Potentially Embarrassing Questions About BC’s Stumpage Rates

By Roy L Hales

screen-shot-2014-03-18-at-3-43-47-pm1During a recent interview,  film maker Damien Gillis said “there would be a great deal of outrage” if the public knew the degree to which we subsidize logging old growth forests. These subsidies come in the form of lower stumpage fees for the remote areas where most of our surviving ancient forests still persist.  Gillis also informed me this is a central issue in the United States’ softwood dispute with Canada. After the interview, I drew up a series of potentially embarrassing questions about BC’s stumpage rates.

Some Of The People I Contacted

Walbran Valley Photo by Ali Harris, courtesy the Wilderness Committee
Walbran Valley Photo by Ali Harris, courtesy the Wilderness Committee

These were emailed to six people whom I expected would either have the answers, or know how to access them.

Unfortunately, I didn’t think to call to the NDP’s forestry critic’s chief of staff. They won’t be looking for my email. So from past experience, I suspect my  questions will be buried amidst their other correspondence for days.

I also missed Jens Wieting of Sierra Club BC, an invaluable source of information, who is out of the country right now.

Given that they only have one sitting MLA,1 one would expect the Green party to be slow in responding. To the contrary, they are incredibly efficient. Within hours of receiving my email, they conveyed my questions to a retired ministry staffer who had worked on the softwood lumber agreement and was also responsible for timber pricing, stumpage and scaling. They did not disclose this person’s name, which doesn’t seem that unusual.

Though I  know the identities of the provincial government staffers I contacted,  the normal practice is to refer to them as government spokespersons. I actually prefer this. They are simply messengers who gather their answers from other sources. In this case, I dealt with two staff from the Ministry of Forests, Lands and Natural Resource Operations (FLNRO). I emailed one of my usual contacts and one of her colleagues responded.

The Low Lying Old Growth is Gone

Torrance Coste Photo by Ali Harris, courtesy the Wilderness Committee
Torrance Coste Photo courtesy the Wilderness Committee

I phoned Torrance Coste of the Wilderness Committee, who confirmed that most of the province’s old growth is in remote areas.

“All of the old growth (forests) that grew along the coast, in low elevations, are already gone. The B.C. government inflates the numbers. In Strathcona park, for example, they’ll calculate all the trees in that forest as old growth. It goes above the snow line. The trees are small. They still have some importance, but they are not prime valley bottom old growth where you get the most biodiversity and carbon sequestration,” he said.

Coste added, “It would be easier to raise awareness if you still had prime old growth standing twenty minutes from Vancouver or Victoria, but they are gone. You have to get out to the Walbran and Clayoquot Sound and you have to get out to East Creek. That’s part of the challenge of trying to save it.”2

Four Potentially Embarrassing Questions About BC’s Stumpage Rates

Clearcut in the Walbran Valley - Photo by Ali Harris, courtesy the Wilderness Committee
Clearcut in the Walbran Valley – Photo courtesy the Wilderness Committee

Damien Gillis explained that remote locations like these would be too costly to log without incentives.

I framed my questions differently. Here are four of my potentially embarrassing questions about BC’s stumpage rates, and the answers I received.

Question #1: Does the Ministry of Forests reduce the stumpage rates on forestry cutblocks that logging companies would otherwise find uneconomical to log?

Ministry Spokesperson: “The Ministry does not ‘reduce’ stumpage rates. The Ministry determines stumpage rates based on market value in accordance with policies and procedures approved by the Minister of FLNRO. These policies and procedures (are) available to the public on the Ministry website. The question as to which timber harvesting opportunities are economical is best directed at (the) forest companies who make those decisions.”3

Retired Ministry staffer: “My last understanding on this prior to retirement is that stumpage rates per say are not directly reduced, they are the result of an appraisal process, which is a legal process that does not allow for a forest officer or official to directly reduce stumpage rates.  Stumpage rates are impacted by many factors in the appraisal.  E.g. distance from nearest mill, slope, road building costs, timber cruise results, which includes m3/ha, stand age…  In the past I have been aware that new stand factors (not the correct terminology, but it’s not coming to me) have been created to lower the resulting stumpage rate, and cruises can be recompiled until they result in minimum or negative stumpage rates.  Sometimes poor stands can be combined with better stands to offset the cost of logging the poor stand.  So the stumpage rate may not be at minimum, but it is lowered by the poor stand cruise information combined with the good stand, resulting in a stumpage rate that is lower than what it would be for the good stand if it was assessed strictly on its own.”

“On the scaling end, the company has an ability to impact stumpage paid depending on what stratum or strata are used to “scale” the timber.  For example combining high value timber with timber assessed at minimum rates, won’t influence the stumpage paid for minimum priced stands, but will reduce the stumpage paid on the higher value stands by increasing the low grade content of the stratum, which is billed at minimum ($0.25/m3).”4

The High Cost of Remote Locations

Old growth tree in the Walbran Valley - Photo by Ali Harris, courtesy the Wilderness Committee
Old growth tree in the Walbran Valley – Photo courtesy the Wilderness Committee

Question #2: Assuming the answer is yes, are stumpage rates sometimes reduced because of the high cost of logging their remote location?

Ministry Spokesperson: “Stumpage rates can vary due to differences in operational circumstances, and over time due to shifting market conditions. Location (and hence transportation) is one of many of the prescribed variables that must be calculated as per the policies and procedures.”

Retired Ministry Staffer: “The appraisal system could result in lower stumpage rates due to the consideration of distance and logging type (e.g. heli) all on its own.  Just to reiterate stumpage rates are not directly reduced, they are set by appraisal and it is through the potential manipulation of appraisal data that stumpage rates can be negatively impacted.  When I left the ministry very few cruise and appraisal checks were being done and they were being further reduced, due to “Professional Reliance”. (appraisal staff in the Ministry that I knew were not comfortable with PR, personally speaking – it’s a joke.)”

“Decadent” Old Growth Forests

Biodiversity in the Walbran Valley - Photo by Ali Harris, courtesy the Wilderness Committee
Biodiversity in the Walbran Valley – Photo courtesy the Wilderness Committee

Question #3: Are stumpage rates sometimes reduced because the cutblocks are in decadent old growth forests, whose timber has a lower market value than timber from monoculture plantations, and logging companies would otherwise find the cutblocks too costly to harvest?

Ministry Spokesperson: “Determinations of stumpage rates must account for the gross value of the timber. To do this, variables such as species and quality must be considered. Quality of the wood is very much determined by factors such as decay, knots, and other defects that detract from the strength or the visual appeal of the wood.”

Retired Ministry Staffer: “Often the appraisal system results in minimum stumpage rates in decadent old growth forest stands. Cruise design and data can be played with to come up with different results.  Using various prisms in the cruise can exclude some trees in cruise plots from being counted/measured.”

Negative Stumpage Rates

Clearcut in the Walbran Valley - Photo by Ali Harris, courtesy the Wilderness Committee
Clearcut in the Walbran Valley – Photo courtesy the Wilderness Committee

Question #4: Are there periodically “negative stumpage rates,” which arise when logging companies find the costs of harvestiing a cutblock exceed the revenues they obtained? If so, how does this system work? (Are logging companies allowed to apply their loss to subsequent cutblocks?)

Ministry Spokesperson: “The notion of ‘Negative Indicated Stumpage Rates’ does exist. However these are hypothetical rates because no timber is ever billed at those rates. These hypothetical rates are superceded by the legislatively prescribed minimum stumpage rate of $0.25 per cubic meter. Therefore actual stumpage rates are never less than this minimum rate. The policies and procedures do not allow for this “loss” to be carried forward to subsequent stumpage rate determinations.”

Retired Ministry Staffer: “Negative stumpage rates means that when the appraised rate is calculated it comes out at a negative value, for example -$1.25/m3.  When this happens the minimum stumpage rate applies to all the grades when the timber is harvested and scaled.  Minimum stumpage rate is $0.25/m3 and has been for many years.  So in a typical logging truck load of 52 m3, they would only pay $13 for stumpage.”

Subsidizing Logging Old Growth Forests

The Walbran Valley - Photo by Ali Harris, courtesy the Wilderness Committee
The Walbran Valley – Photo courtesy the Wilderness Committee

Many variables are taken into consideration when stumpage rates are assigned.  “Operational circumstances,” “transportation costs” and “market conditions” are among them. So is the quality of the timber.

Damien Gillis claims the ministry  prefers monoculture plantation forests, that focus on species of high monetary value . The Retired Ministry Staffer confirmed this when he wrote, “Often the appraisal system results in minimum stumpage rates in decadent old growth forest stands.”

The fact our old growth is now primarily found in remote locations would make them even less desirable, were not the government essentially subsidizing logging old growth forests.

My Fifth Question

biodiversity in the Walbran Valley - Photo by Ali Harris, courtesy the Wilderness Committee
biodiversity in the Walbran Valley – Photo courtesy the Wilderness Committee

This leads to my last question, which the retired staffer did not answer.

Question #5: Does the U.S. Lumber Coalition claim British Columbia’s stumpage rates create an unfair advantage that effectively subsidizes Canadian companies and enables them to dump lumber into the American market at lower prices?

My initial Ministry contact suggested I contact the U.S. Lumber Coalition directly for comment on their claims.

I emailed back,  “I shall contact the U.S. Lumber Coalition as you suggest, but should add I have seen the posts on their website. Does the Ministry have any response to their allegation?”

This prompted an immediate response, “The ministry disagrees with the U.S. Lumber Coalition claims.  U.S. arguments about subsidized Canadian lumber were ultimately rejected in the last round of lumber litigation by independent NAFTA panels.  Those NAFTA panels unanimously concluded that Canadian lumber was not subsidized and did not cause injury to the U.S. industry.”5

“The BC forest industry has always fared better in international trade courts. Several rulings have declared that BC’s stumpage rates are not a subsidy, but Trump’s election and the protectionist economic climate in the States has got the industry worried,” explained Coste.

“Stumpage rates are determined by  market value in the United States, whereas in Canada they are set by the provinces. The U.S. industry declares that is a subsidy and we need to implement a correction tax.”

The Unintentional Saviour Of B.C’s Old Growth Forests?

Clearcut in the Walbran Valley - Photo by Ali Harris, courtesy the Wilderness Committee
Clearcut in the Walbran Valley – Photo by Ali Harris, courtesy the Wilderness Committee

Now that the 2006-2015 U.S.-Canada Softwood Lumber Agreement has expired, the U.S. Lumber Coalition is “able to seek enforcement of existing U.S. trade laws to offset the harmful effects of subsidized Canadian imports.”

“Softwood is something that is on Trump’s radar and it is something the industry is worried about,” said Coste.

If the lower stumpage rates (subsidies) be removed, it will be too costly to log some of the remote areas where our surviving old growth forests persist.

Thus America’s new climate-change-denying President could become the unintentional champion of B.C’s old growth forests.

According to the Canadian government, which is fighting to preserve the subsidies that could bring about their extinction,  without our forests “the 1.5 to 2°C temperature goal will be very hard to achieve.”6

The Rules Are Set To Favour Big Companies

The Walbran Valley - Photo by Ali Harris, courtesy the Wilderness Committee
The Walbran Valley – Photo courtesy the Wilderness Committee

“The rules are set to favour big companies, rather than what is best for the economy or the environment, and yet the industry always cries foul. Every time someone in the BC government  tries to get a fair shake, or stumpage rates that provide maximum benefits for BC citizens, the logging companies will cry foul,” said Coste.

“In cases where First Nations have acquired Tree farm licenses, they can’t cut at the levels that they choose because the province determines that the province has to be higher. There is no relief for First Nations looking at another option for managing their forests and resources, the government needs to collect on the potential stumpage anyway. So they’ll acquire that even if the First Nation, or community forest, doesn’t log.”

“The forests are managed to make money, rather than look after the resource in a sustainable way.”

(Later that day: the US Lumber Coalition petitioned the U.S. Department of Commerce and the U.S. International Trade Commission for relief from unfairly traded Canadian lumber imports. Canada’s Premiers responded by urging the Canadian and United States (U.S.) governments to quickly reach a new softwood lumber agreement. I posted both press releases on the ECOreport)

Top Photo: courtesy the Wilderness Committee

Footnotes

Show 6 footnotes

  1. Andrew Weaver, MLA Oak Bay-Gordon Head
  2. Roy L Hales interview with Torrance Coste of the Wilderness Committee
  3. Email from spokesperson #2, Ministry of Forests, Lands and Natural Resource Operations
  4. Email containing answers from Retired Ministry staffer
  5. Email from Spokesperson #1, Ministry of Forests, Lands and Natural Resource Operations
  6. CANADA’S MID-CENTURY LONG-TERM LOW-GREENHOUSE GAS DEVELOPMENT STRATEGY, Environment and Climate Change Canada, p 7

2 thoughts on “Potentially Embarrassing Questions About BC’s Stumpage Rates”

  1. You missed a lot of facts here that I could really criticise but the biggest thing is, that even if it does appraise at 25 cents per cube the license pays for the silviculture which is the cost between 5-10 dollars per cube.

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