Forest companies need healthy woodlots

On behalf of the Board of Directors and members of the New Brunswick Forest Products Association, I would like to open a direct dialogue with all New Brunswick private woodlot owners,
As the current crisis deepens the need to work together to deal with the global pressures facing our sector has never been greater. Weathering the storm to realize the emerging opportunities in the future should be a shared focus.
The Atlantic Provinces Economic Council’s recent report card (April 2007) on forestry highlights some of these challenge s and the re asons why we need to work together:

* The Canadian dollar rose 40 per cent between January 2003 and summer 2006.
* Energy prices have increased, specifically cost of fuel for transportation.
* Power rates increased by more than 24 per cent in less than two years.
* There is increased competition from Asian and South American producers in the prime U.S. market.
* There is shrinking demand for lumber and related construction material due to recent contraction in U.S. housing market. Lumber demand is down about 25 per cent.

New Brunswick’s sawmills are dealing with a drop in lumber prices of up to 40 per cent over the last year as a result of the drop in U.S. housing starts. The overproduction of some mills in Canada and the pine beetle infestation in B.C. has saturated the lumber market and further reduced market prices.

The record high Canadian dollar has also impacted shipments to the U.S. Maritime sawmills lose an additional $5 million annually for every cent it rises against the U.S. currency. Most importantly, the APEC report highlights the fact that New Brunswick has some of the highest wood fibre costs in the world, and a shrinking wood supply.

All of this confirms that price and demand for forest products are set by global forces outside of the province – impacting the price paid for local wood. The human cost of all of these global pressures is significant, impacting both mills and woodlot owners. APEC confirms that Atlantic Canada has lost more than 8,000 forest industry jobs since 2004, the majority of these have been in New Brunswick. Since this April report, there has been the devastating news from the Miramichi. How can we ensure global competitiveness of the sector while providing a fair return to woodlot owners at home in New Brunswick? With less than 1 per cent of the global market share of forest products but more than 50,000 people in New Brunswick impacted by the fate of our sector, the answer lies in working together.

The final report of the Self-Sufficiency Task Force calls on government to design a strong policy that will ensure the forest sector’s lone-term survival, but cautions decision makers that if that policy is to be successful, the forestry sector must build a consensus amongst its stakeholders. If this consensus isn’t achieved, their conclusion is that there will never be peace in New Brunswick’s forests. This is a conclusion no one can afford.

What we know for sure is that we need both the certainty of a paying customer at a price that is sustainable and the certainty of a cost-effective wood supply. To this end, we believe the Task Force recommendations should have included an equally achievable goal of growing 25 per cent more wood on private land – not just Crown land.

We whole-heartedly endorse the Federation’s request for increased investment in silviculture on private woodlots and are prepared to work with the organization and government to achieve this goal. The Federation plays an important role in silviculture, certification, education and market development – today and into the future.

Establishing a long-term wood objective – on private land and Crown land – would represent a monumental accomplishment. It would encourage necessary investment and upgrades by mill owners who would then have confidence in a stronger future wood supply chain.

Another recommendation of the Task Force deals with eauitable marketing
arrangements and a code of conduct, it reads as follows: “Encourage private woodlot owners and industrial purchasers of their wood to work together to establish an equitable marketing arrangement, including a code of conduct for the industry.”

The Forest Products Association remains committed in establishing a code of conduct, in co-operation with the New Brunswick Federation of woodlot owners. Re-establishing positive dialogue between all forestry stakeholders is necessary.

I believe our members are committed to accept private wood on a proportional basis with Crown wood, and will respect government sanctioned levels of harvest (Annual Allowable Cut) from the seven wood marketing boards in New Brunswick. We are committed to supporting the future of wood marketing boards in New Brunswick.

We want to continue working with private woodlot owners and the Federation as our supply partners on any matters of mutual interest, including growing more trees. Let’s get together to set the stage for a renewed partnership.

There is not a moment to waste, as the competitive pressures build and new opportunities evolve. This current crisis has reinforced our long-held commitment to work with the Federation of Woodlot Owners in building a strong market with a fair market pricing policy for New Brunswick wood supply. We want to resume the talks that we had over the past 18 months.