B.C. won't slash stumpage fees to help struggling forestry sector

WATCH: As the downturn in the forestry sector impacts hundreds of B.C. workers, the province's political parties are at odds over how to fix the problem.

As the downturn in the forestry sector impacts hundreds of B.C. workers, the province’s political parties are at odds over how to fix the problem.

One Okanagan Liberal MLA called on the government this week to reduce stumpage fees, the money it charges industry to log on public land.

However, the government said it’s not interested in “wholesale” changes to the stumpage system, which it said could make it more expensive for Canadian producers to sell to the U.S. in the long run.

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B.C. has seen a string of mills close or take downtime this year, and it’s not just mill workers who are losing their jobs.

Todd Chamberlain, general manager of the Interior Logging Association, said hundreds of harvesters, log haulers and road contractors are also out of work.

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“They are starting to go back to work, but it’s slow starts so they are not going back with their full complement of equipment or employees,” Chamberlain said.

The high cost of raw materials and a relatively low price for their products is making it difficult for mills to make money and causing them to pause production or shut down entirely.

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Some believe the province should change that equation by slashing stumpage fees, which would hopefully lower the price of logs and make it easier for mills to turn a profit.

“The mills are losing money because stumpage is too high. I mean, their cost for processing is pretty low,” said Johnal Lee, president of Coldstream Lumber, which manufactures value-added wood products.

“If they’re losing money, stumpage should absolutely come down.”

However, the province said changing the stumpage fee could hurt Canada in its ongoing softwood lumber trade dispute with the United States because the Americans could argue Canada is unfairly subsidizing its industry.

“We are looking at ways for stumpage to be more responsive to lumber prices, but a wholesale fiddling with the stumpage system, at this point, would be seen as really weakening our case in terms of potential subsidy accusations from the United States,” B.C. Minister of Forests Doug Donaldson said.

The province believes staying the course on stumpage could mean lower tariffs in the long run.

Instead, the province plans to focus on promoting value-added forestry products and trying to increase the supply of logs, which should decrease the cost to mills making it easier for them to turn a profit.

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“We know that in the interior there is a lot of fibre that’s left behind that could be more easily and more economically made available,” Donaldson said.

Donaldson argues that stumpage fees are not the major factor increasing the cost of logs to B.C. mills. He blames high log prices on a lack of timber supply caused by issues like the mountain pine beetle.

However, in the meantime, some industry insiders say immediate help is needed to get the sector through this tough time. Chamberlain would like to see money to help workers bridge their EI assistance and financial help for contractors.

The province said it’s lobbying Ottawa for more EI and early retirement help for workers.

© 2019 Global News, a division of Corus Entertainment Inc.

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