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New Brunswick to raise Crown timber royalty fees

Natural Resources Minister Mike Holland has issued a letter addressed to the New Brunswick Crown licensees and sub licensees advising them of the government’s intent to implement “an upward adjustment that would be made to Crown timber royalties when commodity prices are above normal ranges.”

The news was welcomed by the province’s Federation of Woodlot Owners. “The New Brunswick Federation is happy to see some movement on the Crown Royalty rates. The rates on Crown effectively put a cap on the stumpage price in N.B.,” the federation’s executive director Susannah Banks told CFI.

“With over two years of exceptional lumber prices, we have seen little increase in the price of wood and therefore stumpage rates despite higher prices being offered in neighbouring jurisdictions. It is nice to see the province finally ensuring that someone other than the mills benefit for high commodity prices,” Banks added.

But according to the New Brunswick Lumber Producers (NBLP), if the system proposed by the minister is not properly structured, there is tremendous potential for severe and negative impacts on the long-term sustainability of New Brunswick’s forest products industry.

“While studies have shown that stumpage prices do not correlate directly with downstream lumber prices, the NBLP understand the Government of New Brunswick’s position that increases to royalty rates for Crown timber might be warranted when commodity prices are extraordinarily high, particularly given the lag in time between the government’s survey of private stumpage prices and implementation of new Crown stumpage rates,” said NBLP chair Jerome Pelletier, vice president of J.D. Irving’s sawmill division.

“Nevertheless, we are disappointed by the lack of transparency and details associated with the government’s proposal,” Pelletier added.

A healthy forest products industry is vital for New Brunswick’s economy, supporting thousands of local jobs and generating demand for Crown and private timber alike, the group said in a statement. Failure to implement a transparent system that is consistent with the Crown Lands and Forests Act might also have negative consequences for New Brunswick sawmills in the ongoing softwood lumber dispute with the United States, the group added.

“In the interest of full transparency, we trust the government will publicly share immediately the details of the indexing system and procedures that will be used to calculate the upward royalty adjustment,” the NBLP said.

The eight NBLP members operate in 15 rural communities and represent 95 per cent of the softwood lumber production in the province.  The group is the largest wood buyer for the local private woodlot owners, and also the largest supplier of wood chips, biomass and sawdust in the province.