Government calls for mandatory forest certification.

Ontario forest companies operating under sustainable forest licenses (SFLs) are still trying to make sense of a surprise April Fool's Day announcement issued by Ontario Natural Resources Minister David Ramsay.

The announcement requires forest companies to receive certification by 2007 for sustainable practices that most of them already meet through an independent auditor.

Ramsay made the announcement in Vancouver, B.C. during a speech he was delivering at a certification conference in the province.

"It took us all by surprise," says Tony Saint, the manager of Liskeard Lumber, a New Liskeard-based forest operator. Liskeard Lumber operates in the Timiskaming Forest Management Unit, as well as Temagami and other units. The SFL granted to them is administered by the Timiskaming Forest Alliance (TFA), a co-operative of several forest companies of varying sizes.

Like most forest company operators, Saint is not totally surprised that mandatory certification would come eventually. He is just surprised that Ramsay did not consult with industry stakeholders before making the announcement. Saint says the MNR's new policy is part of a wind of change that is blowing in from the West.

"Certification is big in British Columbia. It seems to be moving closer," Saint says.

Certification with an independent auditor is done to ensure that the forest operators comply with recognized sustainable forestry practices in their day-to-day operations. Three major certifying bodies are recognized by the Ontario government: the Sustainable Forest Initiative (SFI) system, which was developed by the American Forest and Paper Association, the Forest Stewardship Council (FSC) system and the Canadian Standards Association (CSA) system. Under the requirement, the MNR will allow forest companies to be certified by any of the three. Although all three systems maintain strict forest management criteria, industry observers acknowledge that the FSC system is the most rigorous.

The chief concern most forest companies could have with the system, especially small- and medium-sized ones, is the price tag attached to certification, as well as the time-line. Small operators wonder if they can absorb the cost of ongoing certification requirements.

Ramsay says that forest operators are being given a "leg-up" through this announcement and that they should adapt to the new market conditions, which increasingly call for forest operators to ensure their product is cut using sustainable practices.

"It's not us. It's the Time-Warners and the Home Depots of the world that want their wood this way," Ramsay says.

Making certification mandatory, he says, is an excellent way to make the Ontario forest industry more competitive.

Some forest organizations view mandatory certification as becoming a necessary part of the process in the future.

"I see it becoming another cost of doing business," says Carla Grant, the executive director of the Ontario Forestry Association.

Wood product retailers, such as Home Depot and Ikea, have been coming under intense pressure and lobbying from environmental and conservation groups over the past decade to receive third-party certification that their wood suppliers meet tough sustainable forestry requirements.

The cost, say some certification process insiders, can get pretty steep, especially for smaller operations. Mike Clarke is the chair of the SFI implementation committee for Ontario. He estimates that to meet the demands of SFI certification, one of the least rigorous systems, SFL holders would have to put up at least $70,000 in up-front costs to pay for a complete pre-certification audit to determine to what extent the company complies with the requirements. This price tag also includes the cost of hiring external staff to complete the audit and monitor it. To maintain the CFI label, he says, a company would have to indefinitely pay about $6,000 annually. SFL holders will also have to re-do their comprehensive audits every five years, which will further add to costs.

Systems, which have more stringent requirements and auditing, are more costly than the SFI. Requirements not directly related to forestry, such as community sustainability projects, make them more onerous as well time consuming.

The most onerous aspect of certification, Clarke adds, is the regular paperwork requirements in order to maintain the sustainable forestry label, an irony for an environmentally motivated process, which is not lost on Clarke.

In terms of timeline requirements, the Ministry of Natural Resources acknowledges the challenges facing small operators. The MNR has already, says one source within the ministry, met twice with the Ontario Forest Industries Association (OFIA) and the Ontario Lumber Manufacturers Association (OLMA) about the issue. At the second meeting, MNR officials also explained the rationale of the decision to small operators and offered extensive information on all three systems. The MNR has also committed to meeting with individual SFL holders and has committed itself to being flexible on meeting the 2007 deadline.

"They want a safety valve if they're showing a strong record on this. We would be willing to look at exceptions to the 2007 deadline," says Rich Greenwood, manager of the forest evaluation and standards section for the MNR.

Greenwood also says the ministry is looking into the possibility of allowing joint certification audits between neighboring SFL holders as a way of spreading the cost.

Most forest industry associations, says one source from the OFIA, are willing to live with the new requirements and not fight it. They, like the MNR, see it as a way of increasing their own market share and believe that any costs associated with certifying will be offset in the long run through new market share revenues. The Ontario forest industry, they say, will not really have a hard time certifying to most sustainable standards anyway.

"You could stamp a trillium on a tree and that would mean something," says Jamie Lim, president of the OFIA.

Lim says that Ontarians should "take pride" in the level of sustainability already practiced in the province under existing regulations, like the Ontario Crown Forest Sustainability Act. The process, she says, involves open consultations between different levels of government, environmental groups and Aboriginal peoples. The level of transparency in the process, she says, is also world-class.

Forest companies need to figure out these requirements and move on, Lim says. Other issues, like the billions of dollars in softwood as well as billions being sent to American wood manufacturers, are more pressing right now.

www.timfor.com

www.ofia.com

www.oforest.on.ca/

www.mnr.gov.on.ca/MNR/

www.fsccanada.org/ (Forest Stewardship

BY JOSEPH QUESNEL

Northern Ontario Business