New Brunswick to cut timber royalties charged to forestry companies up to $50M
CBC
Seven months after raising royalty rates on trees cut by industry in provincially owned forests, the New Brunswick government is proposing up to $50 million in reductions, with some rates falling all the way back to where they were a decade ago.
It's a move Linda Bell wasn't expecting and doesn't like.
"I really couldn't believe that it dropped that much," she said.
Bell, general manager of the Carleton Victoria Wood Producers Association in Florenceville, says lower royalty rates reduce revenues to the province, but they also make it difficult for private sellers of wood to get decent prices for what they cut.
"The more cheap wood that the mills have from Crown, the less incentive they have to buy our wood," said Bell.
In a posting on the province's Public Review of Draft Regulations website last week, the Department of Natural Resources and Energy Development listed several proposed changes to timber royalties that are charged to New Brunswick forestry companies.
The most significant is a 46 per cent reduction in charges for softwood sawlogs and studwood used by New Brunswick sawmills to manufacture both high and low grades of lumber.
Based on current royalties and historical volumes cut on public land, the price drop will likely cost the province and save forest companies $50 million in fees this year.
The department is asking for public comment on the changes but did not respond to a series of questions about them last week.
New Brunswick raised the royalty rates on publicly owned timber for the first time in seven years last September in a belated, but heavily promoted effort to profit from two years of record lumber prices.
"We've instigated an increase for this year, a fairly significant increase," Natural Resources Minister Mike Holland told CBC News last summer in one of a number of interviews announcing the higher fees.
In 2021, New Brunswick wood manufacturers, mostly sawmills, reported a record $2.6 billion in sales, $1.2 billion more than two years earlier on similar amounts of production.
That helped convince the province it should charge more for trees the mills were using, but the financial bonanza around lumber had largely fizzled by the time royalties were finally raised in the second half of 2022.
With lumber prices now into more normal ranges, the province has decided to roll back royalties as well.
