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| Original News Release |
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| Original News Release |
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The province charges a fee – called stumpage – for Crown timber harvested by forest companies.
Effective Feb. 29, 2004, stumpage prices will be determined on the Coast using the market pricing system (MPS).
The MPS uses the results from auction sales to predict the value of Crown timber harvested under long-term tenures. In this way, the province ensures stumpage prices are market based.
At the same time, auction sales will be expanded. About 20 per cent of Crown timber will be sold each year through hundreds of timber sales, which will vary in size and contain terms of up to four years. The timber will be auctioned by B.C. Timber Sales to the highest bidder. The auction results will be used to update the MPS each year.
Prices received for auctioned timber will still require adjustments before they are applied to the timber harvested under long-term tenure. Adjustments will be made for the responsibilities borne by licensees holding long-term tenures, but not by winners of auction sales. This adjustment is referred to as the “tenure obligation adjustment” and covers such responsibilities as planning costs, road building, reforestation and investment and risks in forest management.
Information on prices bid at auction, timber characteristics and prevailing log price data will be freely available so that potential bidders can make informed bids at auction sales.
Provincial stumpage revenue will rise and fall with the market. Over time, the MPS will ensure that the public receives the highest possible revenue consistent with a competitive forest industry. The system, along with the other elements of the revitalization plan, will also result in public timber going to the highest and best use within B.C.
By being more transparent than the existing system, the new timber pricing system will remove any illusion that B.C.’s industry is subsidized.
Preparations to implement the new system in the Interior are underway. Ministry and industry officials are working together on the design. It is expected that the new system will be ready to be implemented in 2004, but the specific date will depend in part on discussions with the U.S. on the softwood lumber dispute.
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