Ben Parfitt’s article How to Create Green Jobs in BC’s Forests appeared in the August 15, 2011 online edition of the Tyee (link to full article).
In a nutshell, Mr. Parfitt criticizes the BC forest industry for exporting raw logs to China. He argues that diversifying markets and value-added products are the vehicles we need to move this province, its forests and its communities forward to a better place.
We’re just as interested in improving the situation for BC forests and communities. In fact, we strive for the same worthy objectives as Mr. Parfitt: a sustainable forest industry and healthy sustainable forests.
To that end, we’ve taken the time to address some flawed logic, bad comparisons and misinformation Mr. Parfitt stumbled over on the way to a better place.
“We’re Shipping Primarily Non-processed Commodities to China” and Here’s Why
Economic realities dictate how markets work. The products Chinese markets want are logs and lumber. That’s why BC (and our competitors like the US, New Zealand and Australia) sell logs and lumber to China.
Fibre costs and fibre availability are not the limiting factors for value-adding in BC. Conversion costs are. Western Canada has some of the lowest log prices on planet earth. It also has the highest sawmill wages and the highest conversion costs on planet earth.
This is the same reason BC doesn’t export mobile phones and children’s toys to China. A high-cost jurisdiction cannot compete on value-added forest products into the Chinese market, or any market where the costs to manufacture goods are considerably cheaper.
Moving up the Value Chain: Why Comparing BC to Ontario and Quebec Doesn’t Work
Comparing Ontario and Quebec to BC is a bit like comparing an ocean to a lake. Sure, they’re both water, but they’re fundamentally different and exist in distinct environments.
BC’s eastern counterpartes operate with a different species mix (a greater proportion of whitewoods and temperate hardwoods) and a different product mix (newsprint, fine papers, value-added hardwood products).
Interestingly, eastern Canadian provinces are often net importers of logs from the U.S. In Quebec and Ontario there are no log export restrictions on private forest lands. This means, logs flow to the mills on either side of the border that add the most value, and can therefore offer the highest log prices.
This is the opposite of what’s going on in BC. Here, log export restrictions create artificially low log prices – the lowest on the planet. When domestic log prices are competitive there is no incentive to export logs.
Open competition for fibre compels innovation, efficiency, investment, improved utilisation, and ultimatley, increases the economic return to the forest.
“You can’t make forest products if you don’t have healthy numbers of healthy trees.”
BC has loads of healthy trees. Let us say it one more time for emphasis. There is no shortage of healthy trees in BC.
Yes, the harvest of lodgepole pine was accelerated to capture residual value in millions of trees killed by the mountain pine beetle epidemic. However, 100 million cubic meters of timber still went uncut.
That’s right, of the province’s annual allowable cut 100 million cubic metres of timber didn’t get harvested. That’s a lot of trees.
Currently, BC’s coastal timber harvest exceeds its annual coastal timber processing capacity by 8 million cubic metres.
We repeat: there are plently of healthy trees in BC. Trees that were planted and grown for the purpose of harvesting.
Some Raw Facts of Our Own:
• The current market price for lumber destined to China is $248 per thousand board feet. The price for logs (TO THE SAME MARKET) is $630 per thousand board feet.
• The cost of log production on the BC coast is between $400 and $630 per thousand board feet. You do the math.
• Banning log exports and limiting competition for fibre is the opposite of diversification.
• If a forest product is used in a manner that substitutes a high-carbon product like coal, oil, gas, steel, concrete, plastic or aluminum, the outcome is carbon-friendly.
• People don’t burn money. They don’t burn usable logs either. People burn logs to manage forests because current market conditions don’t make it economically viable to use them other ways.
What do you think? We look forward to your comments and suggestions.