"Would you allow someone to log a tree the size of the average Canadian telephone pole from your backyard and pay you only a quarter?

If that is not a subsidy, what is?"

So, if low stumpage is considered a subsidy then I guess low taxes must be considered a subsidy as well. If that is the case, the Americans have NOTHING to complain about. They would have to raise taxes to what Canadian's pay to level the playing field. While low stumpage might be a good or bad policy decision, it is ludicrous to consider it a subsidy. Sorry, Will Horton.

However the logging companies also have to build and maintain much of the road network on public land, something most US companies don’t have to do. They also have to submit 5 year development plans which are expensive to complete. Comparing the industries of both the US and Canada is difficult, a they operate in two very different environments.

The US also has a broader definition of what a subsidy is, including our health care system. Part of our problem with this is that the present government has shot themselves in the foot with how they handled the Iraq war issue, what little feeling Bush had for Canada vanished with that. Also his administration is far more interested in Mexico than us. Added to this is that members of Congress are far more interested in protecting their own rice bowl, than honouring international agreements.

I'm not an expert on the issue but think their are bigger questions we should be asking. If you took someone to court over 5 times and won every time but the other party just refused to pay up or cooperate with the rulings then
why are we participating in this process. Either the court has no teeth or the other party is never going to play by the rules. If I refused to pay a court ruling the fines would increase and they would garnish my wages , take me into custody etc. So we must ask ourselves, what is the value of these agreements if they cannot be enforced
against the most powerful economy. Kind of like ancient Rome.

We ourselves are to blame, we got lazy and have relied on the US to much and not built up our own local economies, we just devalue our dollar and hope Americans come looking for a deal. I am not against trade , what I am against is raw resource extraction for bargain basement prices, we should be using our own wood and not shipping out raw logs. Adding value to the product, look at tiny countries like the UK that are outperforming us with little to no resources, we should stop being the Wal Mart for cheap resources and use our resources to our advantage. Now we are giving away entire energy companies AKA Teresen. The answer is to get out from under these agreements and be more self reliant. A partner is one that looks eye to eye and not someone who comes to you on your knees. We need to stand up and get creative.

Small point, perhaps. Will Horton recommends leaving the beetle-killed forests standing. He feels (and I agree) that there's no need to rush their removal at subsidized stumpage.

Dead trees stand only so long, however. So if I understand Will's point, he's suggesting a longer term of harvest, without subsidies?

Now a question: isn't a standing dead tree (i.e., a dry tree) a better value than a living sap-filled tree, insofar as the loggers and mills see them?

This leads us to an interesting situation:

1) our forest tenure system allows companies to harvest our forests at extremely low prices. This could be interpreted as a subsidy.

2) the US is still wrong to ignore what is supposed to be a binding NAFTA dispute-resolution process.

Are these two points necessarily contradictory? I still think 2) is true even if 1) is also true.

The point is that the US isn't owning up to the trade deal it signed. The fact that our tenure system allows for low-cost access to resources does not mean they can ignore binding rulings.

If Ben Parfitt has read this, I'd like to hear his opinion. Ben, you out there?

It is so refreshing to see a Canadian that is actually "informed" about the softwood dispute. Anyone wanting to be better informed should take the time to read the real details from the court documents instead of merely screaming that the U.S. are 'bullies'. The Canadian PM has writers who pick and choose what parts will go in to print, while ignoring the facts, which include the plain and simple reality that Canada DOES subsidize the softwood industry. Reading the court documents (from BOTH sides) gives such a different picture than what is seen in the normal media, and really puts paid to the PM's arrogance that Canada is innocent in all this and the U.S. is just a bully. After reading about softwood, read the other court cases regarding dairy, wheat, Bombardier (aerospace industry), etc. and you will come away with a completely different picture of what the real issues are, and how big the deception is to the Canadian people. And unlike some people who have already been fooled, one can quickly see that NO Canada has NOT WON all the cases at all.

BC'ers on the Coast need to be aware how this .25 cent beetle wood is affecting them.

The Coastal Forest Industry has many problems, one of them is trying to compete against stumpage that is far lower than what anyone on the Coast could ever dream of.

The Coastal producers, and taxpayers will be the ones footing the bill when the crunch comes. The government should raise the stumpage and start a fund to prepare for the day that the beetle wood is done and the communities pay the price for the government not having a plan.

Interesting article.

One post, however, that suggests that low taxes are a subsidy, is a scarey one.

Because one country has lower taxes doesn't mean it is unfair. In reality it is how all countries should be.

The post's assumption is that every one should have high taxes like us.

The idea that so much of our money should naturally belong to the government is one that should be opposed. The government does not handle money very efficiently, or honestly, and the more government interferes in the economy and people's lives, the more unbustling and unproductive the country becomes.

Low taxes should not be considered a subsidy, but rather a goal to be reached.

As far as stumpage fees go, perhaps a massive stumpage fee would be a good idea. Pay good money for the trees that belong to the people and return the money to the people in the form of dividend cheques each year in the same way Alaskans get them each year for their oil.

The Americans are wrong because even if the stumpage paid for the trees is lower than a market price there would be no reason for the Canadian lumber companies to pass the saving along to American buyers. What impacts the American market is the volume of timber BC allows to be cut, not the price being charged for it, so long as the price is anywhere between zero and fair value. The real complaint by the Americans is volume, not stumpage.

BC lumber and labour policies have been designed to effectively force lumber companies to employ too many people and pay them above market wages. Something had to give to pay for those policies and it was stumpage. If BC frees up the industry, BC can collect higher stumpage for the benefit of all British Columbians but the result will be lower employment and lower wages in those very rural communities you say you are trying to protect.

mbjc88: First of all, our taxes are not particularly high given the services that are provided for them.

Second, your assumption that the private sector is more effective/efficient with money is simply that--an assumption. Corruption, collusion, and rip-offs occur both in government and the private sector (and are worst when they combine the two).

True, government is using money that is taken through the compusion of taxes (in the private sector this is limited to shareholder contributions, bond lending, etc.); but this is balanced by the fact that in theory, at least, every taxpayer has some democratic say in the distribution or uses of his investment.

By contrast, in the private sector participation is limited dramatically so that only a small elite among Canadians has any say except through market preference among brands, for example.

American and Canadian forestry systems simply function differently, and that was a strong point made by one of the responders above. It's very difficult to compare the two other than the fact that they both cut down trees and sell them.

As well, the public and private sectors function differently and hold different responsibilities. One of the serious flaws of modern socio-economic analysis is the unstated assumption that both public and private sector contributions to society should be judged in the same way: through the principles of generally accepted accounting principles and the pronouncements of economists. While these have some relevance to both sectors, their dominance is overblown, particularly with respect to some of the goals of the public sector, most of which the private sector would have no interest in serving without essentially perverting their institutional mandates.

Great post, Joe. I think you described clearly our current policy trade-off, pitting community stability and a certain form of post-WWII economic development against environmental sustainability.

The example of the telephone pole is painfully graphic since I've long-held that B.C. taxpayers are being doubly shafted - first by the dismal stumpage rates with which this Provincial government buys the industry and, second, by the legitimate ammunition it hands to those horse-traders to the south.

There should have been much screaming, particularly from workers in the industry, but we are such an apathetic bunch - such gluttons for punishment.

It is difficult to imagine a much more venal industry since, even with give-away stumpage rates to the industry, there has been questionable log-scaling.

A good article, Will.

Could someone please answer that question: aren't standing, beetle-killed trees (in other words, kiln-dried only better) more valuable to the loggers and mills?

And is there really a good reason to rush into harvesting them?

The issue is the US not abiding by NAFTA rulings, not if we're subsidized.

Subsidies can not be defined, because all government actions and all corporate profits are forms of taxation and subsidies for certain sectors.

All free trade agreements, like the NAFTA and the WTO, globalization, et al are subsidies to certain special interest sectors. Therefore all talk about subsidies is nonsense.

At the same time, many of the stumpage fees are far too low, especially when the benefits end up in the pockets of the multinational mafia and used to displace more workers with more automation and out of the country.

Ed Deak, Big Lake.

BC mary

The value of the dead wood is quite a bit less than the untouched live wood. You can tink of the area around the infected forest as containing 3 types of tree, unaffected, infected and still alive and dead. The companies want to log the untouched wood in front of the infestation. However some companies were transporting infected wood and the beetles falling off the trucks were spreading the infestation, don’t know what they are doing to address this issue. Asian buyers are not very interested in buying the infected wood, despite efforts to market it as “blue pine”. There is also a BC company that has built machines to chew up groundfall where the beetles live and deprive them of their favourite habitat. Lets hope for a few big fires and a –40 cold snap for 3 –4 weeks.

Here are some quotes from the BC MOF website

Beetles attack pine trees by laying eggs under the bark. When the eggs hatch, the larvae mine the phloem area beneath the bark and eventually cut off the tree’s supply of nutrients.
The beetles also carry a fungus that causes dehydration and inhibits a tree’s natural defences against beetle attacks. The fungi stains the wood blue or grey. Despite the discoloration, the wood remains as structurally sound as unattacked pine and can still be used for high-quality products.
Not all of the beetle timber has to be logged today. The timber is expected to retain its commercial value anywhere from five to 18 years after attack (depending on local site conditions). Research and "shelf-life" modelling continues to be conducted to help determine priority areas where more immediate harvesting is required to recover economic value.
Web link
http://www.for.gov.bc.ca/hfp/mountain_pine_beetle/faq.htm#How%20exactly%20does%20the%20mountain%20pine%20beetle%20kill%20trees?

I was told by MOF staff that the fire risk shoots up for the first 3 years and then drops down as the needles and small branches fall off.

There is more than one issue here. It is Ok to agree that the US is not abiding by the NAFTA rules, AND to agree that our stumpage rates are too low.

At the root of low stumpage rates is an accounting system that encourages wholesaling of our natural resources. If you run a business, or are balancing your household budget, you can sell something (debit) and receive payment (credit.)

But since there is no inventory on the books of Canada's natural resources, whenever a government wants to make money they can just sell some resources at any ridiculously low rate (credit, credit, credit) and there is no debit! Everyone praises their fiscal prowess, and we all enjoy the game, until it runs out. Our resources aren't conserved because there is actually a disincentive to do so.

If PM Marten is really, seriously, interested in garnering votes in BC, he could start by flagging his family's shipping line in Canada.
Otherwise he is politically irrelevant to me and does not speak for me. His party has bungled the softwood file from the get-go.
This nonsense has cost me a lot in lost wages, twice in the last twenty years.

So Canada has not won every issue in every case. For example we lost a silver bullet argument that BC was selling land not goods so that timber licences are exempt from countervail and anti-dumping proceedings. The Americans tout this as a finding that the timber is subsidized when in fact all it is is a decision that it is theorectically possible for timber to be subsidized.

We still have won the falling: (1)The extraordinary challenge committee struck down the finding of threat of injury. "Threat of injury" is a condition precedent to everything else. The committee finding is as final and binding in the US as a decision by their courts and there is no appeal. All the US industry can do is to challenge the constitutionality of NAFTA which they have done and which they will lose. (2) A finding at the WTO that cross border comparisons can only be used in exceptional circumstances and the exceptional circumstances have to be shown to exist. (3) A WTO ruling that the Byrd amendment is contrary to WTO rules. (4) A WTO ruling that zeroing as used by the US Department of Commerce was contrary to WTO rules. The Department of Commerce has tried to use a different form of zeroing but they are going to lose that one as well. (5) The recent NAFTA decision that effectively forces the Department of Commerce to recalculate the subsidy rate to a number which is less than 1% which will force the end to the subsidy tariff independent of the decision of the extraordinary challenge committee on threat of injury.

Canada is winning the litigation on all fronts. If the US industry loses the constitutional challenge (which is opposed by the US government) the US will have to give the money back and start over.

There may be a trade-off between economic development and environmental sustainability but I see no trade off between medium and long term community stability and environmental stability.

The trade off which is driving policy is between stumpage revenue and employment.

The pine beetle is driving a harvest but our choice is to harvest and salvage what we can or let it burn or rot. In ten years the beetle kill will be worthless.

Exactly! Well said.
And how come all the small little independent operators and woodlot pay such exorbitant stumpage.
If the big companies paid as much as they do, we'd be getting surplus cheques from the gov't like they are getting in Alberta.

mbjc88:

Sorry you missed my point. How can we call low stumpage rates a subsidy if low taxes (or no taxes) isn't? How about all those arenas and stadiums that get built in the US that get special deals with local and state governments?

The fact of the matter is that low stumpage rates, no matter how bad a policy decision it is, are not subsidies. The government charges the same rate under the same circumstances to anyone that cuts the timber. If they were giving a better deal to one company over another then that would be a subsidy.

We don't complain that lumber companies in the US are taxed at a lower rate, so how can the complain about stumpage?

Thanks for the info, Colin. This quote, however, seems to contradict what you say about beetle-killed trees being of far less value:

Those who build with logs are always looking for ways in which to reduce the moisture content in the logs they build with ... and in my own log homes, I treasured the beetle patterns in the walls.

Is the Ministry of Forests missing out on the right markets?

1. Americans have been putting pressure on us over softwood lumber for years.

2. Certain people in Canada want to agree with them.

3. These people do not want to raise stumpage fees, they want to sell off the forests to the private sector because they believe the government should not own this valuable assets.

Let's call these people conservatives.

Off-subject I know.

But please let me be the first to congratulate Attorney General Wally Oppal for moving forward on Bountiful.

Hey Mel, are there trees in Calgary? ...

Presuming for the moment that what Mr. Horter states is true, can he explain what possible motivation the numerous WTO panels (as well as the cross-border NAFTA tribunals) that have repeatedly ruled in Canada’s favour in this matter, would have to condone the egregious subsidies he purports to exist? It doesn’t make much sense, does it? No. And neither does Mr. Horter’s, unsubstantiated, wooly-headed argument. As for his screed about “Beetlenomics” what would he have the government/industry do? Simply leave the trees to rot in the forest… Better to harvest them while they’re still a viable economic resource and clear the land for replanting, I say. Besides, conflating these two issues really muddies the waters regarding the fundamental issue of stumpage fees and subsidization. Everyone agrees there is a certain degree of subsidization involved (as confirmed by the WTO rulings), but nowhere near the degree claimed by the U.S. lumber companies who are blaming Canadian lumber companies for their own inefficiencies and overall inability to compete. The bottom line is that Mr. Horter and the folks at the Dogwood Initiative are fundamentally opposed to commercial logging in B.C.’s forests and this colours their opinions accordingly.

Thanks Will, good article. You might realign some opponents by emphasizing that the massive forest subsidies once served the social purpose of underwriting and compelling tenure holder investment in decent industrial employment. The forest industry subsidies were significantly labour subsidies targeted on balancing uniquely BC industrial development risk and creating industrial forest employment infrastructure as a matter of public policy.

The subsidies really worked for British Columbia. They worked for labour, for businesses and for communities. The subsidies were also supposed to work for our forests but the professional foresters dropped that ball when they forgot it was ultimately the public and not the tenure holders who were paying them.

That was then. Nowadays, the huge subsidies still exist but labour is a long, long way from the head of the table if they are still even in the cookhouse at all. The subsidies are being almost entirely captured by the forest tenure holders who now apply them to unearned profits, to assist with capital rent, to tenure consolidation, to mill shut-downs, to business mergers and to conversion of resource and capital infrastructure to labour free technology just right for our diminishing future forest industry.

What does this mean? It means simply that the subsidies are not being used as an industrial incentive to create jobs and add working value to our forest resources anymore. It means that we are abandoning the 100 year old assumption that the privilege of exploiting our forests should result in net public revenue, decent employment and social and economic benefits right here in BC. How did it happen? In short, it happened because the threat and hysteria of the US softwood countervail created a context not for abandoning the subsidies but for abandoning labour's involvement and beneficial interest in the subsidies.

(please continue below) Thanks, Touchwood

(continued from touchwood above)

The big question then is why would the beneficiaries of these long-standing labour subsidies and forest policy arrangements allow these benefits to be redirected into the pockets and perks of BC's largest forest tenure holders? The US countervail threat worked so well to deprive labour of security, our communities of certainty and our forests of timber that it is difficult indeed to see this situation as anything other than masterful dark strategy to kick labour and social expectations from underpinning industrial forest policy in BC. Arguably lumber wasn't subsidized in BC but labour was. Subsidizing labour with decent working conditions and family supporting paychecks is not a NAFTA countervailable subsidy. The americans wanted our stumpage increased simply because the globalized forest industry, represented by the softwood countervail initiative, knew that pressure to increase stumpage would support policies to privatize, consolidate and merge the forest industry and put powerful downward pressure on BC's social, environmental and labour expectations.

You wouldn't think that labour and the NDP governments would get sucked into potlatching our forests, communities, wages and work conditions for that crap but when someone drums-up a patriotic war it would be astounding not to expect profiteers, pirates and scoundrels pillaging our legacies and welfare while hidden in the smoke and fog. Knee jerk labour came-out swinging against the US allegations of subsidy and was manipulated with ease by the forest corporations to pretend that the countervail challenge was a national patriotic cause for all out war.

(continue below please)

(continued once more with your indulgence)

BC's forest labour leaders had their choke chain jerked by the forest industry and came to Big Timber's rescue by publically denying and disclaiming the subsidies and effectively abandoning the decent wages, work conditions and social expectations that had been achieved by these policies for over five generations of BC workers. The whole interminable softwood fiasco demonstrated that labour was conned into abandoning decent jobs and wages to defend the industry against a claim of subsidy that was absolutely true but completely non-actionable. It was not actionable under NAFTA because in BC we subsidized labour not lumber. Well, we don't subsidize labour anymore but the money still flows to but not through the tenure holders who are making out like bandits.

So what should we have done? We should have copped a plea. Yes, the structure of the industry amounts to a subsidy which was signficantly beneficial to labour, to social expectations and to community certainty. Yes, the Crown intentionally abandoned the direct public revenue from resource rents in order to oversee tripartite investment in resource, social, industrial and economic infrastructure that would have been otherwise unattainable in BC's capital starved industrial development. Yes, the subsidies did impact the US interests, not so much in terms of price competition but in the exploitation of advantages derived from very large scale production resulting in enormous and expanding levels of US market penetration. Essentially, we could have kept the social and labour subsidies for BC if we had agreed to significantly reduce our level of US market penetration. Doing so would have allowed us to drop the AAC and achieve a vastly more sustainable approach to forestry. We didn't do that because a very small group of people benefitted exorbitantly by agreeing to sell-out our labour, our forests and our social and environmental expectations. Thei names should be on a very visible and ugly monument to blacklegs, incompetents, fools, traitors and profiteers. The americans were wrong before but now they are right-- We now massively subsidize the forest industry and we do so as a direct result of their unsuccessful softwood countervailing initiative.

Who benefits eh?

Cheers,
Michael Major\\
Victoria BC

Colin I think you will find forestry pays the logging companies to build the roads if you were to look into it.

Excellent post Touchwood thank you, why not put these names out there, I think I know a few of them. We need a web page with this info on it for the average British Columbian to read and understand.

Fairly lopsided story. The writer quotes several statistics about the 25-cent trees but does not quote where he got the information. Secondly, what does that mean? In what context? I'm not a forestry official -- it needs to be spelled out for me. 25 cents compared to what in the U.S.? The writer quotes that only some of the wood is going for 25 cents. What's the rest of it going for?

The inescapable fact is, folks, that BC governments have subsidised BC (and now Yankee)forest companies ever since Wac Bennet gave away the the first TFL in 1951. Yes, they've ALL been gifts.

The promise made then was that in return for a cheap, guaranteed supply of timber, the Corporations would provide constantly upgraded, modern production facilities, and economic stability for logging communities.

I'm unfamiliar with the Interior scene, so what follows is what has happened on the Coast.

The companies then totally disregarded any investment in new technology - with the exception of labour-reducing machines in the bush. Sure, they added paper machines in their outdated thermal-chemical mills, but nothing (except for a couple of spoonfed high-capacity sawmills) in sawmill technology, and NOTHING in value-added to recover the qualities inherent in Old-Growth timber. That was left for overseas and American buyers to do.

Our Coastal thermal-chemical mills, however, recover only 2/3 of the of the fibre fed into them - in contrast to the Interior's 99%+ for their Thermal-mechanical mills - so the feed for Coastal mills has HAD to be subsidised. And just imagine the economic leverage the Companies have had with cities like Nanaimo and Campbell River hugely dependant upon them, and Powell River and Port Alberni totally dependant upon them.

So we've been running a Pulp-based economy on the Coast, and that has been reflected in stumpage collected and permissive forest legislation and enforcement.

25-cent give-aways are in no way new. In the late Sixties, the Socreds gave QC Forest Products, owned by the Japanese firm C Itoh, millions of cubic feet of the best Spruce, Yellow Cedar and Hemlock left on the Coast. Some logs were so big they had to be lifted onto the truck one end at a time for a one-log load. They were gifted this timber for 25 cents a cunit (100 cubic feet) or approx 7.5 cents a Meter, in what was euphemistically called "The West Coast Concession".

NO local companies were given a chance to bid.

This type of scam has been epidemic (no, not just endemic)in our forests for 50 years now, and the Companies have just quietly built upon one success after another until we've wound up with today's "Results Based Forestry".

Touchwood is fundamentally wrong. It does not matter to the Americans what labour is paid in B.C. All they ever wanted to do was restrict the BC supply. Their strategy was to challenge export restrictions knowing that BC politians would give almost any concession asked for before they would eliminate log export restrictions. Economists are openly telling B.C. that the best strategy for B.C. to follow is to agree to export quotas. What Touchwood advocates is for the public purse to sacrifice substantial revenue so a few forest workers can be overpaid.

As for scylla: the coastal forest industry is notorious for featherbedding union contracts which were made possible by the old tenure regime and now that industry is dying partly because it refused to cure itself and partly because it is under attack by aboriginals and by urbanites who think they are environmentalists while living in the largest clearcuts in the Province.

No one has invested in new plants on the coast because there has been no security of tenure for the last twenty years. The environmentalists, the Indians and the courts have destroyed whatever the unions failed to destroy.

Joe

writerdave wants comparisons with the US. At the time I wrote of above, a sale of Old Growth Fir was bid up to $100 per 1000 bd feet, or approx $53/Meter in uniflated 60's US dollars. Compare to the 7.5 cents I noted above.

To try and untangle comparisons today involves a quicksand swamp of variables, the primary one being in the few remaining State and National forests,(the only remaining US reservoirs of Old Growth), the main haulroads are paved (as they should be) and maintained by the Forest Service.

But stumpage is just a smoke screen. The main issue is that BC exports virtually 100% lumber from Old Growth which is far superior to that of Second Growth. US builders are fully aware of the quality difference, and are willing to pay a premium for it, such as that imposed by tarriffs etc.

This infuriates the Americans, since their domestic supply is virtually 100% derived from Second Growth plantations producing 25 yr - in the South - to 40-60 in the North-West.

You won't hear about this from our industry apologists, since it will be admitting quality lumber cannot be grown in the short rotation times they presently justify. They know this, (hence the current turnover of ownership of our forest companies), but admitting it would mean cutting back on the present overharvest of what remains of our legacy of Old Growth which is justified by fast-growing trees.

Colin said, "the logging companies also have to build and maintain much of the road network on public land [...] They also have to submit 5 year development plans which are expensive to complete"

Road building is well subsidized. And Forest Renewal put an end to the public heritage of a road network by paying the companies to decommission roads.

I don't think a company has ever, ever been penalized ( by having it's cut reduced, it's license revoked - penalized, I mean ) for merely not following the five year plan. And they relentlessly don't follow the plan.

I think the story of road building is an unhappy chorus in an appalling lament of a common heritage being liquidated while the stewards fiddled, piled coin and called for more circle-jerks -- meaning the MOF, the companies, and the IWA respectively.

Huh. Which, now that I've read it, is what Touchwood said. More or less.

The Export restrictions on logs are another scam, and the unionists, public, AND environmentalists fell hook, line and sinker for it. It has also made fools of "Market" proponents like joesmith above, who at any cost want to believe every lie the forest companies tell them.

There are a number of issues here, all interrelated.

The first issue is that during the time of exports, the price for logs went sky-high. Remember, only the hi-grade logs, excluding the two Cedars were exportable. If these had been included, prices would have gone even higher.

What the uninformed public is unaware of is that log prices are not set by the neocon's "The Market", but entirely through the "Howe Sound Log Market" which is dominated and completely manipulated by the Majors, as was thououghly documented (surprisingly) by the out going Socred-commissioned FOrest Practices Commission. (which the NDP conveniently chose to ignore)

What had happened during the days of Export, during which time NEVER more that 3% of our logs were exported, was that our logs had finally been valued by WORLD prices, not the contrived Howe Sound prices necessary to keep the Coastal dinosaurs operating.f FD

If those prices had remained, it would have forced the companies to reinvest in modern plant to recover the value inherent in our much-desired Old Growth, pumping the money into our economy that should have stayed here and not been wasted by turning our logs into pulp and low-value commodity lumber.

I was scaling logs at the time, and I know that since since stumpage is set on log prices, (except for the poor suffering majors) the Province reaped a windfall in increased revenues, including a very high export tax.

No jobs were being lost. There was increased labour on the log-sorts preparing export logs, lots of jobs created in longshoring the logs into ships, rescaling on the water, storing them for assembly etc, a huge spinoff for the economy for just three percent of our logs.

The cascade continued on down. Since the hi-grade had become too expensive for our dinosaurs to process (remember Pearse's Report of 2001 documenting lumber values back then being equal to the price of chips, so cheap logs made it profitable to waste half the logs in the mill), on the log sorts more attention was paid to recovering grade from the logs, since the lower grade's prices had raised commensurately.

At the very bottom of the grade scale is pulp, and logs I had formerly sent to the pulp sort were being sent to mill sorts, with no trouble selling them at the higher price.

The end result of all this is that logs which had before been left in the bush were now being brought out and sold. IMHO, we recovered far more wood than the 3% being exported, PLUS creating more jobs. Of course I was working for a Gyppo, and the foregoing was not so evident on the big companies' claims, as ever being too set in their ways and too confident of a Gov't rescue to change.

After fruitless effort in trying to explain this to boneheaded loggers and environmentalists, so dependant upon BS jargon from their leadership, I was only reconfirmed in my reasons for departing from the environmental movement and the NDP.

Incidentally, the excesses of the Coastal forest industry are so monumental they are very hard for those familiar only with the Interior to believe.

Here's another answer to your perennial question, BC Mary.

http://www.zmag.org/sustainers/content/2005-10/11schechter.cfm

Dfp
While I still struggle to understand the financing of the road network, I think the interior logging companies try to stick to their plans. I also know they are choked about having to do a 5 year plan and all the consulting, only to have a oil & gas company come in and say they want to build a road next month. Mind you in my job we have been pushing the Oil & Gas companies to do more forward planning and mainly thanks to First Nation Issues, they are starting to do so.

scylla wrote:

And what "lies" told by the forest industry is it that you think I believe?

I read with some interests the comments aboutmy article related to taxes and subsidies.

What people should know is that taxes are excluded from all international agreements on subsidies. This is because governments are allowed to raise or lower taxes at their whim.

However, the price paid for Crown timber, (stumpage) is another matter. And all Canadian courts have agreed that the definition of stumpage is "the price paid for Crown timber".

This follows a number of cases that hold that the Crown owns the timber until stumpage is paid and that most licences (Tree Farm Licences, Forest Licences etc) are what is called a profit et prendre (right to enter and use), which is a very week legal interest.

This distinction between the price paid (stumpage) and tax is why the Canadian and BC governments argued before NAFTA and the WTO that stumpage is to quote their submissions "a levy on a harvesting right akin to a tax."

Canada and BC were trying to argue that the licences gave the companies ownership of standing trees and stumpage was therefore a tax on that ownership interest. They did so because taxes aren't covered by the subsidies agreements.

Canada lost. Both the WTO and NAFTA rejected this technical argument. This is just one of many of the losses Canada has suffered, but that haven't been discussed in the Canadian media.

But once again my point is that Canada subsidizes logging and whether it violates the extremely technical directions of Byzantine trade agreements or not this is Bad for BC, Bad for communities, Bad for government revenues (on which we all rely) and Bad for the critters that rely on our forests.

A "profit a prendre" is an interest in land. The point of the Canadian argument was that Canadian provinces were supplying "land" and not goods or services and therefore fell outside the anti-dumping and anti-subsidy laws which only apply to goods or services supplied by governments.

Under Canadian law a forest license is an interest in land and that is why it is legally possible for forest companies to sue protestors for trespass. The argument was a perfectly legitimate "silver bullet" argument to make, it just happened to lose. There is no shame in making the argument and there is no shame in losing the argument.

As soon as we read 'the Great Bear Rainforest' all credibility was lost. Sorry. Goddam environutz trying to discredit and cripple the forest industry by any means available, old prices, bad math, no sources and now sucking up to Americans. Maybe even someone who paid to have a tree cut down and taken away from the yard of their leaky condo....

Roads aren't built to be generally usefull, aren't nescessarily sustainable, and aren't sustained. In other words, they are built as cheaply as possible, in spite of reasons to do otherwise. Timber harvested for roads is cheaper than usual. Roads in cuts are deleted from the area of the cut simplifying silviculture. It's hard to come up with an angle that doesn't add to the subsidy. I mean, you can reach for the depreciation of the machines as a perhaps extreme but valid example.

Writes joessmith:

The TFLs have been in place for a good fifty years. So what happened to the promised investment in the high-profit thirty years prior? Just what makes you think the last twenty years would have changed anything?

If the Companies had been sincere in their promise to practice environmentally sound forestry, and then not refused to listen when it was demonstrated what it was they were doing wrong, they and we would not be in the bind we are in today.

And regardless of how much timber has been withdrawn from today's "working forest", if not a stick had been withdrawn, all it would have meant was a higher cut, and we'd STILL be in the very same pickle today.

But at the very least, there's still some intact stands left that wouldn't be if we'd followed the advice of your industrial propagandists. Your leopard ain't gonna change any of his spots, joesmith.

My bitch fdf FD f FD f FD f FD FD FD f FD

Twenty years ago there were problems with the labour contracts on the Coast which were themselves blocking re-investment in modern technology.

Investment is not a one time thing. A sawmill or a pulpmill wears out or becomes obsolete. You need to constantly repair, replace and upgrade. Every twenty years or so you have to effectively rebuild the place. What happened thirty years ago is almost irrelevant to the state of capital investment today.

Giving a company a TFL gives them no security if the courts refuse to stop blockades, courts order open ended "consultations" with aboriginal groups, government arbitrarily sets stumpage or governments start mandating that large areas will be protected. I expect that a coastal forest company cannot identify any areas within its TFL and say with certainty "we know that we will be allowed to log there five years from now." Under those conditions what investor would spend one hundred million dollars building a new sawmill or a billion dollars plus building a pulpmill?

Given the state of politics on the coast there is no one who could even effectively give the companies an assurance that they will be allowed to log. If one aboriginal group or environmental group consents to a project another will pop up to oppose it.

If Coastal forest companies are so successful at looting a public resource and pocketing the profit why did Doman and Skeena go bankrupt?

You may also want to ask yourself: Why is the Coastal industry in a constant state of crisis while the industry in the Interior has been relatively stable and has steadily modernized its sawmills? The answer is not that interior sawmill owners are somehow more civic minded than those on the Coast.

Uncertainty and risk impose enormous costs and all by themselves will prevent otherwise profitable investments from going ahead.

So tell me Joe, did Weyerhaeuser Canada buy up almost all of the province's coastal forest operations because they just knew they were going to lose money?

And just what is wrong with open-ended consultations with Aboriginal groups if getting an arrangement all can accept is the target?

Oh, so industry's first aim is not universal acceptance of its cutting plans, but rather the profits to be made from that cutting.

Perhaps if industry, led by government would actually do some real good faith consultations rather than "here it is, take it or leave it" there would be less need for endless consultations.

It's a simple issue, governments have been ordered by the courts to consult because in the past they told Native groups to get out of the way or else and industry has simply laughed at such ideas.

Now that they are forced to consult they want to turn this around, like you are doing, and blame the Indians.

Shallow, shallow, shallow Joe.

If any of those big players are losing their shirts on their BC tenure, let me be the first to invite them to abandon all rights to the forests when they turn out the sawmill's power in an orfer to boost profits.

Lots and lots of small firms, that will likely better utilizew all the wood will be more than happy to take over any that are thrown onto the market.

So tell your employer guys not to sweat bullets and perhaps get into another line of business if they worry about lose of profits do to all those terrible hurdles.

.

As for the Interior's forest industry, better take another look Joe.

In the past few years the majority of sawmills have been shut down. Yest there is still massive volume being cut, but the sawing now occurs at massive new sawmills, the largest of their kind in the world.

Ask forestry workers in Barriere, Lumby, Revelstoke and dozens of other communities if the industry is spewing out wages and you're likely to be laughed out of town.
Frankly, unless you live in the interior and can put you ear to the ground regularly, you would know little about the massive changes in the Interior woods, primarily because most of the media ignore this region.

The interior also has beetle killed trees that must be processeed quickly and thus much work is happening on that front.

I'm certain few coastal communities would pine (sorry for the pun) for a beetle invasion.

In the Interior, joesmith, the upgrading has been underway for a long time. The innovative "spaghetti Mills" were developed at least 40 years ago (Prince George), and the new pulp mills were all the fibre-economical thermal-mechanical type. Innovation has been a watchword in the Interior, in complete contradistinction to the Coast.

The traditionally massive power of the Big Companies on the Coast accounts for the major difference between the two Regions. Some years ago I accused a good friend who was then a Ranger Supervisor in the Interior of belonging to a corrupt organisation, the BC Forest Service.

His angry response went something like this: "Don't think for a minute that we in the Interior are the dupes of the Companies as are those on the Coast" He then went on to tell me of hard-hitting regulatory actions the Interior FS had imposed on the Companies, actions unheard of on the Coast.

I forgot to address another BS issue the neocons have been spouting on these TYEE sites - that it is high worker wages which have cut into forest industry profits.

First of all, the company's accountant has always thought wages are too high, thus the constant push for "efficiencies". Wages are never low enough for him/her.

Secondly, IWA wages always been comparable to those of other industrial unions, if not lower.

Thirdly, forest work is perhaps the most dangerous you can find.

Fourth, the most fundamental tenet of Capitalist economic theory is that some of the wages earned are "recycled" back to the Capitalist when they are spent on goods, earning profits for the Capitalist to reinvest.

Anyone who thinks that can be sidestepped, had better have a close look at the US - now the world's largest debtor nation, and now on the brink of collapse.

The US now imports more than it sells, so how is it to pay its external debt? Give more tax breaks to the rich so they can invest more overseas?

to scylla and allan

I live in the Interior. I do not work in the forest industry but friends and clients do.

I know that the industry here has been engaged in a continuous, and at times painful, updating. I have witnessed that process for over twenty years.

The change is ongoing and at the moment the pine beetle kill is making adjustment easier because there is so much fibre available. It will be painful when the volumes of beetle kill fall off but the mills here are able to get more lumber out of a given log and are able to process smaller logs than they could twenty or even ten years ago. The potential harvest has steadily grown as they utilize lower and lower quality trees.

A reality of modern life is that mechanization has both increased productivity and raised living standards but the flip side of that is that fewer workers are needed in traditional jobs whether that is farming, fishing and factories.

The Coast has avoided adjusting to changing circumstances so that when change is forced on them by circumstance it will be all the more painful.

I basically agree, Joesmith, but when the last of the Interior Old Growth is gone, the disconnect is going to be even more painful than on the Coast, for where the Coast is going to take a downshift in employment when the 2nd Growth comes full onstream, the Interior will now have a lot less 2nd growth to turn to.

This is because the MPB is wiping out the Pine which was to be most of that future supply. You can blame that on your company biostitutes who condoned monocultural replanting with Lodgepole Pine, simply because it is the one Interior species which can be harvested in a short rotation, which then permits an overly fast harvest of the present old-growth which is comprised of other, much slower-growing species, besides Pine.

Just for fun, ask your local MoF forester if the harvest of old-growth is now being cut back to smoothe out the upcoming, now very serious "falldown" in harvest rates. My guess is they aren't, and if so, would this indicate a lack of concern on the part of the Companies and the MoF regarding future "Community Stability"

If past actions of both the Companies and this government are any indication, the likelihood is that the "Quick profit now" ethic of typical resource capitalism will supervene over the long-term interests of your town.

scylla

It is old growth pine which is most heavily effected by the MPB. Cutting has been shifted from areas with predominately spruce to pine areas effected by the MPB. I don't think that the public has yet come to grips with the size of the MPB disaster or just how serious the effect will be on the economy of the Province in five to ten years. If we get an outbreak of spruce bud worm we could be well and truly scr***d.

I agree that as a matter of sound ecology it seems foolish to be planting monocultures. It would have made sense to me to mix in some spruce and some fir to "diversify the portfolio".

As Mike Major pointed out in his two excellent posts, the MPB is endemic in all Pine forests and becomes epidemic only when conditions allow, such as a lack of cold winters and many trees at the right age for attack.

He suggested that pesticides used against the MPB in the end poisoned its predators too, making the infestation spread even faster. The final straw for the Pine is the sheer numbers of MPB which have built up. The younger Pine can block most MPB attacks by exuding pitch, but eventually a massive, continued attack exhausts the young Pine's energy reserves.

The trick for forestry professionals to pull off will be to try and determine what a natural forest in the dead areas - not so easy, since the present "Old Growth" Pine monocultures are already the result of human interventions which began around the very late 1800's.

Such replantings, to be ecologically sound, would consist almost entirely of Fir, Spruce, Hemlock, Larch and Yellow Pine, well interspersed with deciduose species such as Aspen and Birch, among others. For the most part, the opportunistic Lodgepole Pine would be left to regenerate on its own, since its seeds remain viable for many years.

The downside to this model - if we relace the quick-growth Pine plantation with it - is extending rotations by 40-50 years. The upside to doing so is ending up with a much higher value product, along with having genuine economic and environmental sustainability.

Such a forest would need no stand-tending (esp. pesticides and fertisisers) excepting a return to the aboriginal practice of eliminating fuel buildup on the forest floor through using ground-fires.

Such ideas were dominant in North Anerican Schools of Forestry prior to the 50s, before Industry thrust the European "Tree Farm" model upon us. They won, we lost - though admittedly after some 40 years of Bonanza times, now gone.

Sorry, in third para, it's "what a natural forest really is" and "human intervention using forest fires"

Another thing typical of the Coastal forest industry, and untypical of the Interior's, is the reinvestment of profits into modernised plant in the Interior, whereas the Coastal industry's profits have gone out-of-country - vaporised.

I'm just climbing back into this issue because I have seen nothing written here in the past few days to suggest to me the Interior forest industry is creating any more stability than the coast.

Joe, all you are talking about when you speak of stability appears to be corporate profits.

Super mills and government legislation eliminating the requirement of local jobs for local wood, are replacing the employment base once spread throughout the region.

Yes, I too have lived in the Interior for a quarter of a century (if tenure is meant to impress anyone Joe), and during that time income from loggers and sawmill workers has gone from number one in this region to virtually zero in many communities.

I must admit, I am not versed on the lingo nor rarified science used by the industry and by our MoF experts to justify the sweeping eradication of entire communities in the name of profit, but I do think I have a sense that something's wrong when we are flooded in MPB infested wood yet our annual-allowable cut of non-MPB wood keeps increasing.

So now that we have accepted that human communities are simply economic sinks delaying the nervana (profits), we've all been waiting for, where would you recommend an unemployed sawmill worker move his or her children given that a new forest may break out anywhere and time?

Thanks for that Allan, but what does it take to convince people to believe unpleasant facts?

The only point that matters is that the highest NAFTA adjudicating committee just ruled against the U.S. duty. The U.S. owe us $3.5-$5 billion, depending who you believe. What would the U.S. do if the tables were turned?

This duty has destroyed sawmills and whole communities in BC. Canada should sue for punitive compensation. Paul Martin must make this a linkage issue. Rolling over and playing dead is not an option.

This issue should not be regarded as an isolated incident, but as an opening salvo in an ongoing economic war to change Canadian society to benefit U.S. objectives.