Year of the Rabbit: Can we expect a bounce? Plus, CFI’s latest issue out now!

What a start to the new year! 2023 has been ushered in with a spate of further cutbacks and closure announcements by several BC forest products companies that began closing operations late last year. Sawmills, pulp and paper mills and biomass plants are all affected and the reasons given are all the same: lack of economic fiber and weak market conditions.

It’s very difficult to keep track of the closures, but in this issue we’ve created a table to show the list of Canadian mills that have temporarily or permanently suspended operations as of mid-January.

Among those on the list, it was the indefinite closure of Vaagen Fiber Canada that struck me the most because last summer I visited the Midway, BC facility and interacted with employees who took great pride in their jobs and what they do had achieved were. I have written for this issue about that visit and how the local community of 650 people can potentially help get the mill out of the woods.

Vaagen Fiber Manager Dan MacMaster shows CFI the facility in Midway, BC in August 2022. Photo: Annex Business Media.

Sure, government help is on the way. Indeed, both the federal and British Columbia governments have announced new funding, totaling $18.8 million, to convert Paper Excellence’s defunct Crofton mill to manufacture new pulp products. An additional $90 million from the province will be invested over three years to support the transition of struggling forest communities. BC Prime Minister David Eby said the new funds would “diversify the local economy, encourage value-added innovation in the forest sector and create thousands of well-paying jobs”.

But how far can these value-added innovations go given the lack of economic fibers? Where does the economically available raw material for added value come from? In my conversations with industry players: sawmills, lumberjacks, suppliers, they all point out that the BC government must first address the biggest challenge facing the BC segment: the lack of a reliable fiber supply. Companies will not invest in BC unless there is a clear plan to solve this problem. Take Canfor, for example — the company has closed some of its BC facilities, both temporarily and permanently, but last year it announced a $210 million investment in Alabama to build a sawmill with an annual production capacity of 250 million feet of planks to build. In fact, Canadian forestry giants — some of which are based in BC — have been investing in the southern US for years. There are of course many reasons for this, but the key factors are the availability of economic fiber in this region and the tariffs imposed on Canadian softwoods.

Around the same time last year, headlines focused on BC’s postponement of old-growth logging and policy changes to the forest tenure system. Not surprisingly, the lack of access to fiber is dominating the headlines these days as the supply of logs has been dramatically reduced due to various factors such as forest fires, mountain pine and spruce beetle infestations and political changes.

Yes, help is on the way: Premier Eby announced $50 million in funding to be used for projects and programs that increase the use of substandard or residue fibre, including trees damaged by recent wildfires were used, and waste that would otherwise have been left over from deforestation would have been burned in slash-and-burn. That is a beginning. But more needs to be done.

Now, I am not a believer in astrology, but the Lunar New Year, January 22nd, started the year of the rabbit and I would like to believe in the lucky rabbit. In fact, the rabbit is considered one of the happiest animals in the Chinese zodiac as it symbolizes abundance and lives in harmony with nature. How fitting for forestry! In this year of the rabbit, can forestry pull a rabbit out of the hat and recover from the current challenges? Forest Economic Advisors’ Paul Jannke has some answers in his outlook for the 2023 timber markets. Short-lived growing pains are in the forecast, he says, but there’s optimism on the horizon.

We said goodbye to the Year of the Tiger in 2022, which has indeed been a tough year for the forest sector. Traditionally, the Year of the Rabbit is meant to be a gentler year. Well that’s something worth believing. So let’s all hope that this year the industry can regain its footing and take a leap forward.


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