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A cooperative approach to getting wood supply
An Alberta co-op—EDFOR Co-operative Ltd—could be a business model for smaller logging and sawmilling businesses, through which they can acquire a guaranteed wood supply.
By Tony Kryzanowski
Humans have a strong connection with wood. Maybe it has something to do with the discovery of fire and the need for shelter, both of which, of course, involve wood. But even today, if individuals earn a promise of a guaranteed wood supply, it’s common to see their eyes light up and the wheels start turning. That’s what happens to John Nyssen, President of EDFOR Co-operative Ltd. of Edson, Alberta.
The biggest hurdle for many individuals wanting to make money harvesting timber is finding a consistent wood supply. The EDFOR Co-op has managed to solve that problem for its 45 harvesting and seven manufacturing members, having purchased a highly-valued guaranteed wood supply from the province of Alberta. The Co-op is a unique, custom-built organization consisting of landowners and entrepreneurs who purchase a wood allocation from the Co-op to harvest and sell timber or manufacture products generally to supplement their income. Having that supplemental income offers an important safety net in some cases.
“Right now, it’s my primary income,” says Nyssen, who also raises cattle north of Edson. A dedicated member of EDFOR since its inception in 2005, he says there is no question that his primary motivation for belonging to the Co-op is because it guarantees him a wood supply. Like many EDFOR members who tend to be a fiercely independent lot, he’s been producing wood products on the family farm for as long as he can remember. But every year there was always the question of how much wood he could access.
Given its success, the EDFOR Co-op could work as a model for other small Canadian wood producers facing the same challenge of consistent wood supply. In addition to a guaranteed wood allocation, the Co-op offers the services of a fully qualified forester and administrative support to ensure that paperwork is accurate and done on time.
Most Co-op members were longtime subscribers to the province’s commercial timber permit (CTP) program, which allowed them to bid on a wood allocation annually, but with no guarantee that they would earn one, or where it would be located.
To overcome that uncertainty, the Alberta government agreed to allow the EDFOR Co-op to purchase a standing timber quota from the government, which amounts to about 78,000 cubic metres annually in the Edson area, consisting largely of spruce and pine in the sawlog diameter range, with some deciduous wood mixed in. Each Co-op member earns and pays for a portion of that allocation to help support the operation of the Co-op. They have the option of harvesting their allocation and selling it or harvesting it and using it to manufacture value-added products like timbers, corral fencing, posts, flooring and firewood. Membership qualification is open to anyone. The level of experience within the Co-op ranges from very experienced forestry individuals to relative greenhorns, and from hand fallers to fully-mechanized loggers.
There is a primary and a secondary cut component to the wood allocation. The primary cut consists of about 1100 cubic metres of conifer for each harvesting Co-op member as well as a secondary cut consisting of both a conifer and deciduous component within a part of Weyerhaeuser’s Forest Management Area (FMA). Within the secondary cut, the Co-op member takes the conifer while the deciduous is sold to Weyerhaeuser, which operates an oriented strandboard plant in Edson.
“The co-operative’s function is largely to manage both the primary and secondary cut to see to it that all silvicultural liabilities are taken care of and also to allocate, lay out, engineer, design and accommodate the harvest of 1100 cubic metres per member per year of the primary cut,” says David Cobb, who is the Co-op Manager-Forester. He is a Registered Professional Forester in Alberta and B.C. and a forest industry veteran.
The goal when allocating timber is to manage the entire area in a holistic manner so that the timber resource stays healthy and sustainable. The Co-op is trying to avoid high-grading at all costs so that eventually it is not left with just a high percentage of unmerchantable standing timber.
To ensure that they have a wood supply to support their businesses, members who manufacture wood products have priority access to the conifer available in the secondary cut. Sandra Plangger, co-owner of Logstream Ltd with her husband, Tony, and EDFOR Co-op member for the past four years, describes the Co-op as “its own family of people with the same interests and outlooks”.
Located in Edson, Logstream custom cuts lumber up to 20 feet long, consisting primarily of bridge decking and timbers for the oilfield. They also produce fence posts. Plangger says the Co-op membership is definitely worthwhile because they are usually allocated an area where the log profile matches their needs in both their custom cutting and fence post operation. Also, with the wood supply being local, the transportation distance for the logs is reasonable.
Cobb says that members, appropriately enough, do co-operate. In some cases, harvesting allocations are given close to each other so that a group of friends can work together in a particular area. Also, there are occasions where a harvester and manufacturer member or two manufacturer members will come to an arrangement on a wood exchange.
Wood allocations are handled in the most equitable way possible: an annual draw from a hat, which takes place in the fall. Prior to the draw, Cobb will have an idea of how many ‘buddy’ working groups there are and how many individuals there are, and will make that many group and individual blocks available. The ‘Group’ and ‘Individual’ draws are handled separately. Members will pick a chip from a hat, and based on their priority number from the draw, they will choose a harvesting site from the map drafted by Cobb.
Cobb says it is not a matter of someone showing up with the required investment to purchase a Co-op share to earn membership. Existing members understand the value of what they have and the importance of managing it properly, so new members are carefully vetted to ensure that they understand their obligations in exchange for a wood supply. Prospective new members may have to spend some time as auxiliary members before they are accepted into the organization.
The Co-op is held to the same standard as forestry companies in the management of their FMA lands regarding the harvesting and reforestation of timber. Helping members meet their obligations is a big part of Cobb’s busy job.
The Co-op is governed by a board of seven directors elected annually and three executive members elected for three year terms who are responsible for the day-to-day operation of the organization, with directives implemented by the manager-forester and administrative assistant.
The board is also responsible for ensuring that members comply with their obligations. “We have a five step disciplinary process that is used from time to time to help members understand the need to be environmentally conscious, to work in conjunction with the operating ground rules and also to operate within EDFOR’s bylaws,” says Cobb.
He says the Co-op has definitely grown wiser since its inception in 2005, and has put in policies and disciplinary procedures that have helped to keep the organization stable.
“We still make mistakes,” Cobb says, “but we try not to make them twice.”
He concludes that it’s a point of pride within the organization that despite their independent nature, the individual Co-op members have successfully banded together for the benefit of all.
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