Presented by Tom Niemann, on behalf of the Ministry of Forests, Lands and Natural Resource Operations, at the Log Export Policy Meeting - July 20, 2011 in Richmond, BC.

1. Competitiveness
and Innovation Branch

2. Competitiveness
and Innovation Branch
Data source: B.C. Stats
2

3. Long history of responsive policies
 Log exports from old temporary tenures first
banned in 1891
 Some exports permitted in 1901
 Export prohibition extended to Crown land
granted after 1906
 Some exports permitted in 1909
 Export of “surplus” permitted in 1916
 First Log Export Advisory Committee in 1918
3

4. Competitiveness
and Innovation Branch 4
Potential exporters need to show that logs:
– are surplus to the needs of domestic
manufacturers; or
– cannot be economically processed in the
province; or
– export will improve utilization & prevent waste.
Applies to Crown land and some private land
Surplus test procedure
Fee-in-lieu of manufacturing

5. Competitiveness
and Innovation Branch 5
Log exports from pre-1906 private land in B.C.
must also be surplus to domestic needs.
Same surplus procedure as provincial logs.
All logs exported from Canada require a federal
permit.
Fee-in-lieu of manufacture is not applied to
logs under federal jurisdiction.

6. Competitiveness
and Innovation Branch
Generating More Wealth from British Columbia’s
Timber: A Review of British Columbia’s Log
Export Policies
 Views on log exports
 Economics of exports
 Recommendations
Competitiveness
and Innovation Branch 6

7. Competitiveness
and Innovation Branch 7
Support log exports:
• Private landowners
• Market loggers
• First Nations
• Major Licensees *
• Pulp & paper
companies
Oppose log exports:
• Independent sawmills
• Rotary (veneer) mills
• Organized labour
• Environmental groups
• Communities *
* Some exceptions

8. Competitiveness
and Innovation Branch 8
Economics of log exports:
“Log exports are primarily a symptom, not a cause, of
the economic problems facing the coast industry.”
If there are restrictions on export of processed
products, log export restrictions need to consider and
be calibrated to these. (Softwood Lumber Accord)
“The key issue in the Coast Forest Region and in the
northern transition zone of the Interior Forest Region
is the economics of hemlock and balsam.”

9. Competitiveness
and Innovation Branch 9
Recommendations:
1. Adjust fee-in-lieu to reflect lumber export tax
2. Negotiate free trade in logs from private land for lumber from private land
exempted under Softwood Lumber Accord
3. Stimulate harvesting of hemlock and balsam
4. Permit export of lower grades of western redcedar and yellow cedar, with a
transitional fee-in-lieu
5. Simplify operation of the surplus test for private forest land
6. Special considerations for small Crown licences and small private
landowners
7. Considerations for First Nations and new entrants
8. Second growth strategy
9. Free trade in logs with the US as part of a lumber deal

10.  Many written submissions received
◦ No clear consensus
 Policy did not change
◦ Timing was not right, due to recession
10

11.  Jobs in forest industry are down
 US market and stumpage rates are down
 Lumber and log exports to China are up
 Share of log exports going to US has shrunk
 Log exports (Provincial jurisdiction) are up
 Total log exports are about the same
11

12. Competitiveness
and Innovation Branch
B.C. Forest Sector Employment (persons), 2001 - 2010
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
88,600 86,100 91,100 80,400 79,700 81,600 84,200 64,900 52,000 55,500
24.7 25.3 27.7 21.5 21.6 21.7 24.3 17.4 13.9 16.6
48.9 43.8
49.0
46.9 45.8 44.8 44.7
34.3
27.2
29.1
15.0
17.0
14.4
12.0 12.3 15.1 15.2
13.2
10.9
9.8
23.2%
22.0%
21.9%
18.4%
17.6% 17.6% 17.0%
12.9%
11.6% 12.3%
4.6% 4.4% 4.5% 3.9% 3.7% 3.7% 3.7%
2.8% 2.3% 2.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0
10
20
30
40
50
60
70
80
90
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
thousandspersons
Forestry and Logging with support activities Wood Product Manufacturing
Paper Manufacturing As %of Goods-Producing Sector
As %of all industries
Competitiveness
and Innovation Branch
Source: Statistics Canada – Labor Force Survey
12

13. Competitiveness
and Innovation Branch
Data sources: US Census Bureau and Statistics Canada.
Competitiveness
and Innovation Branch 13

14. Competitiveness
and Innovation Branch 14

15. Competitiveness
and Innovation Branch
 Rapidly growing economy
 Value of B.C. lumber exports to China in 2010 were
10 times 2005 level
 China became B.C.’s #1 lumber market in May 2011
 At least 10 mills opened since 2009 to serve China
 Value of B.C. log exports to China in 2010 were 12
times 2005 level
 China became B.C.’s #1 log market in Jan–May 2011
15

16. Competitiveness
and Innovation Branch
Source: B.C. Stats
16

17. Competitiveness
and Innovation Branch
U.S.
51.7%Japan
39.7%
South Korea
5.9%
China +
Hong Kong
1.8%
Other
Destinations
0.8%
B.C. Log Exports in 2005 ($540 million)
U.S.
9.3%
Japan
35.9%
South Korea
21.4%
China +
Hong Kong
32.5%
Other
Destinations
1.0%
B.C. Log Exports in 2010 ($377 million)
17

18. Competitiveness
and Innovation Branch 18
LogLog exportexport volumevolume
Structural changes in the industry and marketsStructural changes in the industry and markets

19. Competitiveness
and Innovation Branch 19