic metres of raw logs going offshore to six million cubic metres,” Norm MacDonald, NDP MLA for Columbia-Revelstoke, told Business in Vancouver.
Forestry minister Steve Thomson announced the changes January 17 at a Truck Loggers Association (TLA) convention.
The adjustments, which were sparked by a roughly 50% increase in log exports in 2011, include:
•a 20% hike in fees charged for exporting logs from the coast;
•a cut in export fees for the struggling mid-coast region; and
•including the cost of transporting logs to Vancouver when they’re put up for bid.
B.C. mills are facing a shortage of timber as they attempt to compete with higher prices offered by buyers in China and Japan, and Thomson said the 20% export fee increase was designed to keep logs in the province to level the playing field for domestic log buyers.
But MacDonald warned that allowing log sellers to add in transportation costs would only drive up the cost for domestic buyers.
“[It] means the logs will go straight offshore into the export market,” he said.
Logs cut in remote locations will almost certainly go up in price, said Angus Allison, who buys logs for Richmond Plywood.
“For me to make a valid offer on a log from Quatsino Sound … I would have to offer the Vancouver market price plus cost of transportation. So I’m not able to buy that log at the domestic price.”
But if the policy changes increase harvesting and push more logs into the domestic supply, Allison said they could stabilize prices.
“What we’ve been doing in the last while is using the premium … on logs that are exported to help carry the logging operations, so there can be a supply of logs for domestic mills,” he said.
The TLA is largely supportive of the Liberals’ measures. TLA executive director Dwight Yochim said being able to factor the cost of transporting logs to Vancouver into the fair-market-value pricing formula will make a big difference to companies that harvest wood.
“If you have a log that you’re able to sell for $68 per cubic metre and it costs $15 to get it to market, the buyer’s only willing to pay $60,” said Yochim. “The seller’s got to eat that to get it to market.”
The TLA will be closely watching the results of the 20% export fee increase.
“The industry may turn around and move that expense to the buyer, in which case the impact will be fairly negligible,” said Yochim. “Or it may cause 20% of the stands to be uneconomic now, and the reaction will be loss of logging jobs on [Vancouver] Island.”
The annual allowable cut (AAC) hasn’t been fully harvested on the coast for several years, and Yochim said the focus should be on increasing logging.
According to a TLA analysis, a total of 60 million cubic metres of coastal timber has remained unharvested since 2000.
“If we could stimulate the economy enough to fully harvest that AAC,” said Yochim, “we could supply the mills on the coast and have wood left over to export.” •
A rough road in forestry policy-making
In March 2012, Thomson made headlines when it was revealed he was consistently ignoring the advice of his own Timber Export Advisory Committee (TEAC) and allowing raw logs to be exported.
The TEAC reviews domestic bids on logs and determines whether a fair price has been offered.
“The minister was saying you need to [consider transport costs], and [the TEAC] weren’t listening,” said Rick Jeffery, president and CEO of the Coast Forest Products Association.
“So he … clarified the policy so that TEAC is now clear on what needs to be included in a fair-market bid for those logs.”