BC exports raw logs, jobs and revenue

November 1, 2002

More raw logs--along with jobs and revenue--will be shipped out of BC over the next three years. That's because the BC government, in February of this year, passed an Order-in-Council allowing an additional 2.7 million cubic metres of raw log exports. The increased exports are to come from the battered North Coast, an area already reeling from declines in its salmon fishery and forestry sector.

Yet the issue of raw log exports is a no-brainer. If we're going to allow our public forests to be cut, we should make sure that we get substantial economic gains in return. These gains go beyond profits for forest companies or revenues for the provincial government and include what is, for the majority of people, most important: jobs. Creating as many good jobs as possible from our limited forestry resources means processing BC's timber here in BC.

This is the simple logic behind a Forest Act regulation that restricts the export of unprocessed timber from public land. It is good public policy. It does, however, allow raw log exports under certain conditions, the two most important being that it would be "uneconomic" to process the logs in BC or that the logs were surplus to the milling capacity of the province.

Unfortunately, these loopholes have been used over the years to increase the volume of raw logs leaving the province. From 1997 to 2001, exports have increased more than tenfold. Though exports from private land are partly responsible for the increase, raw logs are leaving our public forests in greater volumes than ever before. Almost 1.2 million cubic metres of raw logs were exported from public forests in 2001.

If BC were to do nothing more than run these logs through sawmills and pulp mills, the province would have 800 more jobs in its forestry sector, bringing $162 million in wages and benefits to forest-dependent communities. Many more jobs could be created if we moved up the value chain and created the same level of employment (per cubic metre of wood) as the U.S., Scandinavia, or even eastern Canada.

Instead, even fewer jobs will be created from forestry in BC. The Order-in-Council forfeits an additional $144 million in wages in exchange for $2.7 million in revenue to the provincial government (since the government is imposing a $1 per cubic metre stumpage surcharge for the exported logs in lieu of local employment). In all, as many as 1,500 jobs will be sacrificed.

Forest Minister Mike de Jong has defended the government's action, saying it was necessary in order to keep jobs for loggers. But if the minister wanted to offer real help for forest industry workers, the government would give incentives for forest companies to move up the value chain instead of down. The minister's short-term "solution" has not been matched by a long-term strategy to do so.

Incredibly, the provincial government's official reason for the increased log exports is a lack of milling capacity in the province. All evidence, and common sense, points to a different conclusion: that BC has milling overcapacity. In fact, just three months before the Order-in-Council, forestry analyst Peter Pearse delivered his commissioned report to the government. Its conclusion: eight to sixteen mills would have to close in the foreseeable future because there wasn't enough wood to sustain them. Over the last two years, Weyerhaeuser, Western Pulp, and Doman, among others, have complained about fibre supply and have temporarily closed mills.

Not surprisingly, the government's decision has brought criticism and action from the people of the province. A coalition of forestry unions and environmental groups have hired Sierra Legal Defense Fund to fight the Order-in Council in court.

It didn't have to be this way. The province should be moving in the opposite direction by giving forest companies incentives to produce more value-added products in exchange for access to our public forests. It should also be diversifying forest tenures to include communities and First Nations, who are often more willing than transnationals to operate in an environmentally sensitive way and make the most of a renewable, but finite, resource.

This long-term goal--producing more than timber and pulp, and certainly more than just raw logs, from our precious forest resources--is what will relieve the softwood lumber dispute, not moving down the value chain.

Dale Marshall is Resource Policy Analyst for the BC office of the Canadian Centre for Policy Alternatives.