October 18, 2005
The Uncertain Future of BC's Forests
From British Columbia, more evidence of the danger of hitching an economy to resource extraction and commodity exports. As the Vancouver Sun explains today, the BC forest industry is bearing the brunt of a "perfect storm." A rising Canadian dollar, higher energy prices, and the ongoing softwood lumber dispute with the United States are combining to cripple the forest industry.
Not surprisingly, the industry wants relief from the government in the form of tax credits and write-offs. But how much more coddled can BC forest companies get?
As Will Horter, executive director of the Victoria-based Dogwood Initiative, recently opined in the Tyee, Canadian logging companies are already paying ridiculously low fees to cut on crown land. In fact, in seven forest districts, more than half of the cut logs were paid for by just 25 cent stumpage fees. Not only is that a bad deal for government coffers, which could reasonably extract much more revenue from public timber sales, but the low stumpage fees are a big contributor to the softwood trade wars that result in tariffs at the US border. Raising the stumpage fees might resolve the softwood dispute, generate more revenue, and put a fair price on public forest resources to boot.
Of course, even that optimistic scenario would still leave the industry coping with the trade effects of a strong Canadian dollar and high energy prices. But future high energy prices are likely unavoidable. And the fact that the forest industry is susceptible to high prices is just more evidence of its fundamental weakness. In fact, the Canadian economy is already among the most energy intensive in the world. (That is, it takes more energy to produce a dollar of wealth in Canada than almost any place else in the world, including the United States.) Continuing to rely on energy intensive industries like the forest sector for jobs, revenue, and economic growth is probably a recipe for disaster.
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BEFORE YOU GUYS START UP ABOUT HOW LITTLE FOREST
COMPANIES PAY FOR LOGS PLEASE REMEMBER
1. THE PRICE YOU HERE ABOUT IS FOR STANDING TIMBER
2. THE COSTS BORN BY THE FOREST COMPANIES ON TOP OF STUMPAGE INCLUDE, ROAD BUILDING,HARVESTING,
RE-PLANTING,2YEARS OF MAINTENCE TO "GREEN UP "
AND IN SOME INSTANCES ROAD RECLAMATION
3.MOST LARGE US FOREST COMPANYS HAVE/HAD THEIR
OWN FORESTS ON WHICH THEY PAY NO STUMPAGE
B.C. COMPANIES HAVE IMPROVED THEIR "RECOVERY FROM
LOG" %16 SINCE THE DUTYS WENT ON.
THE VALUE OF THE CDN. $ HAS DROPPED 34%
SINCE THE DUTIES WENT ON.
PLEASE CALL ME TO DISGUSS THIS TOPIC
604 937 0416
604 868 1801
SINCE THE DUTIES WENT ON.
Posted by: DON BACKS | Oct 18, 2005 2:48:45 PM
I think the Canadian forest companies need to explore new markets, especially in Asia. Timber is an extremely limited resource and even though it is "a weak industy" there is still much room for stabalization. For instance, further improving the efficency of the energy companies use to cut the timber and refine it is a big step to ofset rising energy prices. In addition, the price per stump point doesn't make a whole lot of sense if the company is paying by the log. Canadian government shouldn't abandon the industry because it is commodity based, but should help it be more prepared to weather future crisis.
Posted by: Gary Durning | Oct 20, 2005 10:24:54 AM