There has been a shift in the long-running battle over raw log exports in British Columbia, to the advantage of industries that profit from shipping logs overseas. The winner of this fight – within the forest industry and within the B.C. government – will be declared this spring.
Log exports roughly doubled last year, bringing much-needed cash into coastal logging companies, but creating a political backlash in the process. So, as with so many conflicts facing the Clark government, the province launched a review, which is due in the next few months.
"I don't think anybody in British Columbia wants to see us exporting non-milled logs," Premier Christy Clark said this week. "The point of the review is making sure we can manage, and hopefully diminish, the amount of raw log exports in British Columbia."
This week offered a strong hint of where the review is headed, and there is little reason to think her government is moving to curtail exports.
The New Democratic Party opposition uncovered the fact that Forests Minister Steve Thomson had overruled his own advisory committee when it pushed back against the rise in exports. In a tough market, Mr. Thomson is effectively deciding which forestry jobs – in the woods or in the mills – are worth more.
Provincial law dictates that logs can only be exported if they are surplus to the needs of B.C. mills – so long as the mills are offering to pay a fair market value based on domestic prices.
Last year, the domestic price was roughly half of what mills in Japan, Taiwan, China and South Korea were willing to pay. So a record number of container ships filled with raw logs – 30 per cent of the harvest on the coast – journeyed across the Pacific.
Most of that wood – about seven million cubic metres' worth – was declared surplus without challenge. It is only when a local mill puts a bid on logs that a company wants to export that the forest minister's Timber Export Advisory Committee has a chance to influence the outcome. That's a small fraction of the volume involved, but the committee was clearly pushing value-added manufacturing jobs.
The tipping point came late last year, when the committee reclassified freight costs so that the logging company, not the mill, would pay for delivering the log booms to the buyer – further lowering the cost to the mill.
In December and January, the committee approved a total of 86 local bids for logs earmarked for Asia. In every case, Mr. Thomson rejected its advice. By February, his ministry stopped referring bids to the committee, resulting in more logs declared "surplus" while local mills curtailed their operations because they couldn't get enough wood.
In an interview this week, the Forests Minister sought to explain his actions. "We are looking for the appropriate balance," he said. "Pure economics would say, let the market dictate."
Right now there are two, very different markets. Last year, Asian buyers were paying $100 for a hemlock log from B.C. But the B.C. mills don't have to directly compete with that price. The domestic market pegged the value of that same log at $55. Now shift the freight costs to the harvesting side of the equation, and the gap is wider still.
Mr. Thomson decided the committee was being too generous to the B.C. manufacturers. "We were essentially saying that the offers did not constitute fair market value," he said.
Dave Lewis, executive director of the Truck Loggers Association, is cheering the minister on that call, noting that the cost of harvesting that hemlock tree is $78. "So when someone comes along and says 'I'll pay you double,' which enables the harvest, that's a really good thing. We can now maintain those roads and those jobs and get people to invest," he said. "Why should a mill be able to operate at a profit at the expense of the guy who cuts the trees? We'd like both to make a profit."
While Mr. Lewis' group wants even more access to overseas markets, manufacturers having been trying to mount their own lobbying effort. That they were relying on the NDP to speak for them this week suggests they are worried about the outcome of the policy review.
Last January, Ms. Clark spoke to the Truck Loggers Association annual convention, where she promised "a common-sense approach" to raw log exports and a government that would say "yes" on the regulation of the forestry industry.
This spring will reveal which side – the loggers or the manufacturers – she was speaking to.
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A jobs log
Premier Christy Clark defended the increase in raw log exports this week, telling reporters "it keeps a lot of people at work when those mills jobs are tough to come by."
But while log exports are rising, the number of jobs in the woods are not.
Year raw log exports in cubic metres forestry and logging jobs
2005 4.8 million 21,300
2006 4.3 million 21,400
2007 3.5 million 24,200
2008 3 million 17,300
2009 2.7 million 13,900
2010 4.5 million 16,100
2011 6.9 million 14,100
Justine Hunter