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Can a little more free market mean a lot more fair value for NB’s forests?

You may have heard about the recent announcement by the New Brunswick government to provide an additional 660,000 cubic meters of softwood to industrial licensees from publically owned Crown forests.

Objections have been raised.

So what else could we New Brunswickers do to spur on more economic activity from our forests?

Here are my two cents.

There are two sources of logs/wood in NB- Crown logs, from publically owned forests, and private logs from some 40,000 small woodlot owners spread throughout NB.

I am a private woodlot owner from NS, and as a member of CFI a woodlot owner in NB as well. Right now mills in NB pay anywhere from 10% to 20% less for logs than do mills in NS. These mills sell the same products into the same markets, so why do NB mills pay so much less for logs?

Industry in NB tells the government and population that they don’t have enough log supply to be sustainable in the long-term and to make investments in the short-term. That is their rationale for asking for more Crown logs.

So industry wants more logs. But they are paying 10%-20% less for logs than their competitors just across the isthmus. Free market ideology tells us that if industry in NB were to pay more for logs, a signal would be sent to small private woodlot owners encouraging them to cut more logs, solving industry's supposed supply crunch.

But in this case, industry doesn’t want to pay more for logs. So they convince the government to artificially and unsustainably increase Crown log supply, thereby reducing industry’s costs allowing them to continue to pay 10%-20% less than mills in NS. And since the NB government doesn't demand a fair price for their logs, the overall price is kept doubly low.

The Hand of Government slapping the Invisible Hand.

What is my proposed alternative? For government to refuse this increase in log supply, forcing industry to participate in the free markets and purchase more logs at fair market prices from small private woodlot owners. This would get more private woodlot owners investing in their woodlots, putting more people to work in their woods and keeping more dollars within this province. At the same time, the value of ALL of our logs – Crown and private both – would be worth more, resulting in the increased value of our overall resource.

That’s what I propose. If big industry doesn’t want to play by our rules, then we will find local enterprises and entrepreneurs who will. New Brunswick still has the expertise and know-how to run a successful, diverse and locally owned forestry industry. Government just needs to stop perverting markets.

Lets start a conversation; have your say here on how NB can innovate our forestry sector.

If you want to know more about the forestry industry and history of government policy in NB go here for videos; Episode 21 is particularly relevant today.

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