New Brunswick

Private woodlots to get larger market share to supply mills in new plan

The Higgs government plans to give private woodlots a larger share of the market to supply large mills in New Brunswick while freezing the amount coming from publicly owned Crown land.

Natural Resources and Energy Development Minister Mike Holland says the changes will spur economic growth

The announcement was made Thursday morning and the changes are meant to spur economic growth among private woodlots. (CBC)

The Higgs government plans to give private woodlots a larger share of the market to supply large mills in New Brunswick while freezing the amount coming from publicly owned Crown land for five years.

Mike Holland, the natural resources and energy development minister, announced the moves Thursday, saying the change will help spur more economic growth among private woodlots.

"This is the progressive realization of a worthy ideal" that the Progressive Conservatives first promised in last year's election campaign, Holland said.

"I feel very proud to be able to talk about this, the next layer of the work we're doing to create that forest for the future," he said.

Natural Resources and Energy Development Minister Mike Holland wouldn't say whether the changes are to comply with 2015 recommendations or to win back the province's exemption from U.S. tariffs. (CBC)

Holland didn't cite a specific percentage of wood that private woodlots would provide to mills. But with their supply growing while the amount from Crown land staying the same, the private share is likely to grow.

Auditor General Kim MacPherson wrote in a report in 2015 that the provincial government was not complying with a section of the Crown Lands and Forests Act.

That law says the minister of natural resources "shall ensure that private woodlots are a source of wood supply consistent with the principles of proportional supply and sustained yield."

MacPherson said at the time that while private woodlot sales were growing, they represented a shrinking share of overall wood sales to mills in the province. 

U.S. lumber lobbyists relied in part on MacPherson's report when it demanded the Trump administration impose tariffs on New Brunswick wood.

The province's industry was traditionally exempt from U.S. softwood duties. But companies in that country said wood from Crown land was becoming a larger share of the market and had reached the level where mills should be considered unfairly subsidized.

They complained the share of Crown wood had jumped to 51 per cent in 2013 from 41 per cent in 2004 and was likely to grow again under the forestry plan put in place by the previous Progressive Conservative government. 

Major forestry companies in New Brunswick denounced the conclusions as "false allegations" and called on the province to refute the auditor general's findings. 

Auditor General Kim MacPherson reported that the province was not complying with a section of the Crown Lands and Forests Act in 2015. (CBC)

But when the U.S. government agreed to end New Brunswick's traditional exemption from tariffs in 2017, slapping duties of 20.8 per cent on most of the wood from the province, then-opposition leader Blaine Higgs said it was time to revisit the forestry plan.

Holland wouldn't say Thursday whether his changes are designed to comply with MacPherson's 2015 recommendations or to win back New Brunswick's exemption from U.S. tariffs. Industry's supply from Crown land is reviewed every five years.

Holland said the changes were "a reflection of what we're hearing on the ground to ensure we've got systems that are working" and said trade officials were working on the issue of American trade measures.

Mike Legere of Forest NB, the group representing most large forestry companies in the province, said they were more likely designed to "appease" woodlot owners who have complained vocally about being undercut by wood from Crown land.

Mike Legere of Forest NB said he considers the change a positive choice but the cap on the amount of wood coming from public forest leases is a concern. (CBC News file photo)

But Premier Blaine Higgs acknowledged to reporters that the shift could eventually allow the auditor general to say that her recommendations have been followed, something that might address U.S. concerns. 

"So in that regard, it's helpful, and I don't deny it's helpful," Higgs said.

Holland also wouldn't say how large forestry companies were reacting to the news they won't be allowed to increase the amount of wood they cut on leased Crown land. 

He said he didn't speak to all of the affected companies ahead of the public announcement, but in the discussions he did have, "all of the conversations were centred around opportunities." 

He also said he pointed out that the PCs had promised these changes in the last election. 

Legere said he saw "some positive" in giving woodlot owners a chance to "catch up" to the supply of wood from Crown land. 

But he also said the cap on the amount of wood coming from public forest leases is a concern. 

"We're talking about trying to grow the province's economy," he said. "Five years to not have any growth in [the annual allowable cut], when we know the wood is there, is sort of deferring potential growth in the industry if those opportunities are there, so it's a concern." 

Jason Limongelli, the vice-president of woodlands for J.D. Irving Ltd., said the Crown should maintain flexibility when it comes to investments and economic development. (Ed Hunter/CBC)

Jason Limongelli, the J.D. Irving Ltd. vice-president of woodlands, said most of Holland's plan amounts to "a great service" to the industry and the province, but he called on the minister to reconsider the freeze on wood allocation from Crown land.

He said the company didn't have any business plans premised on a wood increase, but "this is more about being able to capitalize on future opportunities, future growth, future economic development as it presents itself." 

He said from biomass pellets for energy to recyclable paper bags replacing single-use plastic, wood represents an increasingly popular alternative to fossil fuels. 

"When you look at a decision like this, you have to understand the balance, and there's always markets and timing of investments that you have to consider," Limongelli said.

"That's why we say the Crown should always maintain its flexibility to ensure that it can capitalize on any kind of investment or economic development potential."

Rick Doucett, the president of the New Brunswick Federation of Woodlot Owners, said he's happy about the change. (CBC)

But Rick Doucett, president of the New Brunswick Federation of Woodlot Owners, said his members "are excited to at least be the focus of this minister and this government." 

He said he's also happy about Holland's promise to "refocus" the marketing-board system for woodlot owners.

 "There has to be a structure," he said. "There has to be order to the chaos that's been created over the last 10 years." 

Last year the New Brunswick Court of Appeal sided with large forestry companies in a battle over whether some contractors could buy logs directly from woodlot owners and sell them to major mills, bypassing the marketing-board system that is supposed to regulate such sales.

Tim Fox of the New Brunswick Forest Products Commission, an arm's-length body that oversees the entire system, said he was also happy with Holland's commitment.

"Bringing some more order will alleviate future issues from happening," he said. While last year's court ruling settled one dispute, "there's nothing to prevent them from recurring at any time, really." 

Doucett said a bill introduced by Green Party Leader David Coon would go further to help woodlot owners. Coon's bill would strengthen marketing boards, require all wood to pass through them and force mills to buy 30 per cent of their supply that way.

"That will solve the problem," Coon said Thursday. "This solves nothing." He called Holland's announcement "disappointing."

The Liberals said Holland's announcement is vague and hollow. People's Alliance Leader Kris Austin said it sounded positive, but he wanted to see more details on exactly what the targets will be for woodlot owners.

ABOUT THE AUTHOR

Jacques Poitras

Provincial Affairs reporter

Jacques Poitras has been CBC's provincial affairs reporter in New Brunswick since 2000. Raised in Moncton, he also produces the CBC political podcast Spin Reduxit.

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