Ministry of Forests Annual Report 1994/95

Ministry of Forests Annual Report 1994/95 Table of Contents

Special Accounts-Statutory

The Ministry of Forests is involved on an ongoing basis with special initiatives and programs. Through funding and/or delivery of services, the ministry makes significant contributions to several programs through special statutory accounts.

Special Accounts Introduction

Statutory authorities exist for several Special Accounts in which the Ministry of Forests has significant involvement, through funding, and/or the provision of services, personnel or materials. The Special Accounts include:

The reports that follow under the Special Accounts allocation are organized by these accounts, with the exception of the Forest Stand Management Fund, for which no program report is included.

Forest Stand Management Fund

This account was originally established as a fund by the Forest Stand Management Fund Act, 1986, and was changed to a Special Account under the Special Accounts Appropriation and Control Act, 1988. Revenue is provided by contributions from municipalities, the forest industry, forest sector unions, and others. Expenditures provide for enhanced management of British Columbia's forest and range lands, and for related projects. No financing transactions are provided for under this account.

Small Business Forest Enterprise Program (SBFEP)

This account was established in 1988 through an amendment to section 87.1 of the Forest Act. The account is designed to identify all revenues incidental to the operation of the SBFEP and to provide an ongoing source of funds to defray the costs of the program. Revenue derives from upset and bonus stumpage, annual rents, trespass charges, scaling and registration fees, and sales of logs. Revenue in excess of current expenditures and future basic silviculture requirements is returned to the province's General Fund. Expenditures are made for administration, logging road and bridge construction and maintenance, the costs of selling timber and logs, and basic silviculture to restock logged lands.

South Moresby Implementation Forest Replacement and Compensation)

These accounts were established by the South Moresby Implementation Account Act in 1988. The purpose of the Forest Replacement Special Account is to offset the decrease in forest land available for harvest due to the creation of South Moresby National Park Reserve, by providing forest enhancement, research and extension activities.

The Forestry Compensation Special Account funds acquisition of third-party forest interests associated with the establishment of South Moresby National Park Reserve.

Build BC (Forest Worker Development Program)

This Special Account was created by the Build BC Act, 1993. The account was created to provide funding for projects and initiatives to facilitate the expansion and diversification of the provincial economy in a manner consistent with the Act. Funding for this program is shared among the Ministry of Forests, the Build BC Special Account, and the Ministry of Skills, Training and Labour. Delivery of the program is managed by the Ministry of Forests.

Forest Renewal BC

This Special Account was established in 1994 by the BC Forest Renewal Act to implement a long-term, sustainable investment strategy for the province's forests and forest sector. Revenues derive from increases, as of May 1, 1994, in stumpage and royalties paid by the forest industry for harvesting Crown timber. Expenditures of up to $400 million per year will, by law, be reinvested in the forests, forest workers, and forestry-reliant communities.

The Ministry of Forests delivered Forest Renewal BC programs during 1994/95, but does not fund the Special Account.

Small Business Forest Enterprise Program

Qualified individuals and firms register in this program to purchase Crown timber from the province. Market loggers make up the majority of registrants.

The Small Business Forest Enterprise Program's (SBFEP) main objectives are to provide opportunities for existing and new businesses in the forest industry, to promote diversification and jobs, to support competition and profit, and to encourage sound, integrated forest management throughout the province. The SBFEP also provides opportunities for a considerable number of private-sector contractors who construct roads, reforest land, measure and protect the timber resource, and assist in planning forest management activities.

1994/95 Highlights

The volume of timber available for sale to loggers and sawmillers under the program remained steady throughout 1994/95. Demand for timber grew largely as a result of increasingly strong lumber markets.

Bid proposal sales

These sales are designed to encourage and promote value-added manufacturing, and they continued to receive strong interest during 1994/95. The ministry awarded 30 bid proposal sales, providing approximately 1.9 million cubic metres of timber to remanufacturers and specialty producers. This was an increase of one sale from 1993/94, and an increase of 100,000 cubic metres of timber.

Successful applicants in 1994/95 proposed $14.2 million in capital investments to create 184 new jobs and maintain 569 jobs. Compared to 1993/94, this was an increase in investment.

Special bid proposal sales, designed to encourage small sawmills to provide lumber to remanufacturers, continued during 1994/95: the eight that were sold provided approximately 218,000 cubic metres of timber. This was a decrease from 1993/94, when 813 sales provided approximately 429,000 cubic metres of timber.


All forest lands on which timber has been harvested under the program will be reforested by the ministry. During 1994/95, silviculture activities were carried out by ministry staff under the SBFEP on 129,770 hectares a substantial increase from 100,490 hectares the year before. Silviculture achievements under the program are summarized in Table H-4.

An audit report on the Small Business Forest Enterprise Program begins on page 73.

Program management

The ministry assumes responsibility for the construction of main forest roads and bridges, for silviculture, and for other forest management requirements that are incidental to operations which yield smallbusiness revenue.

The program is managed on a self-financing basis. The SBFEP account receives all revenues, and is the source of funding for all program expenditures. Revenue in excess of the funds required for current expenditures and future silviculture obligations is returned to the province's General Fund. In 1994/95, $264.1 million was returned.

A strong demand for timber is anticipated during 1995/96. The Canada/U.S. exchange rate is favorable for the export of forest products, and the continuing decrease in timber supply in western North America will cause strong demand for lumber and, in turn, for standing timber sold under the SBFEP.

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