Do Citizens Need to be Hurt for NB Companies to Survive?

Do citizens need to be hurt for NB companies to survive? Of course not. So why is this the case for forestry?

In earlier editions of this blog, we talked about the need for changes to the Crown Lands and Forests Act, how over the years various governments gutted the essence of it to the point where it no longer serves the best interests of all New Brunswickers, but only the forestry companies and their mills.

According to a review by CIBC World Markets, New Brunswickers are losing out on about $100 Million per year by this mismanagement, money that otherwise could be going to social programs, infrastructure like roads and bridges, or put against our mounting debt.

But the group that is losing out, even more, are woodlot owners all across rural New Brunswick, who find themselves unable to get fair market value for their wood because they are competing against their own government which is making Crown wood available to forestry companies at below market value.

A Little Math: Do Citizens Need to BE HURT for NB Companies to Survive?

So, on one hand, we have government and by extension taxpayers, losing out on millions of dollars every year because of Crown Land mismanagement. Money that, by any measure, we can’t afford to lose. But what about on the other side of the leger, do the forestry companies that have access to this below-market wood, need this break to survive?

In a word, no. Let’s look at the math. It takes roughly two tons of pulpwood to produce one ton of pulp. That pulp, the fibre that is used to make paper, is sold into the U.S. for $1200 a ton, or about $1600 Canadian. So that’s two tons of pulpwood translating to a sale price of $1600.

The companies can get away with it because of the sweet deal they have with the government for access to wood off Crown land, so they don’t need as much wood from private woodlot owners, and they certainly don’t have to pay them anything above the bare minimum.

The woodlot owner who owns that wood gets roughly $85 for his two tons of pulpwood. Add in the cost of electricity to put it through the mill of about $115 and it shows that what costs $200 Canadian to make, plus the costs of labour in the mill and transportation, and the profit is pretty tidy.

Times Used to Be Tougher. Not Anymore.

Several years ago, when the pulp was sold for $700 US a ton (roughly $900 Canadian), the industry was concerned about its future. But now, even though the price has rebounded all the way to $1600, the amount paid to the woodlot owners hasn’t budged.

Now think about that. The forestry company’s selling price increases by nearly 75%, but the amount it pays for its raw material – the wood it purchases from private woodlot owners so it has a product to process and sell – doesn’t increase even a nickel.

You can also look at logs and stud wood, which are used to make lumber. The market price for lumber has risen considerably, as anyone who has purchased any lately can attest. In other jurisdictions, Nova Scotia, for example, the mills are paying about 30% more to the woodlot owners for wood, but in New Brunswick, no increase at all.

Hardly sharing the wealth is it? But the companies can get away with it because of the sweet deal they have with the government for access to wood off Crown land, so they don’t need as much wood from private woodlot owners, and they certainly don’t have to pay them anything above the bare minimum.

What’s Wrong With This Picture?

That’s a rhetorical question because we all know what’s wrong. We have a Crown Lands and Forest Act that is hurting all of us except the forestry companies.

It is past time that our Crown Lands and Forests Act was scrapped in favour of a new one that serves all New Brunswickers. We can ill afford to continue to lose an estimated $100 Million a year, and the forestry companies don’t need all this access to Crown wood to have a viable business. They could and should be paying a fair price for wood from our private woodlot owners. But they don’t because they don’t have to.

But paying a fair price to private woodlot owners and our rural New Brunswick communities is only part of the benefit of what a new Crown Lands and Forests Act could represent.  A new Act that focuses on more diverse forests would be ripe for any number of economic initiatives from tourism and hunting and fishing, to more value-added industries from maple syrup to any number of high-end wood uses. It would open the door to a much more prosperous New Brunswick.

When political candidates come courting your vote, ask them where they stand on Crown land. And tell them you want changes.

We all, you included, deserve better.

Thank you for listening,

Rick Doucett
President, New Brunswick Federation of Woodlot Owners