Business Plan - Nakusp and Area Community Forest

Transcription

NAKUSP & AREA
COMMUNITY FOREST (2013) Inc.
BUSINESS PLAN
April 23, 2014
Hugh Watt, R.P.F.
True North Forestry Consulting Ltd.
(Adapted from original written by Jesper Neilsen, R.P.F. in 2007)
Nakusp & Area Community Forest (2013) Inc. (“NACFOR 2013”)
Contents
1.
EXECUTIVE SUMMARY ........................................................................................ 4
Business Description ................................................................................................... 4
1.1.................................................................................................................................... 4
1.2 Key Objectives ..................................................................................................... 4
1.3 Ownership and Management ................................................................................ 4
1.4 Marketing Opportunities ...................................................................................... 5
1.5 Competitive Position ............................................................................................ 5
1.6 Financial Summary .............................................................................................. 6
2. MISSION STATEMENT ........................................................................................... 7
3. STRATEGIC GOALS AND OBJECTIVES .............................................................. 7
3.1 Operational Goals / Activity Schedule (“Action Plan”)....................................... 8
4. ORGANIZATION and MANAGEMENT ................................................................. 9
4.1 Ownership ............................................................................................................ 9
4.2 Structure ............................................................................................................... 9
4.3 Governance and Policy......................................................................................... 9
4.4 Management ....................................................................................................... 10
4.5 Operations .......................................................................................................... 10
5. ORGANIZATIONAL CHALLENGES.................................................................... 11
5.1 Management ....................................................................................................... 11
5.2 Strategic Planning .............................................................................................. 11
5.3 Public Consultation Process ............................................................................... 12
5.4 Stakeholder Organizations ................................................................................. 12
5.5 Other Communications ...................................................................................... 13
5.6 Conflict Resolution Process ............................................................................... 13
5.7 Monitoring/Inspection ........................................................................................ 14
5.8 Reporting and Communications ......................................................................... 15
5.9 Audits ................................................................................................................. 15
6. OPERATIONAL CHALLENGES ........................................................................... 15
6.1 Timber Profile (Species and Grade) ................................................................... 16
6.2 Terrain ................................................................................................................ 16
6.3 Compatibility With Non-Timber Resources ...................................................... 17
7. BUSINESS ENVIRONMENT ................................................................................. 17
7.1 Industry Overview .............................................................................................. 17
7.2 Timber Profile .................................................................................................... 18
7.3 Products .............................................................................................................. 18
7.4 Markets ............................................................................................................... 18
7.5 Log Supply and Competition ............................................................................. 19
7.6 Market Challenges.............................................................................................. 19
7.6.1
Maximizing Net Value From Timber ......................................................... 19
7.6.2
Local Nature of Log Markets ...................................................................... 20
7.6.3
Distance to Markets .................................................................................... 21
8. DISTRIBUTION OF FUNDS TO COMMUNITY .................................................. 21
9. RETURNS TO THE LOCAL AREA AND PROVINCE ........................................ 22
Business Plan (FINAL) - April 23, 2014
1
9.1.1
9.1.2
9.1.3
9.1.4
Economic Benefits ...................................................................................... 22
Social Benefits ............................................................................................ 22
Improved Forest Practices........................................................................... 23
Improved and expanded Forest Land Base ................................................. 23
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APPENDICES
Appendix A:
Area Map
Appendix B:
NACFOR Corporate Structure
Appendix C:
Local Contractor List
Appendix D:
Local Manufacturers
Appendix E:
Operating Forecast 2013-2017
Appendix F:
Log price sensitivity estimate
Appendix G:
Operational Goals / Activity Schedule
Appendix H:
Historical 2007 Goals and status
Appendix I:
Contract Award
Appendix J:
Conflict Resolution Details
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1. EXECUTIVE SUMMARY
1.1 Business Description
Nakusp & Area Community Forest (2013) Inc. (NACFOR or NACFOR 2013) is a
company wholly owned by the Village of Nakusp. NACFOR has a 25 year replaceable
Community Forest Agreement (CFA) with the government of BC that was approved in
2011. The original probationary licence was granted in 2007. It is an area based tenure of
approximately 9185 ha with a 20,000 m3 allowable annual cut (AAC). This equates to
roughly 500 logging truck loads of logs per year.
In exchange for the right to harvest timber, NACFOR is legally and ethically compelled
to sustainably manage the land base making up the CFA. Part of the rationale presented
to government prior to being awarded the CFA was the demonstration of a social
responsibility and sharing of net proceeds with the people of the area, as well as operating
in an environmentally responsible manner.
The CFA license area is made up of distinct operating areas at Galena Bay, Fosthall,
Wensley Creek, Kuskanax, Scalping Knife, Wilson, Summit/Box Lake, and Slewskin. An
overview map of the operating areas in relation to Nakusp is shown in Appendix A.
1.2 Key Objectives
NACFOR’s main business objective is to sustainably manage forest land, yielding timber
which is sold on the open market for profit, while meeting or exceeding social and
environmental objectives.
Some examples of the social and environmental objectives are:
NACFOR is committed to stabilizing and growing the local forest industry by
providing employment opportunities for local forestry and wood manufacturing
businesses. This will be done by supporting existing business and encouragement
of new local business initiatives.
NACFOR is committed to fulfilling its business and social objectives in a
sustainable and environmentally responsible manner.
1.3 Ownership and Management
NACFOR is a stand-alone entity, registered as a corporation in BC.
Nakusp (the Village) is the sole owner and shareholder of NACFOR.
The Village of
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As sole shareholder, the Village has certain responsibilities and obligations which it is
required to meet in order to fulfill statutory responsibilities. The Village has confirmed
that the intent of the incorporation of NACFOR is to create an entity that is controlled by
an independent Board of Directors (BoD), with day to day business conducted
independently of the Village council.
A Village appointed volunteer board is responsible for strategic direction, setting policy,
and facilitating the management of NACFOR. The management of NACFOR is done by
management contract. The current local management contractor is True North Forestry
Consulting Ltd.
1.4 Marketing Opportunities
NACFOR has a mixed species profile containing enough premium log grades to enable
profitability when there is reasonable or better demand and price for logs. Premium log
grades can be more widely marketed because it is economically possible to haul them
further to different markets. Along with the premium logs come commodity and low
grade logs during a logging operation. There are currently limited opportunities to
market commodity and low grade logs due to a partly or completely monopolized market
- few buyers, in many cases one buyer.
One of the biggest marketing opportunities for NACFOR going forward is to promote
local manufacturing. By encouraging local manufacturing, NACFOR may secure a
viable and local future market for logs, as well as fulfilling the social agenda of creating
employment and promoting community self-sufficiency. Local manufacturers may have
a direct competitive cost advantage in lower log hauling costs to their facilities.
(Conversely they may be farther from end markets than their competitors.)
1.5 Competitive Position
Strong and innovative direction and management coupled with wealth preservation will
allow NACFOR to endure through peaks and troughs in the economic cycle of the forest
industry.
Some key success factors for NACFOR are:
1. Effective forward planning and harvest scheduling which includes a
determination of net stand values
2. Merchandizing the stands to realize the best net value for the logs.
3. Maintaining adequate and accessible volume and species/grade mix; under permit
with roads built to access the timber.
4. Being able to react to small markets or rapid changes in the marketplace.
5. Demand for and price of premium/specialty grades, commodity grades and low
grades of wood.
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6. Availability and expertise of contractors to log and haul logs to meet market
timing.
7. Ability of management to identify and navigate through multiple constraints to
realize the Allowable Annual Cut (AAC) of the license.
8. Ability to meet multiple financial, environmental and social objectives, integrated
with on-going operations.
1.6 Financial Summary
One year: NACFOR is anticipating strong earnings in 2013 due to a) improved demand
and price for logs and b) accelerated harvest levels in an effort to meet cut control
commitments.
Longer term: A five year income forecast is shown in Appendix E, along with the
assumptions used in developing the forecast. NACFOR is forecast to generate positive
financial results over the next five years, ranging from 5% to 20% (approximate) return
on revenue. Strengthening demand for logs is anticipated, and local shortages of certain
species and grades may drive log prices up. There may be high volatility in log prices
depending on the local and regional competition for logs. The income statement
(Appendix E3) illustrates the high sensitivity of net income to log prices, log grade
profile, and operating costs.
Appendix E2 shows a range of anticipated log pricing by species and grade.
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2. MISSION STATEMENT
NACFOR strives to balance economic, ecological and social values in a manner that
optimizes benefits for the local communities.
The mission statement will be re-visited by the Board periodically to ensure that there is
harmony between the statement and the goals and objectives of NACFOR.
3. STRATEGIC GOALS AND OBJECTIVES
The Board of Directors is responsible for setting broad strategic goals for NACFOR. The
Board sets goals in consultation with NACFOR management and members of the public
through sub-committee work. Strategic goals set the direction and course for
management.
Strategic goals may change over time depending on the Board direction, management,
public suggestions, and external forces.
The current strategic goals and objectives are:
GOAL
GOAL 1: Ensure the
sustainability of area
forests
GOAL 2: Optimize
revenues from
harvested timber.
GOAL 3: Promote
OBJECTIVES USED TO ACHIEVE
GOAL
1. Monitor timber inventories to ensure
that calculated AAC’s are accurate
and sustainable
2. Conserve non-timber forest resources.
3. Develop a Forest Health Tracking
Strategy
4. Achieve improved utilization from
wood waste products
5. Develop a Sustainability Plan to guide
forest management activities.
1. Optimize economic utilization of
product mix.
2. Utilize open market log sales.
3. Promote expansion of local wood
manufacturing
4. Utilize market cycles to advantage
1. Establish NACFOR as a stable,
STATUS
In Progress
On-going
Complete
On-going
New
On-going
On-going
On-going
On-going
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community stability
2.
3.
4.
GOAL 4: Improve
forest worker and
public safety
1.
2.
3.
GOAL 5: Promote
community
involvement in local
forest management
4.
1.
2.
3.
4.
profitable and financially independent
entity.
Provide funding for community
development projects and non-profit
groups.
Promote local value added expansion.
Expand training opportunities for
youth
Ensure CFA areas are economically
viable.
Establish a fair and stable process for
awarding of contracts.
Provide training opportunities for
experienced and entry-level forest
workers.
Establish a Fire Protection Strategy
Establish an effective and inclusive
public consultation process.
Establish a mechanism for dispute
resolution.
Improve public access to local forest
resources.
Provide and promote the disposition of
forestry-related educational tools
within the community. Establish
educational partnerships
On-going
On-going
On-going
On-going
Complete
Complete
On-going
On-going
On-going
Complete
On-going
On-going
3.1 Operational Goals / Activity Schedule (“Action Plan”)
The Activity Schedule (“Action Plan”) in Appendix G is a tool which provides a basic
planning framework for operations. Completed items are checked off and new items are
added, which provides an on-going record of accomplishment for NACFOR.
Original/ Historical Operational Goals: At the time of license application, NACFOR
prepared an action plan to guide the initial activities. A listing of original goals and
activities with the current status is in Appendix H. Goals which are still pertinent but not
completed have been carried forward into the Activity Schedule.
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4. ORGANIZATION and MANAGEMENT
4.1 Ownership
The Village of Nakusp is the sole owner and shareholder of NACFOR.
4.2 Structure
NACFOR was originally set up in 2007 as a corporation. It was recently re-structured as
Nakusp & Area Community Forest (2013) Inc., and known more simply as “NACFOR
2013”. NACFOR is income tax exempt under the “municipal tax exemption” (paragraph
149(1)(d.5) of the Income Tax Act) The chart in Appendix B outlines the corporate
structure. The relevant governing bodies are described in detail below.
4.3 Governance and Policy
NACFOR governance and operations must be consistent with the company Articles.
Board members will be orientated and provided with copies of the Articles, significant
policies and other pertinent documentation of NACFOR.
NACFOR is governed by a Village appointed Board of Directors, which is composed of
a cross-section of the community. The exact number of Board members (currently seven)
is determined by the Articles of the NACFOR, and availability within the Community.
The Board of Directors must include a member of the Village Council and a member of
the the RDCK Area K. or appointee.
Board members serve two year terms which are renewable for up to two additional terms.
Further extensions may be granted so that retirement of Board members can be staggered
over time.
The Board’s mandate is to provide governance and policy support on the following
specific issues:
1. Legal accountability.
2. Financial control.
3. Strategic goals and guiding principles.
4. Public consultation and conflict resolution processes.
5. Hiring of management personnel.
The Board meets monthly with the possibility of some additional meetings to cover
extraordinary issues.
To address needs in specific areas, Board sub-committees may be formed, for example:
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1.
2.
3.
4.
5.
6.
7.
Waste Management
Community Funding
Innovative Strategies
Fire Management Strategy
Finance and Marketing
Youth
Conflict Resolution
Sub-committees may be comprised of members of the public with particular expertise
and interest in the given areas. Sub-committees will be chaired by a member of the
Board of Directors who will report sub-committee findings, including any studies or
recommendations, back to the Board.
4.4 Management
Management of NACFOR is on a contract basis, with the terms of reference for
management services provided by a Request for Proposal (RFP) from the contractor
candidate. Management undergoes a performance review on an annual basis by the
Board. NACFOR will strive for local management in line with the strategic goals and
objectives.
4.5 Operations
NACFOR has no direct staff. All NACFOR operations are done on a contract basis.
Whenever possible, local contractors will be used for all of the following operations:
1.
2.
3.
4.
5.
6.
Forestry planning and mapping
Road and Bridge Construction
Harvesting
Trucking
Silviculture
Road deactivation and maintenance
Appendix C is a listing of potential local contractors available within each of the above
operational phases.
Any local contractor with a proven business record who expresses interest in working for
NACFOR will be eligible to be added to the list and to work within their area of
expertise.
NACFOR’s preferred method will be to award contracts on a rotational basis within each
category.
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NACFOR will offer a competitive rate to the contractor, based on industry standard
costing tools, and subject to negotiation with the contractor. If a competitive rate cannot
be negotiated with the contractor, NACFOR will reserve the right to move to the next
contractor on the list.
Contractors will be assessed for performance attributes such as safety, competency,
compliance, production and cost during the period of their contract. A performance
summary report with recommendations will be filed at the end of the job.
Contracts may be awarded based on competitive bidding. A select invite bid system may
be utilized, with invitees being chosen from known, reputable firms.
NACFOR is not compelled to accept the lowest bid, or any bid, for work tendered.
The current contract award process is included as Appendix I.
Direct award contracts may be considered pending contractor availability and expertise
and scope of work.
5. ORGANIZATIONAL CHALLENGES
Managing a Community Forest license presents NACFOR with many organizational
challenges. Some of these challenges are:
1.
2.
3.
4.
5.
6.
7.
Effective Management
Adequate and Effective Strategic Planning
Public and First Nations Consultation
Conflict Resolution
Monitoring and Improving Operations
Reporting and Communications
Audits
5.1 Management
The challenge of ensuring effective management is the responsibility of the Board. To
date, NACFOR has utilized a renewable management contract with a local forestry firm.
An annual management performance review has been implemented by the Board as a
means to ensure effective management of NACFOR business.
5.2 Strategic Planning
Part of the Boards’ mandate is to undertake strategic planning and provide strategic
direction for NACFOR.
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Strategic planning effort will focus on monitoring existing goals and objectives to ensure
that they are meeting the needs of NACFOR and the community, and developing new
strategic goals and objectives.
The Board will meet periodically to focus on strategic planning. New goals and
objectives may arise as a result of NACFOR or community needs and initiatives.
Strategic and operational goals will be consistent with all applicable legislation,
regulations and governing documents.
5.3 Public and First Nations Consultation Process
Public consultation is an important and sensitive issue with respect to managing a
Community Forest. Numerous stakeholders exist within any public forest tenure. Public
expectations regarding the management of Community Forests may be higher compared
to other licensees. Care must be taken not only to meet all legal requirements but to
ensure that public concerns are considered and addressed.
NACFOR will meet all ‘Public Review and Comment’ requirements pertaining to a
Forest Stewardship Plan outlined in Sections 20, 21 and 22 of the Forest Planning and
Practices Regulation. Provisions include but are not limited to:
1. Public notice in a newspaper;
2. Availability for public review;
3. 60 days to allow for public response;
4. Reasonable opportunity to review the plan; and
5. Obligations to respond to relevant written comments.
In addition, NACFOR will meet legislative requirements for First Nations information
sharing and consultation.
5.4 Stakeholder Organizations
NACFOR will make additional commitments to the Public Consultation Process beyond
the legislation referenced above. It will encourage input and communication from local
stakeholder groups including but not limited to:
1.
2.
3.
4.
5.
6.
Arrow Lakes Cross-country Ski Club;
Arrow Lakes Saddle Club;
Arrow Lakes Ridge rider Association (Snowmobile)
Nakusp Rod and Gun Club.
Nakusp Trails Society
Summit Lake Ski Club
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Other stakeholders and interest groups whom NACFOR is committed to consulting with
during planning and permitting activities include licensed area trappers, wild crafters,
guide outfitters and licensed water users.
Individuals or groups are encouraged to bring forward innovative ideas which can be
implemented by or in conjunction with NACFOR. Although NACFOR recognizes that
the first several years of operations must be focused primarily on establishing an
efficient, stable and respected business, it also recognizes that it must be innovative and
look to the future in order to realize the potential benefits of a CFA tenure.
5.5 Other Communications
NACFOR recognizes that maintaining a wide variety of communication mediums
between the community and itself will be instrumental in implementing an effective
public consultation process. In addition to meeting legislative requirements and
encouraging stakeholder organizations as outlined above, communication mechanisms
will include but not be limited to the following:
1. maintenance of the NACFOR website (www.nakuspcommunityforest.com);
2. an annual open house to display and discuss proposed development and other
activities;
3. annual operations summaries (which may be posted on the website);
4. local newspaper coverage;
5. information at the Village of Nakusp office.
5.6 Conflict Resolution Process
NACFOR management will address any initial concerns or disputes. In many cases
disputes can be avoided or minimized by effective initial communication about issues or
concerns.
Two examples of potential conflicts arising from NACFOR planning or operational
decisions are:
1. Contractor disputes; and
2. Forest management concerns.
Contractor disputes may involve issues surrounding eligibility, rates or non-compliance.
Every effort will be made to solve these at the management level. However, either
management or the contractor will have the option to apply to the Board of Directors to
initiate a conflict resolution process. A sub-committee established by the Board will
review the contractor's application to determine whether or not they will hear the case. If
they resolve not to hear it, management's decision will stand. If they resolve to hear the
case, they will study all relevant information from both parties prior to making a decision.
13
Forest management concerns will be dealt with similarly to contractor disputes except
that such concerns may originate from any member of the public. Public concerns over
forest management might include but are not necessarily limited to issues surrounding
watershed management, recreational use and botanical forest products. An annual public
viewing will be held for all planned NACFOR activities. Any member of the public with
a specific forest management concern will be required to inform NACFOR management
in writing within a specified time period following the viewing. If the dispute cannot be
resolved between management and the public individual or group, the public member(s)
can apply to the Board of Directors for the initiation of a similar dispute resolution
mechanism to the one described above for contractors. The conflict resolution subcommittee created by the Board of Directors will oversee any such disputes.
See Appendix J for an outline of the Conflict Resolution Process.
5.7 Monitoring/Inspection
NACFOR management is responsible for monitoring/inspecting all operational activities.
In doing so, management will ensure that compliance is being achieved with
requirements and/or targets including the following legislation, policy and NACFOR
documents:
1. Forest Act;
2. Forest Range and Practices Act;
3. Forest Planning and Practices Regulation;
4. Kootenay Boundary Higher Level Plan;
5. NACFOR Forest Stewardship Plan;
6. NACFOR Management Plan;
7. NACFOR Business Plan;
8. Forest Safety Council’s approved Safe Work Procedures;
9. Cutting Permit and Road Permit documents;
10. Contractor agreements;
11. Agreements made with local stakeholders
12. Other NACFOR documents
Monitoring/inspections will take place by the following means:
1.
2.
3.
4.
5.
Pre-work and post-work meetings and documentation with contractors;
Regular contractor inspections, documentation and follow-up;
Meetings with affected parties (for example, watershed groups);
Regular internal comparison of targets with results;
Monitoring the degree of success in the meeting the goals of Board strategic or
operational initiatives.
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5.8 Reporting and Communications
NACFOR management will be responsible for reporting inspection results and incidents,
as needed, to the Board, government or appropriate agencies.
At the end of a contract, or periodically during a contract, performance reviews will be
completed to document performance and recommend improvements.
A written monthly management report along with monthly financial statements will be
prepared for the Board of Directors, and discussed at the monthly Board meetings. This
will be the main form of communication between management and the Board.
Management is responsible for producing an annual synopsis/report for the Board which
details the following:
1. Degree of success achieved in implementing specific directives or
recommendations put forward by the Board of Directors;
2. Contractor performance and compliance,
3. Statistical data on planning, road building, harvesting and silviculture operations;
4. Complete financial reports and analysis of financial results
5. Planned activities, operational goals and a proposed operational budget for the
following year.
The company will also file an Annual Report for the Provincial Registrar of Companies.
5.9 Audits
NACFOR will hire an external auditor each year to conduct a full financial audit and
ensure adherence to approved and acceptable standards (International Financial
Reporting Standards). Part of the audit will include suggested improvements to the
financial management of NACFOR. For the sake of efficiency and to match timing, the
audit will be done in coordination with the Village audit.
Periodically the forest management plans and practices of NACFOR may be audited by
the Forest Practices Board. In preparation for this, internal audits will be conducted
periodically by management.
6. OPERATIONAL CHALLENGES
NACFOR has identified three primary operational challenges that must be met to be
successful.
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6.1 Timber Profile (Species and Grade)
NACFOR’s timber profile (species and grade) is the single most important factor in
determining its competitive position. NACFOR originally negotiated for an operating
area with sufficient high-value timber to ensure good opportunities for success. This
allows NACFOR to operate profitably in most market conditions.
There is a low percentage of timber over 140 years of age within the operating area.
Much of the older high defect timber is contained within designated Old Growth
Management Areas (OGMA's), taking it out of the operational timber profile entirely.
A key facet of forest planning is to estimate the net revenue that harvesting will yield
from a given stand of timber. The method used is to estimate the proportion of species
and log grades within stands targeted for development, monetize the stands with current
or projected market pricing, apply an estimate of operating costs, and derive an estimate
of net revenue. This removes some of the operating risk and allow harvesting to be
(somewhat) scheduled according to perceived log market trends. Management will
develop a proforma for each block early in the CP development cycle, which will be
refined as development progresses. These individual harvesting proformas will become
the basis of the log harvesting portion of the operational budget.
Longer term planning tools with an economic basis will need to be developed, refined
and implemented in order to manage risk and help to ensure future success. A 20 year
planning exercise is currently in progress in an effort to meet these needs.
6.2 Terrain
The NACFOR land base is considerably more challenging in terms of its operability than
most areas in the B.C. interior. Steep and rugged terrain often necessitates the use of
cable logging equipment that is more expensive to operate than ground-based
(conventional) equipment that dominates most interior logging operations. Cable
harvesting is estimated to comprise about sixty percent of area operations, increasing
costs relative to some other B.C. interior licensees. The net effect is higher operating
costs than the average interior licensee, the need for specialized equipment, and the need
for trained workers with high capabilities and expertise to operate in these tough
conditions.
This terrain also requires more specialized and expensive road construction. However
because of previous harvesting almost all primary (“mainline”) roads are already
constructed.
The economic recession from 2008-2012 created local instability resulting in a large
erosion of cable logging contractor force and the skill sets needed to operate on this steep
terrain. Presently there is a tremendous need for new workers and wage supported
training opportunities for these workers. Going forward, NACFOR will need to play a
16
role in helping to rebuild these needed skills in the local labour and contracting force. In
time they will be relying on these new workers to ensure successful logging operations.
6.3 Compatibility With Non-Timber Resources
NACFOR is legally and ethically compelled to address a significant number of nontimber resource values in planning and implementing harvesting and forest management.
Non-timber values to be addressed include water, recreation, wildlife, fish, biodiversity,
visual quality, soils and wild crafting.
NACFOR’s goal is to realize the business and operational objectives without
compromising the value and sustainability of other resources. NACFOR recognizes that
it may incur additional costs in its operational activities in order to meet non-timber
resource objectives including:
1.
2.
3.
4.
more detailed planning requirements and increased planning cost.
increased harvesting costs.
increased road construction and maintenance costs.
Development of non-timber resources such as recreation trails and cultural
heritage sites.
Government realizes that community forests face unique costs and circumstances
including a smaller economic scale than larger licensees, and has set stumpage rates for
Community Forest licensees at 15 percent of the normal rate structure under current
stumpage pricing for the B.C. Interior.
7. BUSINESS ENVIRONMENT
7.1 Industry Overview
NACFOR is part of a provincial industry that annually harvests approximately 75 million
cubic meters of timber. The vast majority of this timber is harvested by large tenure
holders with existing and efficient manufacturing plants.
The local and regional forest industry has fundamentally changed since 2008. The severe
economic recession caused instability, insolvency and consolidation. As a result, there are
now fewer outlets for logs within an economic working circle of Nakusp. Lack of log
demand and serious cost control pressure ratcheted down the price of logs on the open
market from 2008 to 2012. Currently there is some improved demand for wood but log
sellers are in the position of being “price takers” because of the limited number of buyers.
The picture could improve if demand increases or if regional shortages of certain species
and grades occur.
17
As a relatively small tenure holder without any manufacturing facility, NACFOR’s
challenge is to create income by selling logs into a monopolized market without the
benefit of a possible gain in economic margin from producing a final product. New
players in the market, including local manufacturers, would help this picture
tremendously by offering other possible markets for logs.
7.2 Timber Profile
NACFOR’s timber profile is representative of the “Kootenay mix,” a term used to
describe the highly diverse species composition within the area’s forest. The main
species within this mix are Douglas-fir, hemlock and cedar, with smaller components of
larch, lodgepole pine and white pine. Spruce and balsam dominate higher elevation
stands, which compose only a small fraction of NACFOR's operable area. Deciduous
stems such as birch and trembling aspen compose a small component of area stands.
NACFOR’s diverse forest is a valuable asset which should increase in value as BC’s
timber supply tightens and world demand for wood increases.
7.3 Products
The timber profile will produce a combination of high grade logs (poles, piling, building
logs), commodity grade logs (sawlogs), and low grade logs (post and rail, pulp,
firewood).
One goal of NACFOR’s operations is to upgrade volume from lower to higher value by
merchandizing logs to the greatest extent possible. This includes correct log
manufacturing, extensive log sorting on the landing, and finding niche log markets. Key
markets to be targeted include Douglas-fir metric grades, timber frame products, piling,
cedar and fir poles and post and rail grades. NACFOR tries to sell locally where markets
exist.
7.4 Markets
Demand for NACFOR’s timber depends on market conditions and log grades. Premium
grade cedar and fir logs generally have good demand from 2 or more competitors, even
when general market conditions are poor. Prices are negotiable but within a relatively
narrow range typically. Commodity grade logs of all species have reasonable demand
from 1 or 2 buyers, but NACFOR is a “price taker”. Demand for low grade logs (pulp,
firewood) is generally reasonable, but margins are low (or negative). Price on low grade
logs is typically not negotiable. Typically, NACFOR sawlog and pulp sales are made to
large sawmills while sales of higher value products are made mainly to smaller and midsize niche wood product producers.
A continuing challenge for NACFOR will be to adapt to changing markets and market
conditions. Maintaining core financial strength will allow for patience to wait for better
18
conditions and higher log prices. Effective planning and operations will allow NACFOR
to take advantage of market upswings and peaks. Quick reaction time to take advantage
of niche markets is critical. This means that a variety of timber must be permitted and
ready to harvest, and contractors must be available and able to harvest when needed.
7.5 Log Supply and Competition
NACFOR is selling into a log market that is easily affected by a very changeable log
supply. Other area forest licensees which may buy timber include International Forest
Products (Interfor - Castlegar), Downie Street Sawmills (Revelstoke), Stella Jones,
Kalesnikoff Lumber, Atco Lumber, Gold Island Cedar, Porcupine Wood Products. Most
of their harvested annual quotas are used to support their individual product capacities,
with some logs being used for trade purposes. When stumpage (Crown charge for
timber) is low and/or lumber markets are low, licensees can often most economically
meet their needs for logs by logging primarily on their own license areas, and buying less
timber on the open market. When lumber prices are high and/or stumpage charges high,
companies will tend to buy more open market timber. At these times, increased demand
and competition should theoretically increase log prices.
The availability of timber from BC Timber Sales (a crown corporation selling timber on
the open market) can affect the local and regional supply and therefore pricing of logs.
Other area community forests include the Kaslo Community Forest and Slocan Integral
Forestry Cooperative (SIFCO) ,Harrop Procter Community Forest and Revelstoke
Community Forest Corp (RCFC).
Other area suppliers of mixed species timber similar to that marketed by NACFOR
include area woodlots and private land holders. The log supply from private land is very
sensitive to log pricing, i.e. when prices improve, log supply increases from private land
sources.
7.6 Market Challenges
NACFOR faces three principle market challenges:
1. Maximizing net value from timber
2. Local nature of log markets
3. Distance to markets
7.6.1 Maximizing Net Value From Timber
NACFOR merchandizes logs by dividing them into different sorts tailored to the needs of
individual mills. Where multiple markets exist, competition for the individual grades
should result in an increase in log pricing.
19
NACFOR markets and pre-sells each timber sort in the bush. Often there are eight onsite log sorts at any one time. The additional operational costs resulting from sorting are
offset by the ability to directly market and haul logs to specific buyers. Maintaining
close attention to product quality and specifications should help to build solid
relationships with buyers who are willing to pay premium prices for a known and
dependable product.
One specific issue which NACFOR will seek to address over time, is the limited number
of area manufacturers currently processing low value timber, particularly hemlock.
Although current consumption of this product by area mills is sufficient to accommodate
supply, the limited number of buyers reduces NACFOR’s negotiating strength on the
selling price. Efforts will be made to help local manufacturers find markets for hemlock
and other historically low value products and to adapt their production capacity to take
advantage of those markets.
NACFOR will also seek to help local manufacturers to expand their markets in some
existing products, for example Douglas-fir and larch piling. NACFOR’s timber profile
contains a significant amount of straight, tall Douglas-fir and larch volume which meets
pole and piling specifications. Expanding local production of this market would help
NACFOR to increase revenues and to would also provide more jobs within the
community.
Revenues and net income in the Forecast Income Statement 2013-2017 (Appendix E)
have been derived assuming a projected product mix and pricing. The sensitivity of net
revenue to these factors (mix and pricing) is high. Appendix F shows an estimate of log
pricing sensitivity for the next five years.
7.6.2 Local Nature of Log Markets
Log markets have been very cyclical in the past five years. Very limited markets existed
during the economic downturn 2008-2012. Log prices fell to historic low levels and
markets for commodity grade and low grade logs were difficult to find or non-existent.
Timing harvest with markets is critical to success. The objective is to survive the
downturns, prepare for better times, and harvest when the species or product is at or near
its peak value. Developing a range of approved cut blocks will be key to ensuring that
NACFOR maintains the market flexibility outlined above. NACFOR will seek to
develop and maintain approved cutting permits for two to three years’ worth of
harvesting.
NACFOR will switch to a “One CP” permitting method to be more responsive to short
lived or niche markets within the next year. This should allow for single cut blocks to be
permitted quickly in response to markets.
20
NACFOR typically has a high proportion of premium quality wood within its operating
areas. While there is reasonable competition and pricing for premium products, there is
very little competition for commodity and low grade products. NACFOR and other log
sellers are “price takers” in these markets. Effort needs to be applied locally to help build
other markets for logs.
7.6.3 Distance to Markets
Nakusp is in a remote location relative to log markets - historically the commodity and
low grade wood in the Nakusp area has been dumped in the lake and towed south to mills
at Castlegar. Premium grade products have been hauled to more distant markets
resulting in high trucking costs to realize the premium value.
Very little of the timber harvested from the Nakusp area in recent history has been
processed locally. One of NACFOR’s objectives is to increase the log supply for local
sawmills. NACFOR hopes that the presence of an available supply of locally-based
timber will encourage existing manufacturers to expand their operations and that secure
supply may provide an impetus for new manufacturers to establish operations in the area.
8. DISTRIBUTION OF FUNDS TO COMMUNITY
The NACFOR Board of Directors is responsible for declaring annual dividends.
A reserve fund will be capitalized and maintained to buffer NACFOR against market
volatility, to cover outstanding liabilities including silviculture commitments, and to
allow for license management, planning and road construction ahead of harvest activities
during times when revenue flow from harvesting is low.
The goal will be to maintain NACFOR as a financially strong entity that can survive
through a poor economy and prosper when market conditions are favourable.
Dividends are payable to the Village of Nakusp (as sole shareholder). The intent of the
Board of Directors and Village Council is that these dividends will be used to fund
projects which have broad community benefit (including projects outside the Village
boundaries) and that will will have a lasting effect on the community. Dividends will not
be used for ongoing Village operations or capital expenditures of a routine nature.
The Board of Directors of NACFOR and the Village of Nakusp council will work
together on a collaborative basis to determine the appropriate mechanism for distribution
of these funds.
21
9. RETURNS TO THE LOCAL AREA AND PROVINCE
NACFOR is committed to providing economic, social and environmental benefits to the
Village, surrounding RDCK defined area K, and to the Summit Lake Ski Hill.
By helping to increase economic self-sufficiency of the area, NACFOR will benefit all
levels of government and the general population of the area.
9.1.1 Economic Benefits
The economic benefits accruing from NACFOR will include:
1. Division of allocated funds to community projects, local charities and other local
organizations.
2. Use of local labor and expertise in NACFOR management, planning and
operations.
3. Support and expansion of existing local mills through increased access to wood.
4. Promotion of new log processing capacity in the local area.
5. Increased opportunities for value-added industry through increased access to
wood.
9.1.2 Social Benefits
NACFOR will help to provide some broad social benefits to the people of the area
including:
1. Working with local schools, colleges and universities to provide training and
learning opportunities on the NACFOR land base and with NACFOR operations.
2. Establishment of interpretive forest sites and trails, to increase public education
on forestry issues and provide employment for local workers including youth.
3. Working with local recreational user groups such as the Arrow Lakes Cross
Country Ski Club, Nakusp Trails Society, Arrow Lakes Ridge rider Association,
Nakusp Rod and Gun Club, the Arrow Lakes Saddle Club and Canadian
Mountain Holidays heli-skiing to improve recreational use of the NACFOR land
base.
4. Helping to enable and provide local jobs and thereby increase the level of
community self-sufficiency.
22
9.1.3 Improved Forest Practices
NACFOR seeks to improve long-term forestry and forestry-related practices within the
community via the facilitation of strategies which may include the following examples:
1. Developing a Fire Protection Plan, including an Interface Fire Management
Strategy;
2. Helping to facilitate a Waste Management Strategy, designed to improve wood
utilization both in the forest and at local mills;
3. Conducting an Expanded Timber Supply Analysis, which will seek to verify the
sustainability of established harvest levels via ground-based surveys and local
analysis;
4. Developing an Innovative Practices Strategy, which would act to promote and
expand the use of non-timber forest products for both commercial and noncommercial purposes.
9.1.4 Improved and expanded Forest Land Base
Through commitments to public consultation, providing tangible benefits to the
community, and using innovative harvesting systems, NACFOR may be able to operate
more easily than major licensees in historically contentious areas. This would expand the
land base that is readily available for harvesting. One example is to create recreational
areas and trail systems concurrent with harvest activities. Another example is to
undertake interface fire protection on the edges of populated areas while still yielding an
economic level of timber harvest.
To provide future security, self-sufficiency and self-determination for the local people,
NACFOR will seek opportunities to expand the managed land base by acquiring
additional Crown tenure or private forest land.
23
Appendix A – NACFOR Operating Areas
Appendix B – Corporate Structure
APPENDIX B - NACFOR CORPORATE STRUCTURE
NACFOR CORPORATE STRUCTURE
NACFOR Corporation
Village of Nakusp is the
sole shareholder
BoD Sub-Committees
Finance and Marketing
Community Funding
Innovative Practices
Waste Management
Fire Management
Youth
Conflict Resolution
Community Input
Board of Directors
Governance
Policy
Fund disbursement
Ensure proper management
NACFOR Management (Contract)
Higher Level Planning
Harvest and Silviculture Scheduling
Contract Operations Administration
Log Sales and Marketing
(Annual open house, NACFOR
website, stakeholder meetings)
NACFOR Operations (Contract)
Development Planning and Mapping
Roadbuilding and Deactivation
Harvesting
Silviculture
Composition*
1 Village Council member
1 RDCK Area K member
Delegates from general public
* Members will represent a crosssection of community.
* Total Board membership is
defined by company Articles
(currently 7 directors)
Appendix C – Local Contractors
NAKUSP AND AREA COMMUNITY FOREST
POTENTIAL LABOR POOL OF AREA CONTRACTORS
PHASE
Forest Development
CONTRACTOR NAME
LOCATION
True North Forestry Consulting Ltd Nakusp
Fortech Forestry Consulting
Nakusp
Road and Bridge Building
Cougar Valley Ventures
Crescent Bay Construction
Galena Bay Contractors Ltd.
Rubi Contracting Ltd
Grapple Yarding
Arrow Lakes Logging
Nakusp
Convergent Management Group Ltd Nakusp
Reitmeier Logging
New Denver
Tower Yarding
Convergent Management Group
H.A. Friedenberger Contracting Ltd
J and D Logging Ltd
R & A Logging
Reitmeier Logging
Nakusp
Nakusp
Nakusp
Nakusp
New Denver
Conventional Logging
DPM Contracting
Donald Kirk Logging
Matchett Logging Ltd
Convergent Management Group
Fauquier
Nakusp
Burton
Nakusp
Specialized Operations
R. Hopp Logging Ltd.
E and F Logging Ltd.
Harlow Creek Contracting Ltd.
Nakusp
Nakusp
Nakusp
Salvage Harvesting
Koert Dietermann Cont. Ltd
Nakusp
Trucking
K & B Trucking
N & M Logging Ltd
Tercola Trucking
K Dupuis
T. Martin Trucking
Y2K Contracting
Rokel Enterprises
Grizzly Basin
B. Marcolli Trucking
Roland Enterprises
GBS Trucking Ltd
W and S Trucking
Nakusp
Nakusp
Nakusp
Nakusp
Nakusp
Nakusp
Nakusp
Nakusp
Nakusp
Nakusp
Nakusp
Nakusp
1
Nakusp
Nakusp
Nakusp
Burton
Darrel Katchen
Reitmeier Transport Inc.
Harlow Creek Contracting Ltd.
Marcolli Trucking Ltd.
Nakusp
New Denver
Nakusp
Nakusp
Silviculture
Hamling Lakes
Summit Lake Services
Greenridge Forest Consulting
Greenpeaks Resource Management
Nakusp
Nakusp
Nakusp
Nakusp
Scaling
Pattom Services Ltd
Nakusp
Wildlife Management
Ingersol Mountain Enterprises
Nakusp
2
Appendix D – Local Manufacturers
LOCAL WOOD MANUFACTURERS
Company Name
Brisco Wood
Preservers
Stella Jones
Primary Materials
Cedar
End Products
Poles (contracted to
pippco)
Poles (contracted to
pippco)
Poles and piling
Location
Nakusp
PIPPCO 2004
Cedar, Douglas-fir,
Larch
All sawlog grades
Lumber
Nakusp
All sawlog grades
Lumber
Burton
All sawlog grade
Lumber, gazebos
Burton
Lumber
Nakusp
All sawlog grades
Cedar
Post and rail
Nakusp
All sawlog grades
Cedar
Lumber
Cants and lumber
Nakusp
Nakusp
Birch, white pine
Lumber
Nakusp
Larry Guidon
All sawlog grades
Lumber
Nakusp
Mike Friedenberger
All sawlog grades
Lumber
Nakusp
Kootenay Custom
Sawing
Summer Creek
Enterprises
Richard Dyck
Zeleznik
Sawmilling
Box Lake Lumber
Products
Donny Rodger
Herridge Truck and
Sawmill
Pine Street Holdings
Cedar
Nakusp
Nakusp
MANUFACTURED WOOD USERS
Company Name
Box Mtn Wood
Products
Butch Warrantz
Designs in Wood
Fiddlehead
Woodworks
Scandic
Timberframes
The Wooden Bow
Joseph Hughes
Primary Materials
All
End Products
Finishing carpentry
Location
Nakusp
All
All
All
Finishing carpentry
Finishing carpentry
Finishing carpentry
Nakusp
Nakusp
Nakusp
Dry Douglas-fir,
cedar,White pine
Yew
All
Timber frame
Nakusp
Bow staves
Various
Nakusp
Nakusp
Nakusp Local Wood Users (April 23, 2014)
Appendix E – 5 year Financial Projections
Appendix E1 –Operating Assumptions
Appendix E2 – Log Grade and Revenue Projection
Appendix E3 – Net Income Projection
APPENDIX E1 - OPERATING ASSUMPTIONS
Nakusp and District Community Forest Inc. (NACFOR)
Projected Operating Areas and Species Profile 2013-2017
Locations/Chart
Year
2013
2014
2015
2016
2017
TOTAL
Baerg, Slewiskin
Summit
Galena Bay
Summit/Box
Wensley,Scalping
Total
plan m3
75,000
20,000
15,000
20,000
15,000
145,000
Fir%
45%
40%
40%
20%
30%
Larch,
Hemlock% Cedar %
Whitewoods
%
10%
30%
15%
5%
35%
20%
10%
30%
20%
5%
60%
15%
5%
45%
20%
Fir m3
33,750
8,000
6,000
4,000
4,500
56,250
Larch,
Hemlock m3 Cedar m3
Whitewoods
m3
7,500
22,500
11,250
1,000
7,000
4,000
1,500
4,500
3,000
1,000
12,000
3,000
750
6,750
3,000
11,750
52,750
24,250
TOTAL
75,000
20,000
15,000
20,000
15,000
145,000
Notes:
2013 is the first year of a 5 year cut control period. Approximately 45,000 was carried forward from previous period
This means approximately 145,000 m3 plus or minus 10% can be logged to the end of 2017
Projected Logging Method and Cost by Operating Area 2013-2017
Locations/Chart
Year
2013
2014
2015
2016
2017
TOTAL
Baerg, Slewiskin
Summit
Galena Bay
Summit/Box
Wensley,Scalping
Total
plan m3
75,000
20,000
15,000
20,000
15,000
145,000
Ground
Skid %
63%
60%
100%
50%
80%
Cable
Grapple %
31%
30%
0%
30%
0%
Cable
Tower %
6%
10%
0%
20%
20%
Aerial %
0%
0%
0%
0%
0%
Ground Cable Grapple
Cable
Skid $/m3
$/m3
Tower $/m3
$
$
$
$
$
20.00
22.00
22.00
22.00
26.00
$
$
$
$
$
30.00
33.00
33.00
-
$
$
$
$
$
38.00
40.00
40.00
40.00
Aerial
$/m3
$ 65.00
$
$
$
$
-
Average
$/m3
$
$
$
$
$
24.18
27.10
22.00
28.90
28.80
APPENDIX E2
Log grade and revenue projection 2013-2017
Year / Areas
Species
Douglas-fir
Hemlock
2013
Fosthall, Cedar
Baerg, Slew
Larch, White wood
TOTAL
Year
Species
Douglas-fir
Hemlock
2014
Summit
Cedar
Larch, White wood
TOTAL
Year
Species
Douglas-fir
Hemlock
2015 Galena Cedar
Larch, White wood
TOTAL
Year
Species
Douglas-fir
Hemlock
2016 Box
Summit
Cedar
Larch, White wood
TOTAL
Year
Species
Douglas-fir
2017
Scalping
Knife,
Wensley
Hemlock
Cedar
Larch, White wood
TOTAL
Species
m3
Grade
33,750 Building Logs,piling
Metric, Peeler
Sawlog
Pulp/Firewood
22,500 Sawlog
Pulp
11,250 Premium, Poles
Sawlog
Post and Rail
Shake wood
7,500 Sawlog
75,000
Species
m3
Grade
Metric, Peeler
Sawlog
Pulp/Firewood
7,000 Sawlog
Pulp
Sawlog
Post and Rail
Shake wood
1,000 Sawlog
20,000
Species
m3
Grade
Metric, Peeler
Sawlog
Pulp/Firewood
4,500 Sawlog
Pulp
Sawlog
Post and Rail
Shake wood
1,500 Sawlog
15,000
Species
m3
Grade
Metric, Peeler
Sawlog
Pulp/Firewood
18,000 Sawlog
Pulp
Sawlog
Post and Rail
Shake wood
1,500 Sawlog
30,000
Species
m3
Grade
Metric, Peeler
Sawlog
Pulp/Firewood
6,750 Sawlog
Pulp
Sawlog
Post and Rail
Shake wood
750 Sawlog
15,000
Grade % Grade%
by
of total
species
volume
1%
0.5%
69%
31.1%
20%
9.0%
10%
4.5%
95%
28.5%
5%
1.5%
10%
1.5%
85%
12.8%
5%
0.8%
0%
0.0%
100%
10.0%
100.0%
Grade
volume
m3
338
23288
6750
3375
21375
1125
1125
9563
563
0
7500
75000
Delivered
Price
estimate
$ 90.00
$ 80.00
$ 60.00
$ 33.00
$ 46.00
$ 34.00
$ 140.00
$ 85.00
$ 40.00
$ 80.00
$ 55.00
$ 64.49
Projected
Total
Revenue
$
30,375
$ 1,863,000
$ 405,000
$ 111,375
$ 983,250
$
38,250
$ 157,500
$ 812,813
$
22,500
$
$ 412,500
$ 4,836,563
Grade %
by
species
Grade
volume
m3
Delivered
Price
estimate
Projected
Total
Revenue
2%
75%
15%
8%
80%
20%
20%
75%
5%
0%
100%
Grade%
of total
volume
0.8%
30.0%
6.0%
3.2%
28.0%
7.0%
4.0%
15.0%
1.0%
0.0%
5.0%
160
6000
1200
640
5600
1400
800
3000
200
0
1000
20000
$ 95.00
$ 85.00
$ 65.00
$ 33.00
$ 48.00
$ 34.00
$ 140.00
$ 90.00
$ 40.00
$ 80.00
$ 65.00
$ 69.79
$
15,200
$ 510,000
$
78,000
$
21,120
$ 268,800
$
47,600
$ 112,000
$ 270,000
$
8,000
$
$
65,000
$ 1,395,720
Grade % Grade%
by
of total
species
volume
2%
0.6%
75%
22.5%
15%
4.5%
8%
2.4%
80%
18.0%
20%
4.5%
20%
3.0%
80%
12.0%
0%
0.0%
0%
0.0%
100%
7.5%
Grade
volume
m3
120
4500
900
480
3600
900
600
2400
0
0
1500
15000
Delivered
Price
estimate
$ 90.00
$ 85.00
$ 65.00
$ 33.00
$ 52.00
$ 34.00
$ 140.00
$ 90.00
$ 40.00
$ 80.00
$ 65.00
$ 72.20
Projected
Total
Revenue
$
10,800
$ 382,500
$
58,500
$
15,840
$ 187,200
$
30,600
$
84,000
$ 216,000
$
$
$
97,500
$ 1,082,940
Grade % Grade%
by
of total
species
volume
2%
0.6%
75%
22.5%
15%
4.5%
8%
2.4%
80%
72.0%
20%
18.0%
10%
2.3%
85%
19.1%
5%
1.1%
0%
0.0%
100%
7.5%
Grade
volume
m3
120
4500
900
480
14400
3600
450
3825
225
0
1500
30000
Delivered
Price
estimate
$ 90.00
$ 85.00
$ 70.00
$ 33.00
$ 55.00
$ 34.00
$ 140.00
$ 95.00
$ 40.00
$ 80.00
$ 65.00
$ 63.98
Projected
Total
Revenue
$
10,800
$ 382,500
$
63,000
$
15,840
$ 792,000
$ 122,400
$
63,000
$ 363,375
$
9,000
$
$
97,500
$ 1,919,415
Grade % Grade%
by
of total
species
volume
2%
0.5%
65%
14.6%
25%
5.6%
8%
1.8%
85%
28.7%
15%
5.1%
10%
1.5%
85%
12.8%
5%
0.8%
0%
0.0%
100%
3.8%
Grade
volume
m3
90
2925
1125
360
5737.5
1012.5
300
2550
150
0
750
15000
Delivered
Price
estimate
$ 90.00
$ 85.00
$ 70.00
$ 33.00
$ 55.00
$ 34.00
$ 140.00
$ 95.00
$ 40.00
$ 80.00
$ 65.00
$ 69.09
Projected
Total
Revenue
$
8,100
$ 248,625
$
78,750
$
11,880
$ 315,563
$
34,425
$
42,000
$ 242,250
$
6,000
$
$
48,750
$ 1,036,343
Trucking
$/m3
$
$
$
$
$
$
$
$
$
$
$
$
8.00
15.00
8.00
8.00
8.00
8.00
14.00
5.80
11.00
11.10
Trucking
$/m3
$
$
$
$
$
$
$
$
$
$
$
$
8.00
17.50
10.00
8.00
11.00
11.00
14.00
5.80
11.00
12.73
Trucking
$/m3
$
$
$
$
$
$
$
$
$
$
$
$
8.80
13.30
9.30
8.00
9.80
9.80
10.50
8.80
10.37
Trucking
$/m3
$
$
$
$
$
$
$
$
$
$
$
$
7.40
16.25
8.80
8.00
10.50
10.50
13.50
5.00
8.80
11.36
Trucking
$/m3
$
$
$
$
$
$
$
$
$
$
$
$
6.00
17.50
8.00
8.00
7.75
7.75
13.90
5.80
7.40
10.52
Estimated
Trucking
Costs /
$
2,700
$ 349,313
$
54,000
$
27,000
$ 171,000
$
9,000
$
$ 133,875
$
3,263
$
$
82,500
$ 832,650
Projected
Trucking
Costs /
$
$
$
$
$
$
$
$
$
$
$
$
1,280
105,000
12,000
5,120
61,600
15,400
42,000
1,160
11,000
254,560
Projected
Trucking
Costs /
$
1,056
$
59,850
$
8,370
$
3,840
$
35,280
$
8,820
$
$
25,200
$
$
$
13,200
$ 155,616
Projected
Trucking
Costs /
$
888
$
73,125
$
7,920
$
3,840
$ 151,200
$
37,800
$
$
51,638
$
1,125
$
$
13,200
$ 340,736
Projected
Trucking
Costs /
$
540
$
51,188
$
9,000
$
2,880
$
44,466
$
7,847
$
$
35,445
$
870
$
$
5,550
$ 157,785
APPENDIX E3
Net Income Projection 2013-2017
2013
75,000
$/m3
Total $
Projected Harvest Volume (m3)
Revenue
Log sales
Interest
$ 64.49
2014
20,000
$/m3
Total $
$ 64.75
$ 4,836,563
$
20,000
$ 4,856,563
Operations Costs
Tree to truck
Hauling
Stumpage
CP Development
Road construction
Road maintenance
Contract Supervision
Silviculture accruals
Annual rent
Total production costs
$ 24.92
$ 11.10
$ 1.50
$ 2.00
$ 1.00
$ 0.50
$ 0.50
$ 5.00
$ 0.25
$ 46.77
Administration
Audit and legal
Bookeeping/clerical
Management costs
Total admin costs
$
$
$
$
Total costs
$ 50.13
$ 3,759,900
$ 62.78
Net income (loss)
Income to revenue ratio (%)
$ 14.62
$ 1,096,663
22.6%
$ 8.51
0.27
0.16
2.93
3.36
$ 71.29
$ 1,395,720
$
30,000
$ 1,425,720
$ 1,869,000
$ 832,650
$ 112,500
$ 150,000
$
75,000
$
37,500
$
37,500
$ 375,000
$
18,750
$ 3,507,900
$
$
$
$
$
$
$
$
$
$
27.70
12.73
2.00
3.00
3.00
2.00
0.50
5.00
0.25
56.18
$
$
$
$
$
$
$
$
1.00
0.60
5.00
6.60
20,000
12,000
220,000
252,000
$ 69.79
2015
15,000
$/m3
Total $
$ 74.20
$ 1,082,940
$
30,000
$ 1,112,940
$ 554,000
$ 254,560
$
40,000
$
60,000
$
60,000
$
40,000
$
10,000
$ 100,000
$
5,000
$ 1,123,560
$
$
$
$
$
$
$
$
$
$
22.00
10.37
2.00
3.00
5.00
0.50
0.50
5.00
0.25
48.62
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
1.33
0.80
6.67
8.80
$ 1,255,560
$
20,000
12,000
100,000
132,000
170,160
11.9%
$ 72.20
2016
30,000
$/m3
$ 63.98
2017
Total $
$ 64.98
$ 1,919,415
$
30,000
$ 1,949,415
330,000
155,616
30,000
45,000
75,000
7,500
7,500
75,000
3,750
729,366
$
$
$
$
$
$
$
$
$
$
29.50
11.36
2.50
3.00
3.00
0.50
0.50
5.00
0.25
55.61
$
$
$
$
20,000
12,000
100,000
132,000
$
$
$
$
0.67
0.40
5.00
6.07
$ 57.42
$
861,366
$ 61.67
$ 16.77
$
251,574
22.6%
$ 3.31
15,000
$/m3
Total $
$ 71.09
$ 1,036,343
$
30,000
$ 1,066,343
$ 10,270,980
$
140,000
$ 10,410,980
$ 885,000
$ 340,736
$
75,000
$
90,000
$
40,000
$
15,000
$
15,000
$ 150,000
$
7,500
$ 1,618,236
$
$
$
$
$
$
$
$
$
$
28.80
10.52
2.50
4.00
4.00
1.50
0.50
5.00
0.25
57.07
$
$
$
$
$
$
$
$
$
$
432,000
157,785
37,500
60,000
60,000
22,500
7,500
75,000
3,750
856,035
$ 4,070,000
$ 1,741,347
$
295,000
$
405,000
$
310,000
$
122,500
$
77,500
$
775,000
$
38,750
$ 7,835,097
$
$
$
$
$
$
$
$
1.33
0.80
6.67
8.80
$
$
$
$
20,000
12,000
100,000
132,000
$
$
$
$
$ 1,800,236
$ 65.87
$
988,035
$ 8,665,097
$
$ 5.22
$
78,308
7.3%
$ 1,745,884
16.8%
20,000
12,000
150,000
182,000
149,180
5.1%
$ 69.09
5 yr TOTAL
155000
100,000
60,000
670,000
830,000
Appendix F – Log Price Sensitivity/Projection
Log Price Sensitivity 2013-2017
Species
Douglas-fir
Grade
Building Logs,piling
Metric, Peeler
Sawlog
Pulp
Hemlock
Sawlog
Pulp
Cedar
Premium, Poles
Sawlog
Post and Rail
Shake wood
Larch, White wood Sawlog
Typical
Delivered
Price
estimate
$
$
$
$
$
$
$
$
$
$
$
90.00
80.00
60.00
33.00
48.00
34.00
140.00
90.00
40.00
80.00
50.00
$m3 Low Range
$/m3 High
estimate
Range estimate
Typical
Trucking $/m3
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
80.00
70.00
50.00
30.00
40.00
30.00
125.00
70.00
35.00
70.00
40.00
$
$
$
$
$
$
$
$
$
$
$
Low range are drawn from historical prices 2008-2012
Many existing mills occupy a specific niche so a regional fibre shortage may increase product demand
Average price are reflective of current market pricing, July 2013.
Note that Prices are FOB landing, for delivered price add trucking to destination
125.00
95.00
70.00
35.00
60.00
40.00
160.00
120.00
45.00
90.00
75.00
20.00
10.00
8.00
10.00
10.00
16.00
8.00
8.00
10.00
Typical Net
price FOB
landing
$
$
$
$
$
$
$
$
$
$
$
90.00
60.00
50.00
25.00
38.00
24.00
140.00
74.00
32.00
72.00
40.00
Comments
Very limited markets, may improve as building picks up
Large market, primary markets are Downie in Revelstoke and Kalesnikoff in Thrums
Large market -Interfor
Large market - Celgar
Interfor
Celgar
For poles 60 feet and less, longer ones are rarer but command higher prices.
Local market
Local market
Interfor
Appendix G – NACFOR Activity Schedule
F:\COMMUNITY FOREST\3 NACFOR Core Plans\2 Business Plan\Planned Activities_November2013
PART 1 - OPERATIONS
CATEGORY
ACTIVITY
STANDARD OF MEASUREMENT
ONE YEAR TARGET
5 YEAR TARGET
Core Plans
Update Business Plan
Plan is consistent with long term CFA and NACFOR
operations
Board to review annually to measure
performance
Complete review and revision; Board
approval; Village of Nakusp ratification
Core Plans
Update Management Plan
NACFOR meets CFA legal obligations
Core Plans
Forest Stewardship Plan
Core Plans
20-year Harvest Plan
Core Plans
Timber Supply Review
Planning
Plan consistent with NACFOR goals
and objectives
Ensure FSP meets forest management commitments Review FSP annually to ensure
compliance
Categorize operability of all mature timber within
Complete ground truthing, mapping
NACFOR chart
and database
Complete official Timber Supply Review of NACFOR Establish acceptable criteria in
chart for Ministry approval using Long Term Harvest consultation w/ MFLNRO
Plan as template
Apprived management plan
Timber Supply Expansion
Mainain landbase in CFA to meet AAC
Identify areas for expansion
Expanded CFA approved
Planning
Roads
Maintain current road permits for NACFOR
operational areas
annual review of road permit status - to Update road permit status as required
be completed by April 1 of each year
Planning
Single Cutting Permit
Cutting permit approval
Approved by December 31, 2013
Planning
CFA Boundary Review
Planning
Forest Management
Planning Framework
CFA boundary located and mapped according to
legal linework
Forest management activities meet legal obligations
Clean up linework and finalize CFA
boundary
Prepare an auditable process for
tracking and meeting legal forest
management obligations
Planning
Sustainable Forest
CFA licence is sustainable
Management Planning
Develop new cutting permit Complete layout and obtain approval for additional
areas
timber harvest -CP103 SW Slewiskin (~17500m3)
Develop a sustainable forest
management plan
60000 m3 developed by November
2012. 30,000m3 approved by
December 2012
Forest Development
Develop new cutting permit Complete layout and obtain approval for additional
areas
timber harvest -CP104 SW Slewiskin (~30,000m3)
CP/RP approval;
Forest Development
Develop new cutting permit Recce Galena Bay chart for development potential;
areas
complete layout and obtain approval for timber
harvest
complete by December 31, 2013
Forest Development
Develop new cutting permit
areas
Develop new cutting permit
areas
Recce Scalping Knife chart; complete layout and
obtain CP approval
Recce Summit/Box chart for development potential;
complete layout and obtain approval for timber
harvest
Forest Development
Update NACFOR
Development Standards
and Procedures
Efficient and effective forest management processes Review existing field and office
that meet EMS and operational requirements
standards and revise as required
Review and assess compliance
Harvesting
CP 102 (Slewiskin)
Complete harvesting of 40000 m3 (all five blocks)
N/A
Harvesting
CP 106 (Fosthall)
Complete harvesting of 27000 m3 (entire CP)
Complete by Aug 1, 2013
N/A
Harvesting
CP 103 (Slewiskin)
Complete harvesting of approximately 30000 m3
Complete by Dec 31, 2014
Harvesting
CP 104 (Slewiskin)
Harvesting
CP 101 (Galena Bay)
Pending contractor availability
Roads
Road Maintenance
Ensure all roads under road permit and RUP are
maintained per standards and agreement
specifications
Annual road inspections
Complete by Dec 31, 2016 (market
dependent)
Complete by Dec 31, 2016 (market
dependent)
Continue to maintain roads as needed
per inspections
Land Based Investment
Program (LBIP)
Spacing - Surveys
Obtain 2012-13 LBIP funding to complete
approximately 30 ha of Pre-Stand Tending surveys
Complete surveys by October 1, 2012
Complete approximately 100 ha over 5
year period pending funding availability
and priorities
Program (LBIP)
Spacing - Prescriptions
approximately 20 ha of Pre-Stand Tending
prescriptions
Complete prescriptions by October 1,
2012
and priorities
Program (LBIP)
Spacing - Works
approximately 20 ha of Pre-Stand Tending
prescriptions (incl. 3.5 ha approved 2011-12)
Complete spacing by November 1,
2012
and priorities
Basic Silviculture
CP 102 (Slewiskin)
Reforest five blocks following harvesting completion
Basic Silviculture
CP 106 (Fosthall)
Complete planting in blocks 1 & 5 by
June 30, 2014
Reforest eight blocks following harvesting completion Complete planting by June 1, 2014
Basic Silviculture
CP 103 (Slewiskin)
Reforest blocks following harvesting completion
Basic Silviculture
CP 104 (Slewiskin)
Reforest blocks following harvesting completion
Forest Development
Forest Development
Maintain an approved Forest
Stewardship Plan
Continue to update info
Effectively promote use of NACFOR
methodology in overall TSA Timber
Supply Review
Maintain cutting permit approval as
required
N/A
Ensure compliance with updated
legislation
Sustainable Forest Management Plan is
current
Maintain continuous inventory of 40,000
to 80,000m3
Complete by Aug 1, 2013
N/A at present. Set target completion
following harvest
Sow seedlings for 2015 planting
Planned Activities_November2013
Stand tending treatments as needed to
maintain stocking
maintain stocking
maintain stocking
maintain stocking
14/11/2013
F:\COMMUNITY FOREST\3 NACFOR Core Plans\2 Business Plan\Planned Activities_November2013
CATEGORY
ACTIVITY
STANDARD OF MEASUREMENT
ONE YEAR TARGET
Basic Silviculture
CP 108 (Wensley)
Establish free-growing stand to meet obligation
Monitor seedling performance
Recreation
Interpretive Forest Trail
Work towards NACFOR Management Plan goal to
establish a trail network in the CFA licence area
maintain stocking
Complete and erect signage by April 1, Ongoing partnership with Nakusp Trail
2013
Society to maintain trail and signage
5 YEAR TARGET
Recreation
Fosthall Falls Trail
Work towards NACFOR Management Plan goal to
establish a trail network in the CFA licence area
Complete field reconnaissance and
build trail
Recreation
Galena Mushroom
Interpretive Signs
Work towards NACFOR Management Plan Goal 5 to Work with mushroom experts to
promote community involvement in local forest
develop site and sign content
management
Ongoing trail/signage maintenance
Recreation
Cultural Heritage Site Arrow Lake
Work towards NACFOR Management Plan Goal 5 to Work with archaeologist to develop a
promote community involvement in local forest
cultural heritage site
management
Ongoing site maintenance
NACFOR Signage
Project Signage
Prepare and erect signage for completed but
unsigned projects (Spacing 2010 and 2011, CP 108
Blk 1, CP 102 Blks 1-5, CP 106 Blks 1-8)
Ongoing trail maintenance
Complete and erect signage by April 1, Continue to update completed projects
2013
annually with on-site signage
NACFOR Infrastructure
Storage Yard
Activate yard
Activate by Nov 1, 2012.
Administrative
Annual Reporting
Business Plan commitment Sec. 5.8 Reporting and
Communications - report on activities and
accomplishments in the past year for reporting to
Village, Board and Public
Annual report to be prepared by April 1 Assess reporting requirements for
meeting Business Plan objectives
Maintain. Amend use as appropriate
Administrative
Annual Operating Budget
Projected income based on volume estimates by
cutting permit and development activities. Budget
reflects non-cutting permit activities to meet CFA
licence obligations
Budget to be prepared by December
31 annually
Evaluate process for meeting budgeted
targets
Administrative
Contract Award Process
Meet Business Plan obligations for contract award
Maintain a current list of available
contractors with updated rotation
status. Establish contractor evaluation
criteria
Evaluate to ensure it is a fair and
equitable process that meets planning
requirements
Administrative
Financial Reporting
Ensure NACFOR financial reporting is completed to
an auditable standard annually.
Accrue silviculture costs upon CP
completion
Continue to accrue silviculture costs and
revise to reflect accurate costs as
required
Administrative
Block Tracking system
Administrative
Contracts
Database to track NACFOR activities and obligations Update ongoing as new permits
Review system and assess performance
developed
All contractors are working under contract or other
Develop contract templates; all
Maintain contracts; ongoing monitoring
agareement; Contractor compliance with NACFOR
contractors working for NACFOR have of Contractor safety measures
safety requirements
established safety measures
Administrative
Data Management
NACFOR data meets needs for ARC standards and
NACFOR mapping needs.
Complete review and organizational
structure of NACFOR data
Update as required to meet current
software needs
Community Initiatives
Bioenergy Proposal
Establish terms of reference with
project partners
Project implemented
Skills Training
Project support within the scope of NACFOR
business plan
Facilitate training opportunities for forest workers
Wood Manufacturing and
Marketing Workshop
Work with Selkirk College and
Community Services on training
initiatives
Work towards NACFOR Management Plan Goal 3 to Partner with Bridges II to develop wood Continue to expand marketing and
promote community stability
manufacturing oppportunities in the
manufacturing and marketing
community
opportunties in Nakusp and area
Planned Activities_November2013
14/11/2013
Appendix H – Historic Goals (2007)
Goal
3.2.1 Short Term Goals (Years 1 through 2.5)
1. Finalize transfer agreements with previous tenure holders by February,
2008.
2. Establish contract award policy via consultation with local contractors
by June, 2008
3. Form Waste Management Sub-Committee by June, 2008
4. Form Innovative Strategies Sub-Committee by June, 2008
5. Form Fire Management Sub-Committee by June, 2008
6. Form Finance and Marketing Sub-Committee by June, 2008
7. Form Youth Sub-Committee by June, 2008
8. Form Conflict Resolution Sub-Committee by June, 2008
9. Form Community Funding Committee by March, 2010
10. Establish working relationships with stakeholder groups affected by CP
development
11. Establish working relationships with non-timber forest resource users
12. Start harvest operations by July, 2009
13. Meet all forest stewardship related commitments
14. Begin to build a cash reserve from NACFOR profits
15. Distribute annual newsletter to area residents by Dec, 2009
16. Establish a NACFOR information display at the Nakusp Village Office
3.2.2 Medium Term Goals (Years 2.6 through 5)
1. Develop Fire Protection Strategy by December 31, 2010
2. Develop Forest Health Tracking Strategy by December 31, 2010
3. Develop Long Term Marketing Strategy by December 31, 2010
4. Develop Waste Management Strategy by December 31, 2012
5. Determine sustainable harvest levels via Expanded Timber Supply
Analysis by December 31, 2012
6. Increase locally obtained wood manufacturing volumes by fifteen
percent above pre CFA levels
7. Continue to build cash reserve and cap at 1 million dollars
8. Begin funding for community projects and non-profit groups
9. Establish at least one interpretive forest site or trail network
10. Continue to meet all forest stewardship related commitments
11. Harvest at least 90% of 100 000 m3 5 Year Cut Control
12. Continue to fine-tune all original goals and amend them to meet
changing demands
3.2.3 Long Term Goals (Year 6-Forward)
1. Successfully convert 5 year probationary CFA to a longer term tenure
2. Adjust harvest levels to reflect findings of Expanded Timber Supply
Analysis
3. Implement Fire Protection Strategy
4. Implement Forest Health Strategy
Status
COMPLETE
COMPLETE
COMPLETE
COMPLETE
COMPLETE
COMPLETE
COMPLETE
COMPLETE
COMPLETE
ON-GOING
ON-GOING
COMPLETE
ON-GOING
ON-GOING
Not Done
Not Done
ON-GOING
COMPLETE
ON-GOING
ON-GOING
ON-GOING
ON-GOING
ON-GOING
ON-GOING
COMPLETE
ON-GOING
ON-GOING
ON-GOING
COMPLETE
ON-GOING
ON-GOING
ON-GOING
5.
6.
7.
8.
Implement Long-Term Marketing Strategy
Implement Waste Management Strategy
Implement appropriate incremental silviculture projects
Become a recognized leader in provincial and community forestry in
the implementation of innovative and sustainable forest practices
9. Continue to fine-tune all original goals and amend them to meet
changing demands.
ON-GOING
ON-GOING
ON-GOING
ON-GOING
ON-GOING
Appendix I – Draft Contract Award Process
NACFOR Contract Award Process
Operational phases will be contracted out to local contractors when possible within following
work categories:
Forestry planning and mapping
Road and Bridge Construction
Harvesting
Trucking
Silviculture
Road deactivation and maintenance
Supervision
Based on the Expression of Interest form submitted to NACFOR, a list of local contractors will be
maintained with up to date information on work category, eligibility, operational capacity and
availability for each of the operational phases. Eligibility will be updated annually.
Contractors must meet the following eligibility criteria:
1. Approved WorkSafeBC registration within appropriate WorkSafeBC classification
2. BC Safety Council certification or registration
3. Maintain liability insurance
o $5 million – logging and road building
o $2 million – road maintenance and deactivation, silviculture and development,
supervision
4. Good financial standing
5. Provide references
6. Company must be based within the local business area or hire locally; if local hire is not
possible, work will be awarded to contractors or consultants with previous NACFOR
experience
7. Work under a prime contractor if not on contractor list
8. If a shareholder owns shares in more than one eligible company only one company can bid on the
work.
9. Favourable rating in previous contracts with NACFOR.
Contracts may be awarded to eligible contractors based on a rotational system within each
contract category, considering operational capacity, timing and contractor availability.
Contract award decisions and rationale will be documented.
NACFOR retains the option to drop a contractor from the list if safety, environmental or
production requirements are not met.
Operational categories may be sub-divided by size to ensure small contractors have an
opportunity to bid on work.
If a competitive rate cannot be negotiated with the contractor, NACFOR will reserve the right to
move to the next contractor on the list.
Draft Contract Award Process_July2013
8-Jul-13
1
NACFOR Contract Award Process
Contracts may be awarded by a select invitation competitive bid process.
NACFOR is not compelled to accept the lowest or any bid for work tendered.
Trucking contractors will preferably be hired by the logging contractor for the convenience of
NACFOR.
Draft Contract Award Process_July2013
8-Jul-13
2
Appendix J – Conflict Resolution
NACFOR CONFLICT RESOLUTION PROCESS
FOR CONTRACTOR OR FOREST MANAGEMENT DISPUTES
Step 1: Complainant and NACFOR management attempt to settle dispute.
Step 2: Failing agreement in Step 1, one or both parties apply in writing to Board of Directors to
initiate Conflict ResolutionProcess.
Step 3: If the Board of Directors determines that the case does not merit further investigation, it
dismisses the application and determines that NACFOR management’s decision will be binding.
Otherwise, it proceeds to Step 4.
Step 4:NACFOR calls on the BoD Conflict Resolution sub-committee to do an initial
evaluation.
Step 5:Sub-Committee asks each party to submit its version of events in writing.
Step 6:Sub-Committee first determines if there are any legal issues to be reviewed. If there are,
or if the sub-committee believes there may be, it refers the issues in question to legal counsel for
advice.
Step 7:Sub-Committee heeds any legal advice provided prior to proceeding with the rest of the
investigation.
Step 8: Sub-Committee sets deadlines for completion of each of the remaining steps in the
conflict resolution process.
Step 9: Sub-Committee meets separately with both management and the complainant, seeking
clarification on any facts that are missing or that do not match between the two written versions
of events. The parties provide written answers to the sub-committee questions.
Step 10:If it deems a negotiated settlement to be possible, the sub-committee briefs the two sides
on potential solutions to the conflict and makes a final attempt to get the parties to achieve their
own negotiated settlement, offering to mediate any discussions if both parties prefer this method.
Step 11:If a negotiated settlement is deemed impossible, or is tried but fails, the sub-committee
makes a written recommendation to the Board of Directors based on all of the facts that have
been made available.
Step 12:The Board of Directors can accept or reject the recommendation or it can ask for further
clarification from the sub-committee on the settlement terms. Once the Board of Directors
ratifies the sub-committee’s recommendation, it becomes binding.
Nacfor Conflict Resolution – April 23, 2014

Business Plan - Nakusp and Area Community Forest

Transcription

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