Tuesday, May 14, 2013

State of the Crown Forest in New Brunswick

This letter is written to an old friend of mine (84 years old) well
respected filmmaker/producer of award winning series and investigative
shows (remember This hour has seven days on C.B.C.) Richard Neilson
originally from Plaster Rock wanted me to write a 4 pager encapsulating
all I have learned in the past few months about the state of our Crown
Forest So if you will bear with me. Here is my days effort.

English: Cropped version of Frank McKenna.jpg
English: Cropped version of Frank McKenna.jpg (Photo credit: Wikipedia)
The state of the Crown Forest in N.B.

My name is *Charles Thériault*, I am a 57 year old filmmaker living in
Kedgwick, N.B. and this is the story of my fight to make things right
for my family, my friends and my co-residents of this fine province.

It all started five years ago when I settled here in this french
speaking Appalachian back woods community deep inside the New Brunswick
Acadian forest, nestled among the finest salmon fishing rivers in the
world. The Restigouche, Kedgwick and Little Main rivers attract the
wealthiest of aficionados willing to shell out thousands of dollars a
day just to sit in a boat for hours, along pristine waterways, tickling
the waters hoping to feel that rush of adrenaline when a majestic
Atlantic salmon decides to hook into the fly.

On the other hand, there is a whole other set of imagery that comes
forth once the gloss of the surrounding nature fades and the stark
reality of the people who inhabit this isolated area becomes all to
evident. The residents of Kedgwick and surrounding small communities are
all rough hewn second and third generation descendants of settlers who
dragged their wives and children here hoping to carve out an existence
from the then abundant forest. Tenaciously, by the sweat of their brow,
they managed to build a community for themselves. Small and medium sized
businesses sprouted everywhere, work was abundant and people prospered.
But today the community is struggling to survive, forest workers must
take on huge loans to finance machinery to get hired by the JDI owned mill.

This story is similar to almost all communities in this province.
Historically, New Brunswick was forged into existence because of it's
forest and up until the late 1970's, it's forest was the main economic
engine that drove the economies of most of its communities.. However
that all changed as of 1980.

That year, the Richard Hatfield government, under the guidance of the
Natural Resources Minister, Bud Bird, brought into existence the N.B.
Lands and Forest Act, which basically handed over license to manage the
totality of all Crown Forest, 50 % of all forest in the province to 9
pulp and paper mills and one large saw mill. They were instructed to
manage the forest for the best interest of the owners of said forest.
The people of New Brunswick. In other words the foxes were asked to tend
to the chicken coop.

It is interesting to note that at the time, Bud Bird was owner of a
large and prosperous industrial supply company (Bird Stairs Inc Held in
trust while he was minister) doing business with most the the large
forest industry players. A few months after the act passed, Bud Bird
leaves government and becomes a director of Fraser Papers. One of the
licensees of our Crown forest.

To add some fairness to the Act, it was required of industry to purchase
the AAC (Annual Allowable Cut) from Private Woodlot Owners as
represented by marketing boards before having access to Crown Forest
timber. The price negotiated for that private wood purchase would also
set the price that industry would pay the government for Crown forest.
That way Crown was not competing unfairly with private woodlot owners.

Unfortunately, in 1992, premier Frank McKenna changed the act so the
Forest Industry no longer had to purchase the Private woodlot owners
AAC. Therefore this group immediately lost all bargaining power and the
price the Industry paid dropped by 40% overnight as well as the price
they paid the province for Crown forest timber.

Over the remaining twenty years, almost all small and medium sized mills
shut down over the province, while industry successfully drove them
bankrupt, thus eliminating competition. Private woodlot owners unable to
compete with the cheap cost paid for Crown Forest timber decided to find
other sources of income.

In the late 1990's early 2000 as the world market for pulp and paper
collapses, several licensee's in N.B. went bankrupt and closed their
mills. However, the Crown Forest licenses allotted to them are folded in
with the remaining licensees. Today only four companies share the total
management control of all Crown Forest. J.D. Irving, Twin Rivers,
softwood Pulp used in the paper making process) AV Nackawick, AV Cell
(Hardwood pulp used in the process of making rayon)

It is interesting to note that former premier Frank McKenna is today
chairman of the board of Brookfield Asset Management, which owns Twin
Rivers, of which Bud Bird is still a director. Also J.D. Irving is the
largest holder of Crown licenses in the province.

During this period of industry upheaval and the U.S. housing market
crash, the province reduced by 50% the royalties owed to the
province..twice. Which means today they are paying just 25% royalties of
1990 prices.

Revenues to the province from the forestry sector are so low that the
ministry can no longer afford to operate. In the 2010 the ministry
generated a loss of 30 million$. How can that be? Has the management of
our richest renewable resource gone so far off track that we are
actually paying the industry to take our wood away? It would seem so.

Several studies over the years were commissioned searching for direction
and all were told to work within the guidelines of existing management
arrangement. Well at least one study in 2010 undertaken by *Don
Roberts*, C.I.B.C Worldwide V.P. stipulated that the main problem was in
fact the management regime in place. The licensee system was draining
the coffers dry. He explained that if the Crown Forest was managed for
its owners, (the population of N.B.) just as Acadian Timber, (formerly
Fraser Papers) manages its industrial forest for the shareholders.
(Frank McKenna and Brookfield Asst Management) The ministry should have
reaped in 140 million $. However it operated at a loss of 30 million $.
His statement was categorical. Time to change how our public forest is

Three years has gone by since M. Roberts recommendations and nothing has
moved to correct the situation.

Why? Why is government not correcting the situation?

I asked *Bill Parenteau*, history prof at U.N.B. Fredericton where he
completed his doctoral thesis on the development of the pulp and paper
industry in New Brunswick. His answer was simple. The Province of New
Brunswick is a *client state* to the forest industry. At least since the
1930's. Being a client state means that industry has more control over
resource policy than does the government.

His analysis was confirmed to me by *Nicole Lang* also history prof at U
de M who did her doctoral thesis on the history of the Fraser Papers
operations in New Brunswick. How troubling is that? Our succeeding
governments have been unable to dictate policy regarding our resources.

A recent example of this happened in early 2012 when the minister of
Natural Resources ordered that all industry players stop gathering
pulpwood on Crown Forest in order to allow private woodlot owners to
sell their pulpwood to industry. All industry players followed suite
except for J.D. Irving which claimed they had special status with
government and need not follow the ministers orders. A week later the
ministerial order was reversed. How blatant a client state is that!

Being a client state to industry would certainly explain the mess that
we are in.

I approached *M. Robert Dick, * Forest Manager at the Department of
Natural Resources and he confirmed that every species of hardwood and
softwood was totally allocated between the remaining licensees. No new
players allowed. Like kids in a candy store the N.B. Forest Industry
players have the totality of our Crown Forest to run roughshod over
anyone who dares to try to compete with them in New Brunswick.

I spoke to *M. Andrew Clarke*, president of the N.B. Federation of
Private Woodlot Owners. who remains befuddled over the fact that the
government is doing nothing to remedy the fact that Crown land is used
to unfairly compete with private owned woodlands. He cannot understand
how the state of Maine forest industry buys wood from N.B. private
woodlot owners at a fair price and the industry seems to be doing well.
While here in New Brunswick ,industry needs iron clad guarantees from
the province, reduced tax rates, and reduced electrical rates and fire
sale priced Crown timber in order to operate in the province in New
Brunswick. What is wrong with the industry business model in N.B.

Seems to me that N.B. Forest Industry dictates and the N.B. Government
accommodates. Once again here is an example of the province being a
client state to the forest industry.

I spoke to *Stephen Wyatt*, forestry prof at U de M specializing in
Social Forestry and Forest Policy. He claims it is time for the forest
regime to change in N.B. This province was the first to implement the
Licensee management approach in Canada and all other provinces followed
suite. However in the last 5 years British Columbia, Ontario and
recently Québec have realized that the model did not work and have
changed it to models where the industry does not manage the resource. M.
Wyatt says we need to extract the Industry from managing our forest
resource in N.B. and go see what other values we can develop from the
forest other than just 2 by 4 and pulp. Perhaps tourism, perhaps
expanded maple syrup industry.

I spoke with *Tom Buckley *Professor at the U.N.B. school of forestry.
He explains how he and his colleagues were commissioned by the
Department of Natural Resources of N.B. to conduct a public survey on
the satisfaction of Crown Forest management. On the eve of the
dissemination of the results, they were asked to withhold the
information from the public. The information clearly indicates a total
distrust of the Forest Industry to manage our Crown Forest.

I spoke with *Don McCrea *long time bureaucrat with D.N.R. then
transferred as Deputy Minister to Transportation to spearhead the
mammoth task of constructing the twined highway in N.B. He was later
offered the post of Deputy Minister of Natural Resources. He turned down
the position because he believed Industry would have fought him every
step of the way to return the control of Crown Forest to the Ministry.
He believes the 60 million $ a year the government pays industry to
manage the forest, do the sylviculture work and maintain forest roads
and bridges cannot be substantiated at todays prices. Yet these fixed
cost have never been reviewed in the past 32 years. Only indexed with
inflation. If Industry saves money on these operations it is theirs to
keep. He also says that since all scaling of wood in now done in the
mill yard rather then in the woods as was done previous to the act. It
is impossible to prove if in fact the province and the wood workers are
actually getting the right amount of payment for the wood cut.

I spoke with *Jeannot Volpé*, former Minister of Natural Resources and
former Minister of Finance for the province of New Brunswick. He
stipulates that we have to take a good long look to see if in fact we
New Brunswickers are getting good value by letting industry manage our
forest resource. He asks if with the billions of dollars the province
has provided the industry, in royalty cuts, tax cuts, power rate cuts,
subsidies, interest free forgivable loans, if in fact we have had value
forrr New Brunswickers or if in fact we have simply been making sure
that this industry make profit on the back of New Brunswick resource.
Has it been worth it? He asks. I don't think so! He answers bluntly. Let
us go see why.

For the moment my inquiries have focused more on the financial aspects
of Crown Forest mismanagement. It seems to me that people will react
more if you can show how hundred of millions of dollars go missing every
year from the taxpayers coffers. If we do a quick financial analysis of
the situation it really comes down to the fact that we as taxpayers of
New Brunswick are actually paying the industry to take the wood away.

But what of the environmental impacts that this mismanagement has
caused. Can we equate the fact that wholesale clear-cutting of our
forest and reduced buffer zones along the waterways is the reason that
every watershed in New Brunswick have been declared compromised. Silting
is choking streams and rivers, endangering fish habitat. Causing erosion
and flooding.

But what of the social impacts that this mismanagement has caused. The
shutting down of small communities. The indentured workers, held captive
by huge loans co-signed by the likes of J.D. Irving which in turn are
guaranteed by the province. When the workers machine becomes almost
paid-off, Irvings demand he purchases a newer more productive machine,
that way keeping the worker in a state of indebtedness.

It is said that 10% of all contractors who work for the Irvings go
bankrupt every year. For sure they are not the only players in the field
but they are surely the largest and carry the most clout.

In Kedgwick where I reside, there are two mills. One is owned by
J.D.Irving and produces stud-wood which in 2011 consumed 300,000 cubic
meters of wood/year (99% from Crown forest) and maintained 57 jobs An
average of 5264 m3 of wood per job/year

The other mill is Groupe Savoie, they produce hardwood pallets, kitchen
cabinet components, pellets and pellet logs, hardwood flooring. In 2012
they consumed 430,000 cubic meters/year (65 % Crown as a sub licensee)
and maintained 465 jobs. An average of 925 m3 of wood per job/year

The answer to creating work in New Brunswick is by forcing the users of
our resource to add value to the raw material. Not by pillaging what
wood we have left but by adding value to what wood we have left.

Without a doubt, the single greatest impediment to my effort in raising
awareness is the lack of support and recognition from mainstream media.
Every published newspaper in New Brunswick with the exception of one
english and one french are all owned by J.D.Irving.

The only way I can get my message out is either by internet or by
gaining national media attention. The internet is working but it is a
laborious process. It is going to take a groundswell of attention from
the population to force our government to revamp the Crown Forest Act
and give us back control over our largest renewable resource. However
the size of the effort.... we will prevail!

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