Higher prices for everyone selling wood to New Brunswick mills expected soon
Acadian Timber president says provincial royalty rates will mean better prices for everyone
New Brunswick's second-largest private landowner believes the amount forest companies pay for trees could soon rise substantially for every seller as the province raises prices for Crown-owned wood.
In a conference call with investment analysts, Acadian Timber Corp. president Adam Sheparski said private sellers of wood in New Brunswick may not get exactly the same price increases government has announced for itself but it could be close.
"We're thinking, you know, in the next few quarters, we're going to start seeing prices start to increase as a result of the royalty rates going up," Sheparski said during the call Thursday.
"Demand is going to drive a fair bit of this, but with the stumpage rates coming up, you know, I'm not sure we're going to be able to capture it all, but we're sure hoping to capture a lot of it."
Acadian Timber owns timberland in the United States and Canada, including 308,000 hectares in northwestern New Brunswick. It is an area about half the size of Prince Edward Island and makes the company the second-largest private landowner in the province behind J.D. Irving Ltd.
Like many private owners of timberland in New Brunswick, Acadian has struggled to get higher prices for wood it sells, despite record earnings being made by mills that buy it.
In financial figures released Thursday, the company reported it made about 14 per cent less from its softwood sales in New Brunswick per cubic metre during the spring than it did in Maine and about 15 per cent less from hardwood after adjusting for exchange rates.
But that may change soon.
Earlier this month New Brunswick Natural Resources Minister Mike Holland announced that after more than a year of resisting the idea, the province would be raising rates it charges forest companies for trees they buy from Crown land.
It's the first increase in provincial timber fees in seven years.
Slightly more than half the wood New Brunswick forestry companies use in their operations is owned by the province. The rest comes from a variety of sources, including industry's own forest holdings and thousands of independent suppliers, including Acadian Timber.
Sheparski told analysts Crown prices are increasing on all high and low-value hardwoods and softwoods by amounts ranging from 40 to 79 per cent.
That's expected to raise an additional $50 million in timber fees this year for the province, and Sheparski said those higher prices should trigger increases in the private market for wood for everyone.
"Crown rates will come up and then we'll start to see, I suspect, the prices for not only private woodlots, but also for us to go up as well," he said.
Two weeks ago, Statistics Canada reported lumber production in May in New Brunswick was worth $186.8 million.
That raised total lumber production over the last 24 months to a record $3.2 billion. New Brunswick lumber mills had never made $2 billion in any 24-month period prior to that.