Forest license rollovers All over again?
By Peter Ewart
It’s been a bumpy ride. In the Spring of 2013, the Clark government put forward legislation that would allow the Forest Minister the discretion to convert (rollover) volume-based forest licenses into area-based tree farm licenses (TFLs) throughout British Columbia. According to the Forest Minister, these area-based tree farm licenses would have a number of benefits, “such as creating an incentive for licence holders to make enhanced silviculture and infrastructure investments that will improve the mid-term timber supply.”
However, this “rollover” legislation generated a storm of protest across the province (as has happened in previous decades when similar rollover proposals were put forward by other governments and then hastily withdrawn because of strong opposition).
Opponents characterized the legislation as the “Forest Giveaway Bill” that would hand over greater property rights to a few big forestry companies, i.e. “the big five”, who control the lion’s share of forest licenses in the province. Tree Farm Licenses are particularly lucrative because they are the closest form of licensing to outright privatization. As Grand Chief Stewart Phillip and forestry analyst Ben Parfitt argue, they “carry the greatest financial value in the marketplace because they grant TFL holders exclusive rights to manage defined areas of the forest over many, many years.” TFLs, in effect, become financial assets that can be sold, traded and speculated with on global markets. These international investors may have zero interest in diversifying infrastructure or even maintaining existing mills, let alone supporting local communities.
Furthermore, as Parfitt points out, TFLs do not necessarily result in renewed silviculture and better managed forests. No matter what kind of forest license they have, companies tend to limit their reforestation investment to the minimal amount required by law and that’s all.
Likely because of the growing opposition and the fact that a Spring election was looming, the provincial government abruptly withdrew the “rollover” section of the bill last March. “This is an important piece of public policy,” Forest Minister Steve Thomson explained, “however, it has become clear to me that greater public engagement is needed before legislative amendments can proceed.”
This Fall, reports from unnamed sources claimed that the Clark government, once again, had put together new rollover legislation. At the Natural Resources Forum in Prince George in January of this year, Premier Clark was equivocal and vague about whether more public and community consultation would be forthcoming, claiming that a lot of consultation had already taken place through the Timber Supply Committee. At the same Forum, perhaps indicating that not all member forest companies were completely on board with the rollover idea, the CEO of the Council of Forest Industries (COFI) qualified his support by stating that it may be suitable for only some areas of the province.
Opponents have remained vocal. And it is not only environmentalists who are concerned. There is a fear that workers, First Nations, small and medium forestry companies, contractors, value-added operators, tourism operators, and forestry-based communities could be left out in the cold as the big companies consolidate their operations into vast tree farm fiefdoms. Some argue it could mean even more mill closures for a province that has already endured far too many.
Furthermore, once land claim settlements are eventually reached with First Nations, British Columbians may have to pay huge sums of money in compensation to these big companies for TFLs that these same companies will pick up today for next to nothing.
Fast forward to February 2014. The Ministry of Forests, Land and Natural Resource Operations just released its Service Plan for 2014-2017. Lo and behold, the first priority in the plan is to “begin public consultation on legislation that would allow the conversion of volume-based licenses to area-based licenses.” How and where this public consultation will take place remains to be seen.
Clearly, there are powerful economic interests in this province that want area-based TFLs. But, as opponents argue, is handing over vast tracts of BC’s forests to a few big companies really in the public interest?
Once again, it’s time for people and interested parties to get into action and have their say.
Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: peter.ewart@shaw.ca
Comments
You’re going to get the same end result whether these ‘rollovers’ happen or not.
Go back and look at the profit picture of all the ‘big five’, and the companies that pre-ceded them that they’ve absorbed.
Their profits,in dollar figures, in a ‘good’ year may seem huge. But are those profits, taken as a percentage of their Sales, rising over time, or falling?
Go back a little further. Two of the largest BC private forest land owners that were also fully integrated forest products producers were MacMillan Bloedel Ltd. and Crown Zellerbach Canada Ltd.
Both companies are now defunct. Why?
They had every incentive to look after their own private forest lands far more intensively than they would have looked after any ‘public’ lands they managed under other forms of tenure.
They ‘owned’ those lands, outright, in fee simple. The highest form of ownership allowed. And they DID re-stock them, and do silvicultural work, fertilisation, etc. Any tree ‘wasted’ on those lands was THEIR tree, one they’d already bought and paid for. The dollar cost of such waste came out of THEIR pocket.
When MacMillan Bloedel was formed in the early 1950’s by merging H R MacMillan Export with Bloedel Stewart and Welch, the MacMillan company had a projected twenty year supply of mature timber on its private lands, while BS&W had forty years supply on theirs. At the then rates of extraction.
Both firms were generally profitable ‘dollarwise’, and had been since their inceptions. But they merged, not just because they saw potential ‘economies of scale’, of which there were certainly some, and the attraction for MacMillan.
But primarily because Prentice Bloedel, the heir of his father’s forest products empire, who’d previously been a mathematics professor at a leading US university, and had quite a ‘scientific mind’, (even though he’s always been dismissed as being a ‘poor businessman’ compared to MacMillan, who dominated the merged company) realised something very early on that others couldn’t yet see.
And many still can’t.
And that something was that no matter how big the entity got, its rate of profit as a percentage of its sales continued to FALL. And that is the main reason why those two companies, as wealthy as they were in timber, are now no longer in existence. They were profitable. But not profitable ‘enough’ when looked at what they had to ‘use up’ to make what they were making. Some will put this down to “they didn’t ‘value-add’ enough” ~ but that’s not the problem whatsoever. Both firms ‘value-added’ plenty, as long as it could be shown to pay.
It is the same phenomenon that will do in, eventually, the West Frasers, and Canfors and Tolkos, and all the rest. It is not something restricted only to the forest industry, but pervades ALL our industries. Uncorrected, it will lead to where many would already like us to go ~ towards a government owned monopoly timber company. But that won’t be the answer either. In fact, when that happens, we’ll be further away from it than ever.
We CANNOT correct the underlying problem by fiddling with ‘tenure’. The problem lies elsewhere, and it is with MONEY itself. And how we currently account it.
The private lands of BOTH the companies mentioned above, are now owned by Firms which have no manufacturing facilities and no logging operations of their own. Those things didn’t pay ~ not ‘enough’. And how much is ‘enough’, under the current set-up? Why, always “just a little bit more”, that’s how much.
They, the successors, Island Timberlands and TimberWest, are now down to the point where they no longer can live off their ‘income’ from doing any of the things their ‘parents’ used to do, or even from just growing trees.
They are, instead, ‘liquidation companies’. They are living off their ‘capital’. By selling the farm, for it no longer pays to farm it. It doesn’t HAVE to be this way. But it will be, so long as we won’t face facts. So long as we let politicians spin ‘inflation’ as being a substitute for genuine ‘prosperity’. So long as we exalt the ‘job’ as the be-all and end-all of everything, and pay no attention to the ‘income’ and whether it still gets us what we need and want. so long as we’re blinded by the ‘dollar’ amount of some outfit’s seemingly ‘obscene’ profits, and fail to realise its actually heading for bankruptcy.
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