Rock-bottom timber prices to go even lower?

You may have noticed a news story last week saying that the governmentis planning to change its logging rules in the northwest to, basically,reduce the price it charges companies for timber. If you pay muchattention to the BC logging industry, you may have asked yourself, “howmuch lower can the price go?” It’s a good question, one that isimportant for the future of our province, and for the newly hot issueof the softwood lumber dispute.

The story, which we posted on our site,says that Forests Minister Mike de Jong wants to reclassify thenorthwest of the province, so the “stumpage rates” government pays forwood there will be set the way they are on the coast. In other words,so they will be lower.

The article contains some fuzzyreferences to market-based pricing, but in reality the government’sproposal is to expand the area in which the major companies can getaway with paying as little as a quarter for a cubic metre of wood.

Ifyou think the situations in which companies get away with paying only aquarter for their wood are the rare exceptions, consider this: ourresearch shows that between 33% and 36% of the wood supply has beensold for $0.25 per cubic metre. The problem is especially bad on thecoast and northwest, havens for some of the last of the world’sold-growth forest.

And if you think a cubic metre doesn’tsound like that much wood, take a look out your window at the nearesttelephone pole: one pole is about one cubic metre in size. When thatwood is also some of the world’s most valuable, you’ll see why we areworried by talk that the government is going to sell even more of itfor less.

Big companies, with their large tenure areas, are ableto abuse the stumpage system, using techniques (not to say scams) like”grade-setting” and “high-grading”. Compare that to small woodlots,community forests, and ventures such as Iisaak Forest Resources, whotypically pay $40 to $60 per cubic metre for wood of the same quality.

Themarkets the Minister is talking about are artificial ones that the biglogging companies control, not true markets where anyone can bid onwood. The result is that stumpage fees are absurdly low, promoting aforest industry that is destroying the environment while givingdwindlin financial reward to communities.

The notion thatMinister de Jong is endorsing is decades out of date: that the only wayto create economic development in BC is to undercharge for ourresources, and to promote the cutting of more wood, faster, and withless done to it before it is sent out of the province.

It’s aneconomy that’s only going to last as long as the old growth remains. Bythe government’s own numbers, that’s not very long. And in themeantime, it’s an economy that employs fewer and fewer people, andsends an increasing amount of the value of our forests to a smallnumber of shareholders.

And it’s an approach to land managementthat will make it even harder for the government to defend itselfagainst the US government’s claims of subsidies on softwood lumber.(For more on softwood, see a bulletin from last fall with links to several of our in-depth stories on the issue.)

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