Presented by Tom Niemann, on behalf of the Ministry of Forests, Lands and Natural Resource Operations, at the Log Export Policy Meeting - July 20, 2011 in Richmond, BC.
3. Long history of responsive policies
Log exports from old temporary tenures first
banned in 1891
Some exports permitted in 1901
Export prohibition extended to Crown land
granted after 1906
Some exports permitted in 1909
Export of “surplus” permitted in 1916
First Log Export Advisory Committee in 1918
3
4. Competitiveness
and Innovation Branch 4
Potential exporters need to show that logs:
– are surplus to the needs of domestic
manufacturers; or
– cannot be economically processed in the
province; or
– export will improve utilization & prevent waste.
Applies to Crown land and some private land
Surplus test procedure
Fee-in-lieu of manufacturing
5. Competitiveness
and Innovation Branch 5
Log exports from pre-1906 private land in B.C.
must also be surplus to domestic needs.
Same surplus procedure as provincial logs.
All logs exported from Canada require a federal
permit.
Fee-in-lieu of manufacture is not applied to
logs under federal jurisdiction.
6. Competitiveness
and Innovation Branch
Generating More Wealth from British Columbia’s
Timber: A Review of British Columbia’s Log
Export Policies
Views on log exports
Economics of exports
Recommendations
Competitiveness
and Innovation Branch 6
7. Competitiveness
and Innovation Branch 7
Support log exports:
• Private landowners
• Market loggers
• First Nations
• Major Licensees *
• Pulp & paper
companies
Oppose log exports:
• Independent sawmills
• Rotary (veneer) mills
• Organized labour
• Environmental groups
• Communities *
* Some exceptions
8. Competitiveness
and Innovation Branch 8
Economics of log exports:
“Log exports are primarily a symptom, not a cause, of
the economic problems facing the coast industry.”
If there are restrictions on export of processed
products, log export restrictions need to consider and
be calibrated to these. (Softwood Lumber Accord)
“The key issue in the Coast Forest Region and in the
northern transition zone of the Interior Forest Region
is the economics of hemlock and balsam.”
9. Competitiveness
and Innovation Branch 9
Recommendations:
1. Adjust fee-in-lieu to reflect lumber export tax
2. Negotiate free trade in logs from private land for lumber from private land
exempted under Softwood Lumber Accord
3. Stimulate harvesting of hemlock and balsam
4. Permit export of lower grades of western redcedar and yellow cedar, with a
transitional fee-in-lieu
5. Simplify operation of the surplus test for private forest land
6. Special considerations for small Crown licences and small private
landowners
7. Considerations for First Nations and new entrants
8. Second growth strategy
9. Free trade in logs with the US as part of a lumber deal
10. Many written submissions received
◦ No clear consensus
Policy did not change
◦ Timing was not right, due to recession
10
11. Jobs in forest industry are down
US market and stumpage rates are down
Lumber and log exports to China are up
Share of log exports going to US has shrunk
Log exports (Provincial jurisdiction) are up
Total log exports are about the same
11
15. Competitiveness
and Innovation Branch
Rapidly growing economy
Value of B.C. lumber exports to China in 2010 were
10 times 2005 level
China became B.C.’s #1 lumber market in May 2011
At least 10 mills opened since 2009 to serve China
Value of B.C. log exports to China in 2010 were 12
times 2005 level
China became B.C.’s #1 log market in Jan–May 2011
15
17. Competitiveness
and Innovation Branch
U.S.
51.7%Japan
39.7%
South Korea
5.9%
China +
Hong Kong
1.8%
Other
Destinations
0.8%
B.C. Log Exports in 2005 ($540 million)
U.S.
9.3%
Japan
35.9%
South Korea
21.4%
China +
Hong Kong
32.5%
Other
Destinations
1.0%
B.C. Log Exports in 2010 ($377 million)
17
18. Competitiveness
and Innovation Branch 18
LogLog exportexport volumevolume
Structural changes in the industry and marketsStructural changes in the industry and markets