Thank you, George.
Good afternoon. I'm going to speak to you about forestry in the Yukon Territory. Forestry is a small but important growing sector in our regional economy.
Yukon is a northern jurisdiction with a large forest area and a small population. The territory is a unique first nations governance landscape. There are more first nations with land claim and self-government agreements than all other Canadian jurisdictions combined. In the Yukon, 28 million hectares are forested and 5.4 million hectares have commercial potential. White spruce and lodgepole pine are the main commercial species.
The following is some information on forest health in the Yukon because I know it's of interest to the committee.
There is currently no mountain pine beetle in the Yukon. Mountain pine beetle has been identified as being 30 kilometres to 50 kilometres south of the Yukon-B.C. border. No major outbreak is imminent. Yukon's spruce bark beetle infestation peaked in 2004, with 380,000 hectares. The outbreak was significant, and the salvage harvest is ongoing. However, climate change is anticipated to result in more frequent pest and disease outbreaks and fires. More frequent fires can impact a generation of boreal forest.
The responsibility to manage and regulate forest resources devolved from Canada to the Government of Yukon in 2003. Following devolution in 2003, the Forest Resources Act was assented to in 2008 and enacted in 2011. It is the first Yukon-grown, post-devolution piece of natural resource legislation. The Forest Resources Act is based on the three pillars of planning, tenure, and compliance and enforcement.
The Yukon has completed three regional forest management plans that cover over 2.4 million hectares of forest. The forest resources management plans are unique. The plans are jointly developed by the Yukon government and first nations, which cover both public land and first nations settlement land. The plans are approved by both parties, by their respective minister and chief.
Yukon has a total maximum annual harvest of 189,000 cubic metres. In addition, there is a salvage uplift of one million cubic metres over a 10-year period. The annual harvest volume is 50,000 cubic metres, 80% being harvested for fuelwood.
Two operating mills in the territory focus on rough dimensional lumber for domestic use in the mining industry, and manufacture under 5,000 cubic metres a year. There is no pulp industry and limited other value-added industries. Employment in the industry is estimated at 150 workers, and there are 80 commercial licences issued in the territory.
Yukoners spend $50 million yearly importing fossil fuels to generate heat. The advantages of using local biomass to generate heat are clear. Locally sourced biomass contributes to the local economy and employment, assigns value to an otherwise wasted product, increases the viability of local businesses, avoids shipping fossil fuels large distances, and reduces greenhouse gas emissions.
While most of the rest of Canada's wood products market is export oriented, Yukon wood products are almost exclusively sold locally. The value of wood from wood products into the territory is high, although the latest figures from the period of 2011 to 2013 show there was a construction value of over $300 million in the territory. Yukon is exempt from the Canada-U.S. lumber agreement due to a very low export volume.
Access to markets is a constraining factor for the Yukon wood products industry. High transportation costs are the main barrier. Fuel costs are high, and the nearest access to rail is Fort Nelson, B.C., which is 950 kilometres away.
While there is increasing pressure on wood supply in B.C. and demand for wood products is showing a steady sign of growth, Yukon's forest resources could potentially play a greater role in the broader market. The port of Skagway, Alaska, is not far from Whitehorse—150 kilometres away—and a project to expand and upgrade the port to allow better access to commercial freighters has begun.
Forest management planning in the Yukon requires collaboration and participation with first nations, industry, and stakeholders. This planning regime is vital to enabling a secure forest land base for forest industry development. Examples of collaboration are the first nations implementation agreements.
Yukon has a unique aboriginal relations landscape. As a result of treaty negotiations, 11 out of 14 first nations are self-governing. This landscape is reflected in forest resource management plans in traditional territories. In areas with completed forest resources management plans, the Government of Yukon has signed forestry agreements with first nations. These agreements and forest resources management plans are key to establishing certainty in the forest land base.
The Yukon government is working with industry members to increase their involvement in forest policy development. The Yukon government works collaboratively with the Yukon Wood Products Association to address forest sector challenges in the territory.
There is growth potential for the Yukon forest sector, both for the local wood products industry and beyond. I already emphasized the need to explore biomass opportunities and export potential. Several first nations have an interest in expanding forest sector opportunities. Working with local industry to improve existing mills and with first nations development corporations will build capacity and businesses.
ln northern settings, forestry professionals are often unavailable and cost is prohibitive. Current industry relies on government staff to complete forest development opportunities. This is not a viable, long-term solution.
A pioneering stage forest industry is sensitive to stumpage fees. The forest industry is currently small with generally low profit margins and harvest volumes. With the potential for industry growth, ensuring an appropriate fee structure is in place is key.
Yukon has a small population with high social values when it comes to forests. Larger scale forestry operations present a number of challenges.
It must be said that non-settled first nations, meaning those that do not have a treaty or self-governance agreements, have an impact on potential expansion of the forestry sector. The instability caused by this situation impacts natural resource opportunities. I should point out that southeast Yukon has substantial forest volume relative to the rest of Yukon. The area falls within Kaska traditional territory, and those first nations are some of the few that do not have self-governance agreements. The Yukon government continues to engage with the Kaska nation to find mutual ground to advance opportunities that benefit all.
The Yukon government continues to implement the Forest Resources Act. The current planning and regulatory regime began with the Forest Resources Act, and the government continues to implement the act, with much work remaining.
There is potential for FPInnovations to provide technical support and advice to build first nations and local industry contribution to the wood products sector. Providing the right advice, training, and expertise to first nations and other industry players can help them realize more potential in the wood products market. Investment or incentives to industry for road building and forest management expertise would also enable the industry's greater opportunity for autonomy and growth.
The move toward efficient biomass heating systems is proving to have broad benefits in the north. These include energy savings and local employment opportunities. The Northwest Territories have moved forward with the support of federal agencies in expanding wood pellet demand, and more recently, toward pellet production. Efforts that support developing biomass opportunities in Yukon will serve to build a stronger regional economy in the north.
Value-added local wood products are an area that Yukon could become more competitive in. Identification of new wood products and market development would increase investment in the industry.
I would like to take this opportunity to highlight that Yukon is pleased to have the opportunity to host the Canadian Council of Forest Ministers in July 2016. We look forward to our hosting responsibilities and the national-level discussions on forests that will take place.
Thank you very much.