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Past demand and future prospects for Canadian douglas fir Haley, David 1964

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PAST DEMAND AND FUTURE PROSPECTS FOR CANADIAN DOUGLAS FIR by DAVID HALEY B.Sc. (Forestry), University of Aberdeen, 1961 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF FORESTRY in the Department of Forestry We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA Ap r i l 1964 In p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the U n i v e r s i t y of B r i t i s h Columbia, I agree that the L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r reference and study, I f u r t h e r agree that per-m i s s i o n f o r extensive copying of t h i s t h e s i s f o r s c h o l a r l y purposes may be granted by the Head of my Department or by h i s r e p r e s e n t a t i v e s . I t i s understood that.copying or p u b l i -c a t i o n of t h i s t h e s i s f o r f i n a n c i a l gain s h a l l not be allowed without my w r i t t e n permission* Department of A o > ^ J 3 ^  The. U n i v e r s i t y of B r i t i s h Columbia, Vancouver 8, Canada i i ABSTRACT The future demand for Canadian Douglas f i r products i s of p a r t i c u l a r importance because this species, although s t i l l the most important species i n the forest economy of B r i t i s h Columbia, i s being r a p i d l y depleted. The prices of Douglas f i r products are generally higher than s i m i l a r products of other species. In t h i s thesis an examination i s made of the past demand f o r the major Douglas f i r products i n t h e i r various markets and projections of future demand are made to 1975* The future demand f o r Douglas f i r i s then compared to the future, p o t e n t i a l supply of t h i s species. I t i s estimated that the production of Douglas f i r lumber i n B r i t i s h Columbia i n 1975 w i l l be 6 per cent higher than i n 1963. Domestic consumption of Douglas f i r lumber i n Canada i s expected to f a l l by about 20 per cent by 1975? being replaced to a great extent by Eastern spruce and pine lumber. In the United Kingdom lumber market Douglas f i r i s being replaced by Western hemlock and cedar. I f present trends continue between 1963 and 1975 exports of Douglas f i r lumber to the United Kingdom w i l l f a l l by 70 per cent. The main source of demand f o r Douglas f i r lumber i n 1975 w i l l be i n the United States market and i t i s estimated that exports of Canadian Douglas f i r lumber to the United States i n 1975 i i i w i l l be about 13 per cent above the present l e v e l . The B r i t i s h Columbia softwood plywood industry i s a major consumer of Douglas f i r logs. Douglas f i r i s being replaced i n plywood manufacture, however, by spruce, hemlock and balsam. I t i s predicted that i n 1975? 25 per cent of a l l the softwood plywood manufactured i n B r i t i s h Columbia w i l l be of species other than Douglas f i r . This i s to be compared with 9 per cent i n 1963. The volume of Douglas f i r peeler logs used by the B r i t i s h Columbia plywood industry i n 1975 i s expected to be twice as great as the volume used i n 1962. The lumber and plywood industries are the major consumers of Douglas f i r i n B r i t i s h Columbia. Their j o i n t demand i n 1975 f o r this species i s expected to be 2,805 MM f.b.m., that i s , about 20 per cent more than i n 1962. The current supply of accessible Douglas f i r saw-timber i s i n s u f f i c i e n t to meet the po t e n t i a l future demand for t h i s species. The annual allowable cut of Douglas f i r i n B r i t i s h Columbia under sustained y i e l d management i s currently only about 3& per cent of the annual cut required to sustain the future demand for t h i s species to 1975. I t i s concluded that the unique demand and supply aspects of the Douglas f i r market and the high p o t e n t i a l value of the Douglas f i r resource, suggest that special attention should be given to t h i s species i n the forest management programme of the province. The value of a sustained y i e l d p o l i c y i n the case of Douglas f i r i s open to question and i v a l t ernative methods of c o n t r o l l i n g the depletion of mature Douglas f i r should be given serious consideration. Future work i n thi s f i e l d might attempt to resolve the proportions of other species represented i n trade name groupings such as "spruce" and "hemlock". Also, some of the projections of demand should be refined by more intensive analysis. X X ACKNOWLEDGEMENTS Thanks are due to the W.J, Van Dusen Foundation and the University Research Committee fo r f i n a n c i a l support which made thi s thesis possible. Also, to Mr. L. Reid of the B r i t i s h Columbia Manufacturers 1 Association for h i s help and advice and to Dr. J.H.G. Smith, of the Faculty of Forestry, U n i v e r s i t y of B r i t i s h Columbia, for h i s advice and encouragement. V TABLE OF CONTENTS INTRODUCTION . . 1 CHAPTER Page I. THE DOUGLAS FIR RESOURCE 5 The Douglas f i r Region of North America . . . . 5 The Douglas f i r Region of Brit i s h Columbia . . 6 Area 6 Volume . . , 6 Rate of Growth 10 II. HISTORICAL DEVELOPMENT OF MARKETS FOR CANADIAN DOUGLAS FIR 11 Trends in the Volume and Species of Timber Cut i n B r i t i s h Columbia, 1921-1962 11 Trends in the Volume of Timber Cut per Year i n Bri t i s h Columbia . 11 Trends in the Volume of Douglas f i r Cut per Year i n Br i t i s h Columbia 11 Changing Pattern of Species Cut i n British Columbia 12 The Province 12 The Coastal Region 12 The Interior Region 12 Stumpage Trends i n Br i t i s h Columbia, 1921-1962 20 v i CHAPTER Page Use of Douglas f i r for Lumber i n British Columbia, I92I-I963 22 Canadian Consumption of Douglas f i r Lumber . . 27 Trends i n Canadian Lumber Consumption . . . . 27 Trends in Per Capita Consumption of Lumber in Canada 32 Trends i n the Consumption of Douglas f i r Lumber i n Canada 33 Trends in Per Capita Consumption of Douglas f i r Lumber in Canada 33 Trends i n the Consumption of other British Columbia Species of Lumber i n Canada . . . 3 4 Price Trends of Lumber in Canada 38 Changes i n Lumber Demand and Supply in Canada, I92O-I960 41 Export Markets for Canadian Douglas f i r Lumber 46 Trends in Canadian Lumber Exports 46 Trends in Canadian Douglas f i r Lumber Exports 47 The United States Market for Canadian Lumber $0 The United States Market for Canadian Douglas f i r Lumber 54 Consumption of Lumber and Douglas f i r Lumber in the United States 55 v i i CHAPTER Page Changing Pattern of Species of Lumber Exported from Canada to the United States 56 The United Kingdom Market for Canadian Lumber 58 Changing Pattern of Species of Lumber Exported from Canada to the United Kingdom 6 l Markets for Canadian Lumber in Other Countries 63 Changing Pattern of Species of Lumber Exported from Canada to Countries Other than the United States and the United Kingdom 66 Use of Douglas f i r by the Plywood and Veneer Industry in Bri t i s h Columbia 67 Production of Douglas f i r Plywood 67 Production of Douglas f i r Veneer 69 Trends in the Price of Douglas f i r Plywood . 70 Markets for Canadian Douglas f i r Plywood and Veneer 72 The Canadian Domestic Market 72 The Export Market 72 The Resource Base of the Douglas f i r Plywood Industry 75 v i i i CHAPTER Page Changing Pattern of Species Used i n the Softwood Plywood Industry of Canada . . . . 77 Other Uses of Douglas f i r i n B r i t i s h Columbia 80 Use of Douglas f i r by the Pulp and Paper Industry i n B r i t i s h Columbia 80 Use of Douglas f i r f o r Tie Production i n B r i t i s h Columbia 8 l Use of Douglas f i r f o r Poles and P i l i n g i n B r i t i s h Columbia 83 Export Trade i n Douglas f i r Logs 83 Douglas f i r on the Vancouver Log Market . . . . 84 I I I . THE DEMAND FOR CANADIAN DOUGLAS FIR IN 1?75 . . . 88 The Demand f o r Canadian Douglas f i r Lumber i n 1975 89 Canadian Domestic Demand for Lumber i n 1975 . • 89 Canadian Domestic Demand f o r Douglas f i r Lumber i n 1975 91 Export Markets for Canadian Douglas f i r Lumber i n 1975 92 The United States Market for Canadian Douglas f i r Lumber i n 1975 92 The United Kingdom Market for Canadian Douglas f i r Lumber i n 1975 96 i x CHAPTER Page Export of Canadian Douglas f i r Lumber to Countries Other than the United States and United Kingdom i n 1975 97 Total Demand for Douglas f i r Lumber i n 1975 98 Demand f o r Douglas f i r by the B r i t i s h Columbia Plywood and Veneer Industry i n 1975 99 Demand fo r Canadian Softwood Plywood i n 1975 99 Canadian Domestic Consumption of Softwood Plywood i n 1975 • 100 Export Markets for Canadian Softwood Plywood i n 1975 100 Use of Douglas f i r for Plywood Production i n 1975 101 Volume of Douglas f i r Logs Required by the Plywood Industry i n 1975 102 Production of Douglas f i r Veneer (for Sale as Such) 103 Demand f o r Douglas f i r i n other Uses i n 1975 • 103 IV. THE SUPPLY OF DOUGLAS FIR IN BRITISH COLUMBIA . . 105 Demand fo r Douglas f i r Sawtimber i n 1975 • • • 105 Demand fo r Douglas f i r Sawtimber i n the Period 1957-1975 107 X CHAPTER Page The Available Volume of Douglas f i r Saw-timber i n B r i t i s h Columbia 107 CONCLUSION . . 114 LITERATURE CITED 118 x i MAPS MAP 1. The Douglas f i r Region of North America 2. The Natural D i s t r i b u t i o n of Douglas f i r i n North America x i i LIST OF TABLES TABLE Page 1 . Gross Volume of Standing Timber i n B.C. by-Species ( a l l trees 4 . 1 inches d.b.h. and over) 7 2 . Sound Wood Volume, to Close U t i l i s a t i o n Limits, on Accessible and P o t e n t i a l l y Accessible Sites i n B.C. ( a l l trees 4 . 0 inches d.b.h. and over 8 3. D i s t r i b u t i o n of P o t e n t i a l l y Accessible and Accessible Douglas f i r Volume i n B.C. by Age Class 9 4. D i s t r i b u t i o n of P o t e n t i a l l y Accessible and Accessible Douglas f i r Volume i n B.C. by d.b.h. Class 9 5. Annual Net Growth of Douglas f i r i n B.C. on Accessible and P o t e n t i a l l y Accessible Sites . 1 0 6 . Average Annual Timber Cut i n B.C. by Species, 1 9 2 1 - 6 2 14 7 . Timber Cut i n B.C. by Species as Percentage of Total Cut, 1 9 2 1 - 6 2 1 5 8. Timber Cut i n the In t e r i o r Region of B.C. by Species, 1 9 2 1 - 6 2 . . . . . 1 6 9 . Timber Cut i n the In t e r i o r Region of B.C. by Species as Percentage of Total Cut, 1 9 2 1 - 6 2 . 1 7 x i i i TABLE Page 10. Timber Cut i n the Coastal Region of B.C. by-Species , 1921-62 18 11. Timber Cut i n the Coastal Region of B.C. by Species as Percentage of Total Cut, 1921-62 . . 19 12. Average Annual Stumpage Prices Received i n B.C., 1921-62 21 13. Annual Production of Douglas f i r Lumber i n B.C., 1921-62 24 14. Annual Lumber Production by Species as Percentage of Total Lumber Production i n B.C., 1921-63 25 15. Consumption of Lumber i n Canada, 1921-60 . . . . 28 16. Value of Lumber Consumption as Percentage of Disposable Income and Gross Building Expenditure, 1946-60 29 17. Average Canadian per Capita Consumption of Lumber, 1926-60 32 18. Average Consumption of Douglas f i r Lumber as Percentage of Total Consumption of Lumber i n Canada, 1921-63 34 19. Apparent Consumption of Lumber by Species i n Canada, 1921-60 35 20. Consumption of Lumber i n Canada by Species as a Percentage of Total Consumption, 1921-60 . . . 36 x i v TABLE Page 21. B.C. Production of Cedar, Hemlock and Spruce Lumber as a Percentage of the Canadian To t a l Lumber Production, 1921-60 37 22. Average Price of B.C. Lumber (Constant Dol l a r s , 1935-39 = 100), 1921-60 39 23. D i s t r i b u t i o n of Canadian Lumber Exports by Destination 47 24. Exports of Douglas f i r Lumber from Canada as a Percentage of Douglas f i r Lumber Production, 1921-62 48 25. Canadian Lumber Exports by Species as Percentage of Total Lumber Exports, 1921-60 49 26. Canadian Lumber Exports to U.S. as Percentage of U.S. Lumber Consumption, 1920-62 51 27. Waterborne Shipments of Lumber to U.S. A t l a n t i c Coast, 1950-61 54 28. Lumber Exports to U.S. by Species, 1921-62 . . . 57 29. U.K. Annual Imports of Softwood Lumber, 1950-60 60 30. Lumber Exports to U.K. by Species, 1921-62 . . . 63 31. Exports of Lumber to Countries Other than the U.K. and U.S., 1921-60 65 32. Douglas f i r Exports to Other Countries, 1926-62 65 33. The B.C. Douglas f i r Plywood Industry, 1944-63 . 69 XV TABLE Page 34. Douglas f i r Veneer Production i n B.C. (For Sale as Such) 1954-62 70 35. Price of Douglas f i r Plywood, 1944-61 71 36. Per Capita Consumption of Douglas f i r Plywood i n Canada, 1948-62 73 37. Percentage Exports of Douglas f i r Plywood from Canada by Destination, 1948-60 74 38. Recovery Rate i n B.C. Douglas f i r Plywood Industry, 1954-63 77 39. The Use of Species Other than Douglas f i r i n Plywood Manufacture, 1954-63 79 40. Volume of Pulpwood Used i n B.C. by Species, 1931-61 82 41. Canadian Exports of Douglas f i r Logs, 1930-60 84 42. Douglas f i r Lumber Production as a Percentage of Total Lumber Production i n the U.S., 1946-60 95 43. Demand for Douglas f i r Lumber i n 1975 98 44. Annual Allowable Cut of Douglas f i r i n B.C. . . 109 45. Summary of Demand and Supply f o r Douglas f i r i n B.C., 1957-1975 113 x v i LIST OF FIGURES Following FIGURE Page 1. Timber Cut in B.C. of A l l Species, 1921-62, (MM f.b.m.) 11 2. Timber Cut in B.C. by Species, 1921-62, (MM f.b.m.) 12 3. Timber Cut i n B.C. by Species as Percentage of Total Cut, 1921-62 15 4. Timber Cut i n Interior Region of B.C. by Species as Percentage of Total Cut, 1921-62 . . 17 5. Timber Cut i n Coastal Region of B.C. by Species as Percentage of Total Cut, 1921-62 . . 19 6. Average Stumpage Price Received i n B.C. by Species, 1921-62 (Constant dollars per M f.b.m.: 1935-39 = 100) 21 7. Lumber Production i n B.C., I92O-63, (MM f.b.m.) . 24 8 . Lumber Production by Species i n B.C., 1920-63, (MM f.b.m.) 25 9. Lumber Production in B.C. by Species as Percentage of Total Lumber Production, 1920-63 25 10. Apparent Consumption of Lumber i n Canada, 1920-60 . 27 x v i i Following FIGURE Page 11. Building Construction and Lumber Consumption i n Canada, 1939-62 31 12. Value of Residential Construction i n Canada as Percentage of Value of Total Building Construction, 1939-62 31 13. Per Capita Lumber Consumption i n Canada, 1926-60, (f.b.m.) 32 14. Canadian Lumber Consumption by Species as a Percentage of Total Lumber Consumption, 1920-60 36 15. Wholesale Price Indices for Canada, 1920-62, (1935-1939 = 100) 38 16. Price of B.C. Lumber, 1920-60, (Constant d o l l a r s M f.b.m.) 40 17. Trend Analysis of Lumber Demand and Supply i n Canada ( A l l Lumber) 44 18. Trend Analysis of Lumber Demand and Supply i n Canada (Douglas f i r lumber) 44 19. Lumber i n Canada—Price (Constant d o l l a r s ) : Quantity Consumed per Annum, 1920-60 45 20. Douglas f i r — P r i c e (Constant d o l l a r s ) : Quantity Consumed per Annum, 1920-60 45 21. Canadian Lumber Exports 1926-60; D i s t r i b u t i o n by Destination, (MM f.b.m.) 46 22. Douglas f i r Lumber Exports from Canada 1920-61; D i s t r i b u t i o n by Destination (MM f.b.m.) . . . . 46 x v i i i FIGURE Following Page 2 3 . Exports of Canadian Lumber, I 9 2 O - 6 0 , (MM f.b.m.) 4 7 24. Douglas f i r Lumber Exports as a Percentage of Production, 1 9 2 0 - 6 2 4 8 2 5 . Consumption of Lumber i n the U.S., 1 9 2 0 - 6 1 . . . 5 5 2 6 . Douglas f i r Lumber Consumption i n U.S. as a Percentage of Total Lumber Consumption, 1 9 2 6 - 6 1 . . 5 5 2 7 . Exports of Lumber to the U.S. by Species as a Percentage of Total Lumber Exports, 1 9 2 6 - 6 2 . . 5 7 2 8 . Exports of Canadian Lumber to the U.K. by Species as a Percentage of Total Lumber Exports, 1 9 2 0 - 6 2 6 2 2 9 . The Price of Douglas f i r Plywood, 1944 - 6 1 , (Constant d o l l a r s per M Sq. Ft . : ^-inch Basis 7 1 3 0 . Per Capita Consumption of Douglas f i r Plywood i n Canada (Sq. F t . per Annum: ^-inch Basis) . . . 7 3 3 1 . The Markets for Douglas f i r Plywood, 1 9 5 4 - 6 3 . . 7 4 3 2 . Trends i n Canadian Lumber Consumption (MM f.b.m. per annum) 9 1 3 3 . Population Trends i n Canada, I 9 4 8 - 8 O 9 1 3 4 . Per Capita Lumber Consumption Trends i n Canada 9 1 x i x FIGURE Following Page 35« Douglas f i r Lumber Production i n the U.S., 1920-1975, ( B i l l i o n s f.b.m.) 94 36. Douglas f i r Lumber Production i n U.S. as a Percentage of Total Lumber Production, 1920-75 94 37. Canadian Exports of Douglas f i r Lumber to the U.S., 1920-75, ( B i l l i o n s f.b.m.) 95 38. Canadian Lumber Exports to the U.K., 1935-75? (MM f.b.m.) 96 39. Canadian Douglas f i r Lumber Exports to U.K. as a Percentage of Total Lumber Exports to U.K., 1950-75 96 40. Per Capita Consumption of Softwood Plywood i n Canada, 1946-75, (Sq. F t . : 4 -inch Basis) . . . 99 41. Export of Softwood Plywood from Canada 1954-75, (M Sq. Ft. : i - i n c h Basis) 100 42. Percentage of Canadian Softwood Plywood Exported, 1954-75 . 100 43. Plywood Manufactured from Species Other Than Douglas f i r as a Percentage of Total Plywood Production i n Canada, 1955-75 102 44. Volume of Douglas f i r Logs Used by Plywood Industry, 1944-75 (MM f.b.m.) 102 45. Percentage D i s t r i b u t i o n of Douglas f i r Cut i n B.C. Between I n t e r i o r and Coastal Regions, 1920-75 . 106 1 INTRODUCTION Douglas f i r has played a major role in the development and rise to prosperity of the Bri t i s h Columbian forest industry. In 1964 i t is s t i l l the most important species used by the lumber and plywood industries of B r i t i s h Columbia. In 1963 Douglas f i r lumber accounted for 32.8 per cent of the total B r i t i s h Columbia lumber production of 6>350*" MM f.b.m. and Douglas f i r plywood accounted for 91 per cent of the total B r i t i s h Columbia softwood plywood production of I8942 MM sq. f t . C^-inch basis). In 1962 the volume of Douglas f i r cut i n Bri t i s h Columbia for a l l uses was 2,331 MM f.b.m. (B.C. Forest Service, 1962), that is 29.4 per cent of the total provincial cut i n 1962. The volume of mature, utilisable Douglas f i r timber available to the forest industries i n B r i t i s h Columbia i s declining rapidly. In 1937 the o f f i c i a l inventory of B r i t i s h Columbia forest resources (Mulholland, 1937) stated that Douglas f i r constituted 24 per cent of the mature saw timber volume on the Coast and 12 per cent of the ^Estimate based on the production of lumber i n Bri t i s h Columbia during the f i r s t 9 months of 1963. D.B.S.—Produc-tion Shipments and Stocks on Hand of Sawmills in Bri t i s h Columbia (1963), 35-002. 2Estimate based on the production of softwood plywood in Brit i s h Columbia during the f i r s t 10 months of 1963. D.B.S.— Peeler Logs, Veneer and Plywood (1963), 35-001. 2 mature saw timber volume i n the I n t e r i o r . In 1957 > twenty years l a t e r , the o f f i c i a l estimate of the B.C. Forest Service (B.C. Forest Service, 1957) was that only 13 per cent of the mature saw timber volume on the Coast was Douglas f i r and i n the I n t e r i o r only 9 per cent was Douglas f i r . Throughout the h i s t o r y of the B r i t i s h Columbia fo r e s t industry the percentage representation of Douglas f i r i n the annual cut has f a r exceeded the percentage representation of this species i n the p r o v i n c i a l forest inventory. Mulholland (1937) stated that Douglas f i r supplies i n B r i t i s h Columbia were limi t e d and that within approximately 10 years the industry would have to turn to other species. In his report on Forest Reserves of B r i t i s h Columbia Sloan, (1956:15) concluded that "Ie, are nearlng the end of the era when v i r g i n f i r was the major producer of our f o r e s t wealth and are approaching an economy dominated by hemlock." In response to diminishing supply, the prices of Douglas f i r stumpage and Douglas f i r products have r i s e n w ell above average since the second world war. Douglas f i r logs command high premiums, p a r t i c u l a r l y i n the better grades. The future prospects for Douglas f i r are of importance to the B r i t i s h Columbia fo r e s t industry and are p a r t i c u l a r l y important to those who manage the f o r e s t resource. At the moment no sp e c i a l attention i s given to the Douglas f i r resource i n B r i t i s h Columbia. The facts that supplies of Douglas f i r saw timber are being depleted r a p i d l y and that the 3 remaining stands of Douglas f i r have an extremely high pote n t i a l value, suggest that t h i s species deserves s p e c i a l attention i n the forest management program of B r i t i s h Columbia. In t h i s thesis the past demand and price trends f o r Canadian Douglas f i r w i l l be examined from 1920 to 1963 and predictions of the demand f o r Douglas f i r i n 1975 w i l l be made. The future demand f o r Canadian Douglas f i r w i l l be compared to the future p o t e n t i a l supplies of t h i s species. The species replacing Douglas f i r i n i t s various markets w i l l be ascertained and the rate at which t h i s replacement i s taking place w i l l be examined. Although the best available information w i l l be used some important l i m i t a t i o n s i n int e r p r e t a t i o n e x i s t . For example, the volume of lodgepole pine and balsam reported as manufactured into lumber i s much less than volumes of logs scaled would indicate. A f t e r making appropriate reduction for volumes used i n manufacture of plywood and pulp and paper i t i s obvious that trade names of lumber do not f a i t h f u l l y represent the species involved, P a c i f i c s i l v e r f i r makes up a substantial proportion of the hemlock sold on the Coast. S i m i l a r l y , alpine f i r and lodgepole pine are commonly sold i n mixture with spruce i n the I n t e r i o r . A s i m i l a r problem arises i n any attempt to d i s t i n g u i s h between species used i n plywood sold either as Douglas f i r or Western Softwood. Not a l l of the veneer used i n Douglas f i r plywood i s of that 4 species and some Douglas f i r may be included i n Western Soft-wood plywood. I t also should be noted that the projections which w i l l be made suffer from most of the l i m i t a t i o n s of h i s t o r i c a l time series data. Refinement by c r i t i c a l analysis of a l l pertinent trade and economic considerations, and use of more sophisticated s t a t i s t i c a l techniques would be highly desirable but was beyond the scope of t h i s t h e s i s . M a p I- T h e Douglas f ir Region of North A m e r i c a -CANADA UNITED STATES 0 ^ Douglas fir Region: Forests in which 5 0 % or more of the stand by volume is Douglas fir-Source: Guthrie a Armstrong, I960-Western Forest Industry 5 CHAPTER I THE DOUGLAS FIR RESOURCE The Douglas f i r Region of North America Douglas f i r (Pseudotsuga menziesii) i s indigenous to Western North America. The, so called, Douglas f i r region ( f i f t y per cent or more of Douglas f i r by volume) extends from Northern California in the south, northward through Oregon and Washington into Southern British Columbia (Map 1) . Douglas f i r i s of minor importance i n Alberta, Montana, Idaho and Wyoming. The potential commercial area of the Douglas f i r region i s approximately 47.2 million acres (B.C. Forest Service, 1957; U.S. Forest Service, 1958) that i s about 4.3 per cent of the total commercial forest area in North America. Douglas f i r is the major species of the Pacific Slope, which is defined as the eleven western States, B r i t i s h Columbia and Alaska (Guthrie and Armstrong, i 9 6 0 ) . In this area Douglas f i r accounts for 22 per cent of merchantable sawtimber volume. Of this, 72 per cent i s in the Coastal Region and 28 per cent in the Interior region. 6 The Douglas f i r Region of B r i t i s h Columbia (B.C. Forest Service, 1957) Area In B r i t i s h Columbia stands containing 20 per cent or more Douglas f i r cover 15.4 m i l l i o n acres. That i s 18 per cent of the commercial forest land of B r i t i s h Columbia. Approximately 76.8 per cent of t h i s area i s i n the I n t e r i o r and 23.2 per cent on the Coast. Volume Table 1 shows the gross volume of standing timber i n B r i t i s h Columbia, by species, to close u t i l i s a t i o n l i m i t s , unreduced f o r breakage and decay. Cubic foot volume was converted to f.b.m. by use of a conversion factor of 6. Gross volume however i s only of academic i n t e r e s t . From a p r a c t i c a l point of view the most useful concept of volume, fo r purposes of long range forecasting, i s the volume, reduced f o r breakage and decay, of timber on accessible and p o t e n t i a l l y accessible s i t e s (Table 2 ) . Table 2 shows that 32.6 per cent of the p o t e n t i a l l y accessible Douglas f i r volume i s i n the Coastal region and 67.4 per cent i n the I n t e r i o r region. Douglas f i r only amounts to 9*2 per cent of the p o t e n t i a l l y accessible volume of a l l species i n the Province. 7 Table 1. Gross Volume of Standing Timber i n B.C. by Species. ( A l l trees 4.1 inches d.b.h. and over) Species Volume Percentage of t o t a l volume B i l l i o n s f.b.m. i Spruce 777.6 27.6 Hemlock 479.4 1 7 .9 Balsam 326.4 11.6 Douglas f i r 228.0 8.1 Cedar 288.0 10.2 Lodgepole 15.4 pine 4 3 ? . o Others 283.8 10.1 Total 2818.2 100.0 Source: Continuous Forest Inventory of B.C. (1957)> Table V - l Table 3 shows d i s t r i b u t i o n of Douglas f i r volume by age c l a s s . Forty-one per cent of p o t e n t i a l l y accessible and accessible Douglas f i r volume i s under 80 years of age. Only 14 per cent i s between 8 l and 120 years of age and 45 per cent i s over 121 years old. Table 4 shows the d i s t r i b u t i o n of Douglas f i r volume i n B r i t i s h Columbia by diameter c l a s s . Seventy-eight per cent of accessible and p o t e n t i a l l y accessible volume i s i n trees over 14 inches d.b.h. Nine per cent i s i n trees of 4 to 9 inches d.b.h. Table 2. Sound Wood Volume, to Close U t i l i s a t i o n L imits, on Accessible and P o t e n t i a l l y A ccessible Sites i n B.C. ( A l l trees 4.0 inches d.b.h. and over) Species Volume i n I n t e r i o r Volume on Coast To t a l volume i n Province Percentage of t o t a l i n t e r i o r volume Percentage of t o t a l Coastal volume Percentage of P r o v i n c i a l t o t a l volume B i l l i o n s f.b.m. B i l l i o n s f.b.m. B i l l i o n s f.b.m. % % % Spruce 553.2 28.8 582.0 37.4 6.6 30.2 Hemlock 120.0 167.4 287.4 8.1 ... 38.2 14.9 Balsam 147.6 60.6 208.2 10.0 13.8 10.8 Douglas f i r 119.4 57.6 177.0 8.1 13.1 9.2 Cedar 42.0 98.4 140.4 2.8 22.4 7.3 Lodgepole pine 363.0 2.4 365.4 24.4 0.5 19.0 Others 137.4 23.4 160.8 9.2 5.4 8.6 T o t a l 1482.6 438.6 1921.2 100.0 100.0 100.0 Source: Continuous Forest Inventory of B.C. (1957)> Table V-3 9 Table 3. Distribution of Potentially Accessible and Accessible Douglas f i r Volume i n B.C. by Age Class Douglas f i r Age Class Volume of Douglas f i r in B.C. Total volume a l l species in B.C. volume as percentage of a l l species Billions f.b.m. Bill i o n s f.b.m. i Younger Immature 1-80 82.2 548.4 15 Old Immature 81-120 27.6 204.6 13.5 Mature 121+ 92.4 1506.6 6.1 Source: Continuous Forest Inventory of B.C. (1957)> Table V-7 Table 4 . Distribution of Potentially Accessible and Accessible Douglas f i r Volume in B.C by d.b.h. Class Volume of Volume of Douglas f i r Diameter Class Douglas f i r a l l species as percentage in B.C. in B.C. of a l l species Bi l l i o n s f.b.m. Bil l i o n s f.b.m. 4 - 9 ins. 18.0 423.6 4.3 10-12 ins. 13.8 248.4 5.6 12-14 ins. 12.6 209.4 6.0 Over 14 ins. 157.2 1380.6 11.4 Source: Continuous Forest Inventory of B.C. (1957)? Table V-8 10 Only 34.8 b i l l i o n f.b.m. or 20.5 per cent of the t o t a l volume of Douglas f i r over 12 inches d.b.h. was accessible and operable i n 1957. Rate of Growth Table 5 shows the net current annual increment (growth minus natural depletion) of Douglas f i r i n B r i t i s h Columbia by diameter c l a s s , on accessible and p o t e n t i a l l y accessible s i t e s . Table 5. Annual Net Growth of Douglas f i r i n B.C. on Accessible and P o t e n t i a l l y Accessible Sites Size Class 10" + d.b.h. 14" + d.b.h. Annual Net Growth, B i l l i o n s f.b.m. Int e r i o r 0.72 0.64 0.57 Coast 0.28 0.20 0.17 Province 1.00 0.84 0.74 Source: Continuous Forest Inventory of B.C. (1957), Table 9-1 Region 4" + d.b.h, 11 CHAPTER II HISTORICAL DEVELOPMENT OF THE MARKETS FOR CANADIAN DOUGLAS FIR Trends in the Volume and Species of Timber Cut^  in B r i t i s h Columbia. 1921-J.962 Trends in the Volume of Timber Cut per Year in British Columbia During the last 40 years the volume of timber cut in British Columbia has shown a marked upward trend (Figure 1). Up to 1939 the majority of timber was cut In the Coastal Region. Since the second world war there has been rapid development of the forest industry in the British Columbia Interior and in 1962 the Interior Region accounted for about 41 per cent of the total provincial cut. The Interior shows a much steeper upward trend of volume cut per year, than the Coast (Figure 1) . Trends in the Volume of Douglas f i r Cut per Year in Brit i s h Columbia For the province as a whole the volume of Douglas f i r cut per year shows an upward trend (Figure 2 and Table 6 ) . In recent years however, this growth has been entirely in the Interior Region (Table 8 ) . In the Coastal Region the volume Fig- I Timber Cut in BCof All Species.1921-1962 (MMfb-m) 4 Yeor Source' B-C-P S- Annuol Report*, 1921-1962-? 12 of Douglas f i r cut reached a peak i n the late 1930's and since t h i s period has shown a downward trend. Changing Pattern of Species Cut i n B r i t i s h Columbia The Province. Taking the Province as a whole the volumes cut per annum of a l l the major species have shown a marked upward trend during the l a s t f o r t y years (Table 6 and Figure 2). The percentage representation of these species i n the t o t a l cut has changed considerably however (Table 7 and Figure 3 ) . Throughout the period Douglas f i r has been the major species but since the late 1930's the percentage of f i r cut has declined r a p i d l y and now shows a steep down-ward trend. Between 1936 and 1940 Douglas f i r averaged 50 per cent of the t o t a l p r o v i n c i a l volume cut. By 1962 t h i s had been reduced to 29.4 per cent. The percentage of cedar cut i n the province has shown a steady downward trend since the early 1920's and i n 1962 accounted f o r only 13.2 per cent of the p r o v i n c i a l t o t a l . The percentage of hemlock, spruce, balsam and lodgepole pine cut a l l show marked upward trends. In 1962 hemlock accounted for 23.2 p e r c e n t of the p r o v i n c i a l t o t a l , spruce 17.6 per cent, balsam 9.3 per cent and lodgepole pine 3*8 per cent. The Coastal Region. In the Coastal Region, hemlock i s now the most important species cut and i n I962 accounted for 35.4 per cent of the t o t a l (Table 11 and Figure 5). The percentage cut of t h i s species shows a steep upward trend. Fig- 2 Timber Cut in BC- by Species, 1921-1962 ( M M f b m ) 3500r 3000 2500 2000 1500 1000 500 Douglas fir Hemlock Western Red Cedar — — — Spruce 1920 1930 1940 1950 I960 Year 1970 Source' B C F S Annual Report!, 1921 -1962-13 Douglas f i r l o s t i t s place to hemlock as the main species cut on the Coast i n the late 1950's. P r i o r to 1940,Douglas f i r accounted f o r more than 50 per cent of a l l timber cut i n the Coastal Region. By the l a t e f i f t i e s t h i s had f a l l e n to 33 per cent and i n 1962 was only 26 per cent. The percentage of cedar declined during the 1920*s but since 1930 has been f a i r l y steady at about 20 per cent of the t o t a l . The percentage of balsam cut on the Coast has shown a marked upward trend over the f o r t y year period and i n 1962 accounted for 14 per cent of the t o t a l cut on the Coast. The percentage of spruce cut on the Coast has varied l i t t l e over the period considered here and i n 1962 t h i s species comprised 4.2 per cent of the t o t a l cut f o r the Coast. The In t e r i o r Region. The volumes cut of a l l species i n the Inter i o r have shown a marked increase from 1921 to 1962 (Table 8). The most important species are Douglas f i r and spruce, comprising 34.8 per cent and 37.6 per cent of the t o t a l cut, respectively. The percentages of t o t a l cut f o r both these species show upward trends (Figure 4). In the 1920*s cedar was as important i n the Interi o r as spruce and Douglas f i r but by. 1962 i t accounted for only 4 per cent of the t o t a l . Balsam, hemlock and lodgepole pine are a l l increasing i n importance (Figure 4). 14 Table 6. Average Annual Timber Cut in B.C. by Species 1921-62 Average Annual Timber Cut in B.C. by Species Period . . _ _ , , Lodge-Douglas Hem- pole f i r lock Spruce Cedar Balsam pine Total f.b.m. 1921-25 972 259 197 571 55 52 2274 1926-30 1461 343 209 683 85 64 2997 1931-35 1025 313 115 372 71 21 2078 1936-40 1619 542 174 594 95 20 3218 1941-45 1336 623 308 581 143 16 3222 1946-50 1619 812 402 741 211 64 4057 1951-55 2090 1095 669 818 330 118 5320 1956-60 2221 1262 937 812 405 217 6114 1961 2099 1533 1171 887 651 260 6875 1962 2331 I838 1390 1037 731 304 7917 Source: B.C.P.S. Annual Reports (I921 - I 9 6 2 ) 15 Table 7. Timber Cut i n B.C. by Species as Percentage of Total Cut 1921-62 Timber Cut i n B.C., By Species, as Percentage of Total Cut Period Douglas f i r Hem-lock Spruce Cedar Balsam Lodge-pole pine Total 1921- -25 % 42.8 % 11.4 % 8.7 % 25.1 % 2.4 % 2.2 % 92.6 1926. -30 48.9 11.4 7.0 22.8 2.8 2.1 95.0 1931- •35 49.5 15.1 5.6 17.9 3.4 1.0 92.5 1936- •40 50.0 16.8 5.4 18.5 3.0 0.6 94.3 1941- -45 41.2 19.3 9.6 18.0 4.5 0.5 93.1 1946- -50 39.8 20.2 9.9 I8.3 5.2 1.6 95.0 1951- -55 39-2 20.6 12.5 15.4 6.2 2.2 96.1 1956- -60 36.4 20.6 15.3 13.3 6.7 3.5 95.8 1961 30.5 22.3 17.1 12.9 9.5 3.0 96.1 1962 29.4 23.2 17.6 13.2 9.3 3.8 96.5 Fig- 3* Timber Cut in BC by Species as Percentage of Total Cut, 1921-1962-70 60 50 c ° 40 v 0, 30 20 -10 " Douglas fir Hemlock Spruce Western Red Cedor Balsam Lodgepole Pine • • • x / 1-1920 1930 1940 1950 Yeor I960 1970 16 T a b l e 8. T i m b e r C u t i n t h e I n t e r i o r R e g i o n o f B . C . b y S p e c i e s 1921-62 A v e r a g e A n n u a l T i m b e r C u t i n I n t e r i o r R e g i o n o f B . C . P e r i o d '"  L o d g e -D o u g l a s H e m - p o l e f i r l o c k S p r u c e C e d a r B a l s a m p i n e T o t a l MM f . b . m . 1921-25 105 10 83 57 7 27 417 1926-30 73 7 108 103 7 37 468 1931-35 54 2 31 29 1 12 217 1936-40 90 5 71 45 - 16 350 1941-45 121 16 147 52 4 16 519 1946-50 383 24 301 75 12 63 919 1951-55 654 62 527 65 36 118 1660 1956-60 1023 109 796 85 64 218 2786 1961 1043 126 1007 132 165 259 2923 1962 1112 173 1105 129 110 304 3217 S o u r c e : B . C . F . S . A n n u a l R e p o r t s (1921-1962) 17 Table 9. Timber Cut i n the In t e r i o r Region of B.C by Species as Percentage of Total Cut 1921-62 Species Cut i n In t e r i o r Region as Percentage of Total Cut Period Douglas f i r Hem-lock Spruce Cedar Balsam Lodge-pole pine Total 1921-25 % 25.1 % 2,4 % 19.8 % 13.7 % 1.7 % 6.5 % 69.2 1926-30 15.6 1.5 23.1 22.0 1.5 7.9 71.6 1931-35 24.8 0.9 14.3 13.4 0.5 5.5 59.4 1936-40 25.7 1.4 20.3 12.9 - 4.6 64.9 1941-45 23.4 3.1 28.2 10.0 0.8 3.1 68.6 1946-50 30.8 2.6 32.8 8.2 1.3 6.9 82.6 1951-55 39.4 3.7 31.8 3.9 2.2 7.1 88.1 1956-60 36.7 3.9 28.6 3.1 2.3 7.8 82.4 1961 35.4 4.3 34.3 4.5 5.5 8.9 93.9 1962 34.8 5.4 37.6 4.0 3.4 9.5 94.7 Fig. 4- Timber Cut in Interior Region of BC- by Species os Percentoge of Total Cut, 1921 -1962 • 70 r- Douglas fir — Hemlock • • • Western Red Cedar — Balsam < Lodgepole Pine Spruce 1920 1930 1940 1950 Year I960 1970 18 Table 10. Timber Cut i n the Coastal Region of B.C. by Species 1921-62 Average Annual Timber Cut i n Coastal Region of B.C. Period Douglas f i r Hem-lock Spruce Cedar Balsam Lodge-pole pine Total M M f.b.m. 1921-25 866 269 114 514 49 23 1858 1926-30 1387 224 101 580 63 30 2617 1931-35 950 302 82 342 69 9 I876 1936-40 1526 538 102 560 94 3 2867 1941-45 1221 606 153 529 139 - 2901 1946-50 1336 788 102 667 200 - 3215 1951-55 1442 1033 135 745 295 - 3658 1956-60 1197 1153 141 727 340 - 3622 1961 1057 1408 163 755 486 - 3952 1962 1219 1665 195 908 621 4700 Source: B.C.F.S. Annual Reports (I92I-62) 19 Table 11. Timber Cut i n the Coastal Region of B r i t i s h Columbia by Species as Percentage of Total Cut 1921-62 Species Cut i n B.C. Coastal Region as a Percentage of Total Cut Period Douglas f i r Hem-lock Spruce Cedar Balsam Lodge-pole pine Total 1921-25 % 46.6 % 14.5 % 6.2 % 27.8 2.6 % 1.2 % 98.9 1925-30 53.2 8.6 3.9 22.2 2.4 1.1 91.4 1931-35 50.7 16.2 4.4 18.2 3.7 0.5 93.7 1936-40 53.3 18.7 3.6 19.5 3.3 - 98.4 1941-45 42.2 20.9 5.3 18.2 4.8 - 91.4 1946-50 41 .5 24.5 3.1 20.8 6.3 - 96.2 1951-55 39.6 27.2 3.7 20.4 8.1 - 99.0 1956-60 33.0 37.8 3.9 20.0 9.4 - 98.1 1961 26.8 35.6 4.1 19.1 12.3 - 97.9 1962 25.9 35.4 4.2 19.3 13.2 mm 98.0 ig 5 Timber Cut in Coastal Region of B-C- by Species as Percentage of Total Cut, 1921-1962-Douglas fir — Hemlock Western Red Cedar — — — Balsam — — Lodgepole Pine — Spruce Stumpage Trends i n B r i t i s h Columbia 1921-1962 20 Table 12 and Figure 6 show the average annual stumpage prices received i n B r i t i s h Columbia for Douglas f i r , hemlock, cedar and spruce from 1921 to I962 (B.C.F.S. Annual Reports). The prices shown here are r e a l prices and indicate changes i n stumpage price which have occurred r e l a t i v e to the general price l e v e l (Base 1935-39 = 100). P r i o r to the second world war stumpage prices remained f a i r l y consant f o r twenty years. Douglas f i r , spruce and cedar stumpage prices were s i m i l a r (B.C.F.S. Annual Reports). Hemlock stumpage remained at a much lower l e v e l . Between 1940 and 1950 the stumpage price of a l l species showed a marked upward trend. Since 1950 Douglas f i r stumpage has increased at a much greater rate than the other species and since 1957 has been double that of the other species. Hemlock stumpage price increased r a p i d l y during the early 1950*s and i s now on a par with cedar and spruce. Since 1957 a l l stumpage prices have f a l l e n and by 1962 spruce and cedar stumpage had reached the pre-war l e v e l . Hemlock and Douglas f i r stumpage are s t i l l about double t h e i r pre-war level,however. Douglas f i r stumpage price i s twice as high as any of the other three major species considered here—hemlock, spruce and cedar. 21 Table 12. Average Annual Stumpage Prices Received i n B.C. 1921-62 Average Annual Stumpage Prices i n B.C. Constant D o l l a r s l per M f.b.m. Period Douglas f i r Hemlock Spruce Cedar 1921-25 1.26 O.83 1.24 1.49 1926-30 1.28 G.73 1.25 1.34 1931-35 1.31 0.82 1.45 1.25 1936-40 1.34 0.71 1.03 1.29 1941-45 1.55 0.85 1.48 I . 6 3 1946-50 1.99 1.24 1.76 1.98 1951-55 3.54 2.11 3.03 2.88 1956-60 4.27 2.12 2.16 2.46 1961 2.94 1.53 1.25 1.41 1962 4.00 1.60 1.32 1.41 IConstant Dollars - 1935-39 =100 Source; B.C.F.S. Annual Reports (1921-1962) Fig- 6- Average Stumpage Prices Received in BC- by Species, 1921-1962-Constant Dollars per M fb-m-(1935-39-100) 8 r o g (i t o t If) r o 0) E J3 Q. «J o o o M c o u — — Douglas fir Hemlock ' — - S p r u c e Western Red Cedar 1920 1930 1940 1950 Year I960 1970 Source' B-CFS Annuol Reports, 1921-1962-22 The Use of Douglas f i r for Lumber in Br i t i s h Columbia. 1921-1963 Douglas f i r i s the most commonly used species of lumber in North America. Use of this species by the British Columbia lumber industry, however, i s declining rapidly as a proportion of total lumber production. The lumber industry of Bri t i s h Columbia originated in the Douglas f i r region of Vancouver Island. The f i r s t sawmill was erected by the Hudson's Bay Company at M i l l -stream, near Victoria, i n 1847, producing mainly rough f i r lumber for local use. The f i r s t m i l l on the mainland was established at New Westminster and in 1863 the f i r s t of two mills was established on the Burrard Inlet (Lawrence, 1955). These three mills dominated lumber production and export on the Pacific seaboard of British Columbia for the next twenty years. The mills were almost entirely dependent upon Douglas f i r for their lumber production and this species dominated both the domestic and export trade. Between 1865 and 1886, most of the-lumber was shipped to Australia, Chile, Peru and China. With the building of the Canadian Pacific Railroad in the l880*s, the lumber industry spread into the southern interior of British Columbia where once again Douglas f i r was the predominant species. Much rough f i r lumber produced was shipped to the prairies and the mid western 2 3 states.* From these early beginnings the lumber industry of B r i t i s h Columbia has grown s t e a d i l y . Today i t i s the most important single industry i n the Province's economy, having an average annual production value between 1950 and i960 of 307 m i l l i o n dollars,and currently producing almost 70 percent of the t o t a l Canadian lumber output. Throughout t h i s period of growth Douglas f i r lumber has been the most important species. The volume of Douglas f i r cut increased from 846 MM f.b.m. i n 1922 to 2,331 MM f.b.m. i n 1962. Throughout t h i s period over 90 per cent of the annual cut of logs was u t i l i s e d by the lumber industry. Table 13 and Figure 7 show the volume of Douglas f i r lumber cut i n B r i t i s h Columbia between 1920 and 1962. There has been a steady rate of growth during the period. Since the 1940's the industry has become more and more dependant upon the resources of the I n t e r i o r and any future expansion w i l l probably be e n t i r e l y within t h i s region. In the I n t e r i o r region as on the Coast,however,Douglas f i r i s the most important lumber species. Although Douglas f i r i s maintaining i t s place i n the lumber industry on a volume basis i t i s gradually *For detailed accounts of the early lumber Industry i n B.C. see: Dixon, L.B., The B i r t h of the Lumber Industry i n B.C., B.C. Lumberman, Vol. 39 (1955), Vol. 40 (1956); Lawrence, J.C., A History of the Lumber Industry of B.C. (1778-1952)? M.A. t h e s i s , Dept. of History, U.B.C. (1956). 24 Table 13. Annual Production of Douglas f i r Lumber i n B.C, 1921-63 Period Annual lumber production i n B.C. Annual Douglas f i r lumber production i n B.C. Douglas f i r lumber production as percentage of a l l species MM f.b.m. MM f.b.m. 1921-25 1,410 929 65.9 1926-30 2,191 1,421 64.9 1931-35 1,297 908 70.0 1936-40 2,103 1,455 69.2 1941-45 2,137 1,317 61.6 1946-50 2,832 1,485 5 2 . 4 1951-55 4,147 1,977 47.7 1956-60 4,849 2,039 42.0 1961 5,382 2,082 39.7 1962 5,956 2,142 36.0 1963 6,35c) 1 2,080 32.8 Estimated from f i r s t 10 months of I963. Source: D.B.S., The Lumber Industry. (Sawmills i 9 6 0 ) , 35-204; D.B.S., Production Shipments and Stocks on Hand of Sawmills i n B.C., 35-003. Fig- 7- Lumber Production in B C , 1920-1963 (MM f b-m) eooo r 7 0 0 0 -5 0 0 0 -4 0 0 0 -— All Lumber (Province) — All Lumber (Coast) — Douglas fir (Province) — Douglas f ir (Coast) i v 1920 1930 1940 1950 I960 1970 Year Source* D-BS,Lumber Industry,35-204 25 decreasing as a percentage of t o t a l lumber cut. Figure 8 shows the volumes of Douglas f i r , hemlock, cedar, spruce and lodgepole pine lumber produced i n B r i t i s h Columbia from 1920 to 1963. Table 14 and Figure 9 indicate the percentage volumes of Douglas f i r , hemlock, spruce and cedar lumber produced i n B r i t i s h Columbia from 1920 to 1963. Table 14. Annual Lumber Production by Species as Percentage of Total Lumber Production i n B.C., 1921-63 Period Lumber Production By Species as a Percentage of Total Production Douglas f i r Spruce Hemlock Cedar Total F, S, H-and C I92I - 2 5 1926-30 1 9 3 W 5 1936-39 1947-50 1951-55 1956-60 I961 1962 1963 65.9 64.9 70.0 69.2 52.5 47.7 42.0 39-7 36.0 32.8 9.4 11.3 7.2 5.6 14.1 17.0 20.7 19.9 22.4 23.0 8.4 11.4 12.6 14.5 18.5 18.4 19.4 23.5 24.8 27.4 7 4 5.6 5.0 6.5 9.8 10.2 10 .5 11.3 10.6 10.7 90.8 93.2 94.8 95.8 94.9 93.3 92.6 94.4 93.8 93.9 Source: D.B.S., The Lumber Industry, 35-204 D.B.S., Production, Shipments and Stocks on Hand of Sawmills i n B.C., 35-003 Fig-8- Lumber Production in B-C- 1920-63 (MMf-b-m) 3000 2500 2000 E _ _ 2 1500 1000-500 Douglas Fir Hemlock — Spruce Cedar — • — - * • — Lodgepole Pine I +s I i — ' 1920 1930 I960 1970 1940 1950 Yeor Source1 D B S - Lumber Industry 3 5 - 2 0 4 j Production Shipments and Stocks on Hand of Sawmills In B-C- 35 — 003-Fig-9- Lumber Production in B C by Species os a Percentage of Total Lumber Production 1920—63• Douglas Fir i I I I I 1920 1930 1940 1950 I960 1970 Yeor Sources D B S - Lumber Industry 35 -204 - , Production Shipments and Stocks on Hand of Sawmills In B-C- 3 5 - 0 0 3 -26 Before the second world war, Douglas f i r accounted for between 65 and 70 per cent of a l l lumber produced i n B r i t i s h Columbia. During the favourable economic conditions of the late 1940*s, a period i n which P r o v i n c i a l lumber production increased over 160 per cent, the industry was forced, by the decline i n Douglas f i r stumpage a v a i l a b l e , to resort to other species. Douglas f i r now accounts f o r less than 35 per cent of the p r o v i n c i a l lumber production and, as indicated i n Figure 9?there i s a steep downward trend. The percentage of western hemlock used for lumber i n B r i t i s h Columbia has been increasing s t e a d i l y since the f i r s t world war. Use of S i t k a , white and Engelmann spruce has increased r a p i d l y since the second world war and now i s almost on a par with western hemlock. Western red cedar i s the only other species contributing s u b s t a n t i a l l y to the B r i t i s h Columbia lumber industry. I ts use i s increasing very r a p i d l y and i t now represents just over 10 per cent of the t o t a l . Lodgepole pine,although very important to some small sawmilling concerns of the central and northern I n t e r i o r , i s r e l a t i v e l y unimportant at the moment from a p r o v i n c i a l point of view. I t amounts to less than 2 per cent of the p r o v i n c i a l lumber production, currently, and i t s rate of use i s increasing only very slowly, primarily because of i t s r e l a t i v e l y small average log s i z e . 1 27 Canadian Consumption of Douglas f i r Lumber Canada uses more lumber, per ca p i t a , today than any other country i n the world (Wilson, 1961). Lumber comprises 2J> per cent of the value of a l l b uilding materials used. I t s other major use i s i n the packaging and shipping industry. The construction industry i s the largest single user of lumber; the majority of the volume used going into r e s i d e n t i a l construction. There i s , however, no detailed information i n Canada on the consumption of lumber by end uses. Douglas f i r i s v e r s a t i l e lumber being adaptable to any of the i n d u s t r i a l uses to which softwoods are normally applied. I t s major use, however, i s i n the construction industry where i t can be used f o r framing, exterior sheathing, i n t e r i o r f i n i s h , doors, f l o o r s and window frames. Trends i n Canadian Lumber Consumption There has been a steady upward trend i n the consumption of lumber i n Canada since the 1920*s. Table 15 shows ten year averages of lumber consumption from 1920 to i960 and i n Figure 1G consumption trends are portrayed i n graphical form. Although consumption of lumber has increased rapidly,the rate of growth does not match the general r i s e 4 5 0 0 -Fig- 80- Apparent Consumption of Lumber in Canada 1920-60 4 0 0 0 h i i ! ' A | \ ! i 3 5 0 0 h 3 0 0 0 h 2 5 0 0 h Total - — Douglas Fir Spruce Hemlock Cedar e -2 2 0 0 0 H 1500 1000 Source : D B S - Lumber Industry 35-204 Trade of Canada (a) Exports 6 5 - 0 0 2 (b) Imports 6 5 - 0 0 5 5 0 0 h V A 1970 Year 28 Table 15. Consumption1 of Lumber in Canada 1921-60 Period Annual consumption of lumber Annual consumption of Douglas f i r lumber Average population Billions f.b.m. Billions f.b.m. 1921-30 2.08 0.64 9,401,000 1931-40 1.6l 0.46 10,890,000 1941-50 2.98 0.62 12,480,000 1951-60 3.79 0.48 15,942,000 Sources: D.B.S., The Lumber Industry, 35-204 D.B.S., Trade of Canada 1. Exports, 65-002 2. Imports, 65-005 *The consumption figures referred to here are of apparent consumption, i.e., production + imports - exports. in economic activity in Canada during the period considered. This may be demonstrated by comparing lumber consumption with other economic indicators for the period. The indicators chosen here are personal disposable income and building construction expenditures. Table 16 shows the value of lumber consumption as a percentage of personal disposable income and building expenditures for the period 1946-60. 29 Table 16. Value of Lumber Consumption i n Canada as Percentage of Disposable Income and Gross Building Expenditure 194-6-60 Value of lumber Value of lumber consumption as consumption as per-percentage of t o t a l centage of personal Year building expenditure disposable income 1946 1947 194b 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 i960 21.8 18.2 18.5 I7.O 14.2 12.7 10.6 9.8 7.7 7.1 7.4 6.3 7.3 1:1 HI 1.86 1.82 1.82 1.84 1.80 1.60 1.63 1.32 1.31 1.40 1.14 1.2? 1.00 0.93 Source: D.B.S., Construction i n Canada, 64-201 D.B.S., National Accounts, 13-201 The decrease i n lumber consumption value as a percentage of building expenditure i s very marked, i n spite of the fac t that the r a t i o of r e s i d e n t i a l to non-residential construction has increased during the period. This i s symptomatic of the trend to substitute other materials f o r lumber. 0 30 Although the use of lumber i n building construction i s d e c l i n i n g , i t i s the high rate of increase i n building construction a c t i v i t y which has stimulated increased lumber consumption i n Canada, p a r t i c u l a r l y during the post war years. The increase i n consumption has also been dependant upon the tendency i n Canada, i n recent years, f o r the volume of r e s i d e n t i a l building to increase r e l a t i v e to the non-residential. In non-residential b u i l d i n g , lumber has been larg e l y replaced by other materials. Technical factors have probably been the main cause for t h i s trend. In addition there has been a demand for high f i r e resistance i n such structures as f a c t o r i e s , warehouses and commercial buildings. Many c i t i e s discourage the use of wood i n downtown commercial areas. In Canada however, wood i s s t i l l the primary material used for r e s i d e n t i a l b u i l d i n g . In t h i s f i e l d , reduction i n lumber consumption has mainly been due to a decline i n the size of dwelling houses, not from the point of view of f l o o r area, but i n so f a r as c e i l i n g s have become lower, basements fewer, roofs less steep and shorter, and large porches have e n t i r e l y disappeared. Lumber i s also being replaced by plywood and fibre-board products i n a wide vari e t y of uses, p a r t i c u l a r l y for i n t e r i o r f i n i s h , although plywood i s also being widely used as exterior s i d i n g . No detailed study has been made i n Canada of lumber use i n r e s i d e n t i a l construction but i n the United States several studies have been c a r r i e d out. I t has been estimated that 31 the average lumber content of a dwelling house declined from 18,900 f.b.m. i n 1920 to 10,520 f.b.m. i n 1953 (Stanford, 1954). In Canada si m i l a r trends have probably taken place. The r e l a t i o n s h i p s between building a c t i v i t y and lumber consumption are c l e a r l y demonstrated i n Figures 11 and 12. Figure 11 shows the value of building construction, r e s i d e n t i a l construction and volume of lumber consumed on a logarithmic scale. This scale allows r e l a t i v e rates of change to be compared d i r e c t l y , by comparing the slopes of the l i n e s , regardless of the absolute l e v e l of the values concerned. Figure 12 shows the value of r e s i d e n t i a l construction as a percentage of t o t a l building construction. Figure 11 shows that during the second world war there was a decline i n building a c t i v i t y ; s i m i l a r l y there was a decline i n lumber consumption. Between 1945 and 1956 there was a large increase i n building a c t i v i t y and an increase, although not nearly so great, i n lumber consumption. Since 1956 the rates of increase i n building a c t i v i t y and lumber consumption have both declined. Figure 12 shows that the r a t i o of r e s i d e n t i a l to non-residential construction has increased since the war. This f a c t has had a marked e f f e c t on lumber consumption. The lumber consumption peak year of 1958 i s almost c e r t a i n l y correlated to the f a c t that r e s i d e n t i a l construction reached a peak i n that year. Other s i m i l a r i t i e s between the r a t i o of 4 0 0 0 3 0 0 0 2 0 0 0 E S cO 1000 9 0 0 cn t 800 7 0 0 —' </> O 600 O O 500 in c o 4 0 0 i i 300 2 0 0 Apparent Lumber Consumption (M M f b m ) Value of all Building Construction Millions Dollars (Constant 1949) Value of Residential Building Con-struction,Millions Dollars (Constant 1949) / \ / \ IZ IN. Source: D B S , Construction in Canada,64- 201-The Lumberlndustry, 3 5 - 2 0 4 -I 1938 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 Year 70 Fig- II- Building Construction and Lumber Consumption in Canada, 1939 -1962 ' Source^ D B S - , Construction in Canada, 64 -201-32 r e s i d e n t i a l to non-residential construction and the consumption of lumber may be found. Trends i n Per Capita Consumption of Lumber i n Canada trends s i m i l a r to gross consumption (Figure 13). A sharp decline during the depression was followed by a steady Increase during the l a t e 1930's. There was a decline during the war years followed by a r i s e u n t i l 194-9. Gross consumption continued to r i s e a f t e r 194-9? but per capita consumption has shown a s l i g h t downward trend. Table 17 shows the average per capita consumption per annum fo r five-year periods between 1926 and i 9 6 0 . Table 17. Average Canadian Per Capita Consumption of Lumber I926-6O Per capita consumption of lumber i n Canada shows Period Annual per capita consumption of lumber Annual per capita consumption of Douglas f i r lumber f.b.m. f.b.m. 1926-30 249 118 181 227 257 248 236 78 34 49 52 49 33 30 1941-45 1946-50 1951-55 1956-60 Sources: D.B.S., The Lumber Industry, 35-204 D.B.S., Trade of Canada 1. Exports, 65-002 2. Imports, 65-005 Fig-13- Per Capita Lumber Consumption in Canada, 1926-1963, f-brn-Year Source: D-B-S-, Lumber lndustry,35-204;Trade of Canada,Exports,65-002-, Imports, 6 5 - 0 0 5 -33 Trends i n the Consumption of Douglas f i r Lumber i n Canada The gross consumption of Douglas f i r i n Canada shows no well marked long-term trend either upwards or down-wards. Consumption was f a i r l y high during the 1920's, low during the 1930*3 and high again during the 1940's (Table 15 and Figure 10). During the 1950*s,however, i n spite of increased t o t a l lumber consumption, Douglas f i r lumber consumption declined to well below the average l e v e l of the 1920's. Douglas f i r lumber consumption as a percentage of t o t a l consumption has declined greatly during the l a s t f o r t y years. In 1922,50 per cent of the lumber consumed i n Canada was Douglas f i r j since then there has been a steady downward trend. In i960 only about 13.5 per cent of the lumber consumed was Douglas f i r . Table 18 shows the average consumption of Douglas f i r as a percentage of t o t a l lumber consumption by ten-year periods. Trends i n Per Capita Consumption of Douglas f i r Lumber i n Canada The per capita consumption of f i r lumber shows a well marked downward trend, p a r t i c u l a r l y during the 1950 ,s. Even i n the 1933-1950 period when t o t a l per capita lumber 34 Table 18. Average Consumption of Douglas f i r Lumber as Percentage of Total Consumption of Lumber i n Canada Consumption of Douglas f i r lumber as a percentage of Period total lumber consumption i 1921-30 30.8 1931-40 28.7 1941-50 20.8 1951-60 12.7 consumption of Douglas f i r remained f a i r l y constant (Figure 13 and Table 17). Trends in the Consumption of Other British Columbia Species of Lumber i n Canada It has been shown that the other major lumber species i n B r i t i s h Columbia are western hemlock, spruce and western red cedar. Figure 10 and Table 19 show the apparent consumption of lumber of these three species i n Canada 1920 to i 9 6 0 . Table 20 and Figure 14 show their consumption as a percentage of total Canadian lumber consumption. These consumption figures represent lumber produced from these 35 Table 19. Apparent Consumption of Lumber By Species in Canada 1921-60 Period Apparent Consumption of Lumber By Species Douglas f i r Hemlock Spruce Cedar MM f.b.m. MM f.b.m. MM f.b.m. I m f.b.m. 1921-25 554 213 247 115 1926-30 726 227 634 112 1931-35 357 130 359 53 1936-40 565 309 618 94 1941-45 615 230 987 98 1946-50 629 357 1159 168 1951-55 457 261 1374 200 1956-60 511 334 1275 204 Source: D.B.S., Lumber Industry, 35-204 D.B.S., Trade of Canada 1. Exports, 65-002 2. Imports, 65-005 36 Table 20. Consumption of Lumber i n Canada by Species as a Percentage of Total Lumber Consumption, I92I-I960 Period Consumption of Lumber By Species as of Total Consumption Percentage Douglas f i r Hemlock Spruce Cedar 1921-25 32.9 12.7 14.7 6.8 1926-30 29.2 9.1 25.4 4.5 1931-35 28.6 10.4 29.8 4.2 1936-40 28.5 15.6 31.2 4.7 1941-45 23.0 8.6 37.9 3.7 1946-50 19.1 10.8 35.2 5.1 1951-55 12.7 7.2 37.9 5.6 1956-60 13.0 8.5 32.5 5.2 Source: D.B.S., Lumber Industry, 35-204 D.B.S., Trade of Canada 1. Exports, 65-002 2. Imports, 65-005 Fig-14- C a n a d i a n Lumber Consumption by S p e c i e s as a Percentage of Total L u m b e r Consumption 1920 — 60-7 0 r 60 Douglas Fir Spruce Hemlock Cedar 1920 1930 1940 1950 Year Source: D B S - Lumber Industry 3 5 - 2 0 4 3 37 species throughout the whole of Canada, not just i n B r i t i s h Columbia. B r i t i s h Columbia has always produced the majority of the cedar lumber i n Canada and i n current years has produced over 90 per cent of a l l hemlock lumber. Only about 40 per cent of spruce lumber i s currently produced i n B r i t i s h Columbia. The majority of spruce lumber i s produced i n the eastern provinces. Table 21 shows the percentages of Canadian cedar, hemlock and spruce lumber produced i n B r i t i s h Columbia for representative years since 1920. Table 21. B.C. Production of Cedar, Hemlock and Spruce Lumber as a Percentage of the Canadian Total Lumber Production, 1920-60 ' B.C. Lumber Production by Species as Percentage of Canadian Total Year • Cedar Hemlock Spruce 1920 73 27.2 8.1 1925 79 54.3 14.7 1930 90.0 61.2 15.4 1935 91.5 81.5 10.1 1939 93.0 79.6 10.2 1947 93.0 78.5 16.2 1950 93.0 83.2 22.6 1955 9§.5 90.2 33.2 I960 96.5 94.4 43.7 Source: D.B.S., Lumber Industry, 35-^ 204 38 Spruce lumber consumption i s the only one of the species considered which has kept pace with the general r i s e i n lumber consumption. The spruce lumber produced i n B r i t i s h Columbia, however, plays very l i t t l e part i n the domestic market. In 1962» f o r instance, only $.6 per cent (75MM f.b.m.) of the 1,333 MM f.b.m. of spruce lumber produced i n B r i t i s h Columbia entered the domestic market, the r e s t being exported, mainly to the United States. Hemlock lumber consumption has increased only s l i g h t l y and i t s percentage representation shows a downward trend. Cedar lumber consumption also shows a s l i g h t increase but i t s percentage representation i s f a i r l y constant. I t i s evident that,apart from Douglas f i r , B r i t i s h Columbian species contribute l i t t l e to the domestic market and the industry i n B r i t i s h Columbia i s oriented to the export market. The enormous recent increases i n hemlock lumber production i n B r i t i s h Columbia have had no e f f e c t whatsoever on the consumption of t h i s species i n Canada. Douglas f i r lumber i s not being replaced i n the domestic economy by B r i t i s h Columbian species but by eastern Canadian lumber, mainly spruce and pine. Price Trends of Lumber i n Canada Figure 15 shows the price indices of lumber and of Douglas f i r lumber i n Canada for the years 1920 to 19^2, together with the general wholesale price index. Fig-15- Wholesale Price Indices for Canada 1 9 2 0 - 6 2 (1935-1939 = 100) General wholesale price index Wholesale price index of Douglas Fir Wholesale price index of lumber (all species) 6 0 0 r 5 0 0 -g 4 0 0 r o m r o - 3 0 0 -X X} c a> o 2 0 0 -100 -1920 1930 1940 1950 I960 1970 Year Source: D-B-S-- Prices and Price Indices 6 2 - 0 0 2 - Special Reference Paper No-24 39 Table 22. Average Price of B.C. Lumber (Constant Dollars 1935 - 39 = 100) Period Douglas f i r Hemlock Spruce Cedar Constant Dollars per M f.b.m. 1921-25 17.82 16.77 18.39 26.92 1926-30 15.82 13.49 17.56 23.77 1931-35 15.23 13.16 18.50 19.40 1936-39 18.06 13.04 19.75 27.03 1947-50 33.07 31.52 26.20 45.28 1951-55 32.34 32.40 24.69 41.42 1956-60 28.78 27.34 23.55 33.09 Source: D.B.S., The Lumber Industry, 35-204 Until 1939 lumber prices were below the general price level. Since the war, however, average wholesale prices in Canada have doubled while the real price of lumber has almost quadrupled. This phenomenal rise in the real price of lumber occurred between 1945 and 1951> since 1951 prices have remained f a i r l y constant, showing only minor fluctuations. The steep rise i n lumber prices in the period 1945-1951 was due to the high demand for lumber in this period induced by the housing boom, in the years immediately following the second world war, and the speculative buying of lumber during the Korean war. The high price of lumber relative to other goods may be partly due to the fact that productivity in the lumber industry has not kept pace with rising productivity in the rest of the economy. 40 Productivity i n the lumber industry i s hampered by r i s i n g logging costs, increasing transportation costs from forest to m i l l and timber of declining size and q u a l i t y . In addition there are many small, i n e f f i c i e n t sawmills i n the industry and technical progress, even i n the larger m i l l s , has been slow. Admittedly, equipment has been improved and v e r t i c a l and horizontal integration have improved e f f i c i e n c y i n the larger m i l l s . There has been no major technical innovation which would be of use to small and large m i l l a l i k e . Automation of the manufacturing process has been rudimentary, compared to other ind u s t r i e s , or e n t i r e l y absent. Figure 15 shows that the price index f o r Douglas f i r has r i s e n almost 100 points above the price index of lumber i n general since the war. A peak was reached i n 1951 of 5.7 times the pre-war (1939) price l e v e l . Since t h i s date there has been a downward trend. Figure 16 shows the price of the four major lumber-producing species i n B r i t i s h Columbia,from I92O-I960, i n constant d o l l a r s (1935-39 = 100). Each species shows a major r i s e i n price during the war years and a marked down-ward trend during the 1950*s. Cedar lumber has always been priced higher than the other species and i n i960 was 78 d o l l a r s per M f.b.m. (not deflated) compared to 64 d o l l a r s per M f.b.m. for Douglas f i r , 6 l d o l l a r s f o r hemlock and 52 d o l l a r s for spruce. The price of f i r lumber was above hemlock up to the war but, since 1947 the prices of these two 80s Fig- IS- Average P r i c e of B-C-Lumber, 1920-1960-(Constant Dollars per M f-b-m-, 1935-1939=100) 70 10 1920 1930 1940 1950 Year I960 1970 Source- DBS-, Lumber Industry, 3 5 - 2 0 4 : 41 species have followed each other very closely. The price of spruce lumber was above f i r up to the war but since 1940 has fallen and i s now the cheapest lumber produced in British Columbia. Table 22 shows the average annual price of lumber in B r i t i s h Columbia from 1921 to i960. Changes in Lumber Demand and Supply in Canada 1920-1960 Price and consumption changes in the lumber market and movements in the demand and supply of lumber during the last forty years can now be studied. It i s very d i f f i c u l t to deduce demand and supply conditions from empirical data but some fundamental inferences can be made. The method applied here has been used by Zivnuska (Zivnuska, 1955) and Holland (Holland, 1950) in studies of the United States lumber market. For each year considered, the quantity of lumber consumed and the average price of this quantity represent an intersection of demand and supply curves, that i s a point of equilibrium. The way i n which this equilibrium shifts from year to year indicates roughly how demand and supply have shifted. Four basic inferences may be set down: (1) A rise in price accompanied by a f a l l in the quantity consumed indicates a net f a l l in supply. It t e l l s one nothing about the change in demand. 42 (2) A f a l l i n price accompanied by a rise in the quantity consumed indicates a net rise in supply. It t e l l s one nothing about the change i n demand. (3) A f a l l in price accompanied by a f a l l i n the quantity consumed indicates a net f a l l i n demand. It t e l l s one nothing about the change in supply. (4) A rise in price accompanied by a rise i n the quantity consumed indicates a net rise in demand. It t e l l s one nothing about the change in supply. The empirical data also t e l l l i t t l e about the ela s t i c i t y of demand and supply. For instance,a small rise in price, accompanied by a large rise in the quantity consumed may be due to an elastic supply curve or a shift i n supply during the period, or a combination of both. In order to carry out a simple analysis of demand and supply, real price (on a base of 1935-39 = 100) and consumption have been plotted on semi-logarithmic paper (see Figures 17 and 18). For purposes of comparison of relative changes, the period has been divided into five sections. The f i r s t section,1923 to 1930,starts after the immediate economic repercussions of the f i r s t world war had subsided and ends at the start of the depression. The second period includes the depression and the recovery period up to 1939* The third period, 1940 to 1946, covers the war years, the fourth period the post-war boom years of the late 1940's and early 1950*s and the f i n a l period from 1955 to the present. 43 In order to make a comparison, similar figures have been drawn for lumber in general and for Douglas f i r lumber in particular. Period I I923-I93O. This period saw a steep rise in consumption accompanied by a f a l l in price. This indicates an increase in supply. The pattern would suggest that either the increase in supply was accompanied by an increase in demand or that the demand schedule was highly elastic. Evidence suggests that lumber demand at this time was probably f a i r l y inelastic. Therefore an increase in the quantity of lumber demanded also occurred. For this period Douglas f i r lumber exhibits a similar pattern to lumber in general. Period II I 9 3 I - I 9 3 9 . Between 1930 and 1933 there was a steep f a l l i n price and an equally steep f a l l in consumption indicating a considerable f a l l i n demand. This was followed in the period 1934-40 by sharply rising demand. Similar patterns occurred for Douglas f i r and a l l lumber. Period III 1940-1946. During this war period the demand for lumber continued to shift upward as indicated by the continued rise i n price and consumption. 44 Douglas f i r lumber consumption started on a down-ward trend during this period, which indicates a net f a l l i n the supply of Douglas f i r lumber. The f a l l in supply offset the rise in demand. Period IV 1947-1955* In this period average lumber prices remained constant while consumption continued to show an upward trend. This indicates that both supply and demand increased during the period. The price of Douglas f i r lumber decreased somewhat during the period while the quantity consumed showed a marked downward trend. This pattern should indicate a net f a l l in demand and i s probably a product of f a l l i n g supply and demand in 1947-1955. Period V I956-I960. In the most recent period lumber price showed a slight upward trend. This indicates a net increase in supply probably accompanied by an increase in demand. Douglas f i r lumber consumption in this period was f a i r l y constant while price showed a downward trend, thus indicating a net f a l l in demand accompanied by a rise in supply. For the period as a whole demand for lumber in general and Douglas f i r lumber appears to have undergone an upward shift particularly during the war years. The high demand for lumber has been maintained during post-war years, Fig- 17- Trend Analysis of Lumber Demand and Supply in Canada All Lumber o g II c n t o i m t o £ w 3 — A I I • Vi Price Apparent Consumption _ A / . A 3Z A / i 1920 1930 1940 Year 1950 i 9 6 0 Fig-18- Trend Analysis of Lumber Demand i and Supply in Canada i Douglas Fir Lumber Price Apparent Consumption 45 but the demand for Douglas f i r lumber is shifting downwards although i t is s t i l l well above the pre-war level. Supply of lumber in general,although exhibiting cy c l i c a l variations, has remained f a i r l y constant (at least no definite trends are apparent). Supply of Douglas f i r lumber,however,has decreased (supply schedule has shown an upward shift) during the period. These general observations are clearly indicated in Figures 1 9 and 2 0 . In Figure 1 9 real price has been plotted over consumption for a l l lumber from 1 9 2 0 to i 9 6 0 and in Figure 2 0 for Douglas f i r lumber. The data on both figures f a l l into two discrete groups. One group covering the pre-war period and another the post war. In the general lumber case (Figure 1 9 ) the net displacement has been upward to the right indicating a large upward shift in demand between the two periods with l i t t l e apparent change in supply. In the case of Douglas f i r lumber specifically, (Figure 2 0 ) ; for the whole period 192I-I96O, the average net displacement has been almost vertically upwards. This indicates a large upward shift i n the demand schedule accompanied by a lower level of supply (i.e., upward shi f t in the supply schedule). Price in Constant Dollars (1935-1939=100) ro o o o OI o o Vol O O c 3 (0 o r~ c 3 o o- o to -n O o 3 Vt c 3 ro re o a. o T3 o <D -1 > 3 3 C 3 ro OI 2 o o & 3 OJ o o o OJ OI o o O o o w KM 01 • 0 30 m I o o _ J5- - J I O Cv ' Ol 1 «o I I t. 0w> o o CD a c o 3 O o 0) C 3 CD O . •D CD — i > 3 3 C 3 -n 5 r c 3 CT CD O O 3 O Q. O F i g - 20- Douglas F i r L u m b e r in C a n a d a P r i c e 5 Quantity Consumed Per A n n u m 50 4 0 POSTWAR •47 £ 3 0 U5_ •S3 •51 •55 -56 I 57 \-5Q-CQS9-I •5o •48 •49 20 I PREWAR O f 1 32. 10 •36 -37 •33 -3*1 .30 X6 •27 as 0 0 X 1 100 200 300 400 500 600 Volume of Douglas Fir Lumber Consumed Per Annum (MM f b - n v ) 700 800 2-46 Export Markets for Canadian Douglas f i r Lumber The Canadian lumber industry has always been largely dependant upon export markets and currently over 50 per cent of a l l lumber produced i s exported. The Br i t i s h Columbian lumber industry was founded upon the export trade with countries bordering the Pacific Ocean and today the Province is Canada1s foremost exporter of lumber, accounting for more than 70 per cent of the Canadian total. The export lumber trade i s dominated by two major markets: the United States and the United Kingdom. In i960 the United States imported 74 per cent of the total Canadian lumber exports and the United Kingdom 14.4 per cent. Table 23 shows exports of lumber to the United States, the United Kingdom and other countries as a percentage of total exports, by five year averages, from 1921 to i 9 6 0 . Figures 21 and 22 show the distribution of Canadian lumber exports and Douglas f i r lumber exports, by destination, respectively. Trends in Canadian Lumber Exports Exports of lumber from Canada have shown a steady increase since the depths of the depression were reached in 1932. Table 23 shows exports of Canadian lumber from 1920 to i960 and Figure 23 shows clearly the marked upward trend. Figure 21- Canadian lumber exports l926-60,dis t r ibut ion by destination, .;• in (MM f -bm) . n i Year Source: D B S - Trade of Canada (Exports) 6 5 - 0 0 2 Source: DBS- Trade of Canada ( E x p o r l s ) , 6 5 - 0 0 2 47 Table 23. Distribution of Canadian Lumber Exports by Destination, 1921-60 Percentage of Total Exports Other U.K. U.S.A. countries MM f.b.m. % % % 1921-25 1958 14.5 66.4 19.I 1926-30 1987 10.0 73.5 16.5 1931-35 1183 40.6 31.6 17.8 1936-40 2067 55.5 27.0 17.5 1941-45 2021 40.2 51.3 8.5 1946-50 2610 24.0 61.9 14.1 1951-55 3764 13.7 68.9 17.4 1956-60 4048 11.7 76.O 12.3 Source: D.B.S., Trade of Canada, Exports, 65-002 Trends in the Canadian Douglas f i r Lumber Exports The importance of Douglas f i r lumber to the Canadian export market has increased enormously during the last forty years and exports of this species show a steady upward trend (Figure 23). From a mere 1.5 per cent of the total lumber exported in 1920, Douglas f i r exports rose steeply to the mid 1930*s when they accounted for 50 per cent of the total. Annual lumber exports from Period Canada Figure 23- Exports of Canadian lumber 1920-60 , MM fb-7000 60001-50001-^ 4 0 0 0 J2 3 0 0 0 h 2000 1000 1920 1930 1940 1950 I960 Year Source: D-B-S-.Trade of Canada (Esports),65-002-48 During the war years the percentage of Douglas f i r lumber exported declined to 28 per cent of the Canadian total in 1946. Since the war there has been a marked upward trend in the percentage of Douglas f i r in lumber exports, which now shows signs of flattening off. Douglas f i r lumber exports have been increasing at a higher rate than production. This clearly indicates that the percentage of Douglas f i r lumber production exported has been increasing. This increase i s shown in Figure 24 and Table 24. Table 24. Exports of Douglas f i r Lumber From Canada as a Percentage of Douglas f i r Lumber Production, 1921-62 Export of Douglas f i r Lumber as a Percentage of Douglas Period f i r Lumber Production 1921r25 37.6 1926-30 47.5 1931-35 60.6 1936-40 64.4 1941-45 53.0 1946-50 57.3 1951-55 71.6 1956-60 75.0 1961 77.5 1962 74.5 Source: D.B.S., Trade of Canada (Exports), 65-002 D.B.S., Lumber Industry, 35-204 Figure 24- Douglas fir lumber exports as a percentage of production, 1920-62-Year Source- DB-S-,Trade of Canada (Exports), 6 5 - 0 0 2 : Lumber Industry, 3 5 - 2 0 4 49 Douglas f i r i s maintaining i t s position in the export market f a i r l y well. Table 25 shows exports of Douglas f i r , hemlock and spruce lumber as percentages of total lumber exports from 1921 to i 9 6 0 . Table 25. Canadian Lumber Exports by Species as Percentage of Total Lumber Exports Lumber Exports by Species as Percentage of Total Lumber Exports Period F i r Spruce: Hemlock % % % 1921-25 17.8 47.5 2.4 1926-30 34.0 33.6 11.2 1931-35 46.4 28.0 7.0 1936-40 45.2 27.7 9.4 1941-45 34.5 37.6 9.9 1946-50 32.6 35.0 11.9 1951-55 37.6 20.5 16.2 1956-60 37.8 29.6 17.6 Source: D.B.S., in Trade of Canada (Exports), 65-002 50 The United States Market for Canadian Lumber The United States has been a major market for Canadian lumber for many years. Since the depression, imports of lumber from Canada have shown a steady upward trend and in i960 the United States market accounted for 74 per cent of Canadian lumber exports. During the 1920's Canada's external lumber trade was concentrated on the United States. Very l i t t l e lumber was shipped to the United Kingdom and most of the exports to this country were from Eastern Canada. Only a very small percentage of exports went to countries other than the United Kingdom and the United States. The demand for lumber in the United States dropped sharply during the depression and with i t the Canadian imports. In 1930 a t a r i f f of one dollar per thousand board feet was imposed on Canadian softwood lumber imports and in 1932 an import tax of $2 per thousand board feet was added. Canadian imports dropped sharply reaching a low in 1934 of 234 million feet. Recovery from the depression was slow in the lumber market and exports from Canada rose only slowly to 1940. Exports received a boost during the early war years, f e l l i n 1943 almost to the 1940 level, and since the war have shown a steady upward trend stimulated by a high level of economic activity and a boom in United States residential construction. Canada competes very favourably with United States domestic 51 lumber and each year captures a higher proportion of United States total lumber consumption, as i s clearly shown in Table 26. Table 26. Canadian Lumber Exports to U.S. as Percentage of U.S. Lumber Consumption, 1920-62 U.S. Lumber Imports From Canada as Year Percentage of U.S. Consumption 1920 3.7 1925 4.0 1930 1935 1.5 1940 1.9 1945 3.2 1950 1955 8.2 i960 9.5 1961 10.3 1962 11.1 Source: D.B.S., Trade of Canada (Exports), 65-002 U.S. Dept. of Agriculture—The Demand and Price Situation for Forest Products (I963) Currently Canada enjoys several trade advantages in the United States market,the main ones being as follows (Canada-American Committee, 1963). 52 (a) Supply of stumpage in the United States, particularly in the North West i s more inelastic and at a lower level than in B r i t i s h Columbia (Canada's main exporting region). Demand for stumpage in the Pacific North West i s shifting upwards rapidly and the result has been higher stumpage prices in the United States than on the Canadian side of the border. In 19&2, for instance, average stumpage paid in the Douglas f i r region of Washington and Oregon was about 25 (United States) dollars per thousand bd. f t . In British Columbia the average stumpage in 1962 was only 4.28 (Canadian) dollars per thousand bd. f t . and the stumpage paid for Douglas f i r i n B r i t i s h Columbia, 9 . 6 l dollars. (U.S. Dept. of Agriculture, 19&3; B.C.F.S. Annual Report, 1962.) This stumpage differ e n t i a l gives some Canadian producers of lumber a definite cost advantage but many argue that stumpage charges are appraisal residuals rather than cost values. (b) Transport costs from B r i t i s h Columbia to the Eastern states are lower than the costs which United States North West producers have to pay to transport lumber to the east. Up to 1961, B r i t i s h Columbia lumber producers were granted a 15 day free hold in freight cars bound for United States eastern markets. Brit i s h Columbia coastal lumber i s shipped by water to the eastern states by foreign vessels, Greek, Norwegian, Liberian etc. United States producers have, under the 'Jones Act', to u t i l i z e American built and owned vessels for domestic shipments of lumber. The freight charges on these vessels are considerably higher than those experienced by Canadian shippers. In addition loading costs are higher by about 4 dollars per thousand feet in United States ports than in Canadian ports. (Canada-American Committee, 19&2.) (c) Devaluation of the Canadian dollar in 1961 gave Canada another distinct trading advantage in a l l f i e l d s . The rapid increase in Canadian lumber shipments to the United States has occurred over a period when United States lumber consumption has remained f a i r l y constant (Figure 25). Canadian lumber has therefore not been supplementing United States production, but replacing i t . 53 The United States lumber industry, particularly in the North West, has been depressed in recent years as evidenced by declining production; a decline in the number of mills; f a l l i n g employment and lower realization on lumber sales. Many producers put the blame for this situation squarely upon Canadian lumber imports and there is a strong movement to discriminate against Canadian lumber. Trade might be restricted directly by t a r i f f s or quota restrictions, or indirectly by demanding that imported lumber be marked with the country of origin thus allowing discriminatory by-laws to be passed which would affect the use of Canadian lumber at the consumption level. So far these measures have not been accepted by the Executive Branch of the United States government but the danger w i l l exist as long as the depression in the lumber-producing industry continues. The increases i n lumber exports to the United States from Canada since the war have mainly been from Brit i s h Columbia. The increases in lumber production in the British Columbia Interior, which is now the main lumber producing region in Canada, have, during the last decade been mainly founded upon r a i l shipments to the Eastern and Mid-Western states. Exports of lumber, by water, to the Eastern states from Coastal British Columbia have been increasing rapidly and have now surpassed shipments from the United States West Coast to these markets. This i s shown in Table 27. ) 54 Table 27. Waterborne Shipments of Lumber to U.S. Atlantic Coast, 1950-61 Year Total From U.S. West Coast From B.C. 1950-54 average 1395 984 (71%) 411 (29$) 1955-59 1390 970 (7050 420 (30$) i960 1544 849 (55%) 695 (4#) 1961 1388 594 (43JO 794 ( 5750 Source: The U.S. Softwood Lumber Situation in Canadian American Perspective. Canadian-American Committee, 1963 The United States Market for Canadian Douglas f i r Lumber British Columbia species have, for the last forty years, played an important role in the lumber export trade with the United States. The British Columbia interior i s well situated for r a i l shipments to the Mid-Western states and the coastal region i s in almost as good a geographical position to supply the United States Atlantic markets, as are the Pacific Western states and, as pointed out in the previous section, B r i t i s h Columbia has a considerable economic advantage over the United States in this f i e l d . The United States i s indeed a more natural outlet for British 55 Columbia lumber than are other parts of Canada East of the Rockies. Exports of Douglas f i r lumber to the United States are shown in Figure 22 and Table 28. As can be seen they closely follow the pattern of a l l lumber exports to the United States as described in the previous section. There has been a steady upward trend in Douglas f i r exports to the United States since the war,reaching a new high level in 1957 of 1,273 million bd. feet. Since 1957? f i r exports have levelled off, unlike total lumber exports to the United States which have continued to rise steeply. Consumption of Lumber and Douglas f i r Lumber in the United States Consumption of lumber in the United States has shown no marked long term trend during the last 40 years. Consumption of lumber was high in the 1920*s, plummeted with the depression of the mid 1930's, rose again to 1940, f e l l during the war, rose again after the war to the early 1950*s when i t again attained the level of the 1920*s and during the last decade has been f a i r l y constant. This shows a marked contrast to Canada where lumber consumption has risen steadily since the mid 1930's (Figure 10). Demand analyses of the United States lumber market (Holland, 1960j Zivnuska, 1955)> indicate that the demand for lumber has increased steadily during the last forty years Figure 25- Consumption of lumber in the U S A - , 1920-61-60,000. 50,000 40,000 All lumber (1920-61) Douglas fir lumber (1926-61) A A . ^ A / \ A £ ~ 30,000 2 2 20,000 10,000 01 1920 / \ / V : 1930 1940 ••; 1950 Year v. I960 1970 Figure 26- Douglas fir lumber consumption in U S A - as a percentage of total lumber consumption 1926 -61* 70 60 50 4 0 c O a. 30 20 10 '; i ± 0 ' 1920 1930 1940 1950 Year I960 1970 56 whereas supply has fallen. This has resulted in there being l i t t l e overall change in lumber consumption per annum during the period but great increases i n lumber price. Douglas f i r lumber consumption shows a similar pattern to total lumber consumption during the period. Douglas f i r lumber accounted for about 20 per cent of United States lumber consumption between 1926 and 194-6. Consumption of f i r lumber rose steeply after the war and in 1952 Douglas f i r lumber accounted for 28.5 per cent of United States lumber consumption. This high level has been maintained to the present. This contrasts sharply to the Canadian situation where Douglas f i r lumber consumption has shown a downward trend since the war and Douglas f i r as a percentage of total lumber consumption has shown a steep downward trend since the mid 1930rs. It now accounts for only about 12 per cent of the Canadian to t a l . This would seem to indicate a more pronounced consumer preference for Douglas f i r lumber i n the United States than in Canada. Changing Pattern of Species Exported from Canada to the United States Table 28 shows lumber exports to the United States by species 1921-63. Figure 27 shows the major species of lumber exported to the United States as a percentage of total Canadian lumber exports to that country. 3 57 Table 28. Lumber Exports to U.S. by Species, 1921-62 Annual Lumber Exports to U.S. Period MM f.b.m. Fi r Spruce Hemlock Cedar 1921-25 76 504 46 -1926-30 399 572 93 45 1931-35 77 165 21 16 1936-40 105 249 44 37 1941-45 254 487 58 78 1946-50 339 685 180 119 1951-55 497 1,012 288 225 1956-60 1,167 1,088 412 253 1961 1,262 1,327 573 279 1962 1,237 1,622 684 335 Source: D.B.S., Trade of Canada (Exports), 65-002 Prior to 1930 Spruce lumber was the main species exported from Canada to the United States. The percentage of Douglas f i r lumber rose during the 1920's and attained the level of spruce in 1930. The percentage of Douglas f i r lumber dropped again during the depression and did not again equal spruce until the mid 1950*s. Douglas f i r surpassed Fig- 27- Exports of Lumber to the US-A- by Species as a Q 0 Percentage of Total Lumber Exports, 1926-1962-7 0 -50 -30 -Douglas f i r . ! • i 1 — — — H e m l o c k — — Spruce •••• Cedar / \ A I J V 1920 1930 1940 1950 Year I960 1970 Source ! D B S , Trade of Canada, Exports , 6 5 - 0 0 2 58 spruce between 1955 and 1959 but now shows a downward trend while spruce shows an upward trend. Most of the spruce lumber exported to the United States has i t s origins in Western Canada. In 19&2 the spruce lumber exports to the United States were 75 per cent western and 25 per cent eastern spruce. Exports of hemlock and cedar lumber to the United States have increased substantially during the period and hemlock particularly shows a well marked upward trend. These four species; spruce, hemlock, Douglas f i r and cedar accounted for 94 per cent of Canadian lumber exports to the United States in 1962. The United Kingdom Market for Canadian Lumber The United Kingdom has, for many years, been the world's major importer of softwood lumber and has vied with the United States as Canada's main customer for this product. Prior to the 1930's practically a l l the softwood lumber exported to the United Kingdom from Canada was eastern spruce and white pine. During the 1920's the Canadian export trade was concentrated on the United States. B r i t i s h Columbia had virtually no lumber trade with the United Kingdom. With the onset of the depression in the United States,Canadian lumber traders turned to Britain as an alternative market. Recovery from the depression was more 59 rapid in the United Kingdom than in the United States and was followed by a boom in house building. Canadian exports to Britain rose rapidly during the 1930's stimulated by a 10 per cent (cost, insurance, freight) preferential t a r i f f agreement. During this decade Br i t i s h Columbia became a major contributer to the United Kingdom lumber trade for the f i r s t time and by the late 1930's Douglas f i r , hemlock and cedar from the Brit i s h Columbia coast accounted for 70 per cent of a l l Canadian lumber exports to Britain. During the war years Canada was Britain's only supplier of softwood lumber and exports remained high, being about equal to exports to the United States. After the war Canadian lumber exports to Britain dropped drastically and in the late 1940's reached record low levels. The main cause of this was Britain's dollar d e f i c i t which forced a reduction in a l l trade with the dollar area and a continuation of wartime controls. In 1949 the Pound Sterling was devalued thus improving Britain's trading position with North America and lumber imports from Canada increased again during the early 1950's. In 1953 timber importation was decontrolled and this was followed by a housing boom. Throughout the 1950's exports of lumber from Scandinavia and Russia to the United Kingdom increased, competing fiercely with Canadian shipments. Russian exports of lumber showed the most rapid increase, from an average of 6o 3 per cent of Britain's total imports in the period 1945-49, to 20 per cent in the period 1955-60. Canada's share of the United Kingdom market has fallen considerably during the last decade. Table 29 shows the distribution by country of United Kingdom imports of softwood lumber from 1950 to 1961. Figure 21 shows exports of lumber to the United Kingdom from Canada 1926-60 compared to exports to the United States and other countries. Table 29. U.K. Annual Imports of Softwood Lumber, 1950-61 Year Canada Finland Sweden U.S.S.R. A l l Sources MM f.b.m. 1950-54 644 26% 19% 546 22$ 10$ 2473 1955-59 487 17% %2% 2&> 19% 2797 i960 617% 1014 29$ 773^  21$ 21% 3545 1961 602 19% 31$ 604 19% 672 21$ 3171 Source: The U.S. Softwood Lumber Situation in a Canadian American Perspective. Canadian-American Committee, 1963 61 Changing Pattern of Species of Lumber Exported from Canada to the United Kingdom Figure 22 shows the volume of Douglas f i r lumber exported to the United Kingdom compared to other countries from 1920 to i 9 6 0 . Figure 28 shows Douglas f i r , spruce, hemlock and cedar lumber as a percentage of total lumber exports to the United Kingdom from 1920 to 1962 and Table 30 shows exports of these species to the United Kingdom by volume. Prior to 1920 practically a l l lumber exports to the United Kingdom were from the Eastern provinces and consisted mainly of spruce and pine. Between 1920 and 1931? however, Douglas f i r lumber increased from 1.5 per cent to 50.5 per cent of the total exports to the United Kingdom and spruce f e l l from 7'4 per cent to 12 per cent. During the 1930's B r i t i s h Columbia's lumber trade with the United Kingdom developed rapidly. Hemlock and cedar contributed substantial amounts of lumber to the United Kingdom market for the f i r s t time. Douglas f i r lumber maintained i t s position as the principal species in the United Kingdom export market through out the 1930's and 1940's, averaging about 50 per cent of the total lumber exports. A major peak in Douglas f i r exports was achieved in 1952 but since this date the percentage of Douglas f i r lumber exported to the United Kingdom has shown 62 a steep downward trend and by 1962 this species accounted for only 13 per cent of the total. Spruce maintained i t s position as the second most important species i n the United Kingdom market from 1930 to 1950 averaging about 30 per cent of the tot a l . In the period 1950 to 1952 there was a steep decline in spruce exports and in 1952 spruce comprised only 5 per cent of lumber exports to the United Kingdom. During the last decade, however, spruce exports have shown a marked increase and i n 1962 were over 25 per cent of the total. About 75 per cent of the Canadian spruce lumber exported to the United Kingdom i s of eastern origin and 25 per cent western. Hemlock lumber exports to the United Kingdom have shown a steady upward trend since this species entered the market in the early 1930's. In 1950 i t took over from spruce as the second most important species and since 1956 has been the major species i n the United Kingdom export market for Canadian lumber. In 1962 hemlock accounted for 46 per cent of lumber exports to the United Kingdom. Cedar lumber entered the United Kingdom market i n the early 1930's. It made no substantial gains until 1953 but since this date has shown an upward trend. In 1962 i t accounted for 8 per cent of the total. Fig- 28- Exports of Canadian Lumber to the U- K- by Species as Percentage of Total Lumber Exports-1920-1962* Source 5 D B S - Trade of Canada (Exports) 65 — 0 0 2 63 Table 30. Lumber Exports to U.K. by Species, 1921-62 Annual Lumber Exports to the U.K. (MM f.b.m.) Douglas f i r Spruce Hemlock Cedar MM f.b.m. MM f.b.m. MM f.b.m. MM f.b.m. 1921-25 17 194 1926-30 42 87 2 1931-35 2 3 4 152 13 4 1936-40 616 335 80 23 I 9 4 I - 4 5 382 255 113 4 1945-50 285 172 99 14 1951-55 362 119 281 9 1956-60 129 94 177 31 1961 143 142 247 48 1962 86 157 282 4 9 Source: D.B.S., Trade of Canada (Exports), 65-002 Markets for Canadian Lumber in Other Countries Figure 21 shows the export of Canadian lumber to other countries compared to exports to the United Kingdom and the United States. These countries are many in number and are situated in the Pacific, South America, Africa, Asia and Europe. They account for only a small percentage of the Canadian lumber export market. Normally, exports of lumber to countries other than the United Kingdom and the United States vary between 8 and 20 per cent of total lumber exports (Table 31). In the depression of the early 1930's, which hit 64 the United States market the hardest, the exports to other countries rose to over 25 per cent of total lumber exports but they soon returned to normal levels as the depression receded. The main importers of Canadian lumber, other than the United States and the United Kingdom, are Australia and South Africa; these countries have been important markets throughout the forty year period considered here. In the 1 9 2 0 , s China and Japan were important markets but today lumber trade with these countries i s sporadic. Other important markets today are Hew Zealand, the West Indies, Puerto Rico and The European Common Market countries. There i s at present an active lumber trade promotion program being carried out in the traditional markets, particularly Australia, Europe and Japan, and In the less developed countries which may provide the market for the future. In 1962, 14.3 per cent of a l l Douglas f i r exported was to countries other than the United Kingdom and United States. This percentage shows a marked downward trend (Table 32) but f i r i s s t i l l the most important species in this export f i e l d , accounting for 44 per cent of a l l lumber exported to countries other than the United Kingdom and United States in i960 (Table 32). 65 Table 31* Exports of Lumber to Countries other than the U.K. and U.S., 1921-60 Period Annual export of lumber to other countries Exports to other countries as percentage of total lumber exports MM f.b.m. % 1921-30 329 16.6 1931-40 333 20.5 1941-50 262 11.3 1951-60 427 10.9 Source: D.B.S., Trade of Canada (Exports), 65-002 Table 32. Douglas f i r Exports to Other Countries, 1926-62 Period Vol. of Douglas f i r exports to other countries Douglas f i r lumber exports to other markets as per-centage of total f i r lumber exports Douglas f i r as percentage of lumber exports to other markets f.b.m. 1926-30 1931-35 1936-40 1941-45 1946-50 1951-55 1956-60 1961 1962 241 235 196 94 226 262 211 221 34.7 42.7 20.9 I3.5 2 6 . 5 18.5 15.2 13.1 14.3 73. 72. 57. 59. 3 1 8 1 62.1 72.8 47.0 Source: D.B.S., Trade of Canada (Exports) 65-002 66 During the last forty years the main markets for Douglas f i r lumber other than the United States and United Kingdom have been South Africa and Australia. In the 1920's China and Japan were quite important. In i960 Douglas f i r lumber was exported to forty different countries situated in Europe, Africa, Asia, Australasia and South America. Only four of these countries imported more than 10 MM f.b.m., however, apart from the United States and the United Kingdom. These were Australia, 101 MM f.b.m., South Africa, 57 MM f.b.m., Belgium and Luxemburg, 13 MM f.b.m. and Puerto Rico, 19 MM f.b.m. Changing Pattern of Species of Lumber Exported to Countries Other than the United Kingdom and the United States Douglas f i r is the most important species of lumber exported to countries other than the United States and the United Kingdom and has been for the last 40 years. It is gradually losing ground to hemlock however. Cedar and spruce have never been important components of this market and do not seem to be gaining any ground. In i960 hemlock accounted for 25 per cent of the market with 134 MM f.b.m., cedar accounted for 3.5 per cent and spruce 2.0 per cent. In i 9 6 0 , apart from the United States and the United Kingdom, only South Africa imported more than 67 10 MM f.b.m. of hemlock lumber (49 MM f.b.m.; Australia only imported 6 MM f.b.m. No country, apart from the United States and United Kingdom, imported more than 10 MM f.b.m. of cedar or spruce lumber. Australia imported 6 MM f.b.m. of cedar lumber, New Zealand 4 million and Trinidad and Tobago 4 million. Only France, Ireland and Bermuda imported more than one MM f.b.m. of spruce lumber. Use of Douglas f i r by the Plywood and Veneer Industry i n British Columbia Production of Douglas f i r Plywood The f i r s t Douglas f i r plywood to be manufactured was in 1905 at Portland, Oregon (Cour, 1955). The f i r s t Douglas f i r plywood to be manufactured in Canada was in Briti s h Columbia in 1913 by the Canadian Western Lumber Company (B.C. Lumberman, Nov., 1955). Up to the 1930's growth of the industry in Bri t i s h Columbia was relatively slow. The development of the water-proof glue-line,however, gave the industry a renewed impetus. During the war years f i r plywood found many new uses and growth of the industry was rapid. After the war the demand for f i r plywood continued and the industry continued to expand, until today i t i s the second largest round-log using industry in Brit i s h Columbia, lumber being the largest. 68 Although the plywood industry makes use of only a fraction of the timber used by the lumber industry, 7.6 per cent in British Columbia in 1962, the value added in manufacture by the plywood industry i s almost 25 per cent of the value added by the lumber industry. Table 33 shows the growth in the output of Douglas f i r plywood in British Columbia from 1944 to 1963 and the number of establishments manufacturing the product. Although there were only 19 mills in Bri t i s h Columbia producing f i r plywood in 1961, their average size was large compared to plywood mills in the eastern provinces. In Quebec and Ontario in 1961 there were 56 mills producing plywood with an average employment of 97 men per m i l l in Quebec and 84 in Ontario. In British Columbia the average employment was 323 m e n P e r m i l l . In Quebec and Ontario the value added by manufacture in the plywood industry i n 1961 was 10 million and 12 million dollars, respectively, compared to 35 million dollars in Br i t i s h Columbia. These figures indicate the importance of the Douglas f i r plywood industry compared to other plywood manufacturing industries in Canada. Most eastern mills produce hardwood plywood. The Canadian softwood plywood industry is situated almost exclusively West of the Rockies. 69 Table 33. The B.C. Douglas f i r Plywood Industry, 1944-63 Production of Douglas f i r plywood Number of mills M sq. f t . manufacturing Douglas Year \ n standard thickness f i r plywood I944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 i960 1961 1962 1963y 284,076 218,199 261,332 268,371 373,241 359,936 389,010 482,581 464,417 628,621 724,460 954,367 1,080,466 1,030,881 1,257,075 1,214,835 I ,338,3g2 1,540,787 1,643,542 1,738,000 ] 11 11 12 11 12 12 14 17 17 17 17 18 19 Estimated from f i r s t 10 months of 1963. Source: D.B.S., The Veneer and Plywood Industry (Annual), 35-206 D.B.S., Peeler logs, Veneer and Plywood (Monthly), 35-001 Production of Douglas f i r Veneer Very l i t t l e Douglas f i r veneer i s sold in this form. Most of i t i s manufactured immediately into plywood. Production of Douglas f i r veneer is unpredictable showing no marked trend (Table 34) . 70 Table 34. Douglas f i r Veneer Production in B r i t i s h Columbia (For Sale as Such) 1954-62 F i r Veneer Production Ye ar 1/20" + M sq. f t . 1954 1,833 1955 2,276 1956 2,380 1957 108,740 1958 45,458 1959 72,922 1960 16,180 1961 19,077 1962 24,787 Source: D.B.S., Peeler Logs, Plywood and Veneer, 35-001 Trends in the Price of Douglas f i r Plywood Table 35 shows the price of Douglas f i r plywood and Figure 29 shows the price of Douglas f i r plywood in constant dollars,indicating the absolute change in price level relative to the general change i n the cost of l i v i n g . It can be seen that the price of Douglas f i r plywood has shown a marked downward trend since 1945. How much of this reduction Is due to an absolute price f a l l , and how much i s due to a f a l l i n the quality of the product offered for sale, i s impossible to say. There has been a marked downward trend in the grade of plywood offered for 71 sale, however, with greater emphasis upon u t i l i t y construction grades rather than decorative finishing grades. Table 35. Price of Douglas f i r Plywood, 1944-61 (Dollars Per M Sq. Ft. (£" Basis)) Price of Douglas f i r Price of Douglas f i r plywood Year plywood Constant dollars Dollars 1935-39 = 100 1944 27.0 20.7 1945 45.6 34.4 1946 43.0 30.8 1947 54.2 33.2 1948 58.2 30.0 1949 54.8 27.8 1950 58.9 27.9 1951 70.6 29.4 1952 70.0 31.0 1953 Z1.2 32.3 1954 6 3 . 4 29.2 1955 60.0 27.4 1956 64.1 28.4 1957 63.O 27.8 1958 55.1 24.2 1959 59-5 25.8 1960 52.1 22.5 1961 48.8 21.0 Source: D.B.S., The Plywood and Veneer Industry, 35-206 Figure 29- The price of Douglas fir plywood, l944-6l(Constant dollars per M sq ft- » 1 / 4 inch basis) (Constant dollars 1935-39 = 100) 80r-70 60 o o II o to C T 40 a. in a o "EJ 5 30 o o 20 10 x 1940 1945 1950 1955 I960 Year Source' D-BS-The Veneer and Plywood Industry, 35-206 1965 72 Markets for Canadian Douglas f i r Plywood and Veneer The Canadian Domestic Market Most of the Douglas f i r plywood produced goes into the domestic market, although the percentage of total production exported i s steadily increasing reaching 15.2 per cent In 1963 (Figure 31). Per capita consumption of Douglas f i r plywood in Canada shows a steep upward trend,increasing from 22.7 square feet (£" basis) in I948 to 75.8 square feet in I962 (Table 36 and Figure 3 0 ) . Seventy-five per cent of a l l Douglas f i r plywood produced i s used in the construction industry and i t i s replacing lumber i n many uses. The Export Market In 1954 only two per cent of Canadian Douglas f i r plywood production was exported; by 1963 this had increased to 15.2 per cent (Figure 3 D . Most of the f i r plywood exported goes to the United Kingdom, which took 94 per cent of total exports in i 9 6 0 . Only a very small amount is exported to the United States; 0.6 per cent of total exports in i 9 6 0 . This i s mainly due to the .fact that there i s a 20 per cent t a r i f f on softwood plywood imported into the United States and a 10 per cent t a r i f f on veneer imports. Table 37 shows the distribution 3 f 73 Table 36. Per Capita Consumption of Douglas f i r Plywood in Canada Per 'capita consumption of Douglas Year f i r plywood in Canada (Sq. f t . per annum) 1948 22.7 1949 25.3 1950 28.0 1951 32.9 1952 31.4 1953 40.3 1954 48.0 1955 56.5 1956 61.5 1957 60.4 1958 § 7 . 5 1959 60.0 1960 66.2 1961 73.6 1962 75.8 Source: D.B.S., The Veneer and Plywood Industry, 35-206 D.B.S., Trade of Canada (1) Imports 65-005 (2) Exports 65-002 of f i r plywood exports from Canada from 1948 to i 9 6 0 . If the t a r i f f barrier did not exist Canadian Douglas f i r plywood would be able to compete very favourably with United States produced Douglas f i r plywood i n the United States market. With the exception of one m i l l , Canadian Douglas f i r plywood is made with a glue line suited for exterior use. Sixty to seventy-five per cent of United Fig 30-80 . t 60 50 in O 03 V 40 CT CO 30 20 10 Per Capita Consumption of Douglas fir Plywood in Canada, 1948-1962 (Sq-Ft-per Annum, 1/4 "Basis) : • t ' ,'.< I' 01 1945 1950 1955 I960 1965 1970 Year 74 Table 37. Percentage Exports of Douglas f i r Plywood from Canada by Destination, 1948-60 Other Year U.K. U.S. countries 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 i960 50.9 50.1 2.6 80.4 81.2 77.4 66.4 78.8 85.1 82.0 92.3 96.5 94.0 2 7 . 4 9.5 29.9 2.1 3.1 13.8 2.6 0.8 2 . 4 0.7 0.6 21.7 40.4 67.5 17.5 15.7 1 7 - 3 I9.8 19.7 12.3 17.2 2.8 5.4 Source: D.B.S., Trade of Canada, Exports 65-002 States Douglas f i r plywood i s made as an interior grade, which is often misused, resulting i n delamination and a f a l l in consumer preference due to dissatisfaction. In the United Kingdom market, Douglas f i r plywood has to compete with many other products particularly fibre boards and particle boards from Scandinavia, which are far cheaper than plywood, and just as satisfactory for many uses. Fig- 31- The Markets for Douglas f i r Plywood, 1 9 5 4 - 1 9 6 3 -Canadian Domestic Consumption 8» Exports (M sq- f t , 1/4"Basis) Year Year Source1 D B S - , The Veneer and Plywood Industry , 3 5 - 2 0 6 -75 The Resource Base of the Douglas f i r Plywood Industry The early Douglas f i r plywood industry was founded upon the large sized, clear Douglas f i r logs available along the Pacific seaboard, in old-growth Douglas f i r stands from B r i t i s h Columbia to northern California. In the 1920's in the United States, only 1.5 per cent of a l l logs cut were considered f i t for veneer production (Cour, 1955)• These were the very best clear stock. The average grade of log used for veneer production has dropped over the last 40 years. There are no estimates available for B r i t i s h Columbia but Schrader (1952), in the United States, suggested that 3° P e? cent of a l l harvestable old-growth Douglas f i r was considered suitable for veneer production. The Stanford report (1954) estimated that 20 per cent of a l l softwood veneer was being made from dumber grade 1 logs. Guthrie and Armstrong (i960) presented a table which shows that between 1950 and 195& the percentage of *A' grade face, in plywood produced in the United States dropped from 44 to 32 per cent while the representation of *C* grade face rose from 15 to 24 per cent. There is good evidence that there i s a similar shortage of high grade Douglas f i r logs i n B r i t i s h Columbia and this scarcity is reflected in the high price of peeler grade logs and the better quality f i r sawlogs. In 1963 number one grade, Douglas f i r peelers commanded an average price of 120 dollars per thousand board feet on the Vancouver log market compared to a price of $92.50 i n i960 76 (B.C. Lumberman, 1960-63), a rise of almost 30 per cent in three years. In the same period the general wholesale price index rose only 6.6 per cent. Number two peelers rose only 7.3 per cent i n price in this three year period and the price of number one sawlogs rose by 10.3 per cent. The shift from high grade, clear, peeler logs to smaller inferior logs has led to marked changes in the pattern of the industry and has encouraged technological innovation. Markets have been created for 'sheathing grades' of plywood where the appearance of the surface i s of l i t t l e importance. F i r plywood is being used more and more for core stock with other materials (not necessarily wood) as a surface veneer. Developments in splicing and patching of veneer sheets have made possible a high degree of recovery from smaller, lower grade, logs. In spite of the fact that the quality of peeler logs i s decreasing, the recovery rate, in terms of square feet of veneer per f.b.m. of peeler log, appears to be ri s i n g . This indicates that the rate of technological advance has so far been more rapid than the decline in log quality. There i s no detailed information on the rate of recovery in the plywood industry available in British Columbia but some indication may be obtained from the volume of f i r peeler logs used and the output of f i r plywood, which 5 77 are reported month by month by the Dominion Bureau of S t a t i s t i c s . Table 38 shows the volume of peeler logs consumed and the apparent rate of recovery i n the B r i t i s h Columbia Douglas f i r plywood industry from 1954 to 1963. Table 38. Recovery Rate i n B.C. Douglas f i r Plywood Industry, 1954-63 Douglas f i r peeler log Recovery rate Year consumption Sq. f t . of plywood M f.b.m. (J") per f.b.m. 1954 244,194 3.19 1955 296,822 3.12 1956 325,873 3.33 1957 313 , 2 9 0 3.50 1958 351,564 3.3§ 1959 345,538 3.38 1960 381,964 3.53 1961 420,345 3.61 1962. 453,622 3.63 1963 1 391,092 3.70 iBased on 10 months only. Source: D.B.S., The Veneer and Plywood Industry, 35-206 The Changing Pattern of Species Used i n the Softwood Plywood Industry i n Canada Because of the technological changes which have allowed the plywood and veneer industry to make use of smaller, lower grade peeler logs, the switch from Douglas f i r to other 78 species has not been as rapid as one might imagine. In addition, manufacturers have several reasons f o r preferring Douglas f i r to other species and are loath to make a change. Douglas f i r cuts e a s i l y on the lathe and checks less r e a d i l y than other species. I t has a low moisture content and can be dried quickly. The consumer has been conditioned to buy f i r plywood and there i s probably a strong consumer preference f o r t h i s species p a r t i c u l a r l y i n the United States where the *Douglas F i r Plywood Association' has subjected this species to high pressure advertising f o r many years (C O U P , 1955)* In B r i t i s h Columbia,however, the movement of other softwood species into the plywood and veneer industry i s gaining impetus. This has been p a r t i c u l a r l y noticeable during the l a s t three years. In i960 only 2.1 per cent of a l l softwood plywood i n Canada was manufactured from species other than Douglas f i r . By 1963 use of other softwoods had r i s e n to 9.1 per cent. I t i s s i g n i f i c a n t that t h i s rapid increase i n the use of other species occurred over a period that saw the most rapid increase i n the pri c e of high grade peeler logs. The species taking the place of Douglas f i r include hemlock, spruce, balsam and cedar. Plywood manufactured from these species i s consumed i n the domestic market. Table 39 shows the output of plywood manufactured from species other than f i r , as a percentage of Douglas f i r plywood output, from 1954 to 19&3, together with the price 79 of high grade f i r peeler logs for the same period. Table 39. The Use of Species Other Than Douglas f i r in Plywood Manufacture, 1954-63 Year (1) Output of ply-wood of species other than Douglas f i r M sq. f t . (J") Plywood of other species as percentage of Douglas f i r plywood (2) Average price of #1 peeler logs $/M f.b.m. 1954 248 0.3 90 1955 1,311 0.1 85 1956 1,068 0.1 90 Less than 1957 622 0.1$ 85 1958 20,026 2.0 75 1959 16,607 1.4 85 1960 27,780 2.1 92.50 1961 74,017 4.9 102.50 1962 97,154 5-9 115 1963 158,000 9.1 120 Sources (1) D.B.S., The Veneer and Plywood Industry. 35-206 (2) Schultz, The B.C. Lumberman, (1954-1963) The use of species other than. Douglas f i r for manufacturing veneer, for sale as such, varies a great deal. For instance, in 1959 veneer from other species amounted to 19.3 per cent of f i r veneer. In i960 this rose to 92 per cent and in 1962 i t was 430 per cent. On the whole, however, Douglas f i r veneer i s sold in this form in smaller quantities than veneer manufactured from other softwood species. ' 80 Other Uses of Douglas f i r In B r i t i s h Columbia Use of Douglas f i r by the Pulp and Paper Industry i n B r i t i s h Columbia In the 1920's and 1930's the rapid growth of the B r i t i s h Columbia pulp and paper industry was mainly based upon spruce and hemlock which were p a r t i c u l a r l y suitable fo r pulping by the sulphite process. Since the second world war there has been considerable expansion i n the use of sulphate pulp, f a c i l i t a t e d by t e c h n i c a l improvements i n the process, e s p e c i a l l y i n the bleaching of the pulp. Douglas f i r i s pulped almost exclusively by the sulphate process and greater use of t h i s species i s apparent. This seems a l o g i c a l development considering that Douglas f i r i s the most important lumber producing species i n B r i t i s h Columbia and that the tendency i s f o r large h o r i z o n t a l l y and v e r t i c a l l y integrated firms to dominate the forest industry. This movement towards integration i n the forest industries has led to the increased use of m i l l residue by the pulp and paper industry, e s p e c i a l l y during the l a s t decade. In i960 m i l l residue accounted for 40 per cent of the pulpwood used i n B r i t i s h Columbia, compared to 20 per cent i n 1950. No d e t a i l s are available on the volume of residue used by species but i t seems reasonable to suppose that Douglas f i r , being the major lumber species i n B r i t i s h Columbia, accounts for a high proportion of the m i l l residue 81 used by the pulp and paper industry. As the proportion of Douglas f i r used by the lumber industry declines (page 21) the quantity of Douglas f i r m i l l residue used by the pulp and paper industry can be expected to decline also. Table 4G shows the volume of pulpwood used by the pulp and paper industry i n Bri t i s h Columbia by species from 1931 to 1961. There are no data available as to the volume od Douglas f i r pulpwood cut, but i t i s reasonable to assume that a high proportion of the 'other softwoods' category is comprised of Douglas f i r . Practically a l l of the softwood pulpwood, other than spruce, balsam and hemlock, is pulped by the sulphate process. The proportion of species other than spruce, balsam and hemlock used as pulpwood i s increasing slowly but in 1961 these other species accounted for only 8 per cent of total pulpwood consumption. In Bri t i s h Columbia, therefore, the volume of Douglas f i r pulp-wood used by the pulp and paper industry in 1961 was less than 8 per cent of total pulpwood consumption. Use of Douglas f i r for Tie Production i n Bri t i s h Columbia In i960 approximately 1.2 million railroad ties were produced i n Br i t i s h Columbia from a total timber volume of 40,713 M f.b.m. Douglas f i r accounted for 75 per cent of t i e production in the province. There appear to be no long term trends in tie production. The number produced varies greatly from year to year. The percentage of ties manufactured Table 40. Volume of Pulpwood (Roundwood) Used in B.C. By Species, 1931-61 Other Spruce and species of balsam Hemlock softwood Volume of Pulpwood Used, in B.C. Percentage of Total Softwood M cords Pulpwood Used 1931-35 139 206 10 355 39 58 3 1936-39 132 242 112 385 34 63 3 1947-50 205 439 33 677 30 65 5 1951-55 363 764 40 1,167 31 65 4 1956-60 503 1,044 102 1,649 30 63 7 1961 641 1,341 163 2,145 30 62 8 Source? D.B.S., Pulp and Paper Mills, 36-204 Spruce and Other species Total Period balsam Hemlock of softwood softwood 83 from Douglas f i r is f a i r l y constant; i t has been between 70 and 80 per cent of total t i e production since 194-5. Use of Douglas f i r for Poles and Piling in B r i t i s h Columbia Most of the piling cut i n B r i t i s h Columbia is Douglas f i r . In 1962 5,717 thousand linear feet of piling were cut in the Vancouver Forest D i s t r i c t ; that i s approximately 17 MM f.b.m. or 1.5 per cent the total Douglas f i r cut in the Vancouver Forest D i s t r i c t . In the Southern Interior in 1962, 6,262 thousand linear feet of poles and piling were cut, that i s approximately 19 MM f.b.m. In the past cedar was the main species from which poles were cut but in recent decades Douglas f i r has become a more important pole species (Sloan, 1956). No data are available on the actual volume of poles cut from Douglas f i r . Export Trade in Douglas f i r Logs The majority of the trade in Douglas f i r logs i s with the United States. There is no export of Douglas f i r logs to the United Kingdom and the log trade with countries on the Pacific seaboard,which was high in the 1930*s,is now sporadic although exports of logs to Japan have increased during the 1960 fs. Table 41 shows export of Douglas f i r logs from 1930 to 1962. No data are available prior to 1930. There Is a steep downward trend i n the exports of Douglas f i r logs. 84 Table 41. Canadian Exports of Douglas f i r Logs, 1930-62 Year Exports to the U.S. Total Exports MM f.b.m. MM f.b.m. 1930 90.7 133.5 1935 41.5 237.2 1940 10.1 27.1 1945 13.0 13.0 1950 9.0 9.0 1951 7.6 1952 9.8 9.9 1953 7.4 7.7 1954 4.2 4.2 1955 0.9 0.9 1956 0.2 1.0 1957 0.7 0.7 1958 1.4 1.4 1959 0.3 0.3 i960 1.9 1.9 1961 14.3 1962 2.6 Source: D.B.S., Trade of Canada (Exports), 65-002 Douglas f i r on the Vancouver Log Market Prices of logs on the Vancouver log market may be used to indicate the relative prices of different species in the Vancouver Forest District and the premiums which are commanded by the higher grades. Between 1924 and 1959> the average price of Douglas f i r logs on the Vancouver log market was 35 P©r cent higher 85 than hemlock and the average price of cedar logs was 27 per cent higher than hemlock (Smith, Ker and Csizmazia, 1961). In 1963 the average price for Douglas f i r logs ( a l l grades) was 92 per cent higher than the average price of hemlock logs and 100 per cent higher than the average price of cedar logs (Schultz, B.C. Lumberman). For the years 1956-1959? using No. 3 Douglas f i r sawlogs as the base, premiums averaged 28 per cent for No. 2 and 70 per cent for No. 1 sawlogs. Premiums were 48, 64, 80 and 97 per cent, respectively, for Nos. 4, 3 , 2 and 1 peeler grades of Douglas f i r (Smith, Ker and Csizmazia, I 9 6 D . In 1963) on the same basis, premiums averaged 17 per cent for No. 2 and 33 per cent for No. 1 Douglas f i r sawlogs. Premiums for Douglas f i r peeler grades were 50» 67, 83 and 100 per cent, respectively, for Nos. 4, 3, 2 and 1. The premiums for high grade Douglas f i r sawlogs have therefore been reduced considerably while the premiums for peeler grades have risen slightly. In the period 1955-1959* No. 3 Douglas f i r sawlogs sold at 26.2 per cent more than No. 3 hemlock logs and No. 3 cedar logs sold at 5*6 per cent less than No. 3 hemlock (Smith, Ker and Csizmazia, 1961). In 1963» No. 3 Douglas f i r sawlogs sold at 41 per cent more than No. 3 hemlock logs and No. 3 cedar logs sold at 18 per cent less than No. 3 hemlock. The price of No. 3 Douglas f i r sawlogs exceeded the price of No. 2 hemlock logs 86 by 14 per cent and No. 1 cedar logs by 9 per cent. The very lowest grades of Douglas f i r , therefore, command a higher price on the Vancouver log market than the highest grades of hemlock and cedar. The price of hemlock logs exceeds cedar in grades No. 2 and 3 but is lower i n grade No. 1. The price of high quality Douglas f i r sawlogs i s probably due to the fact that they are being used more and more by the plywood and veneer industry and the buyers in this industry tend to bid the price up. Good quality spruce and cedar logs are also used by the plywood and veneer industry, however, but the price of these species remains below the most inferior grades of Douglas f i r . There i s very l i t t l e difference between the average prices of Douglas f i r and hemlock lumber and the average price of cedar lumber is considerably higher than Douglas f i r and hemlock. There appears, therefore, to be no rationality behind the high premiums paid for low quality Douglas f i r sawlogs on the Vancouver log market. A careful study of the Vancouver log market would be necessary to explain the anomalies mentioned here. In this thesis only the average price of lumber, by species, has been considered. There may be regional differences in the price of Douglas f i r lumber which might partially explain the high price of Douglas f i r logs on the Coast. No consideration i s given here to the price of lumber by grades. Douglas f i r logs may yield a greater proportion of high grade lumber than other species. 87 A major factor i n the high price of Douglas f i r logs i s probably a strong t r a d i t i o n a l preference for Douglas f i r on the part of the manufacturers. This may be p a r t l y i r r a t i o n a l prejudice and p a r t l y based upon the superior technical working q u a l i t i e s of Douglas f i r . 88 CHAPTER III THE DEMAND FOR CANADIAN DOUGLAS FIR IN 1975 In considering the future demand for Canadian Douglas f i r , products use has been made of several studies which have attempted to forecast the future demand for timber products in the United States and Canada. In the United States, during the last decade, two principal publications have related past demand for forest products to future demand expectations. They are "America's Demand for Wood 1929-1975" published by the Stanford Research Institute in 1954 and "Timber Resources for America's Future" published by the United States Department of Agriculture i n 1958. The findings of these studies were discussed and revised, where necessary, by Guthrie and Armstrong i n "Western Forest Industry" ( i 9 6 0 ) . In Canada, the only major study of the future demand for forest products was carried out by the Royal Commission on Canada's Economic Prospects (Canada, i 9 6 0 ) . The outlook for Br i t i s h Columbia's forest industry was dealt with in the B r i t i s h Columbia Government's brief to the Royal Commission (Government of British Columbia, 1956). The finding's of the Commission were discussed and revised in a paper for the 'Resources for Tomorrow' conference held in Montreal in l ? 6 l (Wilson, I 9 6 D . 89 In this study the forecasts made i n the above publications are considered and revised, where necessary, on the basis of present data. Estimates, based on past trends, are then made of the part which British Columbian Douglas f i r might be expected to play in the future demand for forest products in North America. The Demand for Canadian Douglas f i r Lumber in 1975 Canadian Domestic Demand for Lumber in 1975 The Royal Commission on Canada's Economic prospects (1956) made three predictions of lumber consumption in Canada in I98O. F i r s t l y , they estimated that by I98O the Gross National Expenditure (Product) in Canada would be 53 b i l l i o n dollars (194-9 dollars). Assuming that lumber consumption i n I98O would bear the same percentage relationship to G.N.E. as in the period 1950-54 they arrived at a lumber consumption figure for 1980 of 6 b i l l i o n f.b.m. Secondly, they assumed an expenditure on non-residential construction of 3.2 b i l l i o n dollars (194-9 dollars) by I98O and also that 185,000 dwellings would be bui l t i n the year I98O. They arrived at a lumber consumption figure for I98O of 5.4 b i l l i o n f.b.m. Finally, they assumed that per capita consumption of lumber would f a l l to 220 f.b.m. by 1980 and that the 90 population of Canada would increase to 26.65 millions. These established the basis for a third estimate of Canadian lumber consumption in I98O at 5»$ b i l l i o n bd. f t . These three estimates are shown in Figure 32. Wilson (I961) suggested that these estimates were too high. F a l l i n per capita consumption of lumber in Canada has proceeded at a higher rate than was anticipated in 1956, due mainly to the increased substitution of other materials. Wilson predicted a 24 per cent f a l l i n per capita consumption of lumber between i960 and 1975 and consumption of only 4.8 b i l l i o n bd. f t . of lumber, per annum, i n Canada by 1975. In the light of current trends this figure of 4.8 b i l l i o n f.b.m. i s too high. Consumption i n the three year period I96I-I963 only averaged 3,426 b i l l i o n f.b.m., 13 per cent lower than in the period 1956-60. This i s a greater decline in lumber consumption than was foreseen by Wilson (I96I). From present trends i t seems reasonable to suppose that lumber consumption i n Canada w i l l have levelled off at about 4,100 MM f.b.m. per annum by 1975 (Figure 32). The trend towards a Canadian population of 26.65 million by 198O, as predicted by the Royal Commission on Canada's Economic Prospects (1956) would s t i l l appear to hold good in the light of recent data (Figure 33), giving a population i n 1975 of 24.5 million. 91 If lumber consumption i n Canada in 1975 i s 4,100 MM f.b.m. and the population i s 24.5 million; per capita consumption of lumber w i l l be 167 f.b.m. per annum (Figure 34). This seems reasonable in the light of present trends. Canadian Domestic Demand for Douglas f i r Lumber in 1975 It has been seen that the per capita consumption of Douglas f i r lumber in Canada i s declining steeply (Figure 34). Douglas f i r lumber consumption as a percentage of total lumber consumption has also shown a steep downward trend since the 1920*5 (Figure 15). If these downward trends continued there would be no Douglas f i r lumber consumed in Canada by 1975. It seems reasonable to assume, however, that these trends w i l l flatten off during the next decade and Douglas f i r consumption figures for the late 1950's and early 1960's would seem to support this assumption. Douglas f i r lumber consumption i n Canada has shown a long term down-ward trend since the 1920*s (Figure 32). If this trend continues, as the declining demand for Douglas f i r lumber in Canada- would seem to indicate (Chapter II, page 40) Douglas f i r lumber consumption w i l l have f a l l e n to about 470 MM f.b.m. by 1975. That i s a per capita consumption of 19.2 f.b.m. per annum (Figure 34). Douglas f i r w i l l account for 11.5 per cent of the Canadian domestic lumber consumption. Fig- 32- Trends in Canadian Lumber Consumption (MM f b m ) 8000r-1920 Canadian Lumber Consumption Royal Commission on Canada's Economic Prospects (1956) •i Wilson (1^6/) Estimates of Future Consumption I- Based on gross national expenditure ,6000 MM f-b-m-2- Based on per capita consumption and population, 3- Bosed on building expenditure, 5 8 0 0 M M f ' b m 5400 MM fbm-4- Bosed on per capita consumption and population, 4800MMfb-m-5-Current estimate, 4100 MM fbm-•- Canadian Douglas fir Lumber Consumption 1980 ! Fig- 34* Per Capita Lumber Consumption Trends in Canada-1950 I960 I. 1970 1980 1990 - Year; 92 Exports Market for Canadian Douglas f i r Lumber in 1975 The United States Market for Canadian Douglas f i r Lumber i n 1975 In 1954 the Stanford Research Institute estimated that by 1975 the lumber consumption of the United States would be 44.6 b i l l i o n f.b.m. This figure was the result of a detailed survey of the future requirements of lumber in a l l i t s various uses. In 1958, the United States Forest Service published a detailed survey of future forest product requirements in the United States and placed the demand for lumber in 1975 between 47.6 and 55«5 b i l l i o n f.b.m. The Stanford Research Institute predicted that in 1975 the United States would produce 91.9 per cent of a l l lumber consumed and the United States Forest Service put this estimate at 93.75 per cent. In the light of present trends both these estimates appear optimistic. More recent data suggests that the estimates of population and Gross National Product in 1975? used by the Stanford Research Institute and the United States Forest Service,were too low. Guthrie and Armstrong estimated in i960 that the population of the United States in 1975 would be 224 million (Stanford Research Institute used 212 million and the United States Forest Service 215 million). Guthrie and Armstrong expected that the Gross National Product of 93 the United States in 1975 would be $770 b i l l i o n in 1955 United States dollars; this i s 27 per cent higher than the Stanford Research Institute estimate and 20 per cent higher than the United States Forest Service estimate. Guthrie and Armstrong carried out a linear regression analysis of lumber production,using gross national product and time as independant variables. They obtained an estimated lumber production in 1975 o f 4-8.7 b i l l i o n f.b.m. Guthrie and Armstrong suggested that United States lumber production i n 1975 w i l l be 90 per cent of consumption (Guthrie and Armstrong, i960, p. 163). This estimate now appears to be conservative, however. In 19^3» lumber production i n the United States was only 89 per cent of consumption. Per capita consumption of lumber in the United States by 1975 i s expected to be about 210 f.b.m. per annum. If a 1975 population of 224 million i s assumed, consumption of lumber i n this year w i l l be 47 b i l l i o n f.b.m. and production 42.3 b i l l i o n f.b.m. Past studies therefore suggest that lumber consumption in the United States by 1975 w i l l f a l l between 44.6 b i l l i o n and 55.5 b i l l i o n f.b.m. Current data suggest that 44.6 b i l l i o n f.b.m, i s rather low, as population and gross national product estimates used in obtaining this figure were conservative. The upper estimate of 55-5 Is probably too high as other materials are replacing lumber more rapidly than was anticipated. In this study a figure 94 of 50 b i l l i o n f.b.m. has been used for United States lumber consumption in 1975* This is an average of Guthrie and Armstrong's estimates based upon gross national product and per capita consumption i n 1975« Figure 26 shows that between 1925 and 194-5 Douglas f i r lumber accounted for about 20 per cent of the United States total lumber consumption. Between 1945 and 1952 this rose to 28.5 per cent. Since 1952 this high level has been maintained. The Stanford Research Institute and the United States Forest Service predicted that western lumber would increase in importance in the United States in the future and so far this forecast has been proved correct. It seems reasonable to suppose, therefore, that Douglas f i r lumber w i l l maintain i t s position relative to other species and account for about 28 per cent of United States lumber consumption i n 1975. That i s about 14 b i l l i o n f.b.m. The annual production of Douglas f i r lumber in the United States i s shown in Figure 35. Since the depression of the 1930's there has been a steady long term upward trend in Douglas f i r lumber production. Future production w i l l depend to a large extent upon how quickly and effectively the current economic depression in the lumber industry of the North Western states i s overcome. Assuming that the industry w i l l recover during the next decade and that the long-term upward trend i n Douglas f i r lumber production Fig- 35- Douglas f i r lumber product ion in the U-S-A-, 1 9 2 0 - 1 9 7 5 ( B i l l i o n s f b m - ) -20 Fig-36- Douglas fir lumber production in the U-S-A- at percentage of total lumber product ion, 1 9 2 0 -Year : u-S-Bureau of Census, Census of Manufacturers-95 continues, then the United States production of Douglas f i r lumber i n 1975 w i l l be about 12.5 b i l l i o n f.b.m. This i s 28 per cent of total United States lumber production. Since the second world war Douglas f i r lumber production has been between 25 per cent and 28 per cent of total lumber production (Figure 36 and Table 42). Table 42. Douglas f i r Lumber Production as a Percentage of Total Lumber Production i n the U.S, 1946-60 Period Per cent 1946-50 25.3 1951-55 27.5 1956-60 26.5 United States consumption of Douglas f i r lumber in 1975 w i l l therefore exceed production by about 1.5 b i l l i o n f.b.m. This d e f i c i t probably w i l l be made good by imports of Douglas f i r lumber from Bri t i s h Columbia. This indicates that the rate of Increase of Douglas f i r lumber exports from Br i t i s h Columbia to the United States w i l l not be as great i n the future as in the past (Figure 37). This i s reasonable, considering the declining a v a i l a b i l i t y of Douglas f i r to the Fig- 37- Canadian Exports of Douglas fir Lumber to the USA-, 1920-1975 (Bil l ions f b m ) Year Source- D-B-S, Trade of Carioda (Exports),65-002-96 B r i t i s h Colombia lumber industry and the growing importance of western hemlock and spruce i n the Br i t i s h Columbia export market. The United Kingdom Market for Canadian Douglas f i r Lumber in 1975 The Royal Commission on Canada's Economic prospects (1956) predicted, that by I98O, United Kingdom imports of lumber would be 4 b i l l i o n f.b.m. and that Canada would supply 25 per cent of this t o t a l . That i s one b i l l i o n f.b.m. They added,however, that a major increase i n United Kingdom lumber imports from Russia might change the situation considerably. In the light of current data this prediction of Canada's contribution to the United Kingdom lumber market would seem to be optimistic. The Royal Commission assumed that i n 198O Canada would supply the same percentage of United Kingdom total lumber imports as in the period 1947-1952. In the period 1950-1954 Canada supplied 26 per cent of United Kingdom lumber imports. This had fal l e n to 17 per cent in the period 1955-1959. In the same period Russian lumber imports to the United Kingdom increased from 10 to 19 per cent of total lumber imports. Canada's lumber exports to the United Kingdom have shown a long-term downward trend since the late 1930*s Fig- 38* Canadian Lumber Exports to the U-K-, 1935-1975 (MM f b m ) -Source: D- B S J r a d e of Canada ( E x p o r t s ) , 6 5 - 0 0 2 Fig- 39-70 r -Canadion Douglas fir lumber exports to the U-K-as percentage of total lumber exports to the UK-, 1950-1975-3 97 (Figure 38). Even witb the assumption that current lumber promotion efforts i n the United Kingdom (Brown, 1963) w i l l slow this downward trend, i t seems unlikely that Canadian lumber exports to the United Kingdom w i l l be more than 400 MM f.b.m. by 1975» in view of the expected increases i n United Kingdom lumber imports from Russia. That is, only about 10 per cent of the United Kingdom's total lumber Imports (Figure 38). It has been seen that exports of Douglas f i r lumber to the United Kingdom have been f a l l i n g rapidly since the late 1930's (Figure 38). In 1962, only 86 MM f.b.m. of Douglas f i r lumber was exported to the United Kingdom* that is, about 14 per cent of total Canadian lumber exports to that country. By 1975, i f present trends continue, Douglas f i r lumber w i l l only amount to about 7 per cent of Canadian lumber exports to the United Kingdom* that is,28 MM f.b.m. (Figures 38 and 39). Export of Canadian Douglas f i r Lumber to Countries other than the United States and United Kingdom in 1975 Exports of lumber to other countries have varied a great deal during the last 40 years (Table 32). In the period 1951-60 the average annual exportation of Canadian lumber to markets other than the United States and United Kingdom was 427 MM f.b.m. Exports to these markets are 98 expected to rise steadily, due to the promotional efforts of the lumber trade and the Department of Trade and Commerce, to 500 MM f.b.m. by 1975 (Wilson, 1961). for 47 per cent of lumber exported to other countries (Table 32). This percentage shows a downward trend and i t i s reasonable to assume that i n 1975 Douglas f i r lumber w i l l amount to 40 per cent of Canadian lumber exports to other countries. That i s 200 MM f.b.m. With the exception of the war years Douglas f i r exports to countries other than the United States and the United Kingdom have been between 200 and 300 MM f.b.m. per annum since 1926. Table 43 summarises the expected demand for Douglas f i r lumber in 1975. The total demand w i l l probably be about 2,198 MM f.b.m. or 2.2 b i l l i o n f.b.m. Table 43. Demand for Douglas f i r Lumber i n 1975 In the period 1955-60, Douglas f i r lumber accounted Total Demand for Douglas f i r Lumber i n 1975 MM f.b.m. Canadian Domestic Consumption Exports to U.S. Exports to U.K. Exports to Other Countries 470 Total Demand for Douglas f i r Lumber 2,198 99 Demand for Douglas f i r bv the Br i t i s h Columbia Plywood and  Veneer Industry i n 1975 Demand for Softwood Plywood i n 1975 The B r i t i s h Columbia Government, in i t s Documentary Submission to the Royal Commission on Canada's Economic Prospects (195&)* predicted that softwood plywood production would increase i n the province by 180 per cent between 1955 and 1975* I n the light of current developments this estimate appears to be conservative. Between the periods 1951-1955 and 196I-I963 softwood plywood production i n B r i t i s h Columbia rose by 170 per cent and s t i l l shows a steep upward trend. The B r i t i s h Columbia Government based i t s predictions upon an expected rise i n per capita consumption of softwood plywood i n Canada of 50 P e r cent between 1955 and 1975 and a rise i n softwood plywood exports to 19 per cent of total production. Between the periods 1951-55 and 1956-60 P e r capita consumption of softwood plywood i n Canada rose by 53 per cent and i n 1962 was 92 per cent above the 1951-55 level (Figure 40). Exports of softwood plywood have continued to rise steadily and i n 19&3 amounted to 13«9 per cent of total production (Figure 42). I 60 r Fig- 40- Per Capita Consumption of Softwood Plywood in Canada, 1946-1975 (Sq-ft-, 1/4" Basis) 140 120 ^ 1 0 0 in o CD V i*. 80 CT V ) 60 40 20 / / / / / / / / JL 0 1 — 1945 1950 1955 : I960 Year 1965 1970 100 Canadian Domestic Consumption of Softwood Plywood in 1975 Figure 40 shows the domestic per capita consumption of plywood i n Canada for the years 1948 to 1963 extrapolated to 1975 and assuming a constant rate of increase in the domestic use of plywood. If plywood replaces lumber more rapidly in the future than in the past, as might well be the case, this estimate w i l l be conservative. The per capita consumption in 1975 indicated here is 138 sq. f t . (£-inch basis) per annum. If the population in 1975 i s 24.5 million, Canadian domestic consumption of softwood plywood w i l l be 3,380 MM sq. f t . C^-inch basis). Export Markets for Canadian Softwood Plywood in 1975 Most of the softwood plywood exported from Canada goes to the United Kingdom market, 94 per cent In i 9 6 0 . Only 0.6 per cent of softwood plywood exports in i960 went to the United States market. Assuming that the United States retains i t s 20 per cent t a r i f f on softwood plywood imports, this pattern of trade is unlikely to change i n the future. In Britain, Canadian plywood has to compete with Russian and Finnish hardwood plywood, which is cheaper than Canadian softwood plywood and equally good in many uses. The Br i t i s h Columbia Government (1956) estimated that 19 per cent of softwood plywood production would be Fig- 41- Export of softwood plywood from Canada, 1954-1975 (MM sq-ft-, 1/4"basis)-I 4 0 0 r 1200 1964 1969 Year 1974 1979 ig- 42- Percentage of Canadian softwood plywood production exported, 1954-75-_ j I I I 1 — 1955 I960 1965 1970 1975 Year 101 exported by 1975. If the current upward trend in the export of softwood plywood from Canada continued; by 1975 about 25 per cent of Canadian softwood plywood production would be exported (Figure 42). There w i l l probably be a decline i n the increase of softwood plywood exports to the United Kingdom,however, due to increased competition from Russian and Finnish hardwood plywood. Guthrie and Armstrong (i960) suggested that softwood plywood exports from Canada might f a l l to as low as 9 per cent of production by 1975* In the light of current trends, however, the B r i t i s h Columbia Government estimate of 19 per cent of production appears to be more reasonable (Figure 42). On this basis Canadian softwood plywood exports in 1975 w i l l be 800 MM f.b.m. (^-inch basis) (Figure 41). Use of Douglas f i r for Plywood Production i n 1975 Up to 1957 practically a l l softwood plywood manufactured in Canada was Douglas f i r . In 1958 two per cent of softwood plywood was manufactured from species other than Douglas f i r . The use of other species has risen steadily since 1958 and in 1963 they accounted for 9«1 P^r cent of total production. It i s d i f f i c u l t to forecast what the future trends in the replacement of Douglas f i r with other species w i l l be. It w i l l depend upon the availability of suitable Douglas f i r logs, technological changes which would allow 102 lower grade Douglas f i r logs to be used, and the future price of Douglas f i r logs relative to other species. If present trends continue about 25 per cent of softwood plywood w i l l be manufactured from species other than Douglas f i r in 1975 (Figure 43). If technological progress in manufacture does not keep pace with the rapid depletion of high-grade Douglas f i r , then this estimate w i l l probably be conservative. On the assumption of 25 per cent replacement of Douglas f i r with other species by 1975, the area of Douglas f i r plywood produced in 1975 w i l l be 3,135 MM sq.ft. (£-inch basis). Volume of Douglas f i r Logs Required by the Plywood Industry i n 1975 Table 38 shows the apparent rate of plywood recovery per annum from Douglas f i r logs, 1954 to 1963* During this period recovery rate rose from 3*19 to 3*70 sq. f t . of plywood (^-inch basis) per f.b.m. (D.B.S., The Plywood Industry). It i s unlikely, i n view of the rapidly declining supply of large sized and high-grade Douglas f i r logs, that this rate of increase i n recovery rate w i l l continue for very long and there i s l i k e l y to be a decline. For purposes of this study a recovery rate i n 1975 of 3-50 sq. f t . (^  Inch) per f.b.m. has been assumed. ig- 4 3 - Plywood manufactured from species other than Douglas fir, as a percentage of total plywood production in Canada, 1955 -1975-55 I960 1965 1970 1975 1980 Year Fig- 44- Volume of Oouglos fir logs used by plywood industry in B-C-, 1944-1975 (MM f-b-m-)-I 4 0 0 r I 2 0 0 h ' f 103 On t h i s basis the volume of Douglas f i r used by the plywood industry i n 1975 w i l l be 895 MM f.b.m. This figure seems reasonable i n the l i g h t of current trends i n the use of Douglas f i r logs by the plywood industry (Figure 44). Production of Douglas f i r Veneer (for Sale as Such) Veneer i s mainly produced from species other than Douglas f i r (D.B.S., Peeler Logs, Plywood and Veneer). The volume of Douglas f i r used for veneer production i s n e g l i g i b l e i n comparison to that used f o r plywood production. No attempt w i l l therefore be made to forecast the production of veneer from Douglas f i r . Demand for Douglas f i r i n Other Uses i n 1975 I t i s very d i f f i c u l t , through lack of s u f f i c i e n t data, to make any reasonable estimate of the consumption of Douglas f i r i n uses, other than lumber, plywood and veneer, i n 1975. I t seems un l i k e l y that the use of Douglas f i r as pulpwood w i l l increase very much i n the future. The use of Douglas f i r m i l l residue, which plays a prominent part i n the pulp industry of B r i t i s h Columbia at present, w i l l decline as the percentage of Douglas f i r used by the lumber industry f a l l s . 1C4 Douglas f i r t i e production in B r i t i s h Columbia i s relatively unimportant and the demand for ties in the future w i l l probably remain at a f a i r l y constant level, sufficient for railroad maintenance. The production of poles and piling from Douglas f i r in the future is l i k e l y to decline as the saw-milling industry becomes adapted to using smaller sized timber, particularly i f the premiums for Douglas f i r are maintained. In the past a major part of the poles and piling have been salvaged from logging operations in old-growth stands. 105 CHAPTER IV THE SUPPLY OF DOUGLAS FIR IN BRITISH COLUMBIA In the f i r s t chapter, inventory estimates of the volume of Douglas f i r i n B r i t i s h Columbia were examined. In Chapter II an investigation was made of the part played by Douglas f i r in the British Columbia forest economy since 1920. In Chapter III projections were made of the use of Douglas f i r by Br i t i s h Columbia forest industries to 1975' Some aspects of Douglas f i r supply w i l l now be examined in relation to expected demand. Consideration w i l l be given to the supply of sawtimber only. Products such as poles, piling and pulpwood are insignificant in the Douglas f i r economy compared to lumber, plywood and veneer. Demand for Douglas f i r Sawtimber i n 1975 In Chapter III i t was estimated that by 1975 the potential demand for Canadian Douglas f i r lumber w i l l be 2,198 MM f.b.m. Assuming an average over-run of 15 per cent, the volume of Douglas f i r logs required by the Br i t i s h Columbia lumber industry in 1975 w i l l be 1,910 MM f.b.m. The softwood plywood industry in 1975 Is expected to use about 895 MM f.b.m. of Douglas f i r logs. The required volume of Douglas f i r sawtimber i n Br i t i s h Columbia i n 1975 w i l l therefore be 2,805 MM f.b.m., 106 that i s about 20 per cent more than the volume cut i n 1962 and 26 per cent more than the average annual volume cut i n the period 1956-60. In 1962, 48 per cent of the Douglas f i r cut in Br i t i s h Columbia was i n the Interior Region and 52 per cent in the Coastal Region. Since the second world war there has been a steady increase in the proportion of Douglas f i r cut in the Interior Region of Bri t i s h Columbia (Figure 4 5 ) . In view of the B r i t i s h Columbia government's sustained yield policy i t seems reasonable to suppose that in the long run the distribution of the total cut between the Coast and the Interior of B r i t i s h Columbia w i l l be in the same proportion as the distribution of sawtimber volume between these two regions. The Continuous Forest Inventory of British Columbia (1957) indicated that approximately 30 per cent of the sawtimber volume in B r i t i s h Columbia is i n the Coastal Region and 70 per cent in the Interior. It may take a f u l l rotation or more before the cut becomes adjusted to the standing inventory. For purposes of this study i t w i l l be assumed that the movement of the forest industries i n B r i t i s h Columbia from the Coast to the Interior w i l l proceed at a diminishing rate, as current trends suggest, and that In 1975 60 per cent of the Douglas f i r cut w i l l be in the Interior Region and 4G per cent on the Coast (Figure 45) . Fig- 45- Percentage distribution of Douglas fir cut in B-C-between interior and coastal regions, 1920-1975-Coastal cut of Douglas f i r as percentage of total cut of Douglas f ir in B- C-Interior cut of Douglas f i r as percentage of total cut of Douglas f i r in B-C-100 - 80 c V O a. 60 40 20 1920 1930 1940 1950 Year I960 1970 Source' B-C-FS- Annual Reports, 1920-1962-107 Demand for Douglas f i r Sawtimber i n the Period 1957-1975 The average annual volume of Douglas f i r cut in Bri t i s h Columbia in the period I 9 5 6 - I 9 6 0 was 2,221 MM f.b.m. The total volume cut i n the period 1957-1975, ( 1 9 5 7 i s the year of the last comprehensive, inventory publication for Br i t i s h Columbia) w i l l be approximately 4 5 , 2 3 4 MM f.b.m. The total cut i n the Interior Region during this period w i l l be 2 4 , 3 6 3 MM f.b.m. and in the Coastal Region 2 0 , 8 7 1 MM f.b.m. The average annual cut of Douglas f i r i n B r i t i s h Columbia between 1 9 5 7 and 1 9 7 5 w i l l be approximately 2,513 MM f.b.m., the average annual cut in the Interior Region w i l l be 1,353 MM f.b.m. and on the Coast 1,160 MM f.b.m. The Available Volume of Douglas f i r Sawtimber in Br i t i s h  Columbia In 1 9 5 7 , i n i t s Continuous Forest Inventory of Br i t i s h Columbia, the B.C. Forest Service estimated that there was 35,034 MM f.b.m. of Douglas f i r sawtimber in Br i t i s h Columbia i n trees 1 2 inches d.b.h. and over, to rough u t i l i s a t i o n standards, on productive, accessible and currently operable sites. That i s only 77 per cent of the cut in the period 1 9 5 7 - 1 9 7 5 as predicted by demand considerations. In the Interior the accessible, currently operable volume of Douglas f i r sawtimber, as estimated In 1 9 5 7 , was 2 0 , 4 0 6 MM f.b.m. and on the Coast 1 4 , 6 2 8 MM f.b.m., that i s 108 84 per cent and 70 per cent of the predicted demand for Douglas f i r sawtimber i n the period 1957-1975? respectively. It i s clear,therefore, that i f supply i s to meet the predicted demand for Douglas f i r sawtimber, u t i l i s a t i o n standards w i l l have to change considerably and new areas w i l l have to be made accessible. The potentially accessible volume of Douglas f i r sawtimber in British Columbia in trees 10 inches d.b.h. and over, to close u t i l i s a t i o n limits, i s 161,382 MM f.b.m.} of this, 107,058 MM f.b.m. i s situated in the Interior and 54»324 MM f.b.m. on the Coast. The objective of the B.C. Forest Service is to bring the majority of the commercial forest area in B r i t i s h Columbia under sustained yield management. This w i l l be achieved by the orderly removal of the mature timber with a gradual transition to second-growth stands. Ultimately, the annual cut of an area under sustained yield management i s the average annual growth of the area. The allowable cut during the transition period to sustained yield may be calculated by a variety of methods. The B.C. Forest Service calculates the allowable cut by dividing the volume of the currently mature sawtimber by, the number of years in the rotation and adding to the result the average annual net growth of the forest (Hanzlick's formula). The most recent estimate of the current allowable cut in B r i t i s h Columbia i s 5,802 MM f.b.m. (B.C. Forest Service, 1957)> 4,014 MM f.b.m. of this i s i n the Interior Region and 1,888 MM f.b.m. 109 on the Coast. In 1962, the total timber cut in Br i t i s h Columbia was 36 per cent greater than the allowable cut. According to this basis the Coast was overcut by 150 per cent and the Interior cut was 20 per cent below the allowable cut. The B.C. Forest Service based their estimates of allowable annual cut on a rotation of 100 years on the Coast and 120 years in the Interior. Although the B.C. Forest Service made no estimate of allowable cut by species i n 1957? i t is inevitable that the policy of sustained yield w i l l Influence greatly the future supplies of Douglas f i r sawtimber. The allowable annual cuts of Douglas f i r calculated as described above are shown in Table 44. Table 44. Annual Allowable Cut of Douglas f i r in B.C. Region Current 1 Allowable Cut Potential 2 Allowable Cut f.b.m. MM f.b.m. Coast 326 823 Interior 520 l» 6 l 3 Province 846 2,436 •'•Based on currently, accessible, operable volume of Douglas f i r on productive sites in Br i t i s h Columbia. (Rotation on Coast - 100 yrs.j rotation in the Interior - 120 yrs.) 2Based on the potentially accessible volume of Douglas f i r , on a l l sites. No allowance has been made for increase in growth rates through reclamation of currently non-stocked or poorly stocked commercial forest land. (Rotation on Coast -100 yrs.; rotation in the Interior - 120 yrs.) 110 In 1962, the volume of Douglas f i r cut on the Coast was 3.7 times greater than the current allowable annual cut and the volume cut in the Interior was 2.1 times greater than the current allowable annual cut. The average annual cut of Douglas f i r in Br i t i s h Columbia for the period 1957-1975? as predicted in this thesis, i s 2.8 times greater than the current allowable annual cut and about 10 per cent less than the potential average annual cut. The predicted average annual cut in the Coastal Region for the period 1957-1975 i s 3.4 times greater than the current allowable annual cut and 1.3 times greater than the potential allowable cut. In the Interior Region of Brit i s h Columbia the predicted annual cut in the period 1957-1975 i s 2.6 times greater than the current annual allowable cut and 16 per cent below the potential allowable annual cut. A l l the allowable cuts discussed so far have been based upon the proposed rotations of the B.C. Forest Service. That i s , 120 years in the Interior and 100 years on the Coast. The criterion used by the B.C. Forest Service i n determining rotation length, Is that the forest land should produce the maximum mean volume of timber per annum. Rotations are culminated when the mean annual increment of the forest is at a maximum. No account i s taken of financial or economic considerations. The value I l l of the timber and the costs of producing i t are ignored. The financial returns from a forest enterprise w i l l only be maximized,however, i f the 'financial rotation 1 i s used, that is,the rotation which maximises the net present worth of the forest. Haley (1963) showed that the financial rotation for Douglas f i r , in the Coastal Region of B r i t i s h Columbia, under current u t i l i s a t i o n standards varies from 70 years on site 180 to over 140 years on site 80. On site 120 the financial rotation i s 100 years. This suggests that the average financial rotation on the Coast of B r i t i s h Columbia, for Douglas f i r , is about 100 years, which i s the same as the rotation currently used by the B.C. Forest Service i n this region. If the shorter rotations indicated on the higher sites were practiced,however, the annual allowable cut could be increased considerably. It is possible to shorten the financial rotation in the future. The closer u t i l i s a t i o n standards, envisaged by the B.C. Forest Service in the future,will implicitly lead to shorter financial rotations (Haley, I963). Rotations can also be shortened by the use of a r t i f i c i a l regeneration, the control of spacing, the improvement of site quality and the improvement of planting stock by selection and breeding. Shorter rotations in the future are not considered by the B.C. Forest Service i n their estimates of potential, allowable, annual cut. 112 Control of i n i t i a l stocking accompanied by close u t i l i s a t i o n standards and logging down to an 8 inches d.b.h. marginal tree could reduce the average financial rotation for Douglas f i r on the Coast of B r i t i s h Columbia from 100 years to 60 years (Haley, 1963). This would result in an increase in the potential, allowable, annual cut for Douglas f i r on the Coast of B r i t i s h Columbia of 301 MM f.b.m. per annum, that i s a 34 per cent r i s e . Similar increases can be expected in the Interior Region. Table 45 i s a summary of the supply and demand of Douglas f i r i n Br i t i s h Columbia from 1957 to 1975. 113 Table 45. Summary of Demand and Supply for Douglas f i r i n B.C., 1957-1975 Coast Interior Province MM f.b.m. MM f.b.m. MM f.b.m. Average annual volume of Douglas f i r cut in B.C., 1956- I960 Annual volume of Douglas f i r cut in B.C., 1975 Total cut of Douglas f i r in B.C., 1957-1975 Average annual cut of Douglas f i r in B.C., 1957- 1975 1,197 1,120 1,023 1,685 20,871 24,363 1,160 1,353 2,221 2,805 45,234 2,513 Volume of accessible, operable Douglas f i r in B.C., in trees 12 Inches d.b.h. and over, to rough ut i l i s a t i o n limits, on productive sites, 1957 Volume of potentially accessible Douglas f i r i n B.C., i n trees 10 inches d.b.h. or over, to close u t i l i s a t i o n limits, on a l l sites, 1957 Annual allowable cut of Douglas f i r i n B.C. during transition to sustained yield management, calculated by Hanzlick's formula (1) "Current" Annual Allowable Cut (2) "Potential" Annual Allowable Cut 14,628 20,406 35,034 54,324 107,058 161,382 100 year rotation 26 823 120 year rotation 520 1,613 846 2,436 114 CONCLUSIONS It has been shown that, although the demand for Douglas f i r lumber i n Canada is f a l l i n g and the use of Douglas f i r by the lumber industry and the plywood industry i s declining, the demand for Douglas f i r sawtimber in 1975 w i l l probably exceed the cut i n 1962 by about 20 per cent. This demand w i l l be mainly dependent upon the United States market which currently imports about 60 per cent of the Douglas f i r lumber produced in Canada and by 1975 i s expected to import about 70 per cent of Canadian Douglas f i r lumber production. The current supply of Douglas f i r sawtimber on operable, accessible sites in B r i t i s h Columbia i s inadequate to meet this demand and i t i s evident that Douglas f i r w i l l be logged from poorer and poorer sites and that closer standards of ut i l i s a t i o n w i l l be practiced. As extraction and milling costs rise, the price of Douglas f i r products w i l l rise also. This rise in price w i l l stimulate the substitution of other species of lumber for Douglas f i r lumber by Canadian consumers and the plywood industry w i l l make more use of other softwood species. In the United States,however, Douglas f i r has many traditional trade advantages over other species and enjoys a very strong consumer preference; substitution of Douglas f i r by other species w i l l therefore proceed more slowly than i n Canada. 115 As the price of Br i t i s h Columbia Douglas f i r products rise, however, they may compete less favourably on the United States market, than at present, particularly when the lumber industry of the North Western states overcomes i t s current economic d i f f i c u l t i e s . This could lead to a much smaller market for B r i t i s h Columbia Douglas f i r lumber in the United States, than i s apparent from past trends. The B r i t i s h Columbia government's policy of sustained yield management w i l l reduce the supply of Douglas f i r even more and may force the price of Douglas f i r products up even higher. It was seen in the previous chapter that even the maximum possible "potential" annual allowable cut of Douglas f i r in Br i t i s h Columbia, under the present rotations practiced by the B.C. Forest Service, i s only about 10 per cent more than the average annual cut required to sustain the expected Douglas f i r demand up to 1975 and the current annual allowable cut i s only about one-third of the required annual volume. Rigid application of sustained yield policy might raise the price of B r i t i s h Columbia Douglas f i r to such an extent that i t just cannot compete on the United States market and would be completely substituted by other species in the domestic market. Under such circumstances, the potential value of the Douglas f i r resource, which could be realised without the r i g i d i t i e s of supply imposed by sustained yield policy, might be lost. 116 The demand and supply aspects of Douglas f i r make i t unique amongst B r i t i s h Columbia species. The f u l l potential of the Douglas f i r resource w i l l only be realized i f i t is treated and managed as a separate entity. Obviously, the potential demand for Douglas f i r greatly exceeds the possible allowable annual cut of this species, under sustained yield management and during the transition period to sustained yield management. It i s possible that the cost of managing this species on a sustained yield basis, due to revenue foregone, w i l l far exceed the benefits to be derived from such a system of management. The expected Increases in the price of Douglas f i r relative to other species suggest that this species should be managed on a profit maximising basis. That i s , the cut of mature Douglas f i r should be regulated in such a way that the present worth of the resource i s maximised. This objective i s achieved i f the marginal values of the volumes cut in each future period, discounted to the present, are the same as the current marginal value. This presents several problems, the main one being the estimations of future net worths. The value of the cut in any period is dependent upon the volumes cut in the preceding periods. The d i f f i c u l t i e s of prediction are not insurmoun-table, however. Such a system of management would ensure the maximisation of returns from the Douglas f i r resource and would allow the substitution of other species for Douglas f i r to take place i n a natural and orderly manner. Palmer 117 (University of Br i t i s h Columbia, Department of Forestry) is currently comparing, on an economic basis, the alternative rates at which mature stands of timber might be liquidated, in B r i t i s h Columbia. If i t is considered expedient, however, to retain a sustained yield policy for Douglas f i r i n Br i t i s h Columbia, then every effort should be made to increase the annual allowable cut by adopting financial rotations and by shortening these rotations as much as possible (Haley, 19&3J Smith, Ker and Csizmazia, 1961). 118 LITERATURE CITED B.C. Forest Service, 1958- Continuous Forest Inventory of Bri t i s h Columbia, I n i t i a l Phase, 1957. B.C.F.S., Surveys and Inventory Division, Victoria, B.C. B.C. Forest Service, 1920-1962. Annual Reports. Queen's Printer, Victoria, B.C. B.C. Govt. Bureau of Economics and Statistics, 1963. B.C. Forest Industry Statistics, i960, Victoria, B.C. 54 p. B.C. Govt., 1956. Documentary Submission to the Royal Commission on Canada's Economic Prospects, Victoria, B.C. B.C. Lumber Manufacturers* Association. Annual Reports, Vancouver, B.C. Brown, Richard A.B., 1963. B r i t i s h Columbia Lumber Trade with the United Kingdom. B.S.F. Thesis, U.B.C., Vancouver, B.C. 103 p. Canada, 1957* Royal Commission on Canada's Economic Prospects. The Outlook for Canadian Forest Industries. Ottawa. 26l p. Canadian-American Committee, 1963. The U.S. Softwood Lumber Situation in a Canadian-American Perspective. 50 p. Canada, Dept. of Northern Affairs and Natural Resources, 1956. Forest and Forest Products Statistics. B u l l . 106. Ottawa. 70 p. Canadian Pulp and Paper Association, 1959* Reference Tables. Montreal. 32 p. Cour, Robert M., 1955- The Plywood Age. Binfords and Mart, Portland, Oregon. 171 p. Dixon, L.B., 1955-1956. Birth of the Lumber Industry i n Brit i s h Columbia, B.C. Lumberman, 39: pp. 38-40, 75-78, November, 1955; 39: PP. 55-59? December, 1955* 40: pp. 38-40, January, 1956; 40: pp. 52-54, February, 1956; 40: pp. 44-47, March, 1956; 40: pp. 42-48, A p r i l , 1956; 40: pp. 59-62, May, 1956; 119 40: pp. 58-60, June, 1956; 40: pp. 44-46, July, 1956; 40: pp. 70-72, August, 1956; 40: pp. 50-56, September, 1956. Dominion Bureau of Stat i s t i c s , Ottawa: a) Canada Year Book, 11-202. b) Lumber Industry (1920-1959), 35-204. Sawmills (i960), 35-204. c) Production, Shipments and Stocks on Hand of Sawmills East of the Rockies, 35-002. d) Production, Shipments and Stocks on Hand of Sawmills in B r i t i s h Columbia, 35-003. e) The Veneer and Plywood Industry, 35-206. f) Peeler Logs, Veneers, and Plywoods, 35-001. g) The Pulp and Paper Industry, 36-204. h) Pulpwood Production, Consumption and Inventories, 25-001. i ) The National Accounts, 13-201. j) Construction In Canada, 64-201. k) Trade of Canada, Imports, 65-OO7. 1) Trade of Canada, Exports, 65-004. m) Prices and Price Indices, 62-002. n) Special Reference Paper, No. 24. Duerr, William A., i960. Fundamentals of Forestry Economics. McGraw-Hill, New York. 578 p. Guthrie, J.A. and G.R. Armstrong, i960. Western Forest Industry. John Hopkins Press, Baltimore. 324 p. Haley, D., 1963. Factors Influencing the Financial Rotation of Douglas f i r i n Coastal Br i t i s h Columbia. Faculty of Forestry, U.B.C. Unpublished. 47 p. Holland, Irving I., i960. An Explanation of Changing Lumber Consumption and Price. Forest Science. 6(2):171-191. Landsberg, Hans H., Leonard L. Fischman and Joseph L. Fisher, 1963., Resources in America's Future. John Hopkins Press, Baltimore. 1056 p. Lawrence, J.C., 1957* Markets and Capital: A History of the Lumber Industry of B.C., 1778-1952. M.A. thesis, U.B.C. Dept. of History. 207 p. Love, D.V., 1961. The Future of Trade and Investment in Forest Products Between the United States and Canada. Proceedings S.A.F.-C.I.F. Joint Meeting, Minneapolis, Minn. 9 p. 120 Mcbean, Angus P., 1958. Forestry of B.C. in Perspective. 11th B.C. National Resources Conference, Feb., 1958, Victoria, B.C. 15 p. Mead, Walter J., 1963. Seasonal Variation i n Lumber Prices. Journ. of Forestry, 62(2):89-95. Mulholland, F.D., 1937. Forest Resources of Br i t i s h Columbia. Victoria, B.C. 153 p. Potter, Neal and Francis T. Christy, 1962. Trends in Natural Resource Commodities. John Hopkins Press, Baltimore. 568 p. Schultz, Timber Company Ltd., 1954-63. Log Price Report. Brit i s h Columbia Lumberman, Vancouver, B.C. Sehrader, H.O., 1952. State of the Industry. The Lumberman, January, 1952. Stanford Research Institute, 1954. America's Demand for Wood 1929-1975. Tacoma, Washington, 1954. 94 p. Streyffert, Thorsten, 1958. World Timber: Trends and Prospects. Stockholm, Sweden. 246 p. Smith, J., Harry G., John W. Ker, and Joseph Csizmazia, I 9 6 I . Economics of Reforestation of Douglas f i r , Western Hemlock and Western Red Cedar in the Vancouver Forest D i s t r i c t . University of B.C., Faculty of Forestry, Bulletin No. 3, Vancouver, B.C. 144 p. Sloan, G. McG., 1945. The Forest Resources of Bri t i s h Columbia, 1945. Victoria, B.C. 195 p. , 1957. The Forest Resources of B r i t i s h Columbia, 1956. Victoria, B.C. 888 p. Susanik, Rudolph, 1954. The Changes i n the Bri t i s h Market for B r i t i s h Columbia's Lumber Since 1935. M.F. Thesis, U.B.C, Vancouver, B.C. 95 P. United States, I92O-I962. S t a t i s t i c a l Abstract of the United States. Washington, D.C. U.S. Dept. Agriculture, Forest Service, 1958. Timber Resources for America's Future. Forest Resources Report No. 14, Washington, D.C. 713 p. • 1963. The Economic Importance of Timber in the United States. Misc. Publ. 941. 91 p. 121 U.S. Dept. of A g r i c , Forest Service, 1963. The Demand and Price Situation for Forest Products. Misc. Publ. No. 953. Washington, D.C. 50 p. . Quarterly Stumpage and Log Supply Reports, P.N.W. Forest and Range Experimental Station. , 1963. Timber Trends i n Western Oregon and Western Washington, P.N.W. Forest and Range Experimental Station, Research Paper No. 5« 154 p. West Coast Lumber Manufacturers Association, i960. S t a t i s t i c a l Yearbook. Seattle, Washington. Western Pine Association, 1963. S t a t i s t i c a l Summary. Portland, Oregon. Wilson, D.A., 1961. Demand Prospects for Forest Products Resources for Tomorrow. Vol. 2. Queen's Printer, Ottawa: p. 627-639. Zaremba, J., 1963. Economics of American Lumber Industry. Speller and Sons, New York: 232 p. Zivnuska, J.A., 1955* Supply. Demand, and the Lumber Market. Journ. For. 53(8) 1547-552. 

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