The forest products sector has long served as British Columbia’s leading source of exports and a key driver of jobs and other business activity across the Canadian province.
But the industry has fallen on hard times, to the point that it is no longer BC’s number one export sector.
Some of this reflects the fallout from the pine beetle infestation that devastated forests in the interior in the early to mid-2000s. The beetle destroyed a sizable fraction of accessible fibre in the affected areas. And more recently, wildfires have added to the downward pressure on the timber supply.
However, according to the BC Independent Contractors and Businesses Association, government policy decisions have also played a big role in the jaw-dropping decline in timber harvesting, which, in turn, has reduced the supply of logs and other raw materials needed by lumber manufacturers and pulp and paper mills.
A host of policy changes adopted by the province have slashed fibre supply, sterilised an ever-growing portion of the Crown land base, increased operating costs for logging contractors and lumber companies and created endless delays and uncertainty across all industry segments.
BC has seen staggering declines in the annual timber harvest – from 70 million cubic metres in 2012-14 to roughly 35 million cubic metres last year.
Less harvesting on ‘public lands’ – lands owned by the Crown – accounts for almost all of this. Moreover, actual volumes of timber harvested from public lands have fallen well below the amounts officially approved by the Ministry of Forests. In 2023, the harvest was 40% lower than the annual allowable cut (AAC) set by the government. This is unnecessary and unacceptable.
Since 2017, 30 provincial sawmills have closed or been forced to take extended downtime, owing mainly to their inability to obtain timber to support manufacturing. This is equivalent to a 35% reduction in the province’s total sawmilling capacity in just seven years. Current policy directions point to further pain in the next few years.
The consequences of this mix of ‘natural’ and ‘policy-driven’ changes affecting forestry have been devastating for logging contractors, workers in the industry, and forest-dependent communities. And with leading forest companies increasingly investing and seeking to expand their business footprints elsewhere – in other provinces, the US. and even Sweden – the signs are troubling.
All of this underscores that both shifts in market conditions and government policy choices have combined to create unprecedented challenges for logging companies and lumber manufacturers trying to do business in the complex, high-cost operating environment that has evolved in the province.
The Independent Contractors and Businesses Association says that in terms of provincial government policy, the near-term priority should be to stabilise and then gradually increase the accessible fibre supply. Over the last decade, the province has prioritised conservation values and other environmental objectives and downplayed the importance of sustaining an economically viable and competitive forest industry in British Columbia. A better balance is needed.
A second priority is to advance agreements with First Nations to increase their role in the forest sector and provide for greater revenue sharing to expand benefits for First Nations.
Another policy commitment should be to accelerate innovative management and regulatory models for the forest industry to expedite land use planning, speed up regulatory decision-making, improve wildfire mitigation and pursue biodiversity goals while also ensuring a reliable fibre supply for the industry.
“It is time for policymakers to shift gears,” says the association’s chief economist Jock Finlayson.
“Over the last several years, they have overlooked the commercial needs and the economic benefits that flow from the presence of a significant, globally competitive forest products industry. The balance among the sometimes-conflicting objectives that necessarily shape forest policy – particularly in a jurisdiction where the Crown owns most of the resource – has been lost. It is time to recalibrate policy to put a higher priority on maintaining and expanding fibre supply, improving the industry’s cost competitiveness and ensuring that the large BC-based companies that have contributed to building a world-class forest products cluster remain anchored in the province and continue to be an important part of the British Columbia business community.
Meanwhile, the slump in British Columbia’s forest sector and the global forest products industry and market overall will be topics at the first Global Wood Summit in Vancouver on October 29 and 30.
Industry experts in markets in the US, Sweden, Russia, China and Japan will discuss global forest products, pulp and paper markets, trade, and emerging sectors such as engineered wood manufacturing.
The summit will include a panel on the Chinese and North American lumber markets and sessions on pulp and paper,
Panel experts will include John Brink, a BC wood manufacturing veteran, who has announced plans to acquire shuttered Canfor (TSX:CFP) mills and associated tenures in Vanderhoof, Fort St. John, Houston and Bear Lake.
Experts in mass timber from Europe and Eastern Canada will be among the speakers.
“If you hear what’s going on in Europe (with mass timber), they’re 15 years ahead of us, so they have a lot more insights,” BC forestry consultant and summit joint chair Russ Taylor said.
The summit will also feature sessions on timberlands and fibre supply in the province and transportation and logistics.
Taylor said the summit would also hear some predictions for the forest sector in 2025. As Taylor notes, 2023 and 2024 have been rough for the forest sector, particularly in BC, which has sustained major blows from the shuttering of several major sawmills and pulp mills.
“Companies are bleeding ink right now,” Taylor said. “The third quarter results have come out – they’re going to be horrible. But prices are now picking up, so we’re trying to figure out what’s next.”
