Coastal BC Forestry: cyclic or structural problem?

Summary: Forest industry denies boom/bust cycle and conveniently scapegoats government stewardship policies. 'Gnat like' media memory agrees. Here is some background that concludes coastal forestry has itself to blame.

This page re-purposes TimberWest (February 1998) prospectus in order to put high value coastal wood in perspective.

Forestry companies blame the BC government for "causing" the present market bust, claiming NDP stumpage is too high and environmental (Forest Practices Code FPC) rules cost too much. Bull.

To be consistent, they should praise the Harcourt government for "causing" the last boom in log values.

Note both these graphs are price per cubic metre.
The owners of trees, the people of BC, got $10 (average) for wood that sold for $550. When the sale price increased to $850 the stumpage went up to $25 average. For this stewardship, we are to blame the NDP government?

Perhaps stumpage should be tied closer to the market, on the upturn as well as the downturn. The industry may not want this though, because they make lots of $ on the up-side, then lay off workers, and blame government policies until stumpage comes down and environmental practices are gutted.

 

.

 

 "Rising Tide Lifts all ships"

While Japanese squares are high value the graph on left shows the demand from the Japanese market raised the price of all the wood on the Vancouver Log market which this source considers to competitive.

 I have added the blue trend line. The implication is that even at $100 per cubic metre (see next figure) the price is "good".

 So was the BC government wrong to increase stumpage in 1994? Get real. Should the people of BC subsidize the industry by allowing them to externalize environmental costs to fishers, communities and workers?

 

 While market has fallen from previous boom---

 TimberWest still > $100 per cubic metre

This is TimberWest data; unit log sales. Obviously, the price has fallen in 1998. I would show the lumber prices which have continued high ($590) compared to half that for SPF (interior) lumber, but TW has scaled back by 50%; putting most of its effort in logs

Old-growth coastal forests contain some extremely valuable wood, and a lot that is decayed or worse; the days of cheap commodity 2x4 production's over. The industry seems to want to return to the 1980s.

Coastal sawmills

Can Hemlock carry the coastal commodity wood industry? Douglas Fir does not grow commercially on NorthCoast. Red and yellow cedar are vulnerable to over cutting.
For Interfor example over the business cycle see

Source TimberWest

Thousand m3

Establishments

Lumber (sawlogs)

17,358

74

Veneer/Plywood Mills (peeler logs)

550

2

Shake & Shingle Mills (cedar shingle logs)

1,260

48

Woodrooms and Chipping Plants (pulplogs)

6,160

20

Total

25,328

144

Coastal Commodity production at 90's peak

 This is older data and it will be interesting to see how industry chooses its future after this recession.

As I have argued before, the boom in log prices depended on Japanese market and the exchange value of C$ against Japanese and US currencies.

The future reality appears that quality wood can survive in the Japanese market, but commodity grades will be pushed aside by product from lower cost areas.

 

Back to NorthCoast Economy page or -------main index