My opening remarks will be in French and in English. I will hand out a copy of them.
Good day to all and thank you for giving me the opportunity to share with you my thoughts on the future of Canada's forestry industry.
I am a professor at the Université du Québec en Abitibi-Témiscamingue, where a group of several specialists is working on questions related to forestry and local and regional development.
It seems as though the comfort zone into which Canada's forest industry has been for several decades is now uncomfortable enough for many stakeholders to ask for a drastic paradigm change. I am more than happy to share today the talking stick with chief Williams, since I believe we can learn a lot from first nations about how to live in close harmony with forest ecosystems. Indeed, I think we have forgotten for too long that we are a part of the forest ecosystems we inhabit.
Before speaking about the opportunities and challenges facing the forest industry, it is worthwhile to first stress—no one will be surprised—that Canada's forest industry is presently in a state of crisis. In Quebec—and probably in other provinces as well—it is the worst crisis since the Great Depression of the 1930s. The crisis has major drawbacks in Canadian communities, starting with aboriginal communities, single industry towns, and small isolated communities. In these communities, the crisis translates into impoverished social networks, depopulation, discouragement, and loss of leadership and capacity.
I do not want to comment for too long on the subject of the causes underlying the crisis, but I think it is important to make a distinction that will be of great importance for the rest of the discussion. To explain crises in the forest sector, we often hear about conjunctural and structural factors. We presently are in the fourth crisis since the 1970s. I believe that crises start because of conjunctural factors, i.e. factors external to the industry and thus out of its direct control.
The most important conjunctural factors are the increased value of the Canadian dollar compared to the U.S. dollar, increased crude oil price, and decreased prices of forest products. What is important to understand is that the severity of a crisis, in terms of mills closed, jobs lost or plummeting profits, can be explained, in my opinion, by structural factors, i.e. factors due to the functioning of the industry itself. As every crisis has been worse than the preceding one for at least the past 40 years, it looks as though some major structural problems were left unresolved.
The most important structural factor is the massive production of low-value products such as lumber and newspaper, and massive exports towards a single market: the U.S. This has resulted in two major challenges: diversified products by focusing on high value and certified products, and markets, by reducing dependency on the American market and by considering emerging countries as major markets instead of competitors. To succeed in such initiatives, we need to focus on our strengths. Apart from having an important number of highly qualified personnel, Canada is known as an international leader in terms of environmental certification. The market for certified products has been increasing exponentially for about a decade and Canada is in a good position to take the lion share of this growth.
Amongst the envisioned solutions, we often hear that consolidation, i.e. the grouping of companies into bigger and bigger entities, is inevitable and even a good thing. My own observations lead me to believe exactly the opposite. Without neglecting the important socio-economic role of large companies, it is the middle-sized companies that are best able to stay afloat in times of crises, owing to their unique resilience and stability. Small companies are not able to absorb a crisis, while large companies choose to turn their back on Canada, waiting for better times to come. However, it should not be possible to switch communities on and off, as we do with light bulbs and televisions.
We need to abandon the model of massive production of low-value products, pushed into a market without considering demand, leading to reduce prices, instead, we should aim to optimize the production chain in order for the industry to be more flexible and to be able to respond more quickly and more efficiently to market fluctuations.
The crisis can be considered in two complementary, but different ways. It can either be seen as workers losing their jobs and communities losing their mills, or it can be seen as companies losing money or not making enough. Possible solutions will be different for one or the other aspect of the problem and I think that we have to cease trying to grow money in trees and that we should instead make sure to create and maintain stable and high-quality jobs, in prosperous, healthy and happy communities. We have to go back to a forestry for the people and give more power to local communities and regions to choose what kind of forest use they think is the most suitable and that will take into account environmental, social and economic sustainability.
We have to adopt a holistic view of the forest ecosystem and stop seeing the forest as a wood-fibre warehouse. The numerous ecosystem services and non-timber forest products of the boreal forest should be valued, and communities should get their fair share of the associated socio-economic benefits. It is thus more than time for a paradigm shift toward sustainable forest management and integrated resources management. It is very disappointing that many Model Forests from the Canadian network have had their funding interrupted, since model forests are responsible for developing regional frameworks of criteria and indicators of sustainable forest management. These frameworks are essential to the verification of forest practices and to eventually reach our sustainable development objectives.
Conservation of healthy forest ecosystems should be at the very heart of the Canadian forest strategy. Researchers from the University of Alberta developed an interesting and original way of seeing things: the inverse matrix. Hence, instead of considering protected areas as isolated islands in a matrix otherwise dominated by human activities, we should instead consider human activities as islands in a matrix dominated by natural ecosystems. Ecosystem conservation, through, for example, an increase in protected areas—Canada, I should recall, has only a little more than half of the global average of protected areas—will allow us to keep a safety net to face climate change, market fluctuations, and the uncertainty inherent to the management of complex systems such as Canadian forests. And that does not even include the strong ethical reasons for preserving one of the last frontier forests on earth.
Climate change will constitute a major challenge to sustainable management of Canada's forests. The frequency and severity of insect pest outbreaks and other illnesses will probably increase. The mountain pine beetle has already crossed the geographical barrier represented by the Rockies in some places and threatens to destroy the country a mari usque ad mare. In addition, climate change will trigger the development of unknown forest types, as each species—trees, plants, or animals—responds uniquely to climate change. Thus, forest types will not simply migrate northwards as monolithic blocks. Furthermore, the migration capacity of certain species will be strongly hindered by landscape fragmentation due to human activity, mostly land-use change.
With respect to first nations, although aboriginal forestry is one of my main research interests, I think that chief Williams will explain this perspective much better than I could. Nevertheless, it is important to stress that aboriginal communities face enormous needs in terms of training and capacity development. Without meeting those essential conditions, first nations' participation in planning and management activities will remain marginal. Full participation requires strict measures being adopted to ensure the protection of intellectual property and fair share of economic benefits. Finally, supplementary efforts will have to be made in order to accelerate the settlement of negotiations on land ownership and treaty rights that have been dragging on for too long.
As a professor, you will allow me to stress the utmost importance of massive funding inputs in training and R&D. All the challenges I have mentioned will require enormous efforts in that regard. We have to bring back youth to forestry programs, for example by giving scholarships. Funding must also be considerably increased for R&D, not only from government—which already does a lot but could do more—but also from the industry. Suffice it to mention that American and Fennoscandinavian industries reinvest three to four times more of their gross profits in R&D than Canadian companies.
I will conclude by saying that the challenges and opportunities are numerous and gigantic. There is no magic solution, but rather a set of different solutions—some that we are already aware of, and others that still need to be discovered. One blindly- applied solution to everything will at best put off these problems for a few years. What we need to do is courageously face the problem on all fronts at the same time.
I wish us all good luck.