J.D. Irving tightens hold on N.B.’s forestry sector

A twenty-five year-deal released April 25 between J.D. Irving and the government of New Brunswick has given the former more control over the province’s forests.

This new agreement comes into effect on July 1. The province will be moving away from its long-held “prescriptive-based approach”, one characterized by heavier governmental regulations, towards an “outcome-based management”—shifting the focus towards economic development and allowing J.D. Irving a greater supply of wood from government held crown land.

In exchange, J.D. Irving will have to invest $513-million in its New Brunswick operations.

The province intends to boost softwood production by twenty per cent over the next ten years.

Irving, already a dominant player in New Brunswick’s forestry industry, will see an increase in its annual allocation of spruce, fir, jack pine, and white pine to 2,027,000 cubic meters, with a minimum of 1,898,000 cubic meters of spruce, up from its current allocation of 1,500,000. According to an April 14 press release, J.D. Irving plans to increase its purchase of privately-owned wood by nine per cent as well—a record increase for the corporation. This increase is a form of counter-balancing against the increase in crown land ownership, which has raised concerns about its negative effects on private wood owners.

The increase will be accompanied by significant reductions in environmental regulations, particularly affecting clear-cutting.

Maine’s state government, an area where J.D. Irving has also been deeply involved in forestry, adopted a comparable laissez-faire approach on the matter in 2012. For a number of years, J.D. Irving has been lobbying government officials for similar changes to be made on this side of border as well.

In an interview with the CBC published on April 29, Wally Stiles, Minister of Natural Resources under former New Brunswick Premier Shawn Graham, stated that J.D. Irving had approached him during his time in office in order to sign an agreement similar to the one the Alward Government just passed—but he refused to go as far as the agreement asked, and said he would still refuse today.

Indeed, the government’s window for backing out of this agreement is extremely narrow. David Bell, a contract law specialist at Fredericton’s University of New Brunswick, stated in CBC interview that the agreement puts very specific deadlines on New Brunswick’s government while putting much looser obligations on the corporation. If the province were to eventually refuse meeting these obligations, they could face financial repercussions from the corporation. Certain other criteria are subject to market fluctuations. This means that if the fulfillment of these obligations entails the loss of profitability for J.D. Irving, defaulting on them would be easy.

While many promises have been made in terms of job creations—Premier Alward had promised 500 new forestry jobs and 1,200 construction-related jobs in March, and Irving has announced the creation of 74 jobs along with investments in the Restigouche area in an April 7 press release—the overall sustainability of this agreement remains quite uncertain.

Originally published May 8, 2014.

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