With the forest industry in British Columbia going through turmoil, Nechako Lakes MLA John Rustad said the lumber industry will see a tough time this summer with stumpage prices going up further on July 1.
“This increase in stumpage is going to make operating in B.C. more costly. There is a flaw in the stumpage system because there is a six month to one year delay in how prices work. So now we are seeing prices go up, due to high prices from last year where now prices have collapsed and stumpage is not reflecting it,” Rustad said.
Some mills such as the Vavenby sawmill in B.C. that is permanently shutting down operations in July are closing due to long terms log supply constraints, the high cost of fibre and the ongoing depressed lumber markets.
To add to that, the impact of pine beetle led to the reduction of annual allowable cuts.
“Log supply issues due to pine beetle will lead to closures and there will be mills that go from three shifts to two, but second is the cost stricture. We are in an uncompetitive situation and mills are taking more down time due to the high cost structure,” he said.
Companies like Canfor and Conifex that have curtailments on their mills in B.C., have operation in the United States, Alberta and other jurisdictions where they are not taking any down time.
He said residents of Alberta don’t pay carbon tax, employer health tax and others that B.C. residents do.
“There are 17 to 19 different things that the provincial government has recently added that have driven up cost. Carbon tax was in place before but it was revenue neutral. We can’t blame the current government for carbon tax as a whole, but we are in situation where we have increased cost which has caused an uncompetitive situation,” Rustad added.
He said the provincial government needs to step up to the plate and adjust prices. “It is not a subsidy and would not have an impact I believe on softwood lumber because it is just reflecting current market changes.”
Apart from adjusting stumpage prices to reflect current market conditions, Rustad said, the provincial government needs to find a way to drive down costs that contractors have and put a short term hold on carbon tax.
“Steps like that can help reduce their cost structure and get the mills working. In the meantime, if companies still need downtime, workers need to make payments and they can’t get on EI because they still have to wait two weeks.”
“So they have essentially lost a pay cheque. The government needs to talk to the federal government about bringing in a package that supports the workers that are being impacted by these curtailments,” he said.
However, there is an opportunity right now because of the current market conditions to make a shift in thought, Rustad explained.
He said most communities that are faced with these curtailments need work done on wildfire risk mitigation. “Lot more can be done in the woods to help communities be fire safe, and you have a skilled workforce. They are forestry workers and are used to doing this work. Set up an immediate fund that communities can access to put some of this workforce to work and help get us through this period of time where industry is going through a downtime.
Over 333 employees are affected at the Plateau alone which if one considers the larger impact with families, over 700 people get affected by just one mill taking downtime, Rustad said.
As for local government, they can do some advocacy to get resources from the provincial government. “When it comes to temporary curtailments, they (municipal government) need to ask the provincial government to step up to the plate. Bring in some resources and help us through this time by also relaxing EI for workers affected,” he added.
Rustad said he visited Conifex workers in Fort St. James who are affected by these curtailments and said the workers were worried about their pensions, seniority, structure. He said there are labour issues, uncertainty, fear of finding another job which are legitimate concerns.
Meanwhile, he said B.C. can learn from Sweden as they are able to better utilize fibre.
Sweden has a similar terrain and climate to British Columbia and currently in B.C., the forestry industry operates on 23 million hectares which is less than a quarter of the provincial size. And Sweden operates on 21 million hectares.
“We in B.C. have a cut rate of 64 million cubic metres and they (Sweden) have a cut of upto 92 million cubic metres because they are better at utilizing fibre, they aren’t leaving waste behind, they are doing second cuts. There is a different approach and we need a big shift and I feel there is an opportunity to do things differently,” Rustad said.