Tree Farm Licences and global financiers
Peter Ewart
BC forests are facing unprecedented challenges these days, whether it be the mountain pine beetle devastation of vast areas of forests, dwindling timber supply, mill closures, overharvesting, lack of reforestation and silviculture, cutbacks in forest service staff, gutting of forestry inspections, ramped up raw log exports, as well as various problems associated with climate change and “cumulative impacts”.
Given all of this, it is strange that for over two years now, the BC government has been fixated on tenure reform as a priority. More specifically, it has zeroed in on the expansion of Tree Farm Licences (TFLs) as the magic elixir. Indeed, last year it tried to push through Bill 8 which was explicitly focused on bringing about more TFLs. In the face of massive opposition and a looming provincial election, the BC government withdrew Bill 8 in March of 2013. Later, despite trying to cherry-pick some examples, the Forest Minister was forced to admit in the Legislature that there is no comparative research showing that TFLs result in better forest management or more investment.
This time around the BC government’s push for TFLs is not quite as explicit, being shrouded in the more general heading of moving towards “area-based tenure.” But only the naïve could be fooled. This initiative has been so clumsily put together that even the government’s website admits that the initiative is all about the expansion of TFLs. The website tries to assure British Columbians that TFLs will only be granted in particular cases, that the government will only proceed cautiously and carefully. But, given the government’s record with run-of-the-river projects, BC Rail and other controversies, does anyone really believe that?
So, why is the government so transfixed by TFLs at this time to the point of obsession, especially given the huge difficulties facing the forestry sector? Are vested interests at work here?
Indeed, a faction within the big forest companies, including West Fraser, Conifex and Hampton Affiliates, have been pushing hard for legislation that will allow them to convert their volume-based forest licences into TFLs that will lock up vast areas of BC forests, ultimately excluding smaller operators, First Nations, community forests and others.
Some of this, of course, has to do with the competitive advantage that each of these big companies sees in seizing exclusive control of lucrative forest resources. But there is another factor that should not be discounted at least in the case of those companies seeking more investment. Most of the bigger forest companies in British Columbia are now global companies to one degree or another, whether it is in ownership, financing or corporate linkages. Indeed, there is a lot of international finance capital sloshing around the province these days looking for a home in forestry, especially Asian and especially Chinese money. One indication of this was the $1 billion China-BC forestry Memorandum of Understanding signed earlier this year. And there are various other examples of this penetration.
This global finance capital is especially interested in investments that are secured in assets which can be monetized, traded and speculated with on international markets. Tree Farm Licences, which allocate exclusive control to one company, are a step up in the ladder of asset security from existing volume-based licences. Thus, those forest companies that are able to lock down the choicest parts of BC forests into Tree Farm Licences are more attractive to global financial investors. For other global investors, a Tree Farm licence becomes an investment and asset in itself, a casino chip on the international market.
But there will be a price to pay for British Columbians in terms of forest usage and forest industry diversification, as well as access to fibre by smaller operators, First Nations and others. In effect, our forests will be further alienated from us and increasingly controlled by global forces.
So, how much of the pressure for TFLs is coming from individual companies and how much is coming from foreign backers? Whatever the case, one thing is clear. A small, but powerful, minority is driving the BC government’s obsession.
Unfortunately, this ongoing obsession is detracting from the major tasks confronting us today, including bringing our forests back to health and sustainability and making sure our woods are managed in the interests of all sectors of the forest industry and all British Columbians.
Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: peter.ewart@shaw.ca
Comments
Well said Peter. You sum it up well, but what about Mackenzie Pulp Mill and Chetwynd Pulp Mill, which are now both Chinese owned. I think in the Chetwynd case the reopening of the mill was conditional on TFL rights. So the Chinese are well into this as much as West Fraser, Conifex, and Hampton Affiliates.
The thing with China is the FIPA deal signed by Harper will soon allow them to sue provincial or municipal governments in Chinese courts if their investments in Canada are hampered by domestic legislation that interferes with profits.
What Harper calls ‘enlightened sovereignty’ (FIPA type deals), which is in practice globalist free investment deals creating liability risk out of democratic sovereignty that sets two levels of law between the one of domestic legislation and that of a globalist free for all.
So BC farms out our forests to TFL licesnes of communist Chinese owned forest companies operating in BC. BC then tries to implement legislation, so as to mitigate harm to other stakeholders in the forest, or to allow for other uses within the forest… and the Chinese firms take the BC government to court in Chinese courts for lost profit potential… and the BC taxpayer is now bankrolling a communist Chinese state owned enterprises for guaranteed profits, even if our democratic process or judicial system determines any other stakeholder rights to those forests… such as for example unsettled treaty rights (so we would pay double jeopardy for any such treaty rights deals).
So not only does the TFL system choke off free enterprise for forestry competition in an environment of monopoly capitalism controlled resources, but through international treaty obligations like FIPA it all but rules out all other uses by other stakeholders, and effective regulatory control by the province itself.
IMHO
well said gents, just have to look at the north east and see what the Chinese company Canada Resurgence Developments LTD is up to they talked about a bio plant being built but have the right to ship 100% of the surplus logs and guess what no bio plant but shipping logs off their 16000 sq km area to china and brag about all the other products they are producing with them. They have a nice website,
If there’s so much money to be made through having the security of tenure a TFL is supposed to confer, why did nearly all the original holders of TFL’s, large and small, end up selling them instead of continuing to operate them?
So far as I recall, Warren Buffet’s advice for financial success is, “Buy, hold, and prosper.” You’re supposed to ‘protect the capital’ and ‘live off the income’.
But those companies who long ago were originally granted TFL’s, (they didn’t even have to ‘buy’ them), and held them for many years, and even ‘bought’ some more from others who were also amongst the original recipients, were hardly what anyone could call sterling examples of how to prosper.
Most of them, virtually all, in fact, perpetually suffered from what former Crown Zellerbach Canada’s CEO (and later BC Lieutenant-Governor) Bob Rogers used to say, again and again, at the end of that Company’s Annual Report to the shareholders ~ “an inadequate return on capital to ensure long-term viability.”
I remember asking a relative of mine who was a Crown Zee employee at the time about that once, and his reply was, ” Oh, Crown’s making gobs of money. That’s just ol’ Bob trying to scare the boys into not asking for too much of a raise when the contract’s up.” Seemed possible.
But it wasn’t long after that the announcement was made that CZ was selling their whole Canadian operation. To New Zealand’s Fletcher Challenge. ALL the private lands, (2nd largest holding of forest lands in BC), logging operations, sawmills, plywood plant, pulp and paper mills, and TFL’s, both on the Coast and in the Okanagan ~ and for LESS than the value of the Elk Falls pulp mill alone. Now why do you suppose they did that?
Fletcher Challenge ended up with not only all the Crown Zellerbach TFL’s, but also all the BC Forest Products ones, too, when it later absorbed that company. But it was hardly a sterling example of operational prosperity either. Despite its size. And where is it today? Gone. The TFLs are now held by a variety of smaller companies, some large, like Tolko, some not, like J S Jones.
What have we learned from all this, (and a great deal more, similar stories, throughout the Province)? Seemingly nothing.
We still focus on the ‘wrong’ things ~ some of them are listed in Peter’s article ~ as if we could somehow correct them by doing things differently. But could we?
In a short answer, “No.” Because we still fail to see the underlying problem that prevents that from happening. It ISN’T a question of ‘ownership’, as in large or small, or foreign or domestic, or even public or private.
‘Ownership’ in any of those senses confers upon the owner only two basic things, and each, now, in an increasingly limited way. One is the right to ‘administer’. And the second the right to ‘dis-own’ ~ to sell what has been acquired, or give it away.
What prevents what is necessary, if whatever we do is to really make any sense at all ~ to ‘prosper’ ~ CANNOT be corrected looking at such things as ‘tenure’. That’s NOT where the problem lies. And no solution to it will come from searching there. The answer will only be found by studying WHY there currently is, despite perceptions to the contrary, “an inadequate return on capital to ensure long-term viability.”
The Province of BC is in the business of selling trees. They want to get the most money for those trees as they can.
Volume bases licenses cut the value of those trees because logging is done all over the place–more roads are needed and more roads need to be maintained. It costs more to log with volume based licenses.
Area based licenses mean the trees are worth more.
I say get the most money we can.
As Ewart aptly demonstrates, the dour union-label socialism and narratives of the NDP are hyped in contrast to those of the vacuously happy-faced business-friendly socialism of the BC Liberals. Left out of the interminably monotonous political maneuvering is the question raised by socredible above.
Public ownership means politics everywhere and always. More evolved nations had the foresight centuries ago to diversify the forest ownership picture.
BC totally lacks the stabilizing sociology of small private forest owners that one would find in Europe or the US which amount to about 60% of their private forests by area.
Imagine the starvation if agriculture had to exist under BC’s forest tenure system.
Yes lets be like the states and Europe and pretty soon no one will be allowed to go into our forests to camp or fish or hunt without prior approval of some company based in Germany or China, which would probably be a year long process. Most places in Europe are off limits to the public unless it is set aside as a park or “recreation area”. Do we really want to be strangers and ask permission to access what is supposed to be owned by ALL British Columbians. How long then before the forests because privatized and totally off limits to citizens of this province? Think it can’t happen here? Just look around the world at all the resource rich countries who’s own citizens live in poverty and have to poach and steal resources just to survive? Anyone who thinks giving control to public resources to corporations and expect those corporations to do right by the citizenry are blind to what has been going on in the world over the past couple of decades.
because = become
13 years of the Liberals gutting the forest of BC! enough is enough Christy tell your corporate pals to keep their hands off our forest! The AAC around the province needs to be cut 50% to save the last of the old-growth forest, endangered species and future jobs but Christy doesn’t care about anything except her pals who donate money to the Liberal party. War in the woods is back!
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