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No shortage of logs

Feb. 2, 2015 - As representatives of forest owners across British Columbia – large and small, coastal and interior – we know how important the issue of log exports is to the sustainable management of private forestry operations in B.C.

• A few quick facts about private forestland in British Columbia:
• Approximately 2 million hectares, or two per cent, of the provincial land base
• Accounts for about 10 per cent of the provincial harvest (6 to 8 million m3)
• Creates 5,800 direct family-supporting forest stewardship jobs in rural areas
• Generates $0.5 billion in annual economic activity
• Property tax revenues from private managed forest lands are greater per tree than the public receives from timber harvesting on Crown land

B.C.’s forest owners are unenviably distinguished as the only forest owners in Canada to have their private land log exports regulated. The official rationale for the most recent (1998) iteration of the federal log export restrictions (Notice to Exporters 102) was the fear of a shortage of available logs to meet domestic needs.

A surplus of available timber on the B.C. coast makes N102 obsolete and outdated. The figures below compare the total coastal log harvest in 2013 to mill consumption.

Total coastal log harvest: 18.6 million cubic metres

Coastal mill consumption:  12.0 million cubic metres

Harvested timber volume exceeded coastal mill consumption by 6.6 million cubic meters resulting in a significant log surplus in excess of domestic needs. (In 2013, private land log exports were 2.9 million cubic meters.)

Log export restrictions subsidize lumber producers at the expense of log producers. Under coastal timber surplus conditions, log export restrictions give domestic buyers the power to threaten to use artificially suppressed domestic log prices to block export permit applications. This gives domestic buyers tremendous leverage to: suppress log prices, transfer value directly from tree growers and enjoy a direct subsidy.

As a policy tool, private land log export restrictions have failed dismally. Despite continuous access to some of the best and cheapest logs on earth, uncompetitive coastal B.C. mills are still shutting down. International pricing for logs compels timber processors to be competitive, innovative and efficient. If B.C. mills were competitive, and B.C. domestic log prices were internationally comparable, we would have a thriving, healthy log processing industry. Instead, we have a situation where private forest operations are forced, by outdated policy, to directly subsidize B.C. lumber producers.

As Canada approaches the next round of Softwood Lumber Agreement negotiations with the U.S., maintaining a policy model that subsidizes Canadian lumber production in B.C. jeopardizes Canada’s negotiating position and puts lumber producers across Canada in an awkward and indefensible position.

Governments would never dream of asking one business to subsidize another – forcing steel producers to subsidize auto manufacturers – but that is exactly what happens with every log B.C.’s private operations are forced to sell to domestic mills at suppressed domestic prices.

What’s the solution? Foster an operating climate that encourages and enables timber growers and processors the opportunity to be globally competitive.

As suggested by a recent Fraser Institute study, temporary quota provisions may well be a sensible part of a transitional strategy, provided the ultimate goal is full access to international pricing for private land logs. Alternatively, if government insists on providing a direct subsidy on the backs of private forest operations, then private operations should be fairly compensated.

A few critics of fair trade, who enjoy the spoils of subsidized logs, will disagree out of self-interest, but when B.C.’s private forest operations can realize international prices for our products it will provide the best long-term benefits to the broadest cross section of Canadians.

Rod Bealing is a forest owner and the executive director of the Private Forest Landowners Association. He studied forestry and business management in the U.K., Finland and Canada and has worked in a variety of forest management, communications and advocacy positions.

February 2, 2015  By Rod Bealing