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Strategic Context

Environmental Trends

In Canada, there has been no significant change in the total forest area over the last 15 years. Less than one per cent of the forest is logged each year in British Columbia. In 2007, the B.C. timber harvest was 83,566,914 cubic metres, about eight per cent higher than the 10-year average, primarily due to accelerated harvesting of beetle-killed wood in the Interior of the province.

The mountain pine beetle continues to devastate mature pine forests in the Interior of the province. The Ministry projects that 80 per cent of the merchantable pine in the province’s central and southern Interior could be killed by the beetle by 2013. The total volume of trees infested by the mountain pine beetle, including standing dead trees and live trees under attack, increased in 2007. By the summer of 2008 it is estimated that 625 million cubic metres of timber will be affected, up from 532 million cubic metres in 2006.

Most of Canada’s rangeland is contained in the four western provinces. In British Columbia about 85 per cent of the land area used by the ranching industry is owned by the Crown and the cattle ranching and guide outfitting industries are dependent on access to Crown range. Environmental issues, such as access to water and the loss of rangelands due to invasive plants, forest encroachment and ingrowth and increased off-road vehicle use, are ongoing challenges in the management of rangelands.

Adapting future forest and rangeland management to climate change is a key challenge. In British Columbia climate change may increase timber and forage productivity in certain areas. It also contributes to continued insect and disease outbreaks, forest-damaging events such as ice storms, floods and droughts, a shorter winter logging season and a longer fire season. It also has implications for rangelands, including water and forage shortage, potential introduction of new invasive plants and the spread of those already present.

Socio-Economic Trends

First Nations populations in British Columbia are large, culturally diverse and geographically dispersed. Many Aboriginal communities are located in forested areas and have active land claims in place for Crown land presently allocated for forestry activity. The Ministry works with First Nations to strengthen relationships based on reconciliation, recognition and constructive consultation on social and economic issues.

The economic circumstances of the B.C. forest industry are continually changing as a result of global competition, trade agreements, industry consolidation, commodity prices, exchange rates, technological innovation and product substitution.

World competition is increasing and returns on capital investment are tight. Some countries are emerging as potential customers of B.C. forest products (e.g., China, India and Indonesia) while others are becoming strong competitors (e.g., China, Russia, European countries and Brazil). Given that more than 80 per cent of the sales by the B.C. forest industry continue to be destined for non-Canadian markets, there is continuous pressure to maintain and improve the forest sector’s competitiveness. PricewaterhouseCoopers estimates that for listed Canadian companies, nearly half of which are based in British Columbia, the average return on capital employed was 4.6 per cent in 2006 — well below the target of 10-12 per cent.

Lumber prices trended downwards in 2007 as a result of a decline in U.S. housing starts, rising interest rates and higher energy prices. Throughout 2007, pulp prices rose and newsprint prices were in decline. Investment in the B.C. pulp and paper industry has, as a whole, been below the level required to maintain its current competitive position in world markets. In order to remain competitive in the future reinvestment in this industry is needed. A renewed pulp and paper sector in British Columbia can be globally competitive over the long term through reinvestment and innovation. Due to the interconnectedness between the pulp and paper and lumber industries, the strength of the pulp and paper industry is an important factor in the health of the entire B.C. forest industry.

Throughout 2007 the Canadian dollar was strong against the U.S. dollar reaching parity in September 2007. The strong Canadian dollar is predicted to continue to impact the B.C. forest industry by increasing the relative cost of production in British Columbia, and reducing B.C. companies’ profits as most forest products are sold in U.S. dollars.

The economic circumstances in the ranching sector are similarly difficult as the higher Canadian dollar affects the value of Canadian beef and live cattle exports to the United States, thereby putting downward pressure on the price of feeder cattle shipped out of British Columbia to Alberta and beyond. The ranching sector is facing much higher costs for their inputs such as machinery, fuel and grain; the latter due to competition from the biofuels industry and depressed worldwide grain production in 2007. The effect of higher costs reduces prices expected to be paid for feeder calves. Trade of cattle to the U.S. is expected to normalize in 2008, following a full five years of restrictions due to the occurrence of Bovine Spongiform Encephalopathy (BSE).

Strategic Direction

The Ministry continually improves its management of the province’s forest and range resources; however, the mountain pine beetle infestation, struggling coastal and pulp and paper industries, and international market forces all continue to challenge the B.C. forest sector. All together, these factors amount to an unprecedented and profound impact on the forest sector. The Ministry is taking proactive action to address these challenges while continuing with its regular work in managing and protecting forest and range resources.

In 2008/09, the Ministry will implement the Coastal Forest Action Plan, continue to lead the government’s efforts in addressing the environmental and economic impacts of the mountain pine beetle epidemic, and develop a forests component to the government’s bio-energy strategy. Increased cross-agency collaboration and alignment on land-use planning, research and resource management is also being pursued, as well as ongoing work to adapt British Columbia’s forest and range management practices to a changing climate, improve safety in the forest industry and work closely with First Nations to increase their participation in the forest sector.

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