BC Gov News

To increase harvesting activity on the coast, government is exploring the use of new scanner technology for scaling logs, accelerating the auction of an additional 500,000 cubic metres by BC Timber Sales, improving the log-export system and exploring ways to better harvest the timber profile.

Forests, Lands and Natural Resource Operations Minister Steve Thomson announced the initiatives today in his speech to the 70th annual general meeting of the Truck Loggers Association.

BC Timber Sales is accelerating the auction of 500,000 cubic metres of wood between now and June in order to address a shortage in short-term log supply. The new scanner technology uses lasers to determine the volume of a log and could be a more efficient way of scaling. The ministry is also exploring ways to ensure the entire timber profile available on the coast is harvested more consistently.

Log export policy revisions include a change to the fee structure for exporting some logs. Actual export fees charged will be based on the difference between the domestic and export price of logs. With a current average price difference between the domestic and export price, this represents a 20 per cent increase in fees charged for exporting logs from the coast. However, the revised fee does not apply to logs exported under existing Orders in Council. The new fee schedule comes into effect March 1, 2013.

A change in the fee schedule for logs exported under Order in Council from the Mid Coast timber supply area is also coming into effect immediately. The fee on low- and mid-grade logs will be reduced to a minimum of $1.00 per cubic metre for a two-year trial period. The high cost of logging and low value of timber in this remote area has resulted in lessened economic activity. The lower fee should increase harvesting activity in this remote area.

The higher price from exported logs allows forest companies to harvest stands that would otherwise be uneconomic and provide for increased harvesting and economic activity.

The log export review also improves transparency and predictability by clarifying that freight will be considered on any domestic offers for logs proposed for export. The cost of transporting logs from one of four commonly used locations to Vancouver will be a factor considered when addressing bids by domestic buyers.

Other administrative changes include improvements to the log export data system and clarifying policies for timber marking and scaling.

Quotes:

Forests, Lands and Natural Resource Operations Minister Steve Thomson -

"The increase in volumes of wood sold by BC Timber Sales, and the changes in log-export policy, are designed to increase harvesting activity on the coast, making more wood available on the market."

Bill Markvoort, president, Truck Loggers Association -

"As much as we don't like increases to operational costs, such as this overall increase in log-export fees, we understand the balance required between domestic manufacturers and the international marketplace. We strongly support the two-year trial period to reduce the fee-in-lieu in the Mid Coast and believe this will increase jobs and harvesting opportunities in that area."

Rick Jeffery, president, Coast Forest Products Association -

"The policy and initiatives announced today by the minister will further strengthen our world-class sustainable forest management and improve competitiveness in the coastal forest industry. It emphasizes a more balanced approach that will put more British Columbians to work in the forest industry."

Hans Granander, Bella Coola Resource Society -

"We've been advocating for a lower fee for some time, so we're glad to see the fee reduction in the Mid Coast. This will help us increase our harvest and support the jobs our community forest provides."

Quick Facts:

• Thomson committed to a review of the province's log export policies in July 2011, given the increase in log exports that year. Three multi-stakeholder forums and almost 50 submissions were considered in reaching the final decisions.
• The fee schedule for log exports was last updated in August 2004. B.C. is the only Canadian province to charge fees-in-lieu of manufacturing on its log exports.
• In 2011, the province collected $21.3 million from log export fees.
• Cypress and cedar are not allowed to be exported.

Learn More:

For more information visit: www.for.gov.bc.ca/het/export

Two backgrounders follow (fee schedule, OICs, TEAC TOR).

Media Contact:

Vivian Thomas, Communications Manager
Ministry of Forests, Lands and Natural Resource Operations
250 356-2475 

BACKGROUNDER 1

Coastal log export fee schedule

Log-export fees on coastal logs were last revised in August 2004. Log-export fees are calculated as follows:

• 15 per cent of the domestic log values for Douglas fir, all grades.
• 10 per cent of the domestic log value for all other coastal coniferous species and grades except grades U and lower.
• 5 per cent of the domestic log value for grades U, X, Y and Z for all coniferous species except Douglas fir.
• A fee of $1.00 per cubic metre applies for all deciduous species of timber.

In all cases, the log export fee is a minimum of $1.00 per cubic metre.

Effective March 1, 2013, the fee charged for exporting logs from provincial Crown land in the Coast Area will now also recognize the differential between export price and domestic price of a log, which is due to many factors, as well as the value of the log. The greater the difference between the export price and domestic price of a log, the higher the export fee will be. The multiplication factor as outlined in the table below will apply to existing fees. This new fee will not apply to logs exported under Orders in Council that are in place for Haida Gwaii, North Coast or Mid Coast (see map). www.for.gov.bc.ca/het/export

Difference Between Export and Fee-in-lieu Multiplication Factor
Domestic Prices (per m3)

$ 0 to $10.00 1.0
$10.01 to $20.00 1.1
$20.01 to $30.00 1.2
$30.01 to $40.00 1.3
$40.01 to $50.00 1.4
>$50.00 1.5

For example, the 2011 average export fee on a cubic metre of timber was $7.00 per cubic metre. The current difference between export price and domestic price is $27.00 per cubic metre. Accordingly the new average log export fee will now be ($7.00 x 1.2) $8.40 per cubic metre.

Log export fees for the Interior remain at $1.00 per cubic metre.

Log Exports - surplus test

The Forest Act, since it was introduced in 1912, has always included provisions for limited log exports. Logs can either be exported through an Order in Council, or ministerial exemptions. A company that wishes to export logs must first advertise logs for domestic purchase first. If there is no domestic buyer, then logs are allowed to be exported. The Minister's Timber Export Advisory Committee reviews all offers to determine whether they meet fair market value. The minister confirmed today that significant freight costs must be a factor considered in domestic bids for logs proposed for export.

Mid Coast log export Order in Council (OIC)

Effective Jan. 17, 2013, the fee for mid- and low- grade logs (H, I, J, U, X and Y) exported under the Mid Coast OIC will be reduced to the greater of one per cent of the domestic value of the log or $1.00 cubic metre for a two-year trial period. The intent of the lower fee on lower grade logs is to encourage more harvesting. In 2011 only 10 per cent of the allowable annual cut was harvested. The fee schedule for higher grade logs does not change. Logs exported under this OIC will not be subject to the increased fee.

For example, if a volume of logs with 30 per cent high grade, 30 per cent mid grade and 40 per cent low grade were to be exported under the Mid Coast OIC, 30 per cent of the volume would have a fee assessed that would be 10 to 15 per cent of the domestic value of the log. 70 per cent of the volume would require a fee of $1 per cubic metre.

Orders in Council for exports of Standing Timber

Section 127 of the Forest Act allows "blanket" exemptions from manufacturing restrictions to allow limited exports of logs from a given geographic area. Logs exported under an OIC are limited to a percentage of the harvest and are not subject to the surplus test. These OIC are usually put in place to support local employment. The following log export OICs are currently in effect around the province:

- Haida Gwaii - First came into effect in 1986, terminated in 1992, brought back into effect on July 29, 2010 and expires July 29, 2015. It allows 35 per cent of logs harvested to be exported (except cedar and cypress)

- Skeena Stikine - First came into effect in 1986, was renewed on June 26, 2008 and expires June 26, 2013. It allows 35 per cent of logs harvested to be exported (except cedar and cypress). Covers current districts of Kalum and Skeena Stikine

- North Coast district - First came into effect in 1986, was renewed on June 26, 2008 and expires June 26, 2013, It allows 35 per cent of logs harvested to be exported (except cedar and cypress)

- Northwest Coast (current Mid Coast area) - First came into effect in 1986, terminated in 1992, brought back in 2006, was renewed on June 26, 2008 and expires June 26, 2013. It allows 35 per cent of logs harvested to be exported (except cedar and cypress). With this announcement, it's being extended to June 26, 2015.

- Nass Timber Supply Area - First came into effect in 1986, was renewed June 26, 2008 and expires on June 26, 2018. It allows 100 per cent of logs harvested to be exported.

Media Contact:

Vivian Thomas, Communications Manager
Ministry of Forests, Lands and Natural Resource Operations
250 356-2475

BACKGROUNDER 2

Timber Export Advisory Committee Terms of Reference

1. Constitution

The Timber Export Advisory Committee ("TEAC") is an advisory committee established by the Minister of Forests, Lands and Natural Resource Operations ("the Minister"), to provide recommendations to the Minister regarding the export of timber originating from lands within British Columbia that is regulated for manufacture in British Columbia by the Government of British Columbia.

2. Membership

TEAC will consist of a Chair, not more than eleven (11) members, and a Coordinating Secretary.

The Chair and members are to be persons with suitable background knowledge in some or all of the following areas: the practicalities and economics of conducting logging operations; the practicalities and economics of operating a wood product manufacturing facility; and knowledge of the domestic and export log markets. The membership is to represent all areas of the province where timber exports are prevalent.

The Chair will be appointed for a term of five (5) years and members will be appointed for terms of three (3) years by the Minister. Member terms will be staggered over time to maintain continuity of TEAC. The Chair and member terms may be extended or abbreviated by approval of the Minister.

The Coordinating Secretary and his/her alternate will serve as directed by the Deputy Minister of Forests, Lands and Natural Resource Operations.

3. Accountability

TEAC will report, through the Chair, to the Minister or a designate.

4. Functions and Responsibilities

(a) Applications for Exemption
Applications for Exemption to Export Unmanufactured Timber Products ("Applications") that are advertised on the Provincial Bi-Weekly Advertising List and receive valid offers to purchase the advertised timber ("Offers") will be referred to TEAC.

For each Application that has a related Offer, TEAC will consider whether or not the Offer is fair relative to TEAC's understanding of the domestic market value of the timber under the Application and, on the basis of a consensus, dispose of the Application by issuing one of the following:

• a recommendation to the Minister that the timber under Application should be considered surplus to requirements of timber processing facilities in British Columbia;
• a recommendation to the Minister that the timber under Application should not be considered surplus to requirements of timber processing facilities in British Columbia; or
• a request for further information.

(b) Other Advice and Recommendations

From time to time, TEAC, of its own volition, or in response to a request from the Minister or a designate, will provide advice and recommendations on:

• timber export policy;
• timber export proposals, including proposals relating to Forest Act Sections 128 (3) (a), (b) or (c);
• other applications to exempt timber from the requirements of manufacture within the province, and
• the percentage of standing timber volume, by species, grade and geographic region, to be exempted from the requirement of manufacture in British Columbia, and the term of standing timber exemptions.

5. Powers of the Chair

The Chair will designate a member as Vice-Chair to act in the absence of the Chair.

6. Meetings

TEAC will meet monthly or at the call of the Chair.

7. Quorum

A quorum will consist of the Chair or Vice-Chair and three (3) or more members.

8. Attendance

Members absent for three (3) consecutive meetings will be considered for removal from TEAC.

9. Minutes

Minutes of meetings will be prepared by the Coordinating Secretary, signed by the Chair, and distributed to members and the Minister or a designate.

10. Confidentiality

TEAC deliberations and recommendations are confidential, and the Minister may release information within limitations prescribed by Provincial Law.

11. Funding

FLNRO will provide an honorarium to the Chair and members, at a rate to be determined by the Minister. Reasonable expenses will be reimbursed to all members.

Media Contact:

Vivian Thomas, Communications Manager
Ministry of Forests, Lands and Natural Resource Operations
250 356-2475