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October 28, 2017 11:06 am

AAC reduction – Who will come out on top?

Thursday, March 13, 2014 @ 3:45 AM

By Peter Ewart

Questions are growing about what will happen when the Allowable Annual Cut (AAC) is dramatically reduced in Timber Supply Areas in the Interior of BC as a result of the widespread devastation of the forests by the mountain pine beetle infestation.  This AAC reduction is expected to reach 20% across the region, with some areas hit as hard as 50% or more.  Will the reduction hit all sectors of the industry more or less equally, or will some players be more equal than others?

The big forest companies currently own the majority of the replaceable forest licences in the province.  Under questioning from Opposition forest critic Norm Macdonald in the Legislature on March 11th, Forest Minister Steve Thomson made the claim that any reductions in the Allowable Annual Cut (AAC) for these replaceable forest licences will not be compensable. 

But in a memo dated May 8th, 2013, the Chief Forester of the province appears to contradict that claim.  In his memo, the Chief Forester states that any reductions in the AAC “should be measured and fair.”  However,  “excess replaceable AAC reductions would unduly impact forest licences and could lead to litigation and/or compensation” (this would also apply if existing milling operations are impacted).  In other words, if a forest company perceives an AAC reduction to be in “excess,” it could conceivably litigate and receive some sort of compensation. 

It is interesting to note that non-replaceable forest licences – which First Nations, independent and smaller operators, pellet plants and newer licensees tend to have – are, by definition, not eligible for the same kind of compensation.

Forest policy analyst Anthony Britneff asks whether creating new Tree Farm Licences (as the government appears to favour) in a Timber Supply Area could also trigger compensation issues.  In particular, could compensation be awarded to the companies holding replaceable licences as a result of other companies rolling over part of the timber harvesting land base into TFLs, thereby diminishing the Allowable Annual Cut for a TSA? 

Furthermore, if more TFLs are handed over to the big companies, it is likely that once land claim settlements are eventually reached with First Nations and these overlap or annul existing TFLs, British Columbians may have to pay huge compensation to these same big companies.

These are critical times for forest tenure and timber supply in the province.  When the dust settles from the AAC reduction, who will lose?  Communities, workers (through mill closures, consolidations, and tenure swapping), First Nations, independent and smaller operators, government (through loss of stumpage and tax revenue), and just about everyone else?  But how much will the big globalized companies lose?  Or are they like the House in a casino – always bound to come out on top? 

British Columbians should keep a close eye on all of this.

Peter Ewart is a columnist and writer based in Prince George, British Columbia.  He can be reached at: peter.ewart@shaw.ca

 

 

 

Comments

Sound like government! The people of BC own the trees not the large corporations. So we make the proper decision not to over cut in our forest and then government decide to compensate their campaign supporters. The people will suffer as well due to the reduce revenue from the forest, which will probably mean higher taxes. Sure let compound the issue with paying off big business.

I see your point Peter. The area based tenures imply a sense of ownership, or at least a legal flag post on the way in that direction. This implies legal liability especially to global based forest companies that could then sue through so called investment treaties like the FIPA treaty with China… if we make any policy for the stakeholders, concerning other stakeholder of those same forests in either terms of conservation (wildlife habitat or getting proper value through good forest practices) or access (as in who gets the fiber).

Where as the historical system of volume based tenures makes the access to Crown resources more arbitrary to new realities such as the pine beetle epidemic, thereby allowing for greater flexibility in government policy, or rationing, with out legal liability.

I think its a good argument, but people won’t understand that because its a complex issue.

To me the issue comes down to the hypocrisy of the BC liberals who campaign as champions of free enterprise, but in policy are anything but. So they campaign on free enterprise, but then in policy push the area based tenure thereby enabling monopoly capitalism through near ownership control ever the resources. Meanwhile when one limits the ability for new entrants to enter a market through legal liability loop holes and treaties and legislation… then how can that still be called an open capitalist true free enterprise playing field? I don’t think it can. In fact its more like we just become the valets with chainsaws for large foreign owned multinationals with a monopoly on opportunity to create value out of our ‘public’ forests… and with that monopoly on opportunity or access comes a lot of economic control further diminishing the sovereignty of our democratic institutions.

One thing you can count on a BC liberal for though… and that is they will always be defeatists when it comes to their responsibility to protect the sovereignty and the integrity of the institution of our government and our democracy. For them corporate money in politics gets results.

Then we got this guy here… http://www.therichest.com/top-lists/top-250-richest-people-in-the-world/

Some people may have known Li Ka-shing as the 21st richest billionaire in the world. The Chinese billionaire that owns the Huskey Oil refinery here in PG. But I’m guessing not many people knew he is now the richest Canadian citizen. The rich just buy their citizenship these days. Ten years ago he was making billions doing inside deals with the Communist mainland state owned enterprises… next thing he has all the rights of you and I influencing our governments, but with his billions doing the talking. If not already the Chinese are close to being the biggest owners of most of the wood fiber in Northwest BC, so one wonders where these policy ideas come from?

I guess we can call it ‘enlightened sovereignty’ as Harper terms it. Globalists and billionaires making the rules for globalists and billionaires.

“He who has the gold makes the rules.” Always has been and always will be.

I’m going to go off the reservation here with my own theory. Nobody responds to Peters columns anyways lol.

A real serious issue on my mind right now. This mystery flight Malaysian Airline flight MH370.

This isn’t the first mystery flight and not the first time we have seen transponders turned off. If one wanted to hijack high target scientists and their technology, then hijacking a plane over the open South China Sea and taking the airliner below radar out to the Indian Ocean and Burma, then this flight would probably be one of the easiest targets in the world to set your trap.

We seen transponders turned off that enabled 9/11. In fact to this day I am not convinced an airliner hit the Pentagon… I know one didn’t hit WTC#7… and I doubt anyone was flying from the cockpits when the planes hit WTC towers #1&2. Still to this day people ask about the mystery plane… one that CNN photographed flying over the capital hill in 9/11 when the sky was supposed to be cleared (noted at the time by Peter Jennings and John King live on air).

Not many people know about Rabbi Dov Zakheim… Comptroller and Undersecretary of Defense under GW Bush from 2001-2004, member of the Council of Foreign Relations, and co-author of the PNAC infamous ‘Perle-Harbor-like-incident’ report prior to 9/11. The guy had Rumsfeld announced the Pentagon lost $2.6 Trillion on Sept 10th 2001, records of which were destroyed the next day when the records were blown up in the area hit by the 9/11 planes. This son of a Bolshevik revolutionary is the benefactor of America’s surplus F-16 fleet that outfitted the Israeli air-force.

Rabbi Dov Zakheim also was the CEO of an Israeli company called System Planning Corporation and their notorious Flight Termination System. As such he had contracts with the US Air Force to outfit 32 Boeing 767 air refueling aircraft prior to 9/11 and as such had special access to the codes needed to shut down transponders and essentially as they advertised at the time hi-jack a hi-jacked plane.

If one looks into this guy you would be amazed. He even had one of his subsidiary companies Tridata Corporation oversee the investigation of the first World Trade Center bombing in 1993 giving him intimate knowledge of the security systems and blueprints.

So we know flight MH370 had on board 20 of the worlds foremost scientists in technology for ‘cloaking’ an aircraft with electronic warfare weaponry. Employees of a Texas based company Freescale Semiconductor. Valuable technology potentially in the wrong hands ironically gone missing on a mystery flight. So the motive could very well be a clandestine kidnapping involving the entire plane… only so many people have the technology and motive to hi-jack a 777 through electronic remote drone technology.

We now get reports that Rolls Royce had signals from the engines up to four hours after it supposedly went missing. We know Burma is a strong ally of Israel and they are about a four hour flight away through the straight of Malacca with easy enough fuel to make the trip to a secured airfield in the so called communist Burma.

Lots of questions and lots of coincidence with motive IMO. If hypothetically we could actually prove anything close to a mystery plane that hi-jacks control of a 777 mid flight takes it below the radar and out of the area… then we can blow the official 9/11 story right out of the water. Maybe they messed up and left a radar blip were they never intended, and now how would one get the plane back to the scene of the crime to cover their tracks with all the attention the area now has. It could be check mate and best thing would be if lots of radars were now in the area and satellites looking at airfields in places like Burma.

IMHO
Time Will Tell

Oh come on Eagleone we all know it crash landed on an invisible magnetic island. The wreckage if found will be staged! ;)

Well I’m sure they will have some kind of story to tell anyways. I am a bit skeptical. A remote control hi-jacking that disabled the transponders and locked out the cockpit to outside communication, then taking the plane down below radar seems to most logical theory at this point… especially considering the latest news from the Wall Street Journal about the Rolls Royce engines transmitting for a further four hours, and family saying the cell phones still ring (which wouldn’t happen if they were under water). Conspiracy theory or coincidence, you be the judge.
;)

Considering the source, conspiracy theory all the way.

Peter Ewart is spouting dribble. The chief forester says that they need to be fair if they are going to cut the allowable cuts or there may be consequences–no kidding. The minister says that they will be fair. There is no discrepancy.

Then Peter says that TFLs will mean lawsuits. I imagine that there could be if we let Peter write the license agreements.

Does Peter really think that the Province wouldn’t have a clause in the license agreement that the license is subject to the allowable cuts and that the Province will not be held liable?

They already have this clause. Hence no lawsuits and unfortunately that means that much of this article is conspiracy dribble.

Give us some reporting–some facts, not just conspiracy dribble. I can go to a lot of other sites if I need to read this garbage.

Give me a break.

How do you think any forest company is going to be able to borrow the money it needs to build and operate and maintain and improve a modern mill that can produce and sell lumber competitively into global markets if it doesn’t have some security of tenure?

Do you think our banks are going to give them all the credit they need, not just once, but on a continuous basis, in a situation like that?

Where there is not only any ‘reasonable’ way of projecting what the chances are over time of getting sufficient profits to fully amortise these loans as contracted, but no way at all?

Go back to TFL #1, issued by the old Liberal/Conservative Coalition government that was in office before 1952. It was for an enormous swath of territory in the western Skeena and Nass watersheds, and issued to Columbia Cellulose, the BC subsidiary of Celanese Corp of America, on condition they build a pulp mill in Prince Rupert, which they subsequently did.

Even so, even with the security of all this timber harvesting tenure behind them on a ‘perpetual’ basis, then, not a ‘renewable’ one after a certain number of years, how profitable was that pulp mill?

Once the easy timber that could be floated down those rivers to the mill was gone, and they had to borrow more dough to move logs further by truck, including the cost of building and maintaining haul roads, that company became a financial basket case. Nobody wanted to buy it, and its owners, even with all their considerable resources, had an increasingly costly ‘white elephant’ on their hands.

Even after the NDP bought the company, (which nobody else would buy), to preserve ‘jobs’, and the government recouped, in a sense, the tenure it had given away previously, it was a bottomless pit into which ever more taxpayer money was poured. To what avail?

So we could say the people that were employed by it, directly or indirectly, were still ’employed’? We’d have, and they’d have, likely been a lot better off if the government had just given each one of them the third of a million bucks it cost to maintain each one of those direct jobs, and told them to ‘go spend’.

Actually, the timber does not belong to the people of BC, it belongs to the crown as represented by our elected representatives in parliament.

You gotta remember, we the people don’t actually own sh!t. It all belongs to the government and they allow us to purchase habitation and use rights. Its the original Microsoft model of licensing scheme.

I think the First Nations and most other indigenous peoples in the world who are land based have it right. The earth does not belong to anyone. Neither do small, artificial (delineated by humans) pieces of the earth belong to anyone.

We get to use something that is part of the universe for an extremely short period of time. Some take care of it reasonably well, some do not.

Generally speaking, when we do a lousy job, the earth will mend itself again, just as it has done when forces much bigger than human forces have set it on a different path in the past.

Global warming/cooling, no matter how caused is not a big deal to the earth. It might be a big deal to humans. We have a much lower threshold of coping than the earth does.

So, someone cuts down some trees, and we think we are doing great if we have species diversity and well distributed age stands. In comes a beetle, a change in the climate, sequential excessive fires, and the humans start to jump up and down because their economic and social welfare is in jeopardy.

The earth keeps ticking away despite all the little ankle biters inhabiting the planet. ;-)

I am of the same opinion as icicle. Peter has the wrong interpretation of what the Chief Forester has said.

Unlike agricultural land, whether owned or leased, there is no crop insurance available. The MPB was/is an “Act of God (Mother Nature).

The government may provide some help based on principles of equity possibly using claw-back procedures as was done in the case of creating BC Timber Sales to respond to the USA trade agreement complaints.

An easy way to increase AAC? Stop topping the wood at 6 inches. Decrease it to 2 inches and you would have an increase in volume of at least 10%

I use a lot of 1×1 to build my houses …

The part between 6 inches and 2 inches is a lot of waste. Do you want to keep the pellet plants running? Make them pay for that extra 10% and the loss of opportunity to get improved merchantable timber volume for the higher end product.

It costs money to cut down more trees and haul in more weight just to supply waste wood users.

It costs $100 per bone dry tonne just to get it out of the bush–never mind the stumpage.

Then you want to sell it to the pellet plants for $15 per tonne?

Socredible did not track the Skeena Pulp fiasco far enough.

This mill was eventually purchased by China Paper Group, and its subsidiary Sun Wave Forest Products. Initially the plan was to re-open the pulp mill, however that never happened.

There was a lot of litigation between the City of Prince Rupert and Sun Wave however at the end of the day they came to a settlement wherein the City ended up with the Pulp Mill property and will sell it for development.

The question is. What happened to the TFL????

As near as I can determine the forest license was sold by the Chinese Paper Group (Sun Wave Forest Products) to the newly formed Gitxsan Forest Enterprises for $1 Million dollars. This happened in 2006 (See story in the Terrace Standard)

The original idea was that the Gitxsan would log the timber and sell it to the pulp mill, however the pulp mill never opened, and it now seems that this timber is logged and sent to China.

The Chinese made it clear to the Gitxsan that they did not want to be in the logging business and that they simply wanted to buy fibre.

Hmmmmmm.

PBEC gets their sawdust from Chetwynd, so are you trying to say they only pay $450 a load for a 600km round trip… that wouldn’t even cover shipping costs. The rest of their wood comes directly from the bush at about 20tons a load, so getting the wood out of the bush to a pellet plant doesn’t seem to be a problem. Or should saw mills be subsidized by allowing them to cherry pick and leave the lower value wood in the bush?

I guess that’s what we have foresters for?

Gus can you explain this. It doesn’t make much sense.

‘It costs money to cut down more trees and haul in more weight just to supply waste wood users’

How does utilizing the wood from a tree cut down translate into cutting down more trees?

So the area based policy in Prince Rupert translated into raw log exports to China, and not a free enterprise new entrant in the Prince Rupert area that could access volume through an open bidding process. Seems to prove the point I was making about access to opportunity for a free enterprise system.

Even if the wood only went to a pallet plant or fiber board plant it would have more value for BC than just simply exporting raw logs overseas because of the legal ‘ownership’ of rights to that wood.

If we had the volume based tenure in the Bulkly Valley would the West Fraser mill need to be closed in Houston, and would a deal like the one they made with Canfor even be possible. I think not.

Eagleone.

I assume the basic principle is to utilize the amount that you can take off the land – the AAC – for the highest value.

The top end is not the highest value, unless someone is willing to pay the same or better for that portion of the tree. I understand that pellet plants are not willing to pay those prices.

I am sure that the MoF is also interested in getting the highest value for the wood which is taken out of the forest.

I also assume that the top end of the tree makes for good course woody debris, which I believe is a typical requirement in site treatment prescriptions.

Of course, the question is really moot because the AACs are starting to come down to pre MPB days and will be going below those days.

Right now the AAC is still high for TFL30 since Canfor increased its operations in the west while the MPB wood was still usable and “saved” the non pine stands on TFL30.

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