B.C.’s forest industry will remain on shaky ground unless the provincial government makes some significant changes to make the industry more competitive, says Opposition forestry critic John Rustad.
“Under the NDP we have seen British Columbia become the highest-cost jurisdiction in North America,” said Rustad in a statement issued Tuesday. “This places us at a tremendous disadvantage, leads to underinvestment at a time when we need renewal, and leaves us vulnerable to any future decline in prices.”
The MLA for Nechako-Lakes wrote a letter to forests minister Katrine Conroy outlining some of the challenges he says the industry continues to face, namely excessive red tape and an outdated means of determining the cost of stumpage fees.
Buoyed by sky-high lumber prices, lumber producers have been reaping healthy profits. Canfor recorded nearly $575 million in adjusted net income for 2021 while West Fraser finished the year $843 million to the better in adjusted earnings.
The outcomes failed to quell Rustad's concerns.
“Nobody ever complains about stumpage when we are on the upside of the lumber price cycle, but the way B.C.’s stumpage is calculated today still leaves us vulnerable to price swings or price declines due to the delays in reflecting current market conditions,” Rustad added. “This was one of the reasons why the forest sector faced so many challenges over the previous few years of John Horgan’s government with regular mill curtailments and permanent closures.”
Rustad concluded by saying there are several measures - in addition to modernizing stumpage rates - that the government could take to help protect the 100,000 people in our province who remain employed in forestry either directly or indirectly but did not get into detail.
In an emailed response, a ministry spokesperson said B.C. has a market-based stumpage system with the rates based on prices for timber sold at auction through BC Timber Sales.
He said stumpage is updated annually and quarterly to reflect market conditions for lumber pricing in the Interior and lumber and veneer pricing on the Coast and that ministry consulted with industry representatives about moving to monthly adjustments and, "at this time, the general consensus was to stay with the current system of quarterly adjustments."
