BC Logging Contractor Sustainability Funding

British Columbia Minister of Forests, Lands and Natural Resource Operations, Steve Thomson, announced May 6 more funding to the Forestry Service Providers Compensation Fund—bringing government’s total contributions to $7 million.

British Columbia Logging Contractor Sustainability Funding

Minister Steve Thomson announced last week an additional $1 million contribution to the Forestry Service Providers Compensation Fund—bringing government’s total fund contributions to $7 million—in a move that supports contractor sustainability and the independent harvesting contractors at the heart of BC’s forest industry.

The one-time grant was announced today by Minister of Forests, Lands and Natural Resource Operations Steve Thomson at the Interior Logging Association s 58th annual conference and trade show in Vernon, BC. The grant will enhance the $5-million provincial seed money that established the fund in summer 2012, along with the additional $1-million provincial grant that was already made in 2015.

Thomson made the announcement at the Interior Logging Association’s 58th Annual Conference and Trade Show in Vernon, BC.

“Since it came online in 2013, almost $500,000 has been paid from the Fund to contractors who were working for licensees that became insolvent,” said David Elstone, Truck Logger Association Executive Director. “This shows the fund is needed to support contractors left high and dry.”

Forest contractors run locally owned businesses that create jobs throughout BC’s rural communities. When these companies are left in the lurch by a tenure holder that becomes insolvent, the whole community suffers. “We’ve seen this happen more than once,” said Elstone. “And we know that the ripples are felt throughout our communities.”

For the first time, silviculture contractors are also able to access the Forestry Service Providers Compensation Fund. “This is recognition of the important role silviculture plays within the forest sector,” said John Betts, Executive Director of the Western Silvicultural Contractors’ Association. “We remain optimistic about the forest sector in BC. Nevertheless, this will provide some business certainty for our member as they contribute to the future forests of BC.”

“Also, if they are going to do this, they need to factor in the historic contribution of Canada’s forest industry.”

Half of the new funding will be allocated to the general fund, while the other $500,000 will be allocated to a new sub-account that will be available to the silviculture contracting sector whose activities make a permanent and non-reversible improvement to Crown land. Further work is required to define the specific silviculture services eligible for compensation, along with amendments to the Forestry Service Providers Compensation Regulation and Forestry Service Providers Compensation Fund Administrative Agreement. The Province will work with the Western Silvicultural Contractors Association to determine silviculture service eligibility, with anticipated regulation recommendations to be completed in fall 2016.

Said Reid Hedlund, Chair of the Interior Logging Association, “Logging contractors are an integral piece in the supply chain that provides timber and fibre to the mills and manufacturing facilities that many BC communities depend on for jobs and as cornerstones of their economy. The fund boosts contractor confidence in sustainability, allowing for greater investment in busi- ness resources and more stability in this portion of the supply chain. We welcome this contribution.”

The Forestry Service Providers Compensation Fund was established to give relief to eligible forestry contractors that were not paid for forestry service that they provided because the licensee that received the services became insolvent. It is administered by an arm s length authority, who is guided by a five-member advisory board, consisting of representatives from:

  • Coastal logging contractors
  • Interior logging contractors
  • Major coastal licensees
  • Major Interior licensees
  • The Ministry of Forests, Lands and Natural Resource Operations

Quick Facts:

  • The Forestry Service Providers Protection Act was passed in spring 2010 to protect the financial interests of timber harvesting contractors who have provided logging and related services to licensees. It includes two components: a lien and a compensation fund.
  • The compensation fund was established in summer 2012, with the provincial government contributing $5 million and appointing a fund manager.
  • In March 2015, the Province of British Columbia made a grant of $1 million to the compensation fund.
  • As of March 31, 2016, the fund has provided $484,742 in distributions related to three small insolvencies since inception and, with the 2016 grant, approximately $7 million remains available.
  • Examples of silviculture contractors who make permanent and non-reversible improvements to Crown land include contractors that plant trees, space, brush and perform site preparation.