Bell Beaming Over Forestry Exports

Friday, January 21, 2011 03:59 AM

Prince George, B.C.- Minister of Forest, Mines and Lands, Pat Bell, says he is thrilled that the value of forest product exports to China and Japan have once again exceeded the value of forest exports to the U.S.

In November, ( the latest month for which stats are available) 353 million board feet of lumber was sold to China, while Japan continues to be very strong.

“For the third month a row, the total value of exports into China and Japan exceeded the total value of exports into the U.S. by about $20 million dollars. The exports to China and Japan totalled $140 million compared to $120 Million to the U.S. so that trend continues, and it is very positive, its something we want to stay focussed on moving into the future.”

That future includes dealing with a complaint from the United States over the increased harvest levels in B.C.. The complaint has been filed under the Softwood Lumber agreement and Bell says there is nothing to worry about.

Bell says there are two things which make this complaint different than what has been seen in the past.

1. Arbitrator in this case is not the Americans themselves. Bell says in the past, the complaints have appeared before U.S. Courts. This time, the matter is before the London Court of International Arbitration. “We are far more confident being heard by an international tribunal” says Bell “We believe this will give us a fair footing.”

2. Usually, when a complaint is lodged, an interim tariff is slapped on B.C. wood products entering the U.S. That has not happened in this case.

Bell says the accusations are “Somewhat ludicrous.” He says the complaint is that B.C is harvesting more deadwood today than it did in 2006. “Well that should have been obvious to anyone who has been following the information on the Mountain Pine Beetle that was broadly available through any public resource. The wood has been dead for 4 or 5 years longer than when the Softwood Lumber Agreement was negotiated and it should be obvious to anyone that we would be harvesting more in our volume today than we were in 2006. So we’re confident that we’ll be able to defend our position in the Softwood lumber agreement and we are happy to do that in front of the International Tribunal as opposed to having to do it in the American Court System. “

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Posted on Friday, January 21, 2011 03:59 AM in News by 250 News

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Comments

Posted by: pgguru on January 21 2011 7:18 AM

well if this is such good news pat,why arent the two idled mills in p.g are not re openining yet?

Posted by: Andyfreeze on January 21 2011 8:55 AM

For some reason,when I think of Pat Bell "beaming"...it scares the hell out of me!

Posted by: gus on January 21 2011 9:47 AM

"Beaming" = the export of beams......

Posted by: gus on January 21 2011 9:51 AM

pgguru ..... That is easy to answer ... the total exports are not enough to start the mills up ..... they are nowhere near the total we normally have shipped before the beetle and dead tree stands .... and they will not reach that amount again for several decades unless the MoF starts doing a bit more about regenerating the forests.

Posted by: Jakersdonk on January 21 2011 10:33 AM

Are you serious you guys? pgguru, imagine how many other mills in PG would be closed WITHOUT the offshore opportunity that has been built by the government and industry. He did help with that, its true. PG employment by lumber manufacturing and spin offs would look a lot different today if it hadnt occured. It doesnt look like our US friends would have cooperated in the 'program'.

gus, forest regeneration is in no shape or form in jeapardy. EVERYTHING is regenerated that comes from public forests... and its done well. Check for yourself, its in the forest.

Posted by: Palopu on January 21 2011 12:37 PM

You can rest assured that the USA has a valid complaint. BC is now awarding whole tracts of timber to forest companies without any grading in place. Essentially they cruise the tract and then come up with some sort of average.

In addition the forest companies are paying C$0.25 per cubic meter for the beetle damaged or 4th grade logs. No doubt a significant amount of No. 1 and 2 grade logs are caught up in the averaging, thus giving the lumber companies high quality logs at the 4th grade price.

Stumpage prices for high-value timber fell on July 1,2009 to C$3.20 per cubic meter, a drop of more than 47%-and has fallen further, to C$1.48 per cubic meter in the first quarter of 2011. BC Government state that this is a natural result of the operation of its natural stumpage system.

So it appears that the American complaint is that although Canada taxes lumber exports to the USA at approx 15% when the price per 1000 FBM falls below $300.00 US, the lumber companies get this money back by paying significantly less stumpage on logs, thus nullifying the SLA.

Its interesting to note a statement from the US regarding Canada.

***By their actions, the Federal and Provincial Governments in Canada have demonstrated that they will fully comply with the SLA only when noncompliance becomes more costly that compliance***

If Canada loses this case it could cost the lumber industry $400 Million dollars, however the statement has been made that this is far less than it would have cost if they had complied with the SLA.

So its all open to interpretation, however when the information is coming from the Liberal Government, and considering their track record on putting out honest information, one should take these announcements with a grain of salt.

PS. If the Government is losing millions of dollars in revenue because of the huge reduction in stumpage rates, where do you suppose they will make up the additional revenue. Could this be one reason why they were **hellbent** to bring in the HST.???

Posted by: gus on January 21 2011 1:11 PM

Jakersdonk .... "gus, forest regeneration is in no shape or form in jeapardy. EVERYTHING is regenerated that comes from public forests... and its done well. Check for yourself, its in the forest"

I have checked not specifically as an outsider but due to my direct involvement. Of course the forests will regenerate. However, they are not being replanted to the same level as 3 or 4 years ago when mills were still harvesting and had to replace timber they took on their dime. Neither is anyone putting in some faster growing species as transitional feedstock that can be harvested in 20 to 25 years as they do in Oregon and Minnesota. They are absolutely doing nothing out of the extraordinary to deal with the coming mid term downfall of allowable cut.

They are not even doing any more intensive silviculture work to increase productivity of younger stands.

If they are, you tell me where and what it is that they are doing that is different than before.

In fact, some licencees were moving operations from more secure non-pine timber stands to MPB stands before the MoF had given them approval.

Bureaucracy moves very slowly.

Posted by: gus on January 21 2011 1:32 PM

I have not heard anyone discuss whose responsibility it is to "clean up" after a "natural disaster" (from a forest company's point of view). If anyone knows where that discussion is going, if it is being held, I would be interested to hear.

The fact is, the trees are owned by the people of the province. Companies have a license to maintain the forested areas in their agreement and harvest the timber according to agreed to plans. There are processes in place to mitigate "standard sized" natural disturbances, but nothing like a virtually total kill-off of pine stands.

I think the stumpage price has to be seen in that light. A low price means a company might still be interested in taking the timber and making sure the area is returned to free growing as quickly as possible. It will also reduce major fire risks which is really one of the next stages in the natural progress of forest regeneration after a beetle kill.

If the company's are not provided with lower stumpage rates for crappy wood the are caught between a rock and a hard place. In fact, I would say that the contract under which they operate their license is frustrated by an act of God. They are not insured for that. The province takes care of it.

Doe anyone know more about the legal discussions with the province. I sure would be interested as one of the millions of shareholder in provincial assets .... ;-)

I wonder how this is dealt with in the USA with their private forest lands. Colorado was hit hard with MPB. I wonder if the government is providing subsidies to private land holders.

Posted by: Palopu on January 21 2011 2:10 PM

It would be interesting to know what the stumpage is on timber that is milled for China Markets. (Even though it is low grade lumber) Again I suspect that the logs are low grade, however the return to forest companies would be higher because the lumber to China is not subject to the 15% export tax,. If it was I doubt if any lumber would be going to China, so once again the Province gets less revenue, and looks to taxpayers to make up the difference.

We will see what comes out of the LCIA Tribunal.

American Statement. **BC must reverse its actions and begin to charge the stumpage fees required under the SLA and impose additional, compensatory export taxes to collect the export taxes that its producers have been effectively evading since 2007. If it does not do so the United States must proceed to arbitration and the LCIA Tribunal will require BC to take these steps.**

Posted by: NMG on January 21 2011 4:34 PM

Are the products being made by the MPB logs "low grade"? Said another way, when they end up on the shelves, is the retail price less? Also, are the MPB logs making "equivalent" products to what the non MPB logs would be used for? Is there an argument to be made that the end product should play a role in what the original value of the log is and thus the stumpage that should be paid?

Pat Bell like to brag about the mass exports, but I don't see him also commenting about how the quality of the product stinks since it was made from "low grade" wood. Maybe the MPB wood is still quite salvalageable for use in a "quality" product and thus the stumpage shouldn't be as low.

I can certainly respect the desire to harvest the stuff before it becomes completely useless, but you can't have your cake and eat it too. Either it's crap now and the stumpage should be low, or it's not crap and the stumpage should reflect that. I could see if the wood was just being harvested for some really low end process or purpose, but the fact that it's still being exported as a value added product, to me at least, says that perhaps it does have value and should be taxed as such through the stumpage system. Maybe this is what the US has a gripe with . . .

Posted by: canuckfan1974 on January 22 2011 11:30 AM

pgguru, rumors flying "clear lake to shutdown Rustads to reopen" that's what i been hearing for the past couple months. Being I worked there for over 23 yrs It would have been great to move back to BC again. Now i'm hearing Vananby and Radium mills to reopen and Rustads to permently shutdown. The rumor why Rustad is to close its doors is Cn Rail owns the land Rustad is on and well what I heard is that CN Rail is wanting to use the property on both sides of the tracks in the industrial site as an inland containment port. Instead of having the tracks on 1st avenue overloaded with cosco cars they can use the land to store extra containers. If its the fastest growing port in north american the access containers will have to be put in hold somewhere. This is what I'm hearing now but hey rumors are just rumors til words become action. My thoughts are if this is what there going to do maybe they might start up Rustad for like 6 months then shut it down to see who comes back the less who return the less severence they pay out.

Posted by: canuckfan1974 on January 23 2011 11:00 AM

Correction BC Rail owns the land, me bad

Posted by: Palopu on January 23 2011 8:36 PM

You have to remember that the only Country that containers go to from the Port of Prince Rupert is China. China takes a very small portion of what we produce.

I dont see any need for a inland containers terminal in Prince George, because at this point in time there would not be anything to load into them.

The CN Intermodal Terminal is not congested, the fact of the matter is that there is a limited number of containers that can be loaded out of Pr Rupert, and at this point in time they have reached their capacity.