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Ontario moves smoothly to sustainable forest licenses

By Richard Turtle
Copyright 1997. Contact publisher for permission to use.

Increased responsibilities, reduced rights and increased costs are being placed on forest companies in Ontario as a result of the introduction of Sustainable Forest Licences (SFL). And because the licences now replace previously negotiated Forest Management Agreements, the Minster of Natural Resources (MNR) now has increased powers, including the authority to revoke licences if holders do not live up to their obligations.

But SFLs are being heralded as a positive step forward for the province's forests as the responsibility for forest renewal now lies solely in the hands of those with the most to lose if regeneration programs do not meet minimum requirements set out by the MNR.

Through its Forest Management Business Plan, the province intended to maintain its authority over forest management while reducing its own costs. Those cost reductions are expected to be realized by shifting additional responsibilities to industry along with the costs of taking on those responsibilities.

Government has vowed to treat all industry players fairly while maintaining current wood flows and pro-rata harvesting levels. And any company negotiating an SFL will be required to honour all existing wood commitments and to assume all existing obligations to local forestry businesses and the community. As part of the process, which began in early 1995, it was agreed that discussions would not involve the allocation of any new Crown resources but instead would be based on current approved sustainable harvesting levels.

The first SFL was signed by J.E. Martel and Sons Lumber of Chapleau and that company sees the licence in a positive light. Says Woodlands Supervisor Ron Martel, what the licence does is allows companies to "control the whole scope of operations from harvesting to regeneration and make sure that we are protecting the forest." But the most notable improvement for Martel and Sons is, "we have guaranteed silviculture funding and secured silviculture jobs leading to both a healthy forest and a stronger local economy."

George Bruemmer, president of the Ontario Professional Foresters Association (OPFA), was one of the six members of the Forest Industry Transition Team which provided input during the preparation of Ontario's Forest Management Business Plan. Explains Bruemmer, "with SFLs, there is money locked in for (forest) renewal, so that's a major improvement." A portion of stumpage fees goes directly into a Forest Renewal Trust Fund, he says. As a result, there will always be money available which is specifically targeted for reforestation.

But he cautions that Ontario companies have reached their limit from a taxation point of view and it is becoming increasingly difficult to maintain equitable profit margins. "I think the Ontario government is cognizant of that and (the SFL program) should iron itself out before we reach a crisis."

And while the province's forests are the clear winner as a result, he says, industry was in a better position under the previous FMAs. Because they were negotiated, companies had greater security through ensured long-term wood supply. The licences weaken tenure previously enjoyed by FMA holders resulting in reduced likelihood of significant reinvestment, Bruemmer says.

Alec Denys, the MNR Provincial Leader SFL Negotiations, describes the SFL as "a 20-year renewable licence that gives the holder the right to utilize all the resources in that area under ministry guidelines." And one significant difference is the fact that FMAs had a compensation clause which stipulated the ministry would find alternative wood sources if, for example, part of a Management Unit was designated as provincial parkland. However, he notes "we are looking at a compensation package (as part of the SFL agreement)."

By mid-May, a total of 19 SFLs had been signed, says Denys, and by the year 2000 all deemed SFLs will be converted from FMAs. At that time it is anticipated there will be a total of 59 SFLs across the province.

"In the SFL process, particularly on Crown Units, we've come an awful long way in the past two years," he says. And among the positive results are the good relationships created between the big and small players. Denys explains the licence holders are responsible for negotiating agreements with other smaller companies with access to their SFL unit.

"The small operators," he says, "are getting some pretty good deals" and are well positioned for continued viability within the industry. The licences have also necessitated innovation and co-operation among all the players and, he says, that is also good news for the industry as a whole.

Overall, he notes, "there are lots of challenges in it (the SFL program) but we are trying to be flexible. We're trying to make things happen."

Ontario Forest Industry Association President Marie Rauter says the association has always supported industry taking over responsibility for sustainable forestry, however, licences represent a more one-sided approach than FMAs, particularly with the increased powers of the Minister of Natural Resources, paired with the fact that licences are non-negotiable and revocable.

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