Export laws are threatening Northwest forestry companies: loggers association

Companies say domestic mills can buy timber below harvest cost

As the province reviews its log export regulations for the Northwest Interior, local forestry companies are calling for change, with some saying the survival of companies are being threatened by the current rules.

The Northwest Interior Log Export Order, currently under review, allows companies to export up to 20 per cent of their timber, and after that they’re required to advertise the wood to domestic mills before exporting. A domestic mill can then report whether the timber is “surplus to domestic needs” and a Timber Export Advisory decides whether to allow further export.

But Cathy Craig, president of Brinkman Forest Ltd., a consulting company working with many small First Nations operations in the north, is among many saying the system is putting the Northwest forestry industry at risk.

Government policy is “forcing [First Nations forestry companies] to sell timber at prices substantially below the cost of harvesting,” Craig wrote in an op-ed in early June, adding that companies are feeling the strain.

She says that with all timber above the 20 per cent bar, a domestic buyer can block export applications and secure timber for their own use, and they can do so “at a price that is not only below what international markets will pay, but below what it costs operators to harvest.”

“The inevitable end result will see our businesses fail, communities lose their investments, and once again the northwest industry will go into decline,” she said.

“It is ironic that the same government efforts to secure cheap subsidized logs for local mills will result in no logs for anyone.”

In addition, the current policy is “creating a hostile environment between the milling and harvest sectors,” said Craig, adding that it needs to change.

READ MORE: Northwest economy remains uncertain

Trevor Jobs, president of the Northwest Loggers Association, had similar concerns.

This type of system might work down south, Jobs said, but the problem is that in the Northwest, the only domestic mill is Skeena Sawmills.

So if the mill reports that wood is not surplus and blocks harvesters from exporting it, Jobs says it leaves companies with basically one option — sell it domestically to the only local mill, even if it’s offering prices below the costs of production.

“Being offered prices below cost is problematic from any perspective,” Jobs said, adding that it’s threatening the viability of some companies.

“Some contractors are just going to have to shut down. We can’t operate and subsidize the domestic mill, with logs that cost more to produce than what they’re going to pay.”

As for the log export laws, Jobs says the Ministry of Forests, Lands and Natural Resource Operations should allow companies to export as much wood as they want, and local mills should be forced to offer competitive prices to purchase timber.

But Craig from Brinkman said government should reinstate the prior export limit of 35 per cent, which was in place before a 2013 amendment.

She argues it’s not right that Skeena Sawmills has not been harvesting its full annual allowable cut, but at the same time is blocking exports saying that wood is not surplus to domestic use. Mills should be required to harvest all their own allotted timber before they are allowed to block exports, she said.

Finally, she suggests the province establish a northwest manufacturing group that includes members from the local harvesting community and other stakeholders to grow the manufacturing sector.

Roger Keery, vice president of Skeena Sawmills, agrees that the laws need to change, but he contends that instead of increasing exports, all timber should be advertised domestically before it is exported.

“Skeena has established that sawmilling can be a success here,” Keery said, “and the laws need to reflect this. The current law allows a percentage of logs to be exported without offering them to domestic users (like Skeena). We would like this changed to make this wood available to Skeena to purchase — if we pay fair domestic market value. If we don’t, we support the owner’s rights to export the logs.”

Skeena Sawmills (File photo)

He said Skeena has been offering fair market prices for wood, and the Timber Export Advisory ensures that the offered prices are fair.

Skeena Sawmills has been suffering from lack of timber supply, he added, noting that the mill shut down for a week in May, and again for two days recently.

READ MORE: Lack of logs forces temporary shutdown of Skeena Sawmills

“We’ve struggled to have enough logs the whole year, and we’ve lost… probably two weeks this year, not having enough logs to run our plant,” he said.

“It’s frustrating for us at a time when we have a good demand for our products…. It’s very difficult for us, when we are laying off our employees because we don’t have logs, and then all the logs are being sent to export markets,” he said.

But Keery would like to see a system in place that’s less confrontational.

“Skeena respects the rights of First Nations and timber companies to operate their forest businesses to be as profitable as possible. We believe a strong local sawmill doesn’t conflict with this, it supports it.”

He says Skeena has an agreement with Coast Tsimshian Resources that avoids “blocking” exports and facilitates a good relationship between them.

He would like to have more agreements like that, but legislation could also be changed to encourage companies to work together.

“Changing the rules around will help motivate both parties to work together,” he said.

The ministry has been in consultations with stakeholders about the Northwest Interior Log Export Order, which expires June 26. Final decisions about the order will be known before the end of the month.


 


jackie@terracestandard.com

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