Evidence of meeting #11 for Natural Resources in the 43rd Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was forestry.
A recording is available from Parliament.
Indigenous Relations, As an Individual
We were able to develop a training program with the District of Mackenzie. We were allocated a joint forest licence. We used those funds to help fund some of the training and push through, I think, 10 individuals from the local community into operation jobs and training, which also provided them with skills to go elsewhere. I think some of them were able to go into our logging companies as well as our milling facilities and elsewhere.
I think training is key.
Liberal
Liberal
Paul Lefebvre Liberal Sudbury, ON
Thank you.
Mr. Orr, you talked about value-added products. Do you have any suggestions, from a federal government perspective when we conclude this study, as to more measures we can put in place to support you and the value-added products that you want to create?
Indigenous Relations, As an Individual
From what I've seen with a couple of individual local companies, they're moving to more selective logging and forest practices, taking all of what they call “guts and feathers”, which is everything other than the saw log. Utilizing that instead of throwing it away or burning it and putting CO2 into the atmosphere just is not what we can do.
There is a theory that if we do it right, we are able to manage the forest. I have been told that the forest grows in an S-curve, growing to peak storage capacity and then falling off because some of the trees start to deteriorate. When we start to log selectively, we can get that deteriorated fibre off the ground and have the forest continue to produce at that level instead of dropping off.
Managing the forest better is one of the solutions, I believe.
Liberal
Bloc
Mario Simard Bloc Jonquière, QC
Thank you, Mr. Chair.
Mr. Beck and Mr. Orr, first of all, please forgive us for the small waste of time at the beginning. What can I say? It's part of the parliamentary game.
Mr. Orr, I appreciated when you said in your presentation that there needs to be a cultural change in the industry. That's something that a number of the witnesses we've heard from agree on. For too long, we have been satisfied with the production of convenience products, including the famous two-by-four. The federal government will have to develop programs that allow for value-added production. You've made this point.
I'd like to know if you've used any federal programs to help you move in this direction towards value-added production?
Indigenous Relations, As an Individual
Yes, we have used government funding. I have not been involved with McLeod Lake since 2017, but we had grant writers who would help us to access whatever monies we could. A lot of the time it was more efficient and effective to use our own monies. For instance, the funding for the cant mill that we built was 95% McLeod Lake Indian Band's own source funding. I think not having our own source funding would have made it very difficult to get to where we needed to be.
Yes, we do think there's funding out there, but it's usually only a portion of what's needed, so having our own is essential.
Bloc
Mario Simard Bloc Jonquière, QC
Okay. Thank you, Mr. Orr.
My next question is for you two, Mr. Orr and Mr. Beck.
Your answer just demonstrates what I think is a problem. There is no real strategy on the part of the federal government to support a cluster of value-added products in the forest sector. It seems to me that it's necessary.
As we know, for the only famous investment in forest industry transformation program, or IFIT, we are talking about $82 million over a three-year period. This is very modest when you consider that new technologies in the forest sector are very expensive. So I say this with all due respect.
Do you think it would be good if the federal government had a real strategy on secondary or tertiary processing in the forest sector?
Operations Manager, Capacity Forest Management Ltd.
I feel that more funding from the federal government to help establish some of these biofuel-type avenues, to help with climate change, would definitely help. The strategies are out there, as Mr. Orr has noted, but the funding is minuscule for what is actually needed if we are to look at some of these other aspects of products for forestry, as well as biofuels that may be needed to help with climate change.
Liberal
Indigenous Relations, As an Individual
I think the government is definitely working towards solutions. Part of the solution is just the cultural shift, and change is inevitable in anything. As we get to some of the issues with climate change and as we go forward, that's automatically going to force change. There can be some things that contribute, that could help to promote that.
One thing is that people burn brush piles because it's cheaper. Lighting that up has an economic benefit. Maybe that could be balanced with waste billing, perhaps. For instance, there was a cut just outside of Mackenzie. In about 15 kilometres, there were 15 to 20 brush piles. They were lit on fire and burned. I took pictures and tried to find my old presentation that I provided at one of the natural resources forums, showing these brush piles on fire. I specifically stopped to take pictures. There is a biofacility 20 kilometres away, and this was burned and all that C02 was going up.
From my discussions, the people who would have taken that lost out because there was a bid that was 11% lower. There are some economics there. Being able to light them on fire to save a dollar, I think, has to be looked at.
Liberal
Liberal
The Chair Liberal James Maloney
I've made up for the time that we lost in translation, and then some. I have to move on. You will get another chance.
Mr. Cannings, the floor is yours.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
Thank you, Mr. Chair, and thanks to the witnesses for being here.
I would like to follow up on that discussion, because this burning of slash piles is a real concern to me. I see it in my riding. I am down in the West Kootenay, in the South Okanagan area. Sometimes when I go into the Arrow Lakes in the fall, it looks like I'm entering the gates of hell because there is so much fire on a cloudy day.
I want to let you have some more time to explain the economics aspect and how waste management pricing might affect it. We have heard of the high stumpage rates. Stumpage rates are sensitive issues. It's one of the main reasons that the Americans have put these illegal tariffs on.
Could you explain those stumpage rates? If there was more leeway in terms of the type of wood that is being taken out, how would that work? How can we get companies to stop burning this waste? I know there's a first nations group at the north end of the reservoir, north of Mackenzie, that was paid $1 million a year to burn the wood waste that washes up on the beach instead of diverting it for biofuel.
Mr. Orr, could you take some time to continue on and explain what that waste management pricing would look like?
Indigenous Relations, As an Individual
I don't have the silver bullet for that one. I think there are a lot of variables that go into it, but having discussions with.... I've talked with Len Stratton. He's the B.C. timber sales manager and he's here in Prince George. He says that one of the best ways for us to start to solve some of these challenges is being able to have the discussions about what will work and having a number of parties coming to the table and being able to find the solutions as we go forward.
As I said, I haven't been as much into the forestry sector, so to speak, but I still have the knowledge that there can be solutions. Having the stick and the carrot that we talked about in pricing and whatever that looks like is a bit difficult for me to discuss at the moment, but there has to be some penalty maybe, as well as a benefit, for them to utilize that. As I said, there are a number of other factories and facilities. We have a number of them in Prince George. It just doesn't make sense, if you don't have enough food, to throw out a half or a quarter of the plate. Finding those solutions by talking with each other is the way to go, I think.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
Thanks.
I'm going to Mr. Beck again about the stumpage issues.
If stumpage fees are based on lumber prices, the lumber price today is over $900. It's crazy. It's three times what it normally is.
I think it was you who mentioned a program that returns 75% of those stumpage fees to a first nation if they're part of some program. Could you expand on that and, if that is the case, on whether those groups would appreciate a high stumpage rate?
Operations Manager, Capacity Forest Management Ltd.
Yes, absolutely.
With the high stumpage rates, the 75% stumpage return is through a forest tenure opportunity agreement. It was provided through the Province of British Columbia under the foundation agreement that was awarded to the first nation clients.
Yes, it's great to see the stumpage revenues, but that stumpage revenue is based on logging activity by the first nation band. The problem is that you're kind of in a headway here with high stumpage. The forestry companies aren't logging right now because it's too high a cost and they're not going to get any net returns or revenue, but then the other aspect you have to look at is that with high stumpage, although you're going to to see a higher return to the nation itself; your first nation forestry companies are going to suffer for it.
I may be able to expand a bit, too, on your question for Mr. Orr. There is pricing for the biofuels. It's usually 25¢ for a cubic metre; however, it comes down to the cost of what they pay for that fibre. You have to include logging, hauling and all the engineering and silviculture costs into that, and usually biofuels typically aren't paying enough to get that wood out of the forest land base.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
Maybe you can quickly explain to me how if lumber prices are so high.... I hear that if you're making two-by-fours, you're doing good business today. Am I wrong, or is it just too high, such that we can't do other things like getting at this lower-grade wood?
Operations Manager, Capacity Forest Management Ltd.
The first nations licensee holders and tenure holders are basically market loggers and don't have a mill or anything like that, whereas licensees can pay that higher stumpage and see profits at the end when they throw that lumber out into the open market at $900 to $1,000 a thousand.
When it comes down to first nations, they're market loggers. They don't see that return. They're seeing a portion at the front end, so they're losing out on that aspect of things with the higher stumpage rates. We've gone from $30 a cubic metre to $80 to $85 a cubic metre here in this first quarter of 2021.