The transformation of the Canadian forest sector and Swedish experiences

Summary and presentations May 28

Canada and Sweden are boreal developed countries. The forest sectors are currently going through transformations. However, there are also major differences between the two countries; in scales, ownership, etc. The aim of the conference was to identify important issues to manage in the transformation processes. The morning session focused on the overall transformations and discussed the innovation and investment processes involved. The afternoon focused on the development within forestry.

Morning session: Investments and innovation processes

Introduction to the Canadian forest sector

Mr. Mario Gibeault, the Canadian Forest Service, gave an introduction to the Canadian forest sector. After being a leading forest nation for 350 years he pointed out that in the future customers will become more concerned, showing the need for a strict development of the markets, development of partnerships and the need for an update of regulations.

Status quo is not an option

Mr. Don Roberts, managing director CIBC Market Inc., gave the background of the development of the industry. He concluded that the recession within Canadian forest industry leads to a situation where the status quo is simply not an option. He pointed out that “the best way to go is not geographically, the way forward is to change the game and if you are not mowing, someone else will!”

The Biopathways process

The Biopathways process was described by Mrs. Catherine Cobden, CEO of Forest Products Association of Canada (FPAC). She concluded that emerging market potential is four times greater than the current market and that partnerships are a significant part of the new business model.

Comments from the audience about other sectors interests

Mr. Peter Berg, consultant at McKinsey, put forward that the forest industry tends to forget that other industries and sectors are looking into these markets as well. Mr. Don Roberts made it clear that Canada’s average return on capital employed in the forest products industry 1999-2009 was 2 %, in Europe it was 5 % and in South America 8 %. “Even 8 % is not good enough looking into other sectors – that is why changing the geographical footprint is not the solution!”

The European and Swedish Research and Innovation Landscape

Prof. Kaj Rosén, research manager at the Forest Research Institute of Sweden, presented the European and Swedish Research and Innovation Landscape. The forest based sector is well positioned to take position regarding future research in the EU. He concluded that we do not have any comprehensive analysis like Biopathways in Sweden; the developments are made at the company level.

The Swedish Forest Industries Federation’s view on research and innovation

Mr. Jan Lagerström, director wood research policy at the Swedish Forest Industries Federation, pointed out that the federation is not doing the innovation themselves, but they inspire the producers through e.g. the Ekoportal 2035. Mr. Lagerstöm noted that 25 % of the research by institutes and universities are still financed by the industry.

Comments on the morning session and key messages for the future

Important to look outside the sector…

Prof. Sten Nilsson, fellow of KSLA, gave a historical review concluding that Sweden’s innovation is driven by individual companies and in Canada it is driven by FPAC. “The solutions are sitting outside the sector which is why it is very important with more partnerships outside your home!”

…but not to leave it out

Mr. Lennart Rådström, fellow of The Royal Swedish Academy of Engineering Sciences and KSLA, was skeptical about leaving the traditional sector out. He meant that we need to focus on value change, optimization and value products.

Need for cross-sectorial innovations

Dr. Jonas Brändström, chief strategy officer, eco-innovations at Vinnova, pointed out the need for cross-sectorial innovations and informed that Vinnova is building arenas of partnerships for innovations.

Afternoon session: Forest management

The Minister presented the future vision of the Forest kingdom

The Forest kingdom was presented from an economic, environmental and recreational point of view by Mr. Eskil Erlandsson, minister for rural affairs. The minister referred to the media debate on forestry and concluded that “it is easy to lead an attack against clear cutting, but not easy to solve the climate change without the forest.”

The process around the Boreal agreement

Mr. Avrim Lazar, former president and CEO of FPAC, presented the process around the Boreal agreement. He concluded that the reputation of the forest industries has been well improved; it has changed the sense of respect. “What an example for the industry to stand up and be proud! You have to be seen to be green and then you have to work with the green groups.”

The development of silvicultural systems in Canada

The development of silvicultural systems in Canada was presented by Prof. Suzanne W. Simard, the University of British Columbia. She concluded that there has been a 300 year progress towards today’s social-ecosystem management, but the need to bring innovation into Canadian forest practices is essential and area- or volume-based tenure systems are also in need for a change.

Sweden’s current forestry model fails to deliver

Mr. Håkan Wirtén, secretary general at WWF, pointed out some of the differences between Canada and Sweden; areas of primary forest, biodiversity and ecosystem services, level of protected areas, National Forest inventory etc. Sweden’s current forestry model fails to deliver key environmental aspects, handle increased pressure, demands and conflicts about the land. Therefor WWF introduces a new ecosystem based model based on multiple use. The model is based on what is left in the forest, not what is taken out.

A Swedish company’s view on the development in Canadian and Swedish forestry

Managing director at Bergvik Skog, Mrs. Elisabet Salander Björklund, pointed out that the biggest differences between Canada and Sweden are tenure, in Canada 93 % of the forests are publicly owned and in Sweden the number is 19 %, and the amount of untouched forest which is huge in Canada and close to zero in Sweden. “In Sweden we have a history of managing our natural resources for more than 500 years. Today forest owners feel responsible to manage the forest for future generations. Sustainable management will combat climate change and at the same time create jobs.”

Parallels between Canadian and Swedish silvicultural practices

Mr. Jonas Rönnberg, vice dean at the forest faculty at The Swedish University of Agricultural Sciences, made parallels between Canadian and Swedish silvicultural practices. He concluded that stakeholder involvement is working but fragmentation on the landscape level and lack of knowledge, sometimes leading to practices being used without any scientific ground, is a problem in both countries. “In general we need to continue to improve and debate; many of the improvements can be easily met.”

Comments on the Afternoon session and key messages for the future

Who is going to pay the bill for increased protection?

The question of who is going to pay for an increased level of protected forest areas was discussed. Mr. Lazar concluded that society at large should pay to protect a common need. “There is enough money; it is a question of choosing where to put it.” Mr. Wirtén pointed out that the alternative cost of not acting now is much higher and that the private forest owners also should take a greater responsibility. Mrs. Salander Björklund noted that it is important to talk about how to improve the set asides and not only focus on the percentage protected areas. Mr. Rönnberg opened up for a discussion about the Swedish model, “what if we would see forest more as a crop, and use intensified forestry and produce more in some areas?”

A change in the Canadian tenure system?

Prof. Simard made us aware of that the tenure system in Canada gives little incentive for intensive forestry and that the knowledge of such practices is low. She thinks a tenure reform would not be accepted by the public, but little is needed to give the incentives for intensified management. Mr. Lazar concluded that “status quo has a lot of stakeholders, and therefore it is hard to make changes in the tenure system.”

Outlook for the forest sector and Closing discussion

Outlook studies

Prof. Nilsson concluded that many trends will affect the forest sector and that the greatest challenge for most companies in the industry is how to innovate as fast as possible, faster than their competitors, and how to adapt to changes in the society. “The forest sector will be more embedded in the society. Social contracts, like the Forest Kingdom and the Boreal agreement, will be of importance. There is a deep concern about environmental issues in the society, right or wrong, but that is the perception we have to deal with.” The forest industry in the northern hemisphere is today dominating the making of a new industry, while the southern hemisphere is concentrating on yesterday’s products and business models. It is important for the boreal region to use this opportunity and to continue the innovative approach for the survival of the forest sector.

Industry should take the leading role

Mr. Hervé Deschênes, VP business development at FP Innovations, pointed out that ‘research and development’ and ‘innovation’ are two different things and that we need both. Sweden and Canada has a lot in common and a lot to gain by developing a model for collaboration in innovation. He pointed out that the industry should take the leading role in the unavoidable transformation of the sector. “Time is money, and time is running fast. We need to develop an innovation approach and focus in a few products in order to be successful.”

Legislation for forestry and environment

Mr. Åke Barklund, general secretary KSLA, pointed out that legislation for forestry and environment should be operated at the same geographical level. This is not always the case in Canada. He also made us aware of the fact that Canada is not using improved seeds in regeneration to a great extent, which is a disadvantage. With improved seeds greater production, quality, survival and resistance for pests can be gained. Further Mr. Barklund noted that since the late 80’s we have focused upon the triad of economy, ecology and social values. He concluded that this triad should be complemented with a fourth leg – esthetics.

A summary of the conference

The coming issue of The Secretariat for International Forestry Issues (SIFI) magazine summarizes this conference as well as presenting further analysis of certain issues of interest. This will be published during the second half of this month.

For more information about the project ”The Canadian forest sector and Swedish experiences”, please see:

Picture from panel discussion 1: Lennart Rådström (Fellow of KSLA), Catherine Cobden (FPAC), Don Roberts (CIBC Market Inc), Jonas Brändström (Vinnova) and moderator Jan Fryk (the Forestry Research Institute of Sweden), Photograph: Emma Berglund

Text: Fredrik Ingemarson & Emma Berglund, SIFI