Record lumber prices are cooling without ever reaching N.B. timberland owners

When North American lumber prices hit a record $2,050 per thousand board feet on May 7, about $100 of that was going to New Brunswick landowners who were selling sawlog quality trees into the market.  

It's a fact that still irks Linda Bell.

"It sure is a low number," said Bell, who works with private sellers of wood as general manager of the Carleton Victoria Forest Products Marketing Board. 

"This is something landowners waited for for years, to try and get a good price, and it just didn't happen. These increases for lumber never filtered down through to landowners at all."

Lumber prices are still above traditional levels, but markets have cooled considerably.  

This week, prices for softwood two-by-fours have been hovering around $800 per thousand board feet, giving those who profited from the windfall time to reflect on their good fortune and count their money.

Last month in Alberta, where the province raised timber royalty fees monthly as markets rocketed upward, Agriculture and Forestry Minister Devin Dreeshen revealed in his annual report Alberta earned $413.64 million in timber fees and royalties for the year that ended in March.  

It is quadruple what the province budgeted at the start of the year even though it does not include the major windfall months of April and May.

"Alberta's timber dues system is grounded on the principles of fairness, efficiency, transparency, and industry competitiveness," said Dreeshen's report

"As profits climb higher, timber dues paid to the Crown increase. It also helps ensure Albertans receive a fair return from private companies using a public timber resource."

Companies cashing in

Canada's big publicly traded lumber companies are also flush with money and preparing to announce their own eye-popping results next week.  

The largest, British Columbia's West Fraser Timber Company Ltd., has made so much money off lumber it announced a plan to buy back $1 billion of its own shares from investors two weeks ago.  

Canfor Corporation, another big  producer, also.announced a plan to buy back its shares. Quebec based Resolute Forest Products Inc paid a special $1 dividend to shareholders 

"The cash generated with our lumber platform in these strong lumber markets provides the opportunity to share benefits directly with shareholders," said Resolute president Remi G. Lalonde in announcing the $79 million payout last month

Also earning unprecedented amounts have been New Brunswick forestry companies.

According to Statistics Canada, New Brunswick sawmills and wood preservation operations set a manufacturing sales record for treated and untreated lumber in May of $199.8 million.  It's double the sales of any previous May and the third month in a row lumber producers in the province have set new sales records.  

Over the most recent 12 months New Brunswick lumber production has surpassed $1.6 billion, about $700 million more than the 12 months before that with most of the increase retained by the companies themselves.

Record prices missed by Crown, private landowners

The province did not raise its own timber royalties to share in the flood of money and there has been little change in what landowners have been getting for the trees they sell.

The New Brunswick government's Forest Products Commission tracks amounts paid to landowners for their trees and reported as of last December tree cutting contractors were paying landowners $17.93 per cubic metre in "stumpage" for sawlog quality softwood. 

Stumpage is the price offered by a third party to cut standing timber on a landowner's property, and the December amount is about $1 higher than landowners were getting in December 2016.  It was also the equivalent of about $90 for the 4.4 cubic metres of New Brunswick sawlogs it takes to make 1,000 board feet of lumber.

Bell said that price did come up through the spring, although the forest products commission has not published those numbers yet.  But Bell says it stings to see the size of fortunes being made from lumber across the country in the last year and know so little has made its way back to timberland owners.

"Landowners have tried to get value for their wood lots for so many years and then when the market dictated a good price, our landowners still could not get the value," said Bell. 

"It's very discouraging.  A lot of them will not even cut because they don't feel that, you know, they're not getting fair market value."