A Proposed Framework to Modernize Ontario's Forest Tenure and Pricing System - Public response to participation questions

Questions

What criteria and method should be used to refine and finalize management areas?

As a general rule, appointments made through the Ontario government’s Public Appointments Secretariat are for a three-year term. There may also be an opportunity to renew the appointment.

  • Each MA should have more than one major consumer of fibre to try to get competative forces to play. Saying that, a NWO MA of thunder Bay to Kenora is too large but a Black Spruce/Armstrong/Lakehead/Dog River/English River MA could work.
    -Peppy
  • As a coarse filter, featured species should provide a split. Specifically caribou management areas should be amalgomated to allow for the expertise to be specific to the MU. Natural boundaries such as Forest zones, major water ways need to be considered. Efficient and cost effective forest Mgt also needs to be considered-where will LFMC be located, they should be centralized in MU if possible. Current FMU boundaries should recieve lowest consideration as this is a time of change and if traditional boundaries need reworking this is the time to change. Also traditional markets do not need to rank high as the ability for companies to compete across MU boundaries is important.
    -Freddy
  • Existing forest units of similar ecological characteristics should be considered for combination. Using the existing administrative forest units allows some incorporation of the existing forest management plan work and the opportunity to apply any constraints over bigger but similar areas. Management areas should consider geographically, economically reasonable wood flow to existing users of fiber.
    -Twigger
  • Existing SFL should be left intact as much as possible and joined with similar adjacent SFL’s. Splits could be made in regards to Moose management areas versus Caribou management areas. This would provide a consistent FMP planning approach to the new MU.

    Current forestry staff with industry and MNR have a very professional knowledgeable understanding of their respective SFL/landbases When the new MU are established they will need to hire many of the Foresters that are currently working on the SFL’s. Leaving current SFL boundaries intact as much as possible will ensure a higher level of consistency in field management moving forward. Data management and accuracy will also be much more consistent and auditable against past IFA,s and AR’s.
    -pilkey
  • We have failed dismally to recognize Aboriginal and treaty rights in forest management in Ontario. Tenure reform could start on the right foot by starting with the treaty areas as the first division of management units--Robinson-Huron, Robinson-Superior, Treaty #9 and Treaty #3. These treaty areas are roughly based on large watersheds. I think 4 FMUs are too few and the area too large, so starting with the treaty areas, these could then be broken down into smaller watersheds.
    -Artemis

The MNR is seeking input on which components of strategic forest management planning should be realigned and what criteria should be used as a basis for the associated ecologically based forest management planning areas. What thoughts do you have on these issues?

  • MNR should take over responsibility for the whole front end (strategic section) except for road planning. However this needs to be done under enfoceable timetables to avoid delays. this would be accomplished within the existing planning team framework.
    I don''t think we can find a good ecological MA planning area that makes economic and logistic sense so just stay with the large amalgamated MA.
    -Peppy
  • The strategic components that could be taken over by the MNR/LFMC include all landscape level analysis. This includes analysis/modelling as per the upcoming Landscape Guide and determine how/where FMPs are to implement these. Other strategic components that could be taken over include analysis and determination of long term caribou habitat/marten habitat deferral areas and species at risk direction. Many new staff will be required to do this as this task is currently shared by the companies and MNR.

    Existing SFL holders should continue to do strategic operational work such as road planning, wood supply analysis, determining long term harvest operating areas. Wood supply analysis should have significant company input or leadership, since they are most familiar with the impacts that the modelling constraints wil have operationally.
    -Gantz
  • I agree with Gantz on the strategic portion of the planning process. Where I disagree is the operational planning being done by industry players.
    The LFMC should take the responsibility of operational planning. There is critical links between operational planning and marketing and this needs to be done by the impartial LFMC. Input from industrial users should be solicated but operational planning is a function of the LFMC.
    -Freddy
  • The government should create and develop a high order landscape level planning objective for the province. The strategic plan for a forested area needs to support the strategic land use plan. The strategic plan for a forest management unit needs to designate that area for commercial timber use and is used for commercial timber use maximizing the sustainable allowable cut.
    -Twigger
  • The Strategic planning and Operational planning should both be done by the LFMC. The development of the Long Term Management Direction (Strategic planning) is a long and onerous process and I don''t believe that the MNR has the ability to take the lead on this process. The MNR culture is to review and criticize and it is not in them to construct a product. If the Strategic planning is not done on time the whole FMP is in jeopardy. Currently the SFL holder takes the lead and works with a multi-disciplined Planning Team to complete the Strategic planning. If the Management area consists of 3-4 Forest Management Units the LFMC''s can work with the Regional MNR specialists and complete the strategic planning very efficiently. This will avoid engaging multiple District MNR staff. This will free up the District MNR staff to review the operational planning.
    -Wishiwascanoeing

How should forest resource licence holders be considered in the development of transition contracts?

  • FRL’s that are actually operated by the individual and not brokered should be treated in the transition process the same as existing facilities. The past 5 years actual harvest volume determines the starting point from which their 75% transition contract is set. A “harvest” plan needs to be submitted by the FRL and barring unforeseen circumstances; wood not accessed in a particular year is forfeited to the tendered sales process. Future rights to transitional volumes are based on the past 5 year’s performance.
    -Twigger
  • Involving the tenure restructuring process. I have invested a tremendous amount of money into not just my equipment but also my licenses themselves. It is my understanding the government plans on "taking away" my license which would be a devastating blow (and from what I have researched illegal), that would almost certainly bankrupt my company and put my 10 employees out of work. How could I possibly compete for new blocks with other contractors while also paying for these FRL''s that I have already bought? As far as I am concerned the most valuable asset I have is my FRL and from all appearances from the 2 meetings I have attended the government plans on ATTEMPTING to take that away from me.

    Is it OK to walk onto my land and say "we have decided to restructure how land is owned" or go to the farmers and say "we have decided to redo how milk quotas work"? Of course it isn''t. People paid for their land. Farmers paid for their quotas, and I paid for my FRL. So how is OK to take away my rights to the forest that I paid huge dollars to get?

    I realize that there are different types of FRLs and that in many places in the province they are simply short term deals for small amounts of volumes but in our part of the province where over 20% of the provinces wood is harvested these licenses are bought and/or passed down through the generations.

    So to answer the question of how should we be considered it is very simple: leave my license alone or buy it out from me.
    -JD2210

How many members should be included in the Board of Directors and how much variability should exist between the LFMCs?

  • There should be 15 members on the board with limited variability.
    -Peppy
  • The boards should be smaller with 11 members being the max. This will allow for adequate local representation in larger MAs and adequate representation of local/regional stakeholders, without excessively large boards that in my experience make decision making much more difficult and reduce the boards overall effectiveness. Board size should roughly correspond to MA size with consideration for the diversity of stakeholders.
    -Mtaylor
  • It is my understanding that the board is not a representation type forum (howerver, it may be part of the boards mandate to ensure representation in forest management decisions). For this reason it should be set up to be an efficient decision making committee. Smaller is likely better than larger and the number of members should range between 4 and 10.
    -JG25ca
  • The # of board members is not as critical as who the members are and where that are from. All board members must be from the area the MU represents. Any members parachuted in from other areas will lead to manipulation without recourse and will sink our leaky Forest Industry ship. I believe the concept of an appointed BoD is the mechanism in which NGO''s and eco-terrorists will put the final nails in the forest communities coffin.
    -Freddy
  • Both the number of members and the representation concerns me. Many individuals who have worked in the forestry sector for most of their careers don''t individually have a full comprehension of the complexities involved in managing a forest from a growth/silviculture point of view, the complexities of running a forest harvesting operation and the challenges of keeping a mill operating efficiently: efficient forestry is complex, dynamic and it cannot be justly administered by any number of lay people appointed to a board intended to decide the fate of mills and forest workers.

    I see that the present and typical co-operative SFL structures are strong in this regard. The varied industry and First Nation interests on the boards of the present SFLs pool the knowledge and experience to make the best decisions for the forest without having to educate lay people to the basic functioning of the industry as they progress.

    Lay people, with respect to them, on a management board will drag the discussion down to the lowest common denominator: their insufficient understanding of the complexities of this business. They will not and cannot reasonably be expected to sit on a board, attend quarterly meetings, go on a few field trips and then oversee the operation of a million cubic meter harvest. In-depth knowledge and experience is not gained from that level of exposure, and it is not gained from casual discussion during fancy Board lunches. It does not happen by osmosis: years and years of getting up at daybreak and working long hours gives that experience and understanding. Such niave thinking is a recipe for failure at the board level, and more importantly, a recipe for disaster to those who have mills dependent upon reliable sources of wood, disaster to mills who must demonstrate their own fibre security in order to acquire financing and lines of credit, and disaster to their employees who may lose their work to non-local bidders and mills intent on acquiring that last little bit of high-priced wood to fill their own order books in another province or country.

    To summarize, the lay board idea is flawed. The opportunity here to do the right thing for the forest, forest workers and mills is to continue to encourage (or even force) the development of co-operative SFLs as already exist in the more southern areas of the province. There is a 13-14 year track record there of co-operation and application of a depth of knowledge and experience that must be respected.
    -Fred Flintstone
  • The Board should be composed of 10 to 12 members. Based on the nominees submitted, each stakeholder group requires representation and a balance of interests needs to exist. As every stakeholder in a forest area could be considered to have a “conflict of interest” representing their specific views, the balance should include community, 1st Nations, industry, government and general public. LFCM’s across the province should be similar in structure.
    -Twigger
  • There is also the issue of board members leaving their individual agendas at the door and acting in the best interest of the corporation. There needs to be a mechanism for local input to the process without compromising the role of a Director in the company.
    Another key factor will be ensuring the roles of management and the board are clear
    -Dwayne Nashkawa
  • We are talking about MU''s in excess of 5 million hectare. IF they go to 5 we are talking about 1/2 of northwestern Ontario having on board, all of south-central.. how LOCAL are these boards really going to be... how are you ever going to get acceptance ... everyone has their own communites agenda at heart. Have these guys been in NOntario lately??? There are communites that just dont get along and will never work effectively on a board... history is what it is. The board will have to be paid and for sometime to become knowledgable regarding the intricacies and understanding of wood flow and economics. AND they are political apppointments... need I say more.
    -Researcher
  • Regarding size, I''m wondering if the folks presenting the proposal to us have been flying in and out of our communities, or have taken the time to drive across our province. No better way to have an appreciationof the distances between communities that we deal with in NWO.
    -00dirtfan
  • Boards should have adequate representation from existing forest industries in the LFMC as well as reps from local communities. The board members must be knowledgeable professionals in Forestry and other related fields. Board members must not be political appointees with party agendas. There is no point in having a board managing a large landbase with little or no input from local mills/towns where lives will be affected by the board and General Manager’s decisions. Existing forestry facilities need to have representation on the board to ensure their access to necessary wood fibre and enhance their chance of mill survival.
    -pilkey

What other suggestions should government consider to facilitate a smooth transition to the proposed frame work?

  • Certification organizations such as FSC/SFI and CSA should be actively consulted to help with the transition and insure that the companies who have made a substantial investment into certification can retain the benefits of certification throughout and after the process.
    -JG25ca
  • The government is going to have to decide whether agreements put in place by the current SFL holders will need to be honoured by the LFMCs as the new SFL holders. An example of this is the May 17th agreement between FPAC companies and the environmental groups to suspend harvesting and road building within the area of the undertaking.
    -JG25ca
  • Do not drag this process out. As evident in the past “pilot projects” can get bogged down by players who have no intention of accepting the transition. The government needs to take a firm action in the transition of this program, set a timetable for all areas and abide by that timetable. A firm model needs to be in place by the fall that considers the input that has been received over this process. This should not become a “political” process where the variation by region is set by local political pressures. A consistent approach to transition and implementation needs to be quickly established.
    -Twigger
  • Regarding certification... the certificate is held by the company. The new LFMC will have to get their own certicate at substantial cost. An FSC certificate is not tranferrable to a new entity. They will have to prove themselves as the companies did. There are significant requirements to retain the certificate... another expense that the government does not appreciate the complexity and extent that the companies went to and continue to, in order to retain them. However, it will be a requirement as it is demanded by the market place.
    -Researcher

What activities should be considered for reinvestment in the forest (such as additional silviculture, training, marketing, information, etc.) and how much variability should there be between LFMCs for reinvestment in the forest?

  • Suggestions:
    • Training-harvesters and staff training to identify value added raw timber products.
    • Marketing-promote products available from MA to stimulate investment in manufacturing-website, tade fairs etc
    • Preharvest inventory data-intensive preharvest data is required for effective negotiating of tenders and contracts as well as to identify products that will support new businesses. Intensive silvicultre-as required to meet identified needs.
    • Investment opportunities should have a high degree of flexibility between individual LFMC.
    • A mechanism for approval should be given to the manger or the board basing decisions on local needs measured against a broad set of guidelines.
    • -Freddy
  • This will be an individual LFMC decision under the direction of the Board. Each LMFC will likely be different depending on the local needs.
    -Peppy
  • Another item that should be funded by re-investment and along the same lines as the pre-harvest inventory work is targeted enhancements to forest inventories to allow for better strategic and operational planning.
    -JG35ca
  • The LFMC must address any outstanding legal requirements with respect to silviculture. Any plan for reinvestment in the forest needs to be developed and approved by the Board of Directors for the LFMC. LFMC’s should be guided by the existing FMP strategy for any strategic expenditures on the forest. Any special interest that needs to be addressed on a particular forest outside of the approved management planning guidelines needs to be financially supported by the special interest group or the government.

    All LFMC’s should be operated in a similar manner.
    -Twigger
  • In order to remain competitive in a quickly changing environment and given the consumers pressures on "green" approach, and demand for light footprint operations and so much more, it will be imperative that each LFMC support research efforts being conducted by universities and other agencies. The large companies that were actively involved in not only research but so many other areas that the government failed to address including the millions of dollars in support to aboriginal communities to become involved in forest management and silvicultural adtivities will have to be now supported by these LFMC''s
    -Research

How can a level playing field be best provided through the implementation of these transition contracts?

  • Treat all existing users of wood equitably. Have a process that defines the ground rules for transitioning into the new system and stick by them. Do not allow anyone to become a “broker” of Crown wood or tie up Crown wood through lack of utilization in any particular year. We need to insure that the players operating in the LFCM management area are truly contributing to the forest economy of the area and the revenue model of the LFCM
    -Twigger

What price information from the transitional contract should be made available as described in the Market Information section?

  • The negotiated price between the LFCM and the buyer should remain confidential to those parties. Any wood purchased through the tendered sales program should have full public disclosure of the pricing. LFMC’s would have the obligation to post tendered sale prices within a week of acceptance on a central site for public viewing.
    -Twigger

How should a right of first refusal be factored into the transition contracts?

  • Right of first refusal should not be a factor at all. No place for ROFR in a free market system. Operating facilities will have certainty of supply in the transition as new entrants will not have facilities running to compete for fibre. LFMC will need to have a percentage paid up front for winning tenders and this will prevent wood being locked up for future use.
    -Freddy
  • I agree. The intent is to move to a free market system and trying to do this while retaining vestiges of the old system will likely create inequalities. In order too keep it fair an initial public offering price should be established for each LMFC wood supply based on historical rates, but it should be open to anyone in the market to bid. Establishing an IPO date will allow holders of ROFR to stock up if they are concerned about a spike in wood costs.
    -JG35ca
  • A transitional contract volume should be tied to the 75% supply requirement of a facility. If a company does not negotiate a contact for this supply or a portion of it, the wood moves into the tendered sale arena for that given year.
    -Twigger

What time frame and phase-out provisions should be considered for the transitional contracts?

  • Time frame should br short, start of the 2011/12 AWS would be a reasonable target. This transitional process will create uncertainty and may limit investment in the sector and as a result should be kept as short as possible.
    Phase out provisions should be 1) MNR will need to be responsive, effective and efficient in the amalgimation of current MU''s. Contingency plans will need to be developed to bring the amalgimated units into the same FMP cycle. MNR staff levels will need to reflect this increased activity to minimize delays. 2) In context of current facilities consuming wood no significant disruption is expected. AAC are not immediatly changing only the mechanism of how the land base in managed and fibre is accessed. 3) Stability in the ESA regulations. Still lots of uncertainty and fear in the province. Need to ensure litegation is not a process of every harvest block approval.
    -Freddy
  • Current tenure models need to be considered in phase out provisions. Specifically share holder forests where significant investment has been made by individual businesses. Through long term contracts for a portion (75%) of current AAC tenure holders can be provided stability while allowing time to prepare for a 100% free market state. Providing 5 years of continued market share and reducing at 20% per year for the following 5 years will provide the nessesary transition time frame. Similar provisions can be applied to corporate tenure holders as well. Regional variation depending on levels of competition and historical practices will need to be considered.
    This will also provide for continued participation of various sized businesses in the market place. To rapidly go to free market conditions will allow logging businesses that are of sufficient scale to monopolize the harvesting and create an unhealthy market condition.
    -Freddy
  • A longer term is needed. The government is taking advice here from ecologists. They are not economists, and certainly don''t deal in the financial realities of defending business plans for the purpose of raising capital to keep mills open, expand mills and . I would submit that removing security of supply through this reform proposal could trigger some banks to call their loans and operating lines made to the industry. Government workers are paid every two weeks, regardless of their production or output, with little regard to the security of the resource. Industry does not work like that: security of supply is very important to the remaining industry in this battered province.
    -Fred Flintstone
  • The “transitional” contract with existing facilities needs to be the cornerstone to recognize and support the long term investment a company has made in an area. To start, the transitional period should be at minimum a 5 year term to allow a complete transition to the new process of securing timber. The LFMC would be obliged to make the 75% volume available at a negotiated price to the existing company, and the company would need to put forward an access and harvest plan to actually utilize the volume. Again, barring unforeseen circumstances, annual volume could be lost to a company’s transitional contract if it was not accessed. After the 5 year transitional contact, an exiting company should be offered the first right of refusal on the same volume going forward. This will provide a degree of certainty for the established company and a base revenue model for the LFMC.
    -Twigger

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