Fight Fires AND Stimulate Rural Economies

CLICK HERE FOR MY PROFESSIONAL WEBSITE

Part of the challenge with wildfire is fuel load, that is to say, that over time when you control fires fuel builds up – then when conditions are opportune, the fire starts and is more severe than if the fuel load were reduced by regular fires or other means. It is the “other means” that interests me, how can we reduce the risk of fire and spare ourselves the smoke. Much suggestion for mitigating the severity of wild fires centres around controlled burns, perhaps there is another solution.

It has also come to my awareness that thinning and limbing, a part of the interface treatment process and an essential part of good forest management offers a substantive return on investment. Numbers I was provided indicated an approximate 5% / annum return on invested capital for thinning and limbing (this number is dependent on the various timber types and growing conditions – 5% is a conservative number).

The question becomes, how to fund Thinning and Limbing and garner the double benefit of increasing forest productivity and reducing the risk of forest fire – (reducing forest fire risk would require a slight expansion of normal prescription for thinning and limbing). If it were private land, ownership would seek a capitalization medium to fund a process with a known return. In the case of government, silviculture practices, as fire prevention, tend to be viewed as an expense rather than an investment. In light of a known of a known return, there is an opportunity for the government to fund silviculture programs at little or no real cost to the government.

The government could develop a silviculture bond program, that is to say, it could issue bonds at a given rate of return to the public against the anticipated return generated by various silviculture programs.  There is a tremendous amount of benefit that is derived from silviculture, the forest production increases, fire risk is lowered, the tree production cycle is shortened, there is immediate employment in the activity and related multiplier effect and there is the maintenance of an industry critical to rural British Columbia. While there is a 5% or better direct return, there are other benefits, the quantification of which is outside the scope of this document, but common sense would indicate are significant.  Given this reality, the government could issue bonds with a rate of return at a few points over the expected rate of return the increase in fiber would generate; offering opportunity for a British Columbia Forest Bond with a rate of return perhaps as high as 7 to 10% - by present day standards, a rate of return that is attractive especially when supported by a provincial government.

A policy like this does two things, it reduces the cost of silviculture processes, and it, in effect, “subsidises” retirement savings. If done aggressively is would be a form of region specific “quantitative easing” directed at the “RRSP” security seeking investor – highly stimulative.  We need a policy like this due to the nature of our population, in the same vein as Japan but to a lesser degree, British Columbia is stagnating somewhat, if not overall, most certainly in the rural economies – simulative policy is required.

MORE THINKING ON THE SUBJECTS OF FISCAL AND FOREST POLICY

Tax Policy - KISS - Keep it Simple Stupid

CANADA - ECONOMIC STAGNATION NATION

Thoughts on - Counter Cyclical Spending

MORE THINKING ON FOREST AND RURAL POLICY

CROWN LAND - WASTED ABUNDANCE

RURAL REVITALIZATION - POLICY MATTERS

FOREST INDUSTRY PERSPECTIVE

FOREST TENURE REFORM

CLICK HERE FOR MY PROFESSIONAL WEBSITE

BC Wildfires – Causal Factors - Forest Care Matters

As is often the case in managing anything, strategy determines the outcome and no amount of genius in tactics will remedy a poor strategy; if this is true, we know that no predetermined strategy will generate the same frustrating circumstance of applying tactics without satisfaction in the outcome. 

CLICK HERE FOR MY PROFESSIONAL WEBSITE

The assessment of what is causing the “increase” and “intensity” of forest fires is beginning to roll in. One listens to the forest experts, fire experts, talking heads – they are all very intelligent people who have been examining the challenge under the rubric of existing policy and governance. Their thinking is forged by government policy, forest management history as it is affected by provincial policy and their solutions stem from tweaking existing policy – they are in effect essentialists – their map of reality is predetermined. The single constant element of all suggestions is more funding.  I am in no way belittling incumbent actors or experts, I know many and have a tremendous amount of respect for them – their hands are tied by a myriad of factors.

Forest policy in British Columbia, like much policy, has EVOLVED under a collection of human interests; largely socioeconomic, which results in action that is abstracted away from the realities of the forest itself and oft times the highest and best outcomes from an enviro-socio-economic perspective. The best forest policy emerges from a sound understanding of the natural systems at play, the outcomes that are desired and then design thinking being brought to the challenge to generate policy. As policy has EVOLVED, the policy has generated no clear long term strategy and as a result, there are many Faustian elements in practices undertaken.   

There are only two factors that matter in forest management, the natural systems in the forest and how we as humans interface with those natural systems.  You're thinking, thank you for stating the obvious, while this is obvious – the power of vested interests and the resulting institutional inertia have, in many cases, divorced us from this obvious reality.

By way of example; I did some work related to assessing various land “units” that have as a large component of their value in timber. I contacted some staff at the Forestry and they were kind enough to provide data with respect to the economic value of various silviculture treatments. Thinning and limbing generated an approximate 5% per annum return (this return is a product of achieving a viable stem more rapidly and hence intensifying land use) – this is a general number for the purpose of illustration, it varies depending on stand type and other factors. So why are we failing to thin and limb forests in a significant way? Some takes place, but there are billions of hectares of forest unattended to.  

As forest policy has evolved and by extension, the way we interface with the land has put us in a curious circumstance. We are the best in the world at milling lumber. Very few, if any, jurisdictions can compete with the “manufacturing” aspect of our industry. We are the most proficient in the world at harvesting timber – the complex of equipment and technology we use is unparalleled. Yet, when it comes to managing the forest itself, the foundation of our forest industry we do poorly; one symptom of this reality is the wildfire challenge. The mills are owned assets and production is constantly rationalised to returns. The harvesting processes are performed by owned assets and constantly rationalised to returns. The forest is held as a public asset and forest harvesting rights are in large measure “volume” based (companies are sent to various places in the forest to take trees then they leave) – there is no connection between a given land-base and those reaping its benefit. This has resulted in reality that has us being “tree harvesters” rather than “tree farmers”, as such the land-base is largely unattended to.   

To a degree, what has emerged out of the evolution of forest policy is the quintessential tragedy of the commons. There is a single steward of the forest, the government, the challenge is, the accountability loop is long and unclear and the management perspective is more influenced by the short term interests of a multitude of actors and political reality, than by the health of the forest or even the industry itself.  How does this relate to wildfires you ask? It has to do with the attention paid to any given hector of land and in the case of fire concerns, the immediacy of the threat to the affected party’s livelihood.  

In Sweden, where tree farming is common practice and often an extension of an aggro enterprise – the attention given to a given hector of land is greater, than in BC’s forest. When people live on a given piece of land economic concern is immediate and hence management of a resource is rationalised to returns – but something more happens, people become attached to the land – they are an extension of the land – it is their home – many times for generations.  There is a healthy dynamic that emerges out of the combination of concern for the land and the requirement to make a living from it, a more nurturing management perspective comes to play, as we manage the forest we have a more extractive perspective. When the management of the land-base is “micronized” to a specific acreage,  more effort is applied to production per acre and harvested fibre is delivered into the market in response to market singles rather than other imperatives, as is the case in BC now.

In the case of fire management, for example, fuel load, the primary causal factor in the disaster we’re experiencing now, is better managed in an intensively managed forest that is “farmed”, than in BC’s case where the forest is extensively managed.  Further to the point of attention to the land; a person who owns timber harvesting rights to a given piece of land has a heightened concern with respect to a threat like fire than an entity as defuse as government – which is why we are in the state we are.

Tenure options are many, and one realises that in BC we have many users on the forest land-base, we can develop a tenure regime that protects the tradition of multiple users of the land base, yet captures the management imperatives that the forest requires to maximise its health, protection and benefit to us.

MORE THINKING ON FOREST AND RURAL POLICY

CROWN LAND - WASTED ABUNDANCE

RURAL REVITALIZATION - POLICY MATTERS

FOREST INDUSTRY PERSPECTIVE

FOREST TENURE REFORM

CLICK HERE FOR MY PROFESSIONAL WEBSITE

British Columbia Forest Tenure Reform

British Columbia Forest Tenure Reform 

Excerpt from 2008  letter to Minister of Forests "As Minister of Forests you've inherited a policy framework that has been forged over fifty years, by what I refer to as the Unholy Trilogy – big business, big labour and big government."

Link to Related Government Documents

Preamble

Stephen Covey, in his book Seven Habits of Highly Successful People, counsels us to “begin with the end in mind”. The end I have in mind for forest policy is forged, in a large measure, by what I want to avoid “more of”, than what I want to see more off and is founded as much in the preservation of healthy societal realities that existed in the past, as opposed to the promotion of nouveau societal engineering.

Here is what I know for sure, if you generate a circumstance where every acre of forest land is meeting its potential, then the societal benefit will be greater than it is now, so that is where the focus should be in forest policy.  In essence, then, take care of the long-term production interests of the forest and you take care of the people relying on the forest.  

I can know nothing of the forest and know how best how to manage it - because I understand people. All policy has to start with the realities of the individual, the realities of the community and finally, the central administration. The cornerstone of a healthy community is a collection of prosperous individuals. In reading the materials generated in the policy process to date, this reality has been forgotten.

China tripled agricultural production in three years by merely giving people quasi property rights and the fruits of their labour. They also improved the overall stewardship of the land - we know that the incentives inherent in the ownership and market-driven enterprise work, it is amazing to me that so many seem to think they can engineer something better - the facts simply contradict them - ownership or in essence long term tenure, works, the capacity to hold rights to and manage assets in accord with our judgment, and the market, is the cornerstone of the western world’s success, embrace the reality and prosper.  I believe in markets and ownership, and the desire of the individual to better their lot, I make policy suggestions based on this reality.  The benefits of ownership are proven time again, this is no mere academic musing, we all enjoy the fruits given us by an environment that permits enterprise.

In British Columbia, Canada over actually, we are witnessing the de-ruralization of our society, people are moving away from the land, away from natural systems, away from the Kadence of life that brings into visual relief the true realities of stewardship. With this reality, we have been left with a largely urban population convinced nature is a place of fragility, rather than a robust and generous provider.  An aft glance at the society that built a compassionate, self-reliant Canadian reality shows a rural/agrarian community as its point of origin. We would do well to look back and extract from history what best suits our future, in forest policy and other policies as well.  The rural agrarian Canadian society was a complex of self-reliant individuals, living miles from one another – but connected by a common living circumstance that made a community. From this came a culture that forged the great generation, people who lived by one another for generations, held integrity in high regard and lived by their word, this stands in stark contrast to the popular culture emerging out of the urban reality, where fickle seems to be the order of the day.    

It was with this backdrop that in 2008 I wrote a letter to the Minister of Forests Pat Bell in the hope that perhaps the government would see the opportunity to prosper from our forest resource, truly prosper in the fullest sense of the word. I have been largely disappointed, a reality we idealists are often faced with. This is in no way a reflection on Mr. Bell or his efforts, in fact, he achieved a great deal in this portfolio – the town of McKenzie thanks him for his efforts.  The culprit here is the same as it is everywhere in government, institutional inertia just keeps the beast rolling – enshrined interests holding on to what they have at the expense of greater prosperity. 

  

In a review of the discourse around forest policy, one asks, what is in it for me, an individual who sees opportunity everywhere for forest-related business and witnesses the entire thrust of forest policy directed toward incumbent actors – 5% of the land donated to woodlots or other means for the entrepreneur to access a resource is as laughable as it is dismal and it is sure to produce more of the same mediocrity in land utilization that one has witnessed in the past. 

Below is an excerpt from a letter sent to Pat Bell in 2008, it communicates the “end I had in mind” then when you read it contextualize its contents to the time … in rereading the letter in preparation for this submission I have found little reason to change my position, nor has the situation that the functional aspects my suggestions were addressing found resolve.

Letter to Pat Bell – then Minister of Forests – 2008

Over the course of my lifetime, I have worked in the forest industry, interfaced with it while involved in the tourism industry and gained some insight into its administrative side via participation at the Kamloops LRMP. This exposure has formed a perspective I think is worthwhile, and may be of use to you is some way.

As Minister of Forests you've inherited a policy framework that has been forged over fifty years, by what I refer to as the Unholy Trilogy – big business, big labour and big government. Political pragmatism in relating to the two primary special interest groups has created an industry that has perhaps underserved British Columbia, or left potential un-accessed. The weak US market and resulting waning of the forest industry presently, may offer a juncture where many of the interests that may have inhibited reform in the past, are now muted – companies gone or contracting and labour expectations reduced due to the stark realities presently facing the industry. The areas wanting of attention from my perspective are tenure reform, bug kill utilization and non-United States’ market development.

When one examines the forest industry, a glaring aspect that comes to view is the present domination by Volume tenure allotted to companies and then loosely tied (but tied to milling) to production facilities. The present policy has; failed to facilitate “the support of communities” in any real way, failed to facilitate the most effective use of timber assets, siloed lumbering functionalities in a manner I believe to be undesirable, and perhaps, most importantly, generated a log market that offends our best customer. A transition to an area based long term tenure format may address these issues.

I envisage area based tenure taking a form similar in nature to our present Woodlot tenure or Tree Farm tenure, existing completely separate and distinct from milling facilities (the actions of individuals may include milling activities but policy considerations would have milling separate and distinct). Tenure size would be moderate, perhaps in the order of an average annual timber volume accretion, in the context of long run sustainable yield, sufficient to generate net revenues in the order of $500,000 annually for proprietorship (based on historical data). The term of tenure (tree farming rights) would be ad infinitum, facilitating the future trade of tenure or perhaps intergenerational transfer. The industry would then be supported by an open log market that would emerge in much the same fashion as the cattle industry or other markets have. Government revenues would be garnered from the initial sale of these long term harvesting rights and then a royalty structure at the point of log sale. There are many issues that arise in designing tenure to meet the best interests of British Columbia, such as the nature of ownership of these tenure units, while these issues are extensive they are outside the scope of this communication. This brief outline of the created tenure type will, hopefully, serve to provide context and support to the points made with respect to tenure reform.  

   

Forest companies in the past have been able to secure the rights to harvest a given volume of timber; where, when and how, has been at the discretion of Ministry of Forests (MOF), and this right seems to be let often on the bases of a milling facility requiring timber. By observation, often the milling facility is closed, as production is concentrated to a more productive facility somewhere else or as the result of some other dynamic. Again by observation, the Forest Company retains the volume, often at the expense of local industry. This rationalization of production facilities may be necessary (for forest companies) to garner maximum efficiency under present industry conditions; however, the premise for the company’s garnering the tenure is no longer valid. This reality is not conducive to healthy public perception of government action and is breeding resentment, as evidenced by press coverage often referencing this occurrence in local media. An area based tenure format would extend to proprietors long term tenure based solely on harvesting and sale of timber to a free market. While area based tenure may fail to guarantee the logs will be milled locally, area based tenure and the related open log market will guarantee the opportunity for them to be milled locally. Additionally, the premise for tenure will always hold policy integrity (continuity with perceived public good) as policy is executed, allaying the valid public perception that local trees are unduly being milled in other regions. The pure physicality of the circumstance will extend advantage to local purchasers due to transportation advantage and local association.

The development of area based tenure, with tenure being focused to harvesting and growing trees, serves to fracture the tree farming tenure ownership from the milling function. This is desirable, as it extends greater influence to the tree farming process in the logging industry as a whole, by bringing “business” focus to tree farming process. Presently, the logging function is performed under contract to an entity absent long term interest for a specific area of operation and then the silviculture function is performed by another contractor who is overseen by the government (and with no long term interest in the area); the government of course being largely isolated from incentives associated with long term ownership and most certainly absent any real attachment to a profit motive.

The management of resources by “macro” entities, as is now the case, results in the siloing of activities in a manner that is both unnatural and unproductive. The present circumstance is analogous to government owning all the farmland and functioning as the monolithic manager of agricultural lands; the person milking the cows with no attachment to the cow’s long term health or wellbeing. The present circumstance then is absent the incentives that drive success generally in other sectors of economy - the ownership and interest in the profitable utilization of an asset. By designing the tenure in a manner that integrates the management perspective, resources will ultimately become better utilized. The tenure structure that provides incentive to proprietorship by integrating the profit motive with the full spectrum of tree farming activity, silviculture to logging in the context of long term ownership and appropriate logging practices, will surely result in better outcomes over time.    

                      

A by-product of broad based “proprietorship focused” tenure will be an emergence of an open log market and a Royalty system for government revenues. This means of government interface with resources and revenues is commonplace and widely accepted by governments the world over. Our present mode of governance over the province’s timber resources is both an anomaly and irritant to the United States. …..

I offer a less “industrialised” perspective than you're apt to be exposed to as Minister of Forests, a perspective I can proudly state has found its origins in being a farmer’s son and the desire to produce a societal circumstance well populated with independent people – well designed forestry tenure reform offers opportunity to create such a circumstance. Thank you for your consideration of the contents of this letter and I hope the election outcome gives you some extended tenure!

Industry Asset Security & Labour Interests

In reading the materials that have emerged out of the tenure reform process thus far, one sees repeated reference to “secure timber supply” for milling facilities and secure jobs for workers – This was dealt with to some degree above – but it requires further attention.

Sawmills and timber processing facilities will exist in relation to the timber supply regardless of whether sawmills and timber processing facilities hold tenure over forest or not. It is the coupling of the two operational modalities in conjunction with the siloing of growing, harvesting and marketing timber that is at the crux of miss management in the industry as a whole.  The process of growing and harvesting timber has no mandatory relation to processing timber into a finish product. It is the job of government in forging policy to attack the challenge of forest management with the maximum outcome of the committed land base and resource in mind.  If the government does this, the security of production assets will be inherent. Asserting that tying timber tenure to production facilities is necessary so secondary producers can have their assets secured is analogous to insisting that Cargill slaughter facilities hold primary production for cattle rearing on a 1/3 of Alberta. What secures assets is a supply of inputs and a market for outputs - timber tenure in no way is an imperative to have fiber supply - the willingness to pay fair market price at any point in time is.  BC forest policy has been held in stasis  by aforementioned  unholy trilogy - Big Government -  Big Business - Big Labour, what is key in policy reform it to remove ourselves from the limitations associated with industry actors perceived and often short term interests - and focus on maximizing the production of every acre of forest land slated for forest activity. 

The joy in fragmenting the timber supply management is that a 1000 flowers bloom; it is errant to try to anticipate management outcomes to a specific degree, one needs to realize that more actors means more innovation. At present there is a monolith called the BC Forest Service that manages the timber supply, by fracturing the management of the forest new best practices will emerge more often and in greater volume - it is the nature of large entities to have a low degree of absorptive capacity. 

One is compelled to voice strong objection to policy that would have tenure allocation at the behest of government only and directed toward established participants - we have stagnation now - what we need is to facilitate disruption and dynamism. Disruption, innovation, fast timber growth - dynamism will come from smaller area based tenure - same tenure area, more wood faster, needs to be theme of tenure reform.  There is no operational correlation between forest farming and secondary production - there is no practical rationale for continuing to attach the two in policy. Fiber garnered through an open log market and fiber garnered in the present modality is still fiber - the difference is an open log market fed by a large number of area based tenure holders, will see the timbered land base more intensively managed to grow timber and it will also align timber harvesting and marketing more intricately with demand. 

By detaching primary and secondary production there is no compromise made in primary production in the harvesting and marketing of timber to satisfy other interests - the market is the best determinant of when and what to harvest - certainly a better determinant than cashflow considerations of secondary producers or the sacred cow of "labour” quotas, tacit and omnipresent in the present policy mix. Let me assure all concerned however, that if policy is directed at maximizing resource value in the context of market imperatives, the wellbeing of those dependent on the industry will be better addressed - ultimately asset security and job security is a function of a strong industry overall that is rationalized to the market place.

The very best way to satisfy social and economic objectives is to have the value of the resources under management maximized.  The focus of land management policy needs to be on managing land, extract the maximum poetical volume and quality of timber from the land and you extract the most social benefit.  This is especially true when you have granted access to the land, to a large number of operators whose future is forged by the production choices they make – the new source of prosperity for British Columbia – the forest farmers. 

If policy makers have the courage to donate a significant portion of the a land base to the tenure profile suggested above, say 25 – 50 % of the annual allowable cut, much benefit will be derived. The trilogy will have a new partner, the independent business operator – the tree farmer. In the late 1970s there was a study conducted to find the most efficient business unit functioning in the US, they identified the 1200 acre family farm. It was efficient because the decision making processes where generated by the people executing on the land – knowledge was applied at the point of action. The realities of scale have driven farm sizes upward, but the efficiency remains.  Most importantly in relation to the suggested tenure however, is that the management perspective is lengthened along the full forest growth continuum to harvest, there is a steward that is intimately acquainted with a given acreage and the knowledge that can only be garnered by close association with a given stand of timber will drive a stem by stem market execution. 

   

One would think that this would be an agreeable proposition for incumbent timber companies; this proposal allows them to focus on their core capacities – processing lumber and value added products – and ensures unfettered and fair access to fiber via a free and open market.  

Letter to Mr. Thomson - Minister of Forests, Lands and Natural Resource Operations

April 20, 2014

Hon. Steve Thomson

Kelowna-Mission

Minister of Forests, Lands and
Natural Resource Operations

102 – 2121 Ethel Street
Kelowna, BC
V1Y 2Z6

EMAIL - steve.thomson.mla@leg.bc.ca

Dear Sir,

In 2008 I submitted a letter to Pat Bell, the then Minister of Forests in the hope of calling attention to the opportunities associated with tenure reform. I encouraged him to contemplate the advantages of smaller area based tenure rather than the present circumstance of volume based tenure. Mr. Bell’s efforts as Minister of Forest were exemplary, he accomplished a great deal. The challenge is the inertia associated with entrenched industry interests – they have effected a stasis in forest management in BC. The recent forest policy review and the subsequent tenure review appear to have achieved very little reform. It seems your Ministry has embarked on a process of tenure reform as indicated by the Discussion Paper the ministry generated titled Area-based Forest Tenures; this document however, and the associated process, has defined the scope of discussion within the “status quo box”, when what is required is “real reform”.

I am concerned that there has been no real change in the tenure picture all these years later – there is no greater access to the land for individuals. There is no doubt that area based extended term tenure will generated a better stewardship circumstance for the industry. We know from experience that “extended ownership” encourages better behavior than temporary arrangements. We know that tightly run small business brings efficiency to any task. We know the merits of enterprise. We know that we need to extract maximum benefit from the land base. It is time we put what we know to work in forest policy.

Please see my response to your tenure review process at the link below.

http://nthomson2.blogspot.ca/2014/04/british-columbia-forest-tenure-reform.html

We need to do better than the status quo, we need new blood and dynamism in the forest industry, please have a look at what I’ve proposed. It takes courage to change, we need leadership here.       

Sincerely,

Neil E. Thomson

Forestry - An Industry Perspective

The forest industry was the mainstay of British Columbia's economy for generations; while it's percentage of provincial GDP has fallen, it's importance remains. We are generally healthier for less predominance over the economy by the forest industry, we are more diversified now. 

I prospects for wood-fiber are good, stick frame construction - long a North American preference - is gaining traction in the emerging markets - the BRICKs and the like. It is the adoption of stick frame construction in China and the resulting demand for fiber that has shored up an otherwise challenged US-centric market. It is the sense of the writer that the US housing market will show mild improvement until about 2018 and at that point it should move into a long and strong growth pattern. This prediction is based on the belief that there was a confluence of cycle ends – major economic cycle, business cycle and technology cycle and well as, the resulting the commodity supper cycle correction or slowing – all of which collided with a grotesques financial deepening to create the down turn in 2008 – the real world economic cycles are now, one by one, running their course. One would anticipate that the inverse of 2008 will be true in 2018 – this thesis is shored up to some degree by severe downturns, 1930 etc., normally taking a decade to recover from. The future is bright for the forest industry in terms of product offering and a broader deployment of wood fiber in regional diversity, and in existing and new uses.

The challenge for the industry at large, but an opportunity for some, is the reductions in Annual Allowable Cut the are sure to follow the devastation that the Pine Beetle infestation inflicted.  The post infestation pine forest viability is extending as the industry adapts processing and marketing to the present reality, soon however, stand viability will be gone and with it timber supply. This will leave a lot of stranded capital in milling plant sitting or looking for fiber to feed it - the combination of excelled demand for fiber and reduced supply is sure to drive fiber prices upward. This reality bodes well for privately held and managed stands of timber.

There is going to be a girth of "none-viable" fiber laying in waste thought out the province for years to come, as transportation costs drive reduced the viability of the fiber source and or the fiber source decays; there is opportunity here, I've donated considerable thought to how one might unitize this material - I believe there are many. There may be some answers in the history of logging and milling in the province, perhaps mobile milling and other mobile utilization holds the answer to overcoming the transportation challenge. Transportation holds a high degree of sensitivity in material value being hauled - this presents an opportunity.

I have contemplated extensively, forestry as an adjunct to an agricultural enterprise, a companion enterprise if you will. Forestry works well in this space, many forestry activities labour demands are counter-cyclical to agriculture or can be made to be so. There is skill cross over between agriculture and forestry that permits work force substitution. The two industries have operational similarity and in the longer term, growing trees is really just crop management. The challenge here to some degree is government policy, an over emphasis on volume based timber tenure, rather than area based timber tenure, has taken the long term management of the forest out of the hands of people and put it in the hands of government. A number of distortions have emerged out of the province's forest policy, there are avenues to access timber supply in the longer term. I believe the government will be compelled in the years to come to give area based tenure its due in forest policy - perhaps there is a new era about to emerge. 

There are a number of opportunities now; wood electrical generation, private portfolio of timber properties, localized milling, harvesting technologies geared to low volume salvage of fiber in conjunction high efficiency remote mobile milling - the list is extensive - all it needs is the confluence of capital and people.  

I am excited about the prospects for forestry, if you are too, the opportunities are waiting.  

Forest Policy Reform – British Columbia

Letter to the Forestry Minister:

Some reform has taken place since this letter was sent, but more is needed. 

Over the course of my lifetime, I have worked in the forest industry, interfaced with it while involved in the tourism industry and gained some insight into its administrative side via participation at the Kamloops LRMP. This exposure has formed a perspective I think is worthwhile, and may be of use to you in some way.

As Minister of Forests you’ve inherited a policy framework that has been forged over fifty years, by what I refer to as the Unholy Trilogy – big business, big labour and big government. Political pragmatism in relating to the two primary special interest groups has created an industry that has perhaps underserved British Columbia, or left potential un-accessed. The weak US market and resulting waning of the forest industry presently may offer a juncture where many of the interests that may have inhibited reform in the past, are now muted – companies gone or contracting and labour expectations reduced due to the stark realities presently facing the industry. The areas wanting attention from my perspective are tenure reform, bug kill utilization and non-United States market development.

When one examines the forest industry, a glaring aspect that comes to view is the present domination by Volume tenure allotted to companies and then loosely tied to production facilities. The present policy has; failed to facilitate “the support of communities expected” in any real way, failed to facilitate the most effective use of timber assets, siloed lumbering functionalities in a manner I believe to be undesirable, and perhaps, most importantly, generated a log market that offends our best customer. A transition to an area-based, long-term tenure format may address these issues.

I envisage area-based tenure taking a form similar in nature to our present Woodlot tenure or Tree Farm tenure, existing completely separate and distinct from milling facilities (the actions of individuals may include milling activities but policy considerations would have milling separate and distinct). Tenure size would be moderate, perhaps in the order of an average annual timber volume accretion, in the context of long run sustainable yield, sufficient to generate net revenues in the order of $500,000 annually for proprietorship (based on historical data). The term of tenure (tree farming rights) would be ad infinitum, facilitating the future trade of tenure or perhaps intergenerational transfer. The industry would then be supported by an open log market that would immerge in much the same fashion as the cattle industry or other markets have. Government revenues would be garnered from the initial sale of these long-term harvesting rights and then a royalty structure at the point of log sale. There are many issues that arise in designing tenure to meet the best interests of British Columbia, such as the nature of ownership of these tenure units, while these issues are extensive they are outside the scope of this communication. This brief outline of the created tenure type will, hopefully, serve to provide context and support to the points made with respect to tenure reform.       

Forest companies in the past have been able to secure the rights to harvest a given volume of timber; where, when and how has been at the discretion of the Ministry of Forest (MOF), and this right seems to be let often on the bases of a milling facility requiring timber. By observation, often the milling facility is closed, as production is concentrated to a more productive facility somewhere else or as the result of some other dynamic. Again by observation, the Forest company retains the volume, often at the expense of local industry. This rationalization of action may be necessary to garner maximum efficiency under present industry conditions; however, the premise for the company’s garnering the tenure is no longer valid. This reality is unconducive to healthy public perception of government action and is breeding resentment, as evidenced by press coverage often referencing this occurrence in local media. An area-based tenure format would extend to proprietors' long-term tenure based solely on harvesting and sale of timber to a free market. While area-based tenure may fail to guarantee the logs will be milled locally, area-based tenure and the related open log market will guarantee the opportunity for them to be milled locally. Additionally, the premise for tenure will always hold policy integrity as a policy is executed, allaying the valid public perception that local trees are unduly being milled in other regions. The pure physicality of the circumstance will extend the advantage to local purchasers due to transportation advantage and local association.

The development of area-based tenure, with tenure being focused on harvesting and growing trees, serves to fracture the tree farming tenure ownership from the milling function. This is desirable, as it extends greater influence to the tree farming process in the logging industry as a whole, by bringing “business” focus to tree-farming process. Presently, the logging function is performed under contract to an entity absent long term interest for a specific area of operation and then the silviculture function is performed by another contractor who is overseen by the government; the government of course being largely isolated from incentives associated with long term ownership and most certainly absent any real attachment to a profit motive. The management of resources by “macro” entities, as is now the case, results in the siloing of activities in a manner that is both unnatural and unproductive. The present circumstance is analogous to the government owning all the farmland and functioning as the monolithic manager of agricultural lands; the person milking the cows with no attachment to the cow’s long-term health or wellbeing. The present circumstance then is absent the incentives that drive success generally in other sectors of the economy; the ownership and interest in the profitable utilization of an asset. By designing the tenure in a manner that integrates the management perspective, resources will ultimately become better utilized. The tenure structure that provides an incentive to proprietorship by integrating the profit motive with the full spectrum of tree farming activity, silviculture to logging in the context of long-term ownership and appropriate logging practices, will surely result in better outcomes over time.                           

A by-product of broad-based “proprietorship focused” tenure will be an emergence of an open log market and a Royalty system for government revenues. This means of government interface with resources and revenues is commonplace and widely accepted by governments the world over. Our present mode of governance over the province’s timber resources is both an anomaly and an irritant to the United States. While I am uninformed as to the exact cost or benefits of our present stumpage system relative to an open market system, our industry’s reluctance to embrace new and more agreeable operational modalities indicates to me the industry may be deriving benefit that is structurally related to the stumpage system. If this is the case, this is distorting industry participant conduct and very likely resulting in timber trading at prices that are different than if the prices were determined by market forces alone.     

The utilization of bug kill is critical and time sensitive as dead standing timber falls in value. The solutions of chipping and burning wood, and similar strategies seems to concede a lot of value to the present market circumstance, as cutting and milling the wood (the highest and best use) is presently hampered by a temporary market conditions. There is an apparent roll for government here to intercede by becoming the “purchaser of last resort”. The government could simply purchase lumber milled from bug killed stands at a per thousand price that offers companies an adequate return to provide an incentive to harvest, and mill at a fast enough rate to ensure the timber is utilized before it reaches a point of decay that will only allow burning or just leaving it to rot. The government would then acquire a large inventory of milled lumber to hold and to sell later as market conditions improve. While this is “capital” intensive, over time it offers a net positive revenue opportunity for the government. This action is justified in the context of managing a disaster. Potentially, lumber that has found existence under this type of policy could be used to seed new markets. While I process some ideological encumbrance to measures of this nature, given this circumstance it seems prudent. Additionally, the British Columbia government could promote this policy to the public and the federal government as a stimulus measure. In all, while quite a strong intervention, it seems to warrant consideration.             

One last point, regarding the forest industry, with respect to our efforts to diversify markets for our lumber products. While I realize that it is in the interest and is the responsibility of the industry to find markets, the US market has been so dominant for so long, that apathy amongst industry participants has precluded the aggressive pursuit of other markets. Our present situation, with the industry effectively in a state of collapse, is a product of the absence of strong leadership in this regard. British Columbia is grossly underperforming in non-US markets as regions like Scandinavia take market share, as has been reported they have in Japan. This criticism is toward the generalized culture, as opposed to the present government – which I view favourably and support. Substantive investment in market diversification is justified.

I hoped to offer a less “industrialized” perspective than you’re apt to be exposed to as Minister of Forests, a perspective I can proudly state has found its origins in being a farmer’s son and the desire to produce a societal circumstance well-populated with independent people – well-designed forestry tenure reform offers the opportunity to create such a circumstance. Thank you for your consideration of the contents of this letter and I hope the election outcome gives you some extended tenure!