New Brunswick

N.B. lumber company sales during record price surge pass $1B

New Brunswick lumber companies rode escalating prices to another income record in March — but it's not all good news in the province's forest industry, as discontent over the price being paid for New Brunswick trees that lumber is made from continues to grow.

Refusal to raise Crown timber royalties by Higgs government continues to draw criticism

About half of the trees used by sawmills in New Brunswick to make lumber comes from trees cut on Crown land. But while lumber prices have tripled for consumers over the past year, royalty rates have not changed since July 2015. (Shane Fowler/CBC)

New Brunswick lumber companies rode escalating prices to another income record in March — but it's not all good news in the province's forest industry, as discontent over the price being paid for New Brunswick trees that lumber is made from continues to grow.

"It's very frustrating," said Linda Bell, who represents private sellers of wood in Carleton and Victoria counties. "It's absolutely ridiculous as far as I'm concerned."

Records compiled by Statistics Canada show sawmills and wood treatment facilities in New Brunswick earned $173.9 million on the production of lumber products in March, obliterating a 19-year-old earnings record for the month by more than $80 million. 

It also pushed the value of production of treated and untreated lumber in New Brunswick over $1 billion in just eight lucrative months stretching back to last August. That is $463 million higher than lumber operations, mostly sawmills, made during the same period one year earlier.

It just encourages a depressed marketplace.-

It is an ongoing financial windfall for forestry companies. But private sellers of wood who compete with wood cut on Crown land to supply lumber mills complain that few of those hundreds of millions of new dollars are being shared with them, or taxpayers. 

Bell said New Brunswick's refusal to raise royalty rates on Crown timber during the bonanza, like other provinces are doing, is creating a ceiling on the price for trees that can be charged to mills by everyone else.

"It just encourages a depressed marketplace," said Bell.

"It's so sad … the nurses working their butts off, fighting for a little bit more money. Fighting to hire doctors. Fighting to hire nurses. And instead of supporting those systems, they're supporting industry."

Bell's argument is essentially the same one made two weeks ago by CIBC analyst Hamir Patel, who called New Brunswick logging company Acadian Timber an "under performer" for the low prices it has been getting selling wood to New Brunswick's booming sawmills.

"Log prices in New Brunswick have been sluggish due to the provincial government's perplexing decision to leave royalty rates on Crown timber unchanged for the past six years," Patel said in a statement.

"It seems like there's a landlord in the province that doesn't want to collect their rents."

By contrast softwood timber royalties in Alberta, which were below New Brunswick's one year ago, are now four times higher after increasing five months in a row to match increases in the price of lumber.

It's a price shadowing the Alberta government claims is important to ensure forest companies pay full value for what they use. 

Lumber cut from Crown wood in Alberta this month is raising four times the royalty revenue than lumber cut in New Brunswick. (Colleen De Neve for CBC News)

"These charges ensure Albertans receive fair compensation for the use of publicly owned forest resources," the Alberta Department of Agriculture and Forestry said on its website.

N.B. stays course on Crown timber royalties

For the past two weeks New Brunswick Natural Resources and Energy Development Minister Mike Holland has been defending not raising royalty rates on trees like Alberta does despite record lumber prices. 

He said it's better to ride out highs and lows in commodity markets with a "stable, steady," royalty system that doesn't bottom out when prices plummet. 

He also said higher royalties collected by the province would hurt average buyers of lumber products although it is not clear how since lumber prices are set by open trading in commodity markets, not by local sawmills.

"Do you think for five seconds that if stumpage rates went up significantly, they would not be passed onto the consumer?" Holland said, during question period last week.

Bell calls that untrue "because lumber prices are set based on supply and demand globally," and argues no one will pay for higher royalties except forest companies. 

New Brunswick lumber companies themselves have said little during the debate and appear content to let Holland do the talking for them.

The largest forestry company in the region and fifth largest in Canada is J.D. Irving Ltd. It produces 1.2 billion board feet of lumber per year at its 10 sawmills, seven of which are in New Brunswick. 

J.D. Irving Ltd. is the largest forestry company in New Brunswick with headquarters in Saint John. It has seven sawmills in the province but is not weighing in on the debate over Crown timber royalties. It says it defers to the position taken by Natural Resources Minister Mike Holland. (Robert Jones/CBC)

J.D. Irving vice president of communications Anne McInerney declined direct comment on the royalty issue, writing she "will respectfully defer to the Minister's recent comments on the topic."

Last week in the Legislature New Brunswick Premier Blaine Higgs called the run-up in lumber prices a "blip in time" not worth responding to yet.

But Bell hopes the millions of extra dollars being earned daily by companies changes that view soon.

"We have a government that stands there and argues that the wood's not worth any more than it was in 2015," Bell said. "You know, it's ridiculous when you look at."


Robert Jones


Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.


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