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Part 2 Land To The Tiller,Forests To The Communities

By Peter Ewart & Dawn Hemingway

Tuesday, February 24, 2009 04:08 AM

By Peter Ewart & Dawn Hemingway

 

This is the second article of a three  part series .  The first article can be accessed at: “Land to the tiller, forests to the communities – Part 1.”

 

A few hundred years ago, during the Middle Ages, society looked very different from today, at least on the surface.  Indeed, it was dominated by a tiny aristocracy who had absolute power over the land and over all the affairs of the community.  Everything in feudal society revolved around these princes and barons, whose gloved hands were rarely, if ever, soiled with  earth or dampened with sweat.

 

This was despite the fact that it was the lowly serfs and peasants who were the productive forces in the society and who actually tilled, cultivated and harvested the land.  Any initiatives outside of the parameters of the rigid class system were stifled. Ultimately, this was an untenable situation, and the serfs and peasants revolted, their rallying cry often being “land to the tiller.”

 

But in some ways, things aren’t that much different today.  The CEOs of the big corporations are like feudal lords.  In fact, in the realm of forestry, they are often referred to as “timber barons” because their companies control vast tracts of forested land in the province. 

 

The prevailing ideology for a long time has been that the interests of these  corporations, many of which are multinationals, should be at the center of forestry production in BC and Canada. In fact, the argument is made that these large companies must be at the center in order that workers have jobs and communities flourish.

 

The rest of the forest industry, whether it be workers, communities, contractors, suppliers, value-added manufacturers, or small and medium forest companies, revolves around the aims and interests of these big companies.

 

In a sense, because of government policy, the rest of the forest industry is reduced to the status of bystanders.  To put it another way, these big companies are the sun and everyone else is a satellite.  This relationship is reflected in practically every aspect of forest policy, whether it be access to timber, timber licensing, forestry de-regulation, rules governing corporate concentration, and so on.

 

Control is not here in Prince George, Mackenzie, Fort St. James or other forestry communities.  Rather it rests in government offices in Victoria and corporate boardrooms in New York and other places.  It is a highly centralized system that allows big companies maximum opportunity to influence the forest policies of big government far away from local areas and regions.

 

Today, if a mill shuts down, the workers, contractors, communities and municipalities are left powerless.  Like the serfs and peasants of feudal times, initiative is not in their hands.  The mills sit idle, rusting behind padlocked gates.  The trees in the forest stand untouched and unharvested, swaying in the wind.  And a community’s livelihood trickles away bit by bit like sand in an hourglass.  It is such a stifling of creativity and energy, of entrepreneurial spirit, of individual and community potential.  And it is certainly not ensuring the livelihood of workers, families and communities.

 

So why not change this situation, especially now when the current forestry system is in such disarray?  Why not shift to a community-based and community-centred forest industry, where it is the community around which everything revolves?  Why not have the forests controlled by the people and communities that do forestry rather than by far away bureaucrats and financiers?

 

The seeds for such a shift have already been planted.  Community forests, which are forests managed by local governments and local organizations for the good of the community, have been in existence in BC since the late 1940s.  In more recent years, both the NDP and Liberal governments, to their credit, have put policies in place that have allowed community forests to expand significantly.

 

But community forests still remain only a small part of the timber allocation in the province, between 600,000 to 700,000 hectares out of a productive forest base of about 29 million hectares.  Yet the results so far have been impressive, with community forests across the province, both native and non-native, taking the initiative in a wide variety of ways, depending on local circumstances.

 

For example, when mills close down, the experience has been that some community forests develop silviculture and land management programs which give unemployed workers the opportunity to build back up their Employment Insurance benefits.  Others grant logging rights so as to finance community projects of various kinds.  Still others use their forests to encourage diversified wood manufacturing and processing, or to diversify into other industries like recreation and tourism. 

 

It is clear. At the time of a severe downturn, we need the unleashing of creativity, not the stifling of it by outmoded forest management and tenure practices.

 

The issue before our generation today is to substantially expand community forests to the point that control of the forests in the province shifts to the forestry-based communities.  The provincial government regularly hands out huge timber licenses to big companies whose CEOs and shareholders often don’t even live in British Columbia.  Why not then, communities?

 

The provincial government, of course, would still have overall responsibility for forest policy and environmental regulations.  But communities like Mackenzie, Fort St. James, Prince George, Quesnel, Princeton, Port Alberni and Campbell River would work out what should be done with their forests and how to best manage them.

 

This would unleash the energy and initiative of the communities, in terms of diversifying and getting the most value out of the forest resource.  As it stands now, if the big companies close down operations in a community practically everything and everyone is put in a position of paralysis.  All the invaluable knowledge and experience, built up over many years, of planting, growing, harvesting and processing the forest resource is wasted, is put on indefinite “hold,” until, or if, the company decides to restart its operations.

 

Community forests are one way to get around this problem. 

 

In Part 3 of this series, we will be discussing how the expansion of community forests, which has broad support in the province, can be used to alleviate regional disparity and strengthen the municipal level of government in rural areas.

 

Peter Ewart is a writer and instructor, and Dawn Hemingway is a writer and professor.  Both are based in Prince George, British Columbia, and can be reached at hemingwa@unbc.ca


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Comments

The key to this concept is that communities have a REAL SAY in what takes place with the forest industry and the forest itself.

The ministry of forests should not have the authority to remove local milling requirements as they did. If local communities had a say, this would not have happened. If local communities had a say this appurtenancy requirement would be reinstated, immediately.

Currently there is an awareness to what has gone so wrong, but remember that communities and local governments have gravitated towards supporting large corporations for a long time as well.

I wouldn't assume that just because local governments wish to do better than the provincial government, that they would be always better at delivering these results.
Local leaders may or may not have the ability to forsee what they are actually advocating for and this could just as easily backfire.

Community forests have their place, but the reality is that each and every company needs its own secure timber supply in order to finance its operation. Building any type of facility without this known and secured long term timber supply will not provide local sustainable benefits. The proof of this is that the ministry of forests has for the last few decades reduced the offering and tenure lengths to a degree which couldn't support any new operators. What has been offered to small enterprises really amounts to a sick joke appeasement to public requests for small industry development.

Did local governments complain about this or did they even understand this was occurring?

What bothers me the most is that this crisis was predictable as; "putting all your eggs in one basket" allways is, and yet the provincial government steered it this way and local governments just followed, until it was too late.
These are all very good comments and this type of system in the real world does work...I also have seen it work.
Confor, West Fraser, Abitibibowater, Tolko and Interfor are an example of some companies that are still in existance today although some of their facilities have experienced shuts or have been permanently closed, such as the two Canfor Mills in Mackenzie and two sawmills in Fort St James. The three Abitibibowater facilities in Mackenzie are also for all intents and purposes permanently closed.
The funny thing about all of this is every one of these operations had a relatively long term secure timber supply.....and yet they are all down permanently. These mills should be running if they have the ability to be cost competitive Don't you think. The problem lies with the cost of logs in the region. When your log cost's and Lumber recovery calculate out a cost of $250 mfbm before Sawing cost's are added, you are already into a losing money proposition. Sawing cost's are varialble but can take the total cost's to produce logs into lumber to over $300 mfbm.
These log prices are set by the ministry of Forest and the Government. As you can see it does not matter how long term your supply is, at these prices you will need a very good market to operate profitably.
Fort St James has access to very cheap bug wood. They also a huge amount of high quality timber that goes right past their front door to keep the mills in Prince George running, that could be diverted to their operation. This is the same Timber that was supposed to supply mills in the Smithers, Hazelton, Kitwanga and Terrace area with fiber to operate but was re-allocated for political reasons...Prince George "Canfor" needed the timber at the time. The mills in Prince George, will again, need more timber very soon...when the bug wood is gone, I wonder where this timber is going to come from??....The system as it stands today allows any company to buy up Idled or shut sawmills for pennies on the dollar. These companies have no intention of running the operations, their main purpose is to secure the rights to the timber Supply. This allows the said companies to ship the timber to any one of their other mills for processing(this practice is in fact encouraged by our leaders).
The point is, in general comunities are held at ransom from both sides. If Big corporations are given to much control and to much security they can decide to sell raw logs rather than process in the community, or they can shut mills down and do nothing with the fiber. If big corporations are not happy with their long term supply they may decide not to operate in the area because of the risk's involved with an insecure timber supply.
I believe that Timber supply needs to be attached to the community "appurtanency" if you will, and not be allowed to move from the community at all. I believe that the ministry of forest and government should not be involved in setting log cost's. I also believe that it is time our Government starts to show that it is willing to take on the task of attaching huge tariffs to logs leaving the country regardless of destination. Big industry and our Government is dictating our countries unemployment statistics, not the general public.
BC log prices are not set by the Government- it is some what competive but not the degree in the states- BC log prices are very cheap compared to other countries- US, Sweeden, Norway etc. The problem is not log prices they are already at rock bottom- on the Coast the problem is the high cost of labour and low productivity. In the US a mill work makes $17 hour with few benifits in BC $23 to start with lots of benifits- I remember one mill manager on the Coast saying if I can only get the logs for free I could make money- of course he went broke. Also Appurtanency is so 80's and only leads to uncompetive mills- open it right up and get some competion. Closed shops do not work.
Good one dogs, work for free, that should fix everything.
Dogs,

The prices of BC export logs are only cheaper because the stumpage is set at a devalued rate...this has very little to do with market pricing.

If you are referring to stumpage you are incorrect, the stumpage for the majority of timber harvested in BC is set by government...only a small % is set competitively under BC Timber Sales the rest is devalued/subsidized (which is the reason why the US harvesters, rightfully, have issue with raw logs. It is also the main reason why timber has been liquidated at such an unsustainable rate in BC over the last few decades.)

I agree with your suggestion that BC pulp, paper, and saw mills have productivity problems; however, your suggestion that high cost of labour in BC is causing mills to go south of the boarder is beyond nonsense. Wood product manufacturing is not a labour intensive activity, it is capital intensive. In reality, paying an employee more in a capital intensive operation almost always leads to higher levels of productivity.

The reason why mills are going south has nothing to do with market forces or productivity (because free trade does not exist when it comes to BC-US lumber) and everything to do with political ineptness: American industry pressure groups and government have out negotiated the BC Government, leveraged NAFTA, and the BC government has been too chickenshit to support the domestic manufacturing sector.

Anyways...i dont mean to be rude, it just really irritates me when people point to economic forces as the main problem with the forest sector in BC. The problems are deep-rooted and structural...they lie primarily in the liquidation and conversion paradigm put forth by early lumber men: the idea that we should transform forests into plantations and grow monocrops...a backwards idea that is still forms the basis of forest management policy in BC.

Stack on top of that a tenure system that favors multinational cooperations with absolutely no vested interest in forests, forest communities, or forest workers and it looks even worse.

And stack on top of that devalued resource rents, which stimulated an unsustainable megaboom in the 80s and a series of falldown and softwood tariff induced busts ever since, and it looks even worse.

And stack on top of that the failure of successive BC governments (NDP and Liberal)to help build domestic wood processing capacity.

Then top it off with unsettled land claims and the pine beetle outbreak (both product of poor public policy)and you have yourself one hell of a ice cream cake. All it needed to collapse is for the metaphorical refrigerator, the once thriving export market, to shut down. But we cant blame the collapse on the economic slowdown, it only triggered the collapse of a broken and backwards system.

BC's forest economy must be rebuilt from the ground up. Changing tenure to a community based system is a good start; however, it can only be considered a first step for the BC gov. Liquidation and Conversion must be changed to real EBM,our government must quit setting stumpage at devalued rates and value timber at beyond market prices, they must tie value addition to tenure and stumpage, help new locally grown companies build the capacity to manufacture wood products in the new economy, quit suppressing fires at a large scale, and let the First Nations inn.

Its not about economics, its about government policy.
Great post Evan. I like how you framed that picture....
I agree with Evans post that the problem is primarily a "structural problem".

If our provincial government is to change the course of the forest industry, it must detach from its alliances with the few international mega corporations.

Practically all forest policy, tenure and stumpage systems have been carefully crafted to support these bohemoths. In doing so they have deliberately been designed to exclude competitors and we have paid a huge price for having this happen.

The former post touches on the problems with US trade and the reasons why we are having a perpetual softwood lumber war, ;being caused from under valued stumpage.
I agree that there is truth to this and the irony is that the softwood lumber agreement which the provinces and Canada signed on to only made things worse, for the people of Canada.
The core issue to the softwood lumber dispute (as asserted by the US coalition)is the lack of competetive forces which are either structurally designed through our stumpage system OR which are "allowed to exist" through our tenure system. Both of these government systems undermine Canadian log markets.

They do so for the benefit of the large corporations and no one else.

The softwood agreement which the large international corporations supported actually serves to harm their Canadian competition even more and therefore furthers our non competetive log markets.
The parts of the softwood "deal" were actually several deals of federal "political triumph", corporate influences which shut the door on value added producers, existing and new, as well as circulating a new tax to the province's coffers. Ironic that they who caused the softwood lumber dispute were rewarded with a system that increases their dominance of our Canadian industry and governments.

If the current global financial crisis had not occurred, the plan would have led to even more control and dominance. This crisis is our opportunity to correct many things which could reverse what has been at work for a long time.
I am not referring to economic rent (stumpage or other forms of rent)- which is set by the Government- The post referred to Log prices which are set by an open competitive market - In BC are open competitive markets are quite weak with little or no competition- Log prices are already too low- There are 2 loggging jobs for every mill job. The woods operations should be separate from the mills- If mills can not afford to pay the market value for logs (because they are high cost and low prodcutive) let them go out of business.
I take your point to a degree here dogs. Yes, the logs may be sold on an open market; however, the harvesting costs are a major determinant of the price range that harvesting companies are able to sell at. The price of logs is not only low in BC because competition is weak (as you suggest) it is also low because harvesting prices are low (which is due, in part, to low stumpage). So the government does, to a degree determine the price of logs.

Anyways, although I started with stumpage that was not the main point of my last post. The point was to discuss the roots of the mess that we find ourselves in.

I guess in response to your dog-eat-dog outlook on mill closures I would respond by suggesting that you look into the reasons why mills are facing productivity problems. It is not because employees make more money in BC (as you suggest), instead its because successive BC governments have failed to put in place domestic manufacturing incentives. In fact they have put in place disincentives to domestic manufacturing.

When I hear comments like "let them go out of business" it kinda makes me cringe....because peoples livelihoods go out the window at the same time. It is evident that you are well versed in classical economic theory; however, the rigid and simplistic nature of classical economic theory can lead to skewed readings of reality if they are not supplemented by common sense, compassion, and knowledge of the workings of the real economy. I would suggest that you examine this issue through a more holistic lens and then report back.

Regards,

EP
A couple of thoughts to ponder;

The entire BC stumpage system is something which needs an overhaul IMO.For all its endless complexity and supposedly justified or well intended objectives, does it actually serve anyone properly?
Is our stumpage system really just a strange form of tax which is charged at the front end of the business operation?

Why is our stumpage system so complicated?
Is our "market pricing system" accurate or effective towards balance between returns to the government and profitability of companies? I don't think so.

Is it accurately calculated at the time which it is calculated?, maybe yes and maybe no, but does this matter?, no. Projected revenues for government or projected costs to industry in a fluctuating market serves no usefull purpose.
Is stumpage accurately calculated for the time when the timber is actually harvested, delivered and scaled, graded and billed to the company at a quarterly adjusted rate which is actually a trend rate from the market prices of the prior year? theoretical chance of markets going up or going down; 50:50 average over time. Accurately calculated stumpage at any given time? highly unlikely, but does it matter at this point,when these are still just logs?just logs which might remain in inventory for the next six months or more before they are milled? Yes Victoria, thats what happens in the northern interior,more often than not. And yes it matters when timber is scaled and billed because this is when the rate of the day is actually paid and this now becomes actual revenues for government and actual expenses to companies, despite the fact that they are not accurate, even if these logs were converted to finished products and sold within this specific quarter.

Is stumpage accurately calculated for when the timber is actually converted to finished product and sold at the market price of that day? The chance of this occuring is nearly impossible, despite this elaborate system which is actually totally useless and very expensive.

Despite the fact that when the finished products are sold at an actual "market price" and using the actual costs of sales involved, is what is actually important to determine an appropriate balanced rate charged; giving the province a fair return and allowing for companies to operate profitably, modernise, expand,diversify and sustain themselves,their employees,communities and the entire forest economy.....our stumpage system wizards choose to estimate,complicate and hopelessly predetermine these rates which cannot possibly do anything but undermine all it is intended to accomplish.

Just tax the net at the back end rather than the front end.

Is this a consequential issue?
Just say for instance that all combined this stumpage system costs industry and government $7.00 per cubic meter to administer,calculate and charge etc. Timber cruise,count snags,compile data,measure cracks, compute costs,estimate recovery,estimate labour and equipment costs,count worm holes,average selling prices of lumber and chips,US exchange rates, compute,calculate,recompute,contest and protest etc,etc,for about 7 bucks a cubic meter.
Remember, this is not the stumpage rate, but the costs to develop a supposedly accurate rate and collect the stumpage.

In rough calculation of this would suggest that the "cost to calculate inaccurate stumpage rates" of this useless stumpage system is substantial and nearly equivalent to the 15% softwood lumber tax which is charged at current lumber prices.

Perhaps if we charged a proper accurate stumpage rate, the softwood lumber dispute and the 15% tax could end as well...adding up to about 30% to the net value of our products.Industry could use this today and this could be added to stumpage when profitability returns to previous levels.