WOOD PRICES SOAR WHILE WE’RE LEFT OUT IN THE COLD
November 16, 2020
The COVID-19 pandemic has sent prices for lumber soaring as more and more people invest in renovations and home repairs, but the bounty is not being shared with private woodlot owners caught in New Brunswick’s badly broken wood marketing system.
“How can anyone have confidence that the people of New Brunswick are seeing a fair return off of the forest that belongs to them?
While wood prices are rising nationally and internationally, the prices for raw materials from New Brunswick’s private woodlots have stayed flat.
The wholesale price for two-by-fours increased more than $700 per thousand board feet between May and September, but private woodlot owners have seen little to no change in what they are paid.
In neighbouring Nova Scotia, the mill price for stud wood is $209 a cord – in New Brunswick, it’s $149.
How can anyone think this is fair?
FLURRY OF DISTRACTION
Recently, industry and government seized on a new report from Auditor General Kim Adair-MacPherson, hailing her report as a potential fix for the punitive tariffs imposed on softwood from the U.S.
While one hopes that that mess can be resolved, that flurry of distraction conveniently overlooked her confirmation that there is still no definition of fair market value for New Brunswick wood.
“The flurry of distraction from industry and government conveniently overlooked the Auditor-General’s confirmation that there is still no definition of fair market value for New Brunswick wood.
Considering how crucial fair market value is to the proper functioning of the industry, it’s a glaring problem.
The Auditor-General also pointed out that according to provincial law, the government is bound to set royalty rates for wood coming from Crown lands every year – but that they haven’t done so since 2014-15.
SYSTEM IS BROKEN
How can anyone have confidence that the people of New Brunswick are seeing a fair return off of the forest that belongs to them?
It’s no surprise to woodlot owners in the province that the system is broken.
It’s worth looking at a province like Alberta, which has a much more effective system for Crown timber royalties – a sliding scale.
As retail prices climbed, the royalty rate there climbed along with it – to $67.30 per cubic metre.
Alberta bases the royalties on the value of the finished product.
New Brunswick, meanwhile, sets royalty rates based on what is being paid for private wood.
INCENTIVE TO KEEP RATES DOWN
That means there is a real incentive to keep the price of private wood down to keep royalty rates down.
“In a nutshell, New Brunswick creates an incentive for large mills to pay less for wood.
In a nutshell, New Brunswick creates an incentive for large mills to pay less for wood.
We have told numerous governments that royalties ought to be indexed on the basis of finished product values, similar to other jurisdictions. But, so far, no action.
Back to the Auditor General: she noted that there is no definition of fair market value for wood, which she calls “an obvious gap.”
Government and industry glossed over that. Instead, they focused on her report pointing to the government's assertion it had made improvements to the surveying of private wood prices in the province and was confident in them.
Very quickly, the government and industry hailed that as ammunition for the province in the ongoing U.S. trade dispute. But the Auditor-General was not giving her own opinion; she simply said the government felt it was improving.
“The dwindling share of wood from private woodlots was clearly cited by U.S. forest industry groups
This interpretation by government and industry is also surprising, since the fundamental problems that triggered the imposition of tariffs, including industry’s growing reliance on Crown timber, reach far beyond the process for calculating private wood prices. The dwindling share of wood from private woodlots was clearly cited by U.S. forest industry groups when they argued that the New Brunswick industry was now subsidized at a level that warranted trade sanctions. Five years ago, the Auditor General issued a report looking at the way the province was addressing, or not addressing, provisions of the Crown Lands and Forests Act. In that report, Ms. Adair-MacPherson observed that:
there is no clear strategy for private wood supply.
the Department of Natural Resources does not meet its principal responsibilities under legislation respecting timber supply from private forest lands. The Crown Lands and Forests Act stipulates that the Department will ensure the wood supply from private woodlots is proportional to that from Crown land and the yield can be sustained.
the department has failed to ensure private wood supplied to mills is proportionate. They have not planned for, monitored, or reported on proportional supply since at least 2002.
These problems remain.
The New Brunswick legislature soon will open for a throne speech, a new session and a chance for the majority Progressive Conservative government to make changes it promised in its electoral campaigns.
“Now is the time to make that ideal a reality, and to address the fundamental flaws that plague the wood market in the province.
It’s time for a review of the almost 40-year-old Crown Lands and Forests Act to bring it up to date and to restore the place of private woodlots in the bounty of our forestry sector.
Mike Holland is back in his cabinet seat as Natural Resources Minister and we can all recall him saying changes are coming in forestry, including giving private woodlots a larger share of the market while freezing the amount coming from Crown lands.
Mr. Holland said a few months ago “it was a worthy ideal” that would spur growth in the private woodlot sector.
Now is the time to make that ideal a reality, and to address the fundamental flaws that plague the wood market in the province.
New Brunswickers deserve no less.
Thank you for listening,
Rick Doucett President, New Brunswick Federation of Woodlot Owners