BEHIND THE NUMBERS
economic facts, figures and analysis
June 2007
Wood Waste and Log Exports on the BC Coast
By Ben Parfitt
British Columbia’s forest industry remains a vital part of the provincial economy. But there are signs that
all is not well. Numerous opportunities to generate jobs from forest resources are routinely squandered.
Absent much-needed provincial forest policy reforms, the situation is poised to get worse.
This short paper addresses two of the more troubling trends plaguing the coastal industry – rising log exports
and mounting wood waste. Both have significant implications for forestry workers and rural communities,
especially on the coast. In the past two years roughly one in three logs from coastal forestlands failed to be
run through provincial mills. They were either exported out of the province to US or overseas mills, or left
to rot on the ground at numerous logging sites. The cost of not turning those logs into lumber and other
wood products here in BC was the loss of an estimated 5,872 jobs in 2005 and 5,756 jobs in 2006.
In the absence of provincial forest policies that:
• restrict the ability of companies to export raw logs,
• require companies to invest in new mills or upgrade existing ones, and
• penalize companies for unacceptable levels of wood waste,
British Columbians can expect ever-diminishing returns from their forest resources. A series of policy recom-
mendations aimed at reversing current trends anchors the report.
Rising Raw Log Exports
Raw log exports from public and private forestlands in coastal BC have been a longstanding concern. Since
2000 when annual log exports stood at 2.68 million cubic metres, out-of-province raw log shipments have
risen more than 75 per cent to 4.7 million cubic metres (see table). The increase alone amounts to 57,714
highway truckloads of raw logs, enough wood to keep two sizeable sawmills supplied for a whole year.
A primary reason for the exports is that the bulk of BC’s private forestlands are located on the coast,
and in particular on Vancouver Island. Companies logging private lands have higher profit margins than
their counterparts logging public forestlands because they pay no stumpage or timber-cutting fees to the
province.
Coastal exports are also rising because big private forestland owners like TimberWest Forest have deliber-
ately divested themselves of manufacturing facilities in order to become almost exclusively market loggers
and exporters. TimberWest set records for exports in 2005, selling 1.7 million cubic metres of logs from its
coastal BC holdings to buyers in the US, Japan and other Asian markets.1 In the first nine months of 2006,
the company distributed $76.3 million in cash to its shareholders, in part because of a “richer sales mix” or
higher percentage of valuable logs sold on export markets.2
There is mounting concern that log exports from public forestlands could follow a similar upward trend. In
March 2006, for example, the provincial government signed an Order-in-Council that gave the green light
to increased log exports from BC’s mid coast. Based on recent logging rates, the approval paved the way
for up to 350,000 cubic metres in additional logs to be sold to out-of-country buyers.3
Further public and private land log exports may also occur because of the sharp decline in the number of
wood processing facilities in BC and, in particular, on the coast. A recent survey by the United Steelworkers
Union found that, since 2000, 38 wood processing facilities in BC have ceased operation. The latest mill
closure occurred in February 2007 and involved Western Forest Products’ New Westminster sawmill. The
cessation of production at that site cost 284 workers their jobs.4
BC forest policies once required companies that logged public forestlands to own and operate mills in
exchange for their access to Crown timber. But the province dropped those requirements in 2003. Its
scrapping of so-called appurtenancy clauses paved the way for further log exports. By law, companies
wishing to export logs from BC must first notify prospective domestic buyers that such logs are available for
purchase. If the logs are not purchased they are then deemed “surplus” to domestic needs, and may then
be exported. Clearly, the fewer number of domestic mills there are, the more likely it is that companies can
meet the surplus test and therefore export. It becomes a self-fulfilling prophecy.
Compounding problems, the province agreed in negotiations with US trade officials prior to the Canada-
US Softwood Lumber Agreement of 2006 to exclude raw logs from the list of products covered by the
agreement. Significantly, the softwood dispute was also the underlying reason behind BC’s earlier decision
to scrap appurtenancy and other “social contract” provisions from its forest policies.5 The exclusion of raw
logs from the SLA creates further incentives to export raw logs because once certain export thresholds are
reached under the agreement, BC mills producing softwood lumber products, which are covered under
the SLA, pay export taxes of up to 15 per cent. No such punitive taxes apply to raw logs. If you were a
company shareholder far removed from the impacts your decisions had on the lives of working people,
which scenario do you think you would support?
2 Canadian Centre for Policy Alternatives – BC Office
Growing Wood Waste: Take the Best, Leave the Rest
In addition to a surge in the number of raw logs exported from coastal BC, an analysis of data maintained
by BC’s Ministry of Forests shows that high numbers of usable logs are being left behind at logging sites.
Usable or “merchantable” logs left behind following logging are those logs that the government and forest
companies agree could be turned into lumber and other wood products or chipped for use in pulp and
paper products. By law, companies are required to disclose how many such logs are left behind. They then
make nominal stumpage payments to the province in lieu of not taking the logs.
Members of the public can access information on how many usable logs are wasted through a database
known as the Harvest Billing System, provided they know what to look for. Database searches reveal how
many usable logs are left behind on public lands, but not on private lands. That is because companies
logging private lands are not required to submit information on the number of logs they leave behind. Nor
are they required to pay stumpage fees on that waste wood. They must, however, report the total number
of logs they harvest and stamp with private timber marks.
Absent a comprehensive government survey of waste levels on private lands, an estimate must suffice. Fol-
lowing conversations with various forest industry workers who expressed the opinion that wood waste levels
are as high or higher on private lands as on public lands, the approach taken in this paper was to conser-
vatively assume that waste levels would be roughly equal on private and public lands. When the estimated
amount of usable waste on private lands was then added to the usable waste on public lands, it showed
that in each of the last seven years nearly 2 million cubic metres of usable logs on average were left on the
ground rather than milled. That is enough wood to have kept two sizeable sawmills running for the entire
seven-year timeframe covered in this report. In 2005, the number of usable logs left on the ground was an
incredible 3.63 million cubic metres, enough material to fill the beds of 103,826 highway logging trucks.
The information in the following table shows both wood waste levels and log export levels. The wood
waste figures show a dramatic ramp-up in the number of usable logs being left behind in the bush rather
than milled beginning three years ago. This reflects changes introduced by the provincial government
under the Forest Revitalization Act, which allowed for the present “take or pay” system.
Table: Log Exports, Wood Waste and Job Impacts
Waste Logs Log Exports Exports/Waste
Year
Jobs Lost
(February to January) (millions of cubic metres)
2000/2001 1.3 2.7 4.0 3,160
2001/2002 1.5 2.3 3.9 3,047
2002/2003 1.3 3.3 4.6 3,631
2003/2004 0.4 3.8 4.2 3,282
2004/2005 1.7 3.2 5.0 3,962
2005/2006 3.6 3.8 7.4 5,872
2006/2007 2.6 4.7 7.3 5,756
Sources: Figures on waste logs come from the Harvest Billing System database maintained by BC’s Ministry of Forests. Members of the
public can access the database at: http://www.for.gov.bc.ca/hva/hbs/index.htm. Because research for this report commenced in
March, the most recent 12-month period was used as a starting point, hence the February to January timeframes. December to
January figures would vary only slightly from those presented here. Information on log exports comes from Ministry of Forests
annual reports. Job loss figures are the author’s estimate based on Statistic Canada’s 2006 Labour Force Survey.
Wood Waste and Log Exports on the BC Coast 3
Jobs Foregone: What Do We Lose by
Not Processing Logs Here in BC?
In each of the past two years nearly one in every three logs felled in BC’s coastal forests failed to be run
through local mills. The consequences for working people and communities were, predictably, not good.
Using forest industry employment figures and logging data from the Ministry of Forests one can calculate
the number of manufacturing jobs generated per unit of wood.
That ratio can then be applied to the total number of logs either exported or left on the ground in each of
the past seven years. When that is done, the lost employment opportunities associated with logs coming
from coastal forests but not run through BC mills is 4,101 jobs per year. The last two years, in particular, are
especially bad in terms of foregone jobs, averaging more than 5,800 per year.
Why are so many logs not being processed locally? Part of the answer has already been provided – namely,
that logs from private forestlands are not subject to the same rules as those from public lands and therefore
are more profitable to log and place on export markets. As well, present policies encourage companies
to close mills because there are no penalties when processing
facilities are shut down. And we now have the added, and
some would say perverse situation, in which BC companies are
In the past two years roughly one in penalized under the SLA for selling lumber into the US but not
penalized if they ship raw logs south of the 49th parallel.
three logs from coastal forestlands
failed to be run through provincial The province’s decision to end requirements that companies
own and operate mills in exchange for access to public timber
mills, and were instead exported
also explains why more usable logs are left in the bush rather
out of the province or left to rot on
than processed. As more mills close, there is less ability to
the ground. The cost of not turning process logs locally. Equally important, as new investments
fail to materialize the chances increase further that more logs
those logs into lumber and other
will be left behind. This is particularly true when considering
wood products here in BC was the one particular wood species – hemlock. Hemlock is by far the
loss of an estimated 5,872 jobs in most common tree species in coastal BC. It is an extremely
moisture-laden wood that requires drying in kilns in order to
2005 and 5,756 jobs in 2006.
extract its maximum sales value.
Hemlock logs are the most likely to be left behind in present-day logging operations in large measure
because there is a paucity of domestic mills and kilns designed specifically to process and dry hemlock
lumber. The end result is that more emphasis is placed on logging prime second-growth and third-growth
Douglas fir forests, with much of that harvest destined for the export market, or to log remaining pockets
of highly valuable old-growth cedar, spruce or fir, with some of those logs export bound or destined for
processing in coastal BC’s remaining mills.
Until such time as new investments are made in mills that can efficiently process and dry hemlock, there
is every reason to believe that the wasting of usable logs on BC’s coast will continue unabated. And the
danger in allowing that to happen is that our coastal forests will continue to be overcut, because if we’re
not utilizing what we log then we’re logging too much. Which means even deeper employment cuts and
further economic upheaval in coastal communities in the months and years ahead.
4 Canadian Centre for Policy Alternatives – BC Office
Charting a New Course: Proposed Forest Policy Changes
Staying the present course is a policy option, but not one that most British Columbians would support.
How, then, to bring log exports under control and stop the wanton wasting of forest resources?
Bringing an end to log exports should be an overriding policy objective. But getting there will require both
the efforts of the provincial government and the federal government, which has authority over private
forestlands. In addressing the log export issue the province should:
1. Immediately impose high fees in lieu of domestic manufacturing on all logs destined for export
markets so that there is the strongest possible incentive to process those logs here in the prov-
ince.
This recommendation appears to be one that the province is embracing. In late May, Forests Min-
ister Rich Coleman announced that logs exported from Crown lands will be subject to some form
of an export tax. The tax will be equivalent to the 15 per cent tax currently levied on US-bound BC
softwood lumber products once certain price or export thresholds as outlined in the Canada-US
Softwood Lumber Agreement are reached.6
2. Ensure that there is a stringent and transparent process in place that truly allows domestic mills to
bid on and buy logs prior to them being deemed “surplus” and exported.
3. Demand that the federal government impose the same requirements on companies logging
private forestlands.
4. Declare a phased-in end to all log exports from BC.
To address the continued wasting of usable logs on the coast the province should:
1. Immediately impose tough new utilization standards that require companies to bring the trees
that they do log into communities for processing.
Such standards must, however, ensure that sufficient amounts of woody debris are left on the
ground to rot and return needed nutrients to the ground.
2. Require forest companies to make minimum levels of investment in new or existing milling facili-
ties in exchange for continued access to publicly owned timber.
This recommendation may require some rethinking of the old concept of appurtenancy. New mills
or expanded mills will only work if they are in the right location. And the right locations will be
heavily influenced by present-day realities including the fact that the nature of the forest resource
has changed (little old-growth remains) and power considerations. Hydro supplies are tight in
places like Vancouver Island and new mills and lumber drying facilities in particular are extremely
energy intensive.
3. Require companies to process the hemlock trees that they log or face reductions in logging quotas
so that our forests are not being over-cut and our most prevalent coastal tree species wasted.
Wood Waste and Log Exports on the BC Coast 5
Notes Parfitt, Ben. 2006. Softwood Sellout: How BC Bowed to the
US and Got Saddled with the Softwood Lumber Agreement.
1
TimberWest 2006a. Canadian Centre for Policy Alternatives – BC Office.
November.
2
TimberWest 2006b.
3
Province of British Columbia. 2006. “Log Exports to
Province of British Columbia 2006.
Benefit Coastal First Nations.” News Release. Ministry of
4
Western Forest Products 2006.
Forests. March 27.
5
Parfitt 2006.
TimberWest Forest Corp. 2006a. Presentation to CIBC
6
Hamilton 2007.
Whistler Conference. February 16.
TimberWest Forest Corp. 2006b. “Financial Highlights for
References the Three Months Ended September 30, 2006.” Third
Quarter Results. October 26.
Hamilton, Gordon. 2007. “B.C. Launches Radical Forest-
Western Forest Products Inc. 2006. “Western Forest
Sector Overhaul: Environment, economy behind shift
Products Announces Sawmill Restructuring.” Market
to logging second-growth timber, minister says.” The
Advisory. November 14.
Vancouver Sun. May 24.
about the author
Opinions and any errors in this paper are those of the
author, and do not necessarily reflect the views of the
Ben Parfitt is the CCPA-BC’s resource policy analyst. He is
Canadian Centre for Policy Alternatives.
a long-time writer on natural resources and environmental
issues, co-author with Michael M’Gonigle of Forestopia:
This publication is available under limited copyright
A Practical Guide to the New Forest Economy, and author
protection. You may download, distribute, photocopy,
of Forest Follies: Adventures and Misadventures in the Great
cite or excerpt this document provided it is properly and
Canadian Forest. His most recent reports include True
fully credited and not used for commercial purposes.
Partners: Charting a New Deal for BC, First Nations and
The permission of the CCPA is required for all other uses.
the Forests We Share (CCPA–BC, January 2007) and Over-
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