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Exports to China a necessary - and lucrative - part of B.C.'s logging equation

" The log export policy is a policy that provides for jobs in British Columbia … it's very clear that these log exports are a necessary part of the overall equation," Forests Minister Steve Thomson said this week in the legislature.

British Columbia sent softwood lumber worth nearly $1.1-billion to China last year, reflecting an increase of 60 per cent over 2010 and a hike of more than 1,500 per cent over the past decade. Around one-third of the province's exports of softwood lumber went to China.

The NDP earlier this week questioned why the B.C. government has allowed the export of raw logs from Crown land to China while some mills in the province say they cannot find enough wood. The government rejected the advice of an export advisory committee that recommended that logs designated for export be directed to a local mill. Doug Routley, the NDP member from Nanaimo-North Cowichan, said he has been told by mill managers that several B.C. mills will shut down if the current level of raw log exports continues.

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Both the companies that export the logs and the local mills that want the logs have a point, said David Cohen, a professor in the department of wood science at the University of British Columbia's faculty of forestry.

Much of the controversy revolves around price. Chinese companies are willing to pay roughly 35 to 70 per cent more than B.C. mills. The difference is around $20 to $30 more per cubic metre.

The timber companies have to sell the wood to the highest bidder to be profitable, Prof. Cohen said. The mills need the wood to stay open and provide jobs for the economy.

If local mills could afford to pay the same price as Chinese companies, the logs would be staying in Canada, he said. "They are not receiving enough wood because they are not willing to pay the export prices."

But a halt on exports will not necessarily mean more logs for local mills. Much of the wood exported is of low quality, used in China mostly for concrete forms. The forest companies say the domestic price does not cover the cost of taking the low-grade logs out of the woods. Without exports, the companies would do less logging, which would mean fewer jobs in the woods and less work for truckers and shippers.

The impact of log exports on the B.C. economy has been significant. China's growing appetite for logs and sawn lumber was having "a profound impact" on the revitalization of the B.C. forest industry, International Wood Markets Group Inc, an industry consulting group, stated in a news release last summer. "Without the emergence of this important wood market in China, many B.C. loggers and sawmill workers would still be unemployed," the consultants said.

Western Forest Products exports about 10 per cent of its total volume cut to China. "It's a small portion of our cut, but that per cent is important to us," said Lee Doney, Western's vice-chairman.

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A higher export price helps the company access marginal timber stands, he said. "We would not be able to take them out if we did not have an export premium." The company would lose money by logging low quality wood at domestic prices.

The premium from logging for exports has also opened up opportunities for more cutting. For every cubic metre of log taken out for export, the company takes out twice as much wood – much of it of higher quality – for its local mills, he said.

Those trying to block exports are trying to gain access to more logs for less than the cost of taking them out of the bush, Mr. Doney said. They do not have wood for their mills because they cannot get wood at a price they are prepared to pay, he said. "They want to be subsidized."

Log exports have helped Western Forest Products create 400 jobs, he added. "If we cannot continue to do this, we will lose those 400 jobs, including 200 in our mills."

Mr. Thomson told the legislature that the log export policy was under review, and he recognized that the exports had to be balanced against the supply to the local mills. With the surge of exports to China, the balance may be out of kilter. But Mr. Thomson is right in saying that exports are a necessary part of the equation.

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