Creation of a Stable and Prosperous Forest Industry

Year: 
2016

Introduction

The B.C. forest industry, one of the historic cornerstones of our provincial economy, is facing a myriad of challenges at this time

Background

B.C.’s land base is 95 million hectares (ha) with 62% forested land base and of this 62%, 22% is available for harvesting. Parks, Protected Areas and Conservancies make up 14.4% (14,063,250 ha) of the land in the Province which is totally off limits to forestry activity. The forested area is split between the Interior (68%) and Coastal (32%).

In 2014, the total B.C. forest industry revenue was $16.7 billion, split 62% from the Interior and 38% from the Coastal regions. Total economic output from forestry was $31.4 billion of which 50% was direct output and 50% was indirect and induced output.

Total employment generated was 145,000 FTE (full time equivalent) jobs in 2014. Of this, almost 63,500 were created within the industry with an additional 82,300 FTEs created through linkages with other industries and suppliers. Revenue from the industry to the provincial government was $1.4 billion, federal government $934 million, and municipal governments $150 million. The forest industry supports 6.3% of the jobs in B.C. or about one out of every 16 jobs. Forest industry manufacturing accounted for 24% of direct manufacturing jobs in B.C. with 40% of the regional economies being forest sector dependent.

Report

The B.C. forest industry is a major contributor to the provincial economy and is important to the social fabric and economic well-being of communities throughout the province.

The industry provides employment and economic opportunities, generates government revenue and is a growing economic contributor to First Nations communities throughout B.C. Since 2002, the Ministry of Forests, Lands and Natural Resource Operations has signed forest tenure agreements with 175 of the 203 First Nations in B.C. These agreements provide $324 million in resource revenue-sharing and access to 63.2 million cubic meters of timber.

Over the past several years, the timber harvesting land base (THLB) has been reduced significantly to create Protected Areas and Conservancies. In addition, management regimes, such as Eco System Based Management (EBM), have been applied to the Central and North Coast, diminishing the available THLB. The establishment of the Great Bear Rainforest Agreement in this area brings the proportion of conservation to approximately 55% of old growth temperate forest on B.C.’s coast.  One of the fundamental cornerstones of the agreement, and EBM, is human well-being for the communities in the area; this commitment has not been fully addressed.

In addition, there has been a tendency by large forest licensees to take profits earned in Canada (B.C. in particular) and use them to purchase a larger share of the industry in the U.S. south where they have more certainty in the land base. This is detrimental to B.C. communities and need to be addressed moving forward to ensure small town economies built around the forest industry survive into the future.

Growing pressure from other industries, such as hydro, oil and gas, and a push to increase parks and protected areas are underpinning the Province’s Cumulative Effects Survey to determine how all of the different interests will span the existing land base. In other words, the forest industry is still under considerable pressure to operate in a diminishing land base and still maintain a viable presence in communities and the province as a whole.

Recently, several different events beyond the control of the forest industry have resulted in a lack of business certainty for the industry. These events cover a wide spectrum of factors from catastrophic insect infestations, such as the Mountain Pine Beetle and Spruce Beetle in the Interior, to rights and title court decisions awarded to First Nations across the province and the Softwood Lumber Agreement (SLA) with the U.S.

In 2016, the Province will announce the results of a Timber Supply Review (TSR) in the Merritt Timber Supply Area. It is already apparent from information and options provided that this announcement will be significant as it will reduce the amount of timber being harvested by approximately one third for the next several decades. This will result in businesses and forest dependent companies to downsize their activities; this will have a cascading effect on the business community as a whole in the region. The Province currently has a proposed program called the BC Rural Dividend initiative which will provide $25 million per year for three years. Although this is a start, it needs to be targeted to areas that are facing these historic changes and increased to insure there is a safety net in place to help the survival of effected communities.

All of these cumulative effects have greatly diminished business certainty, resulting in decreased investment and a lack of interest from younger generations to get involved in the industry as a career. Demographically, the industry is in the same struggle as many other cornerstone industries, which helped to grow the provincial economy into what it is today.

Currently, the Province seems to be struggling to deal with all of these different challenges, in a manner which will allow the forest industry to grow and prosper into the future.

This has also resulted in a movement of investment from B.C., south to the U.S. where companies that flourished from the natural resources of B.C. are now taking their dollars and purchasing manufacturing plants in the southern states where certainty of the land base and a lower cost structure are more attractive. 

Several solutions present themselves and with the assistance of the provincial government, the B.C. forestry industry and the province as a whole would benefit.

THE CHAMBER RECOMMENDS:

That the Provincial Government:

  1. Take steps to halt the erosion of the timber harvesting land base by making impacts on the timber harvesting land base a mandatory consideration in the approval process for any further creation of parks and protected areas or other similar initiatives within timber harvesting land base areas.

  2. Ensure there is sufficient funding and consultation with industry stakeholders in place to complete the cumulative effects work that is currently underway in the province, so a forest harvesting land base can be ensured which will allow the industry and communities to prosper into the future.

  3. Provide incentives such as training funding programs, which would support small businesses such as contractors and new entrants into the industry.

  4. Develop a transition plan for communities that have been devastated by the Mountain Pine Beetle epidemic so they can maintain an economy while the forest surrounding their location re-establishes itself to a marketable age class.

  5. Most importantly the Province must continue to work with First Nations on Land Claims and Rights and Title cases to try and increase certainty on the land base which is now view differently as a result of the Tsilhqot’in decision.

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