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New Brunswick's forest products marketing boards must review and approve sales from private woodlot owners. (Jacques Boissinot/Canadian Press)

The power of New Brunswick's forest products marketing boards to review and approve all contracts for the sale of wood from private land has been upheld by a provincial panel.

In a recent decision, New Brunswick Forest Products Commission found, “the boards have jurisdiction to require all direct agreements …be reviewed and approved.”

J.D. Irving, has been entering into direct sale contracts with woodlot owners in New Brunswick instead of purchasing through the seven marketing boards.

Ken Hardie, manager of the New Brunswick Federation of Woodlot Owners, said these agreements threaten the existence of the marketing boards.

In late 2012, the marketing boards — which oversee 1.7 million hectares of private forest — stepped in and said all private wood sales must be approved by them first.

"We were unwilling to set aside the regulatory authority that the boards have in terms of approving contracts," said Hardie.

But, in May, JD Irving launched an appeal to the Forest Products Commission, saying it had the right to buy direct from woodlot owners, and alleging bias against the company on behalf of the marketing boards and the commission.

After deliberating for five months, the commission found all private wood contracts can be reviewed by the marketing boards. It was the first appeal decision from the commission since 2008.

Private timber sales up

However, the three-member panel was also critical of the marketing boards, concluding, “the boards have not exercised their authority in a proper manner.” The panel found the current system to review and approve contracts is insufficient and lacks details.

Overall, Hardie is pleased, but said in a province where industry dominates wood supply and demand, small woodlot owners will still struggle to get a better price.

"We're in a situation now where there's virtually no negotiation," he said.

In an email, J.D. Irving spokesman Geoff Britt called the situation an “ongoing legal matter.”

Britt said the company is reviewing the decision and its impact.

"The issues before the commission, and their findings, do not affect the practice relating to direct contracts for purchased wood," said Britt.

According to Hardie and J.D. Irving, the sale of wood from private land in New Brunswick is increasing.

Britt said the company purchased the most private timber since 1989, and stands to purchase even more in 2013.

This has put $50 million over two years in the hands of woodlot owners, while supplying material for the J.D. Irving’s mills, said the company.

The company has until Nov. 27 to challenge the decision in New Brunswick's Court of Appeal.