The Canadian Federation of Woodlot Owners (CFWO) is calling on Manitoba woodlot owners to voice their support for three national initiatives that directly affect their businesses. The CFWO is fighting for a softwood tariff exemption on sawlogs from private woodlots, a silviculture savings plan for woodlot owners, and a national tree-planting program.
CFWO says the silviculture plan and a national tree-planting proposal would significantly aid Canada’s fight against climate change. It is asking woodlot owners to contact their federal Member of Parliament in Manitoba to voice their support for these plans.
To help Manitoba woodlot owners understand the issues at stake, CFWO has provided the following details on its program proposals.
Softwood lumber exemption for private forest sawlogs
As sellers of sawlogs, woodlot owners hope for a positive resolution of the Softwood Lumber Agreement (SLA) dispute. We are experiencing price reductions and fear that the real risk of sawmill closures could be even more damaging.
Lumber from private forest timber is not an issue for the Americans. Their domestic timber market is dominated by private forest sawlogs. The unrestricted flow of sawlogs across the border, which is the case in all provinces except British Columbia, has been viewed by them in the past as a positive attribute.
Verification of the origin of an individual sawmill’s sawlog supply is no more complicated than the chain of custody systems used in forest certification.
An exemption would relieve the “collateral damage” being experienced by many thousands of woodlot owners and benefit the sawmills to whom we sell.
Through the Canadian Federation of Woodlot Owners (CFWO), we have had good communication with the SLA negotiating team at Global Affairs Canada. At a meeting with them on Sept. 19, 2018 we were assured that our request for an exemption would be on the table when negotiations resume.
A Personal Silviculture Savings and Investment Plan
Proper forest management of woodlots involves a disconnect between years when planting and thinning should be done, and years when harvesting is appropriate. This disconnect is accentuated after natural disasters or insect and disease outbreaks.
In order to recover at least some value from the silviculture investments of previous decades, a woodlot owner or license holder must desperately try to salvage as much damaged timber as possible before decay makes it unsaleable. The resulting spike in revenue has significant income tax implications.
The disconnect between revenue from the sale of timber and silviculture expenses is unlike the circumstances faced by other small businesses. Provisions exist in Income Tax policy for carrying back or forward a portion of the costs of planting and thinning, but these are limited. This limited ability to deduct expenses from revenue is a major disincentive to increased silviculture and reforestation.
We have proposed the Personal Silviculture Savings and Investment Plan (PSSIP) as a solution.
Revenue from harvests could be deposited in a registered account similar in structure to an RRSP. Principle and interest would be withdrawn when planting and thinning are required on the woodlot.
Appropriate administrative guidelines for PSSIPs have been discussed for several years with officials from the Department of Finance and the Canada Revenue Agency, most recently on November 2, 2018.
We believe there are no practical or technical impediments to our proposal.
If PSSIPs become a tool available to woodlot owners and license holders, they will provide a big incentive for more tree planting and silviculture. The result will be broad benefits for rural development and climate change mitigation, and increased timber supplies will strengthen the competitiveness of Canada’s forest industry.
A national silviculture and tree planting program
In the Pan Canadian Framework on Clean Growth and Climate Change presented in December 2015, we were pleased to see recognition of the importance of our efforts to manage our forests.
We work in our forests on a regular basis, so we see the damage being done to forests by extreme weather and increasing insect and disease outbreaks. We also see how our silviculture and tree planting work increases the growth and health of forests. The Framework recognizes the high potential contribution of increased silviculture and tree planting in the fight against climate change.
We are committed to increasing our existing silviculture and tree planting efforts. This will include reforesting previously denuded land and regenerating forests subjected to catastrophic events. For us to do so, the economics must make sense.
Silviculture and tree planting cost money. The return on these investments comes in the form of revenue when the trees are harvested. That is normally a matter of 20-35 years in the case of pre-commercial thinning, and 50 to 60 years when trees are planted.
In recognition of the very long-term nature of silviculture and tree-planting investments—and of the broad public benefits from these investments—governments have often shared the cost with woodlot owners.
This was the case with the Federal-provincial Resource Development Agreements (FRDAs) of the 1980s and 1990s, and in all provincially funded programs currently in existence (in Québec, New Brunswick, Nova Scotia and Prince Edward Island).
Owner contribution has always been set at 10-percent of the total cost (cash or in kind) because it makes no financial sense for owners to invest more than that. It does make sense for governments to contribute 90-percent of the costs because of the large benefits to society as a whole. This includes:
- rural employment (silviculture and logging contractors),
- industrial timber supply (mill employment, spinoff employment),
- environmental benefits (on water, biodiversity, carbon. (Except in some exceptional cases, markets do not pay for these goods and services.)
In addition to the 10-percent contribution to direct costs, owners are also indirectly contributing the general costs associated with property ownership (taxes, insurance, boundary line maintenance, regular inspections). In a proportion of cases, there is a measurable opportunity cost associated with silviculture, and especially planting of marginal farmland (e.g., revenue foregone from rent for hay production or grazing).
In response to the Pan-Canadian Framework, seven provincial woodlot owner associations proposed silviculture and tree planting programs grouped under the title: “Mobilizing Canadian Private Forest Owners to Fight Climate Change”. We submitted this proposal through the Environment and Climate Change Canada portal in July 2016.
In many cases, these proposals will augment existing provincial programs already in place, and in all cases, associations are in active discussions with their respective provincial government authorities to ensure provincial government involvement. The proposals involve a mix of silviculture and tree planting tailored to the specific conditions in each province.
Contributing to Canada’s fight against climate change
These proposals will contribute to Canada’s efforts to fight climate change in five ways:
- As forest growth is increased through silviculture and tree planting, carbon will be taken up from the atmosphere for long-term storage.
- As this increased forest growth contributes to an increase in sustainable production of timber in the medium and long term, the lumber used in building construction, furniture and other long-term wood usage will add to the long-term storage of carbon.
- Increased use of wood for construction and household goods will reduce the greenhouse gas (GHG) emissions from the production of concrete and steel that would otherwise have been used in those buildings and goods.
- The program as proposed in July 2016 will allow several tens of thousands of Canadians to make a concrete and meaningful contribution to fighting climate change in a way that carries a positive benefit for rural economic development. The trade-offs between the environment and the economy that are frequently encountered in actions related to fighting climate change are avoided.
- Public awareness of the critical role of forests in fighting climate change will be increased with field days near urban centers organized by the associations.
We were again very pleased when the Low Carbon Economy Fund was announced in June 2017 to see that forestry (with agriculture) was identified as one of three priority areas for support by the Fund. We submitted an Expression of Interest in May 2018 for the Challenge portion of the Fund and received an invitation to submit a detailed proposal for a three-year proposal in August.
Unfortunately, two conditions attached to the invitation have made it impossible for us to proceed. Because woodlots are considered to be profit making businesses, we would be eligible for only 25-percent Federal support instead of 40-percent for non-profit organizations. Further, we would be required to identify all 7,000 participants in the application. Each of these conditions is insurmountable.
Making a national tree-planting program a reality
We see two possible routes that would make a national tree planting program a reality in 2019:
- Additional money be made available to the provincial government “Leadership” portion of the Fund where those two insurmountable conditions would not apply,
- Establish a budget for a national program separate from the Fund and under Natural Resources Canada.
We have proposed two ways in which the Federal government can support our efforts to grow more trees and nurture healthier forests. If the Personal Silviculture Savings and Investment Plan and a national silviculture and tree planting program seem like good ideas to you, please help us make them happen.
Contact your Member of Parliament and explain the importance of these programs to you, your community, and to our country in meaningfully addressing climate change issues.