August 5, 2023
I am beginning to think there is one thing the two major political parties in New Brunswick can do in a bipartisan way and it’s taking a bad situation in the private woodlot sector and make it worse.
We had high hopes this time around things would be different as the talks started out with enormous promise and ideas to turn the private woodlot sector in a more hopeful direction.
Although we want to address the inequity the influential buyers in the province now have in our broken negotiating system for fair woods prices, both Liberals and Conservatives always lack the political will to tackle that problem head on. Instead, a series of other measures are proposed that might make things better and so we start down that road with each administration.
Unfortunately, after all the discussions, the final decision to do something tends to benefit those influential buyers and the sellers are left in a weaker position.
It is really starting to feel like we are about to experience this 30 year political trend all over again. Our talks regarding the situation on private woodlots and for all of those involved in the private woodlot supply chain led to some ideas for the future that will not address the market issues here in the province, but they still held the promise of improvements.
As things were announced regarding a new system to determine Crown Royalties, those that want everything got nervous that they may be forced to share with others and they made statements like,
“If the system proposed by the Minister is not properly structured, there is tremendous potential for severe and negative impacts on the long-term sustainability of New Brunswick’s Forest products industry,” https://globalnews.ca/news/8970837/new-brunswick-timber-royalties-rates-increase/
Typical industry fearmongering to keep the politicians in line. It’s been working for decades, why deviate from the pattern now?
The original discussions on the crown royalty rates and crown royalty rate adjustment system had the promise of adding money to provincial coffers and providing significant investment back into the private woodlot sector.
A CONVOLUTED MESS
However, after reviewing the draft of the regulations proposed for the crown royalty rate
adjustment system, it appears industries’ concerns about not having a properly structured system have been addressed by allowing them extraordinary influence in the writing of the regulation. It’s the only explanation on how such a straight-forward system as discussed with the Federation of Woodlot Owners has become this convoluted mess that will not generate nearly the benefits we discussed.
The original discussions on how to set both Crown Royalties and Crown Royalty Adjustments
proposed a regional survey of wood values (prices). This survey would look at Nova Scotia, PEI, Maine and Quebec. Yet somehow, we have fallen back on the New Brunswick Forest Products Commission (NBFPC) Private Wood Stumpage Survey as the benchmark to set Crown Royalties.
The NBFPC erroneously refers to this study as the Fair Market Value Study. It is not possible to study something that does not exist. Although the existence of a Fair Market for private woodlot products in New Brunswick has been debated for years, the lumber boom of 2021/22 proved beyond a shadow of a doubt that there is no such thing as a fair market for private wood products in New Brunswick. During that time woodlot owners in every province and state around us were getting paid double for their wood, while NB woodlot owners saw no increases.
New Brunswick has a distorted marketplace brought on by the largest supplier (NB Government) offering too much wood into the market at too low a price. You would have to have slept through 2021/22 to believe otherwise.
Now that the boom has subsided the Department of Natural Resources seems to have misplaced all their calculators and negotiating skills as they set up a two-tier system that will lose taxpayers money. They have set royalties well below 2017 to 2020 levels and created a royalty adjustment system that can’t generate enough money to break even with previous royalty revenues.
The system we were discussing with this government was going to be designed to ensure that if those who were rolling in money during good times chose not to share it with others, a system backed by legislation would be in place to force at least a little something out of their selfish hands. This latest proposed regulation does the opposite, it rewards this selfish behaviour with a discount.
When will NB governments stop feeling the need to feed the corporations and start to help those that are in actual need?
Thank you for listening,
Rick Doucett
President, New Brunswick Federation of Woodlot Owners