DEBRA BRASH/Postmedia News Files
May 6, 2011
National Post
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Politicians want more value added to B.C.’s logs, but experts argue that raw material is all that sells on the world market.

Fresh from his election as B.C. NDP leader, Adrian Dix has been wooing the left-wing base with a slate of classic NDP issues: Beef up health care for seniors, drive out the HST and, of course, crack down on the export of raw logs.

It’s a philosophy that B.C. politicians have been rolling out since colonial times. Before Confederation, B.C. officials implemented export tariffs on logs to encourage domestic sawmills. In 1935, the B.C. legislature proposed a “gentlemen’s agreement” with Washington State to block foreign log shipments. During the 2009 provincial election campaign, Mr. Dix’s NDP predecessor, Carole James, raised the issue in a news conference held in front of log booms in Vancouver’s Burrard Inlet. “While British Columbians are losing their jobs, our forests are creating jobs beyond our borders,” she said.

B.C. exports of raw logs have gone up dramatically in recent years. Between 2009 and 2010, largely due to increased demand from China, per-month averages of raw log exports grew by as much as 200%. Regardless, the share of total forestry exports deriving from raw logs remains relatively small. In 2010, raw log exports fetched only $300-million — versus $3.6-billion for exported lumber. Still, critics deride the trend as a job killer. In a 2007 report, the Canadian Centre for Policy Alternatives blamed raw log exports for costing British Columbians more than 5,000 jobs per year.

Forestry insiders, on the other hand, credit log exports with maintaining the few forestry jobs that remain. “The export of logs is something that is done out of necessity,” says John Winter, president and CEO of the B.C. Chamber of Commerce. “Certainly people would prefer to be sending out a finished product … but if you don’t chop down the trees then nobody’s working,” says Mr. Winter.

The B.C. Liberal party website estimates about 2,000 forest workers owe their jobs to log exports.

B.C. logs already face a gauntlet of export restrictions. Logs harvested on private land can only be sold overseas if the harvester can first prove that the wood isn’t needed by B.C. mills. Overseas sales must be advertised, and domestic mills are essentially given a veto over whether they go forward. Logs harvested from Crown land used to be banned from export, but now they’re merely subject to a series of taxes and restrictions.

Groups such as B.C.’s Private Forest Landowners Association blame the province’s export restrictions for keeping log prices artificially low. They’re certainly lower than world prices. Per log, Asian buyers can offer up to 100% more than B.C. clients. “The same log in Canada selling for $50 is going for $90 in China,” says Tom Sundher, president of Coast Clear Wood, a Vancouver-based wood exporter.

The increase in foreign log sales has meant a spike in B.C. logging operations; stands of timber that were not economical to harvest at Canadian prices are now being cut down for Asian buyers. The surge in activity, in turn, has maintained the flow of low-grade logs into B.C. sawmills, says Dave Lewis, executive director of the Truck Loggers Association. Logs for the domestic market wouldn’t be economical to harvest on their own. But with export premiums already paying off the overhead costs, B.C. logging firms can afford to pull out the low-grade timber needed to fuel the province’s saw and pulp mills, says Mr. Lewis.

“The thing everybody needs to get through their head is, if we don’t get that export premium, that other wood doesn’t come to market,” says Mr. Lewis. Even with the increase in forestry activity, B.C. harvesters are still coming in well below the Allowable Annual Cut, a government limit on the province’s tree harvest.

B.C.’s forestry economy has been in a “tailspin” in recent years, say critics. Between 1990 and 2008, the logging sector lost more than 8,900 jobs, according to government estimates. Forestry now employs less than one per cent of British Columbians. B.C.’s sawmills and pulp mills have been closing consistently since the 1980s, but ever since 2001, they have been vanishing at the unprecedented rate of six a year, says a report by the University of British Columbia.

For thousands of B.C.’s newly unemployed sawmill workers, it’s hard to shake the image of a foreign freighter loading up with raw logs destined for overseas sawmills — particularly in many communities that foster memories of the “good old days” of B.C. logging. Lumberjack competitions and logging-themed monuments are commonplace in interior B.C. towns, and even ultra-urban Vancouver has an axe-wielding lumberjack on its coat of arms. “We used to have a couple hundred sawmills off the coast of British Columbia alone — today we have less than a handful,” says Bob Matters, the wood council chairman for the United Steelworkers. “We’re just giving away literally thousands of jobs.”

Of course, while foreign buyers are keenly interested in B.C. logs, they have far less interest in B.C. lumber. “The logs are worth more than the lumber,” says Ric Slaco, chief forester for Interfor, one of the largest wood producers in the Pacific Northwest. Thanks to low labour costs and more meticulous production methods, Chinese sawmills can turn logs into lumber far cheaper than B.C. mills. If B.C. does ban log exports, it wouldn’t spur local industries, says Mr. Slaco. Rather, international log buyers would just redirect their freighters towards New Zealand and South America.

Most forestry-sector insiders agree that B.C.’s long-neglected sawmill sector is in desperate need of investment. Many sawmills are hard to reach and feature out-of-date equipment — especially when compared with mills south of the border. “We’ve got issues that aren’t as simple as saying, ‘No more log exports,’ ” says Tom Sundher.

Ironically, the neglected state of B.C. mills could be due in part to the province’s history of harsh restrictions on log exports, says Harry Nelson, a professor of forest resources management at the University of British Columbia. Shielded from competitive pressure, sawmills were under less pressure to keep up with global forestry trends.

Still, Mr. Nelson doesn’t expect the “ban raw logs” argument to go away anytime soon. Trees have a different effect on public opinion than other natural resources. Albertans have no problem exporting unprocessed wheat and British Columbians don’t have much problem loading up Asian tankers with unprocessed coal and natural gas — but emotions are triggered when foreigners start to buy up tangible hunks of the landscape.

“It’s a basic idea that we should be doing as much to our resources to add value to them here rather than shipping them off somewhere else,” says Mr. Nelson. “If you don’t know the specifics of the issue it sort of makes sense … even if it doesn’t make economic sense.”

National Post