Market turmoil pushes forest producers to the brink

April 16, 2020

By: The Working Forest Staff

SHERBROOKE, Guysbourough Journal – Rocked by shuttered markets, battered by plunging demand at Nova Scotia’s only paper mill, and cratered by COVID-19, St. Mary’s independent forest sector is hanging on by a twig, area harvesters say.

“This is the worst it’s been in 40 years,” contends Luke McGrath, a partner in L & E McGrath Bros. of Aspen, which typically cuts about 6,000 cords a year on private woodlots in Guysborough County. “There’s not a sawmill in Nova Scotia that’s taking wood right now. Every piece of gear we have is just sitting in the yard. We’re not doing a thing, because there’s nothing to do.”

Peter Archibald of Peter Archibald Forestry in Glenelg, referring to the roughly 3,000 cords of pulpwood he would normally cut and sell in any given year, says, “We’re talking about $400,000 to $500,000 in revenue. Today, I’m looking at absolutely nothing. Zero.”

The story is much the same across this heavily forested region, where, according to one 2008 estimate done by Dartmouth consultant AMEC Earth and Environmental, as many as 300 people work full-time – and many more part-time – in silviculture and harvesting, as well as trucking, road building and other woodlands- related jobs.

“I could rhyme off the names of people for days who cut wood around here,” McGrath says. “Then, there’s the people who haul the wood, put in the roads, work the excavators and dump trucks. All of it is idle. Everyone is laid off.”

The troubles began earlier this year when Northern Pulp in Pictou shut down, leaving Port Hawkesbury Paper the sole remaining market for a sudden oversupply of wood chips and logs in the province. That cut both the volume of new lumber the mill could buy and the price it was prepared to pay.

Last month, following public health measures imposed to slow the spread of COVID-19, Port Hawkesbury Paper stopped buying wood altogether. In an email to the Guysborough Journal, the company’s sustainability and outreach leader, Andrew Fedora, said, “Due to the impact of the COVID-19 pandemic, we have been forced to curtail all incoming deliveries of wood fibre for the month of April and scale back planned incoming wood deliveries for the month of May. It should be noted that incoming wood fibre deliveries are generally reduced during this time of year due to soft ground conditions and spring weight restrictions, throughout the industry.”

He added, “This situation is evolving, and we will continue to monitor and adjust as required. We are very cognizant of and regret the impact these actions will have on all those affected. We will provide additional updates as the circumstances develop. This will not have an impact on deliveries of paper to our customers.”

Perhaps, but Archibald and McGrath warn it’s only a matter of time before this perfect storm undermines rural economies, including that in St. Mary’s, across Nova Scotia – affecting everyone from woodlot owners to grocery store clerks.

“Landowners are not going to accept the low stumpage [price] being offered,” Archibald says.

Meanwhile, McGrath points to the inevitable drop in overall consumer demand. “People who don’t have any money aren’t going to spend any money. Who’s going to go the store? Millions of dollars in lost revenue? Oh yeah. I would say that.”

Traditionally, according to AMEC’s figures, northeastern Nova Scotia produces roughly 50 percent of the province’s pulpwood, 41 percent of its lumber, and 74 per cent of its whole tree chips. When Northern Pulp still operated, Guysborough County alone supplied Nova Scotia mills with about 30 percent, or 625,000 cubic metres, of their wood. According to Fedora, “Fifty percent of our wood procurement comes from small private woodlands. In 2019, 11 percent of our small private purchases were from Guysborough County.”

In fact, the tribulations St. Mary’s now faces are becoming commonplace across woodland-rich areas of Nova Scotia. Last week, CBC News reported, “Western Nova Scotia’s last major sawmill is shutting down. Freeman Lumber announced that the Greenfield-based outfit could no longer afford to operate due to a lack of markets for wood chips following the closure of the Northern Pulp mill earlier this year. The move means the loss of about 150 jobs, millions of dollars in the local economy in Queens County and surrounding areas and spillover into the broader forest industry.”

Meanwhile, in the United States – which imports a significant number and volume of Nova Scotia wood products – COVID-19 is already wreaking havoc on international forestry indicators. “There are projections that it could take up to three years for the U.S. economy to recover from the coronavirus pandemic,” Matthew Pelkki of the University of Arkansas at Monticello wrote in magnoliareporter.com last week. “Global trade in wood products will likewise be curtailed until at least mid-2021, with the most severe declines in the second and third quarters of 2020 lasting through the first quarter of 2021, and then a slow recovery that could take as long as two years.”

All of which may be harbingers of even bigger disruptions yet to come for local forest producers. “The closing of Northern Pulp, the provincial commitment to achieve long-term improvements in forest practices through implementation of the Lahey recommendations, and the current global business and social challenges posed by the coronavirus mean that essentially everything is up in the air at the moment,” said Andy Kekacs, executive director of the Nova Scotia Woodlot Owners and Operators Association in an email. “I don’t think it’s possible to make informed comments about what will happen over the next six to nine months.”

He added, “That said, it’s clear that – over the long term – small landowners, companies in the forest sector, and the forest itself will benefit from…moving away from management that emphasizes short-term economic gains, and toward practices that result in healthy, diverse, natural forests over the long term.”

For now, though, Luke McGrath echoes the sentiments of his fellow woodsmen and women in the shadow of Port Hawkesbury Paper’s decision to cut back, “We’re just hoping they’re going to start taking wood again.”

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