Friday, January 24, 2014

Log Exports and the funny business of forestry in BC

The issue of log exports from British Columbia forests comes up on a regular basis. The public and communities see log exports as a loss of local wood products manufacturing jobs and income. The simple solution is to ban or restrict log exports.

British Columbia has had legislation aimed at restricting log exports for a century, and logs cannot be exported without getting special approval. The issue continues like a festering sore that never gets healed. There are economic arguments on both sides of the issue. On the coast of BC, where harvesting and transport costs can be high, gaining a better price for a portion of the harvest by exporting the logs can make a logging operation viable. Work and income is generated by exporting logs.

Both sides of the argument should be asking some basic questions. Logs are expensive to transport. Wood products can be packed or bundled for long distance transport without the weight of the bark, sawdust or wood chips produced in the manufacturing process. We should be asking ourselves why offshore wood manufacturers can afford to pay more for our logs and transport them over great distances. Lower labor costs may be a factor, but offshore manufacturers are also adding higher value. BC's inability to add equivalent value in wood manufacture is rooted in the institutional framework for managing public forests.

 Public forests with the BC Government as trustee, were supposed to provide a higher standard of forest stewardship to sustain timber supplies. In addition, public forests were intended to ensure that forest resources would not end up in the hands of a small number of forest corporations that could restrict the availability of timber and the development of a diversified competitive wood products manufacturing sector.

The whole intent of public forests as an institution has been undermined. Instead of ensuring good forest management, BC politicians have seen our public forests as a money barrel. They allocated rights to harvest timber to forest companies. Today, after some corporate concentration, a few forest corporations control most of the harvest from public forests. Timber from public forests is priced on an administrative pricing system and there is no real market for public timber. The corporations that hold most of the harvest from public forests are commodity wood products producers. Value adding manufacturers have difficulty in getting timber because the market is restricted. A portion of the harvest is sold by the government operated BC Timber Sales, but its limited percentage of the timber supply does not amount to a real market.

Since public timber is allocated to forest corporations, real market value is never determined. Public forests are not operated like a business. Timber is a natural resource that can be taken from the forest. The BC Government and forest corporations get income from the timber and both parties have been reluctant to return enough to ensure adequate forest stewardship.

The public are shareholders of the public forest and they are denied normal expectations of a shareholder in an enterprise. The forest is not managed in their interest by competent professional managers. A great deal has been made of public involvement in forest management in BC in recent years. Most of this much lauded involvement comprises the right to comment on the forest plans of a forest corporation made in the interests of profit and the corporation's shareholders.

The public should expect that their forests to be operated like a business. It should be managed by professionals directly accountable to the public. Timber should be sold on an open market to realize its real value. Necessary forest stewardship should be funded directly out of income to sustain the forest enterprise in the long term. Timber will be available for purchase on a competitive basis. Wood products manufacturing will become more competitive and diversified. Log prices will increase and there will be less incentive to export logs.

2 comments:

  1. Forest Trust sound good on paper but they are not a realistic business model. What we need are set of guide lines which gives more than lip service to environmental habitat and is also realistically enforceable.Giving near absolute control over our crown forests to monopolies is not in the public interest even though it reduces the cost of government management. And it is the net profit to government and industry which is driving this proposal.
    Bert

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    1. You do not say why forest trusts are not a good business model. Forest estates all over the world are run by forest managers who take income from timber and non timber forest products, hunting and fishing and other nature based economic activity. The income is used to cover the costs of forest stewardship and there is usually some surplus.
      There is no business model for running BC's public forests at the moment. It is more of an exploitation model with forest corporations taking out wealth and not spending sufficient on stewardship. That is why we are facing problems in the forest industry and forest dependent communities

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