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Growing the cut in Alberta

Alberta’s new Conservative government is considering more intensive land management to grow its Annual Allowable Cut, by perhaps as much as 30 per cent.

By Tony Kryzanowski

Even though the province’s current commercial forest is fully allocated, Alberta’s new Conservative government wants to investigate ways to boost the province’s available wood basket from public lands by at least 30 per cent while continuing to manage the forest resource in a healthy and sustainable fashion.

That’s according to Devin Dresshen, Alberta’s new Agriculture & Forestry Minister, who was the first speaker at this year’s annual Alberta Forest Products Association (AFPA) convention held in September at Jasper Park Lodge.

He said that amount of additional commercial fibre could deliver a net benefit to the province of about $3 billion.

AFPA President and CEO, Paul Whittaker (above), introduces Alberta deputy ministers (left to right) Jason Krips from Economic Development, Trade and Tourism, Bev Yee from Environment and Parks, and Andre Corbould from Agriculture and Forestry, to update convention attendees on new directions set by Alberta’s new Conservative government, which includes consultations on a new Forestry Act.

Dresshen has given individuals in his department the task of investigating how there could be changes to current forest management and reforestation practices that could result in growing more trees on the same land base, potentially resulting in a larger annual allowable cut (AAC) for forest companies down the road.

“We want to set the bar high and to be able to achieve that,” Dresshen told delegates at the convention.

Paul Whittaker, AFPA president and CEO, said that the Minister’s comments emanated from a conversation Dresshen had with several forest industry representatives, some of whom have experience growing trees on private land.

“What they were saying to the Minister is that they know that we can actually get more AAC and grow more off the same number of hectares, so they are talking about more intensive management,” Whittaker said. “We know we can increase the AAC if we do some things right.”

Potential new approaches to forest management and reforestation fall in line with another announcement made by Dresshen. He said that consultations will begin soon on legislative changes to the Alberta Forestry Act and regulations governing the province’s forest industry, with the goal of presenting legislation for a new Forestry Act in fall, 2020. The province is aiming to reduce red tape, improve efficiency and eliminate barriers to forest industry growth in the province, such as giving the Minister the authority to renew a forest company’s Forest Management Agreement (FMA) rather than requiring an Order in Council involving the entire provincial cabinet.

Consultations are expected to begin soon on legislative changes to the Alberta Forestry Act and regulations governing the province’s forest industry, with the goal of presenting legislation for a new Forestry Act in fall, 2020.

The province is also establishing three sub-regional task forces to provide it with direction on endangered Woodland Caribou habitat management that will include four industry representatives, but it has already taken the position that the socio-economic impact of how caribou lands will be managed in future will be a big part of the conversation. This could put the province at odds with the federal government as it relates to the wording and application of the federal Endangered Species Act.

Andre Corbould, Alberta's Deputy Minister for Agriculture and Forestry, said that the federal Endangered Species Act is a “fundamentally flawed” piece of legislation because it does not consider the socio-economic impact when action is taken to protect endangered species like the Woodland Caribou.

Bev Yee, Deputy Minister for Environment and Parks, said that there will be a different approach to caribou management in the province, focusing on land-use versus the federal government’s caribou-centric approach.

“We believe in working landscapes where industrial activity can continue on those landscapes,” she said. Future land use management where caribou call home will include socio-economic impacts and will be based on what Yee called “sound science”.

According to Dresshen, new Alberta Premier Jason Kenney is focused on jobs, economic growth and oil pipeline construction. At present, this oil-producing province is constrained in shipping its petroleum products to markets by pipeline capacity.

The government’s focus on economic growth is particularly timely against a backdrop that according to Todd Hirsch, Chief Economist at ATB Financial, is far from rosy. Gone are the heady days between 2010 and 2014 when the oil industry was booming and the province was achieving annual GDP growth of five per cent or more per year, rivalling such economic powerhouses as China and leading many to believe that this trend would continue unabated.

However, the collapse of the oil sector in 2015 changed all that. Since then, Hirsch said that the petroleum sector has shed 25 per cent of its workforce, and with the growing number of automated systems being put to use by industries—including oil and gas—many of those jobs will not return.

He predicted tepid GDP growth in Alberta of only 0.8 percent in 2019 and 2 percent in 2020.

“It’s hard to find a sector in Alberta that is not experiencing challenges,” he said. “Essentially, it is going to feel like zero growth (in 2019).”

It appears that the province’s forest sector is not markedly better off. Whittaker described 2019 as a challenging year, where the industry has experienced a price rollercoaster in all sectors.

“Benchmark prices have dropped 30 per cent year over year,” he said, and further complicating business for Alberta forest companies is the over 20 per cent softwood lumber tariff to ship dimension lumber to the United States. Kevin Lynch, a lawyer with Bennett Jones, a law firm assisting the Alberta government with Softwood Lumber Agreement negotiations, said that current countervailing duties on Alberta companies are twice as much as during the last dispute. That’s because of the growing importance of Alberta exports to the U.S. relative to Ontario and Quebec.

However, a forestry economic overview presented by Paul Jannke from Forest Economic Advisors LLC, showed that Alberta’s industry is not experiencing the kind of industry curtailment and job loss that is currently occurring in neighboring B.C. All told, about 2.5 billion board feet of softwood lumber has been taken out of production over the past year in North America, with the B.C. Interior far ahead of other areas in contributing to this production retreat.

While indicating that he is generally loathe to offer comment on issues impacting the forest industry outside the province, Whittaker said that it is hard to ignore the challenges being experienced by British Columbia’s forest sector, created by a diminishing resource because of the mountain pine beetle epidemic and forest fires.

“There are too many mills chasing too few trees,” he said. What’s also hurting B.C.’s forestry sector is a provincial NDP government eager to “rethink the industry” without being on the same page as industry.

In addition to greater support from the federal government in caribou management that does not exclude industrial activity on lands they occupy, Alberta is also calling on the feds for financial support in its fight against the advance of the mountain pine beetle in the province. The danger presented to Alberta’s commercial forest was evident in Jasper National Park—the entire Lodgepole pine forest right to the eastern gate of the park is infested with the beetle that has already devastated B.C.’s Interior forest industry, leading to mill closures and significant job loss.

Alberta is very unhappy with how little the federal government has provided in financial support to help keep the beetle at bay, says the government.

“This is a Canadian issue,” said Deputy Minister Corbould. “Up to now, we are not at all satisfied with the federal response to that.”