Profits for the District of Mission’s forestry operations have rebounded significantly, nearly doubling projections set out in the 2020 budget.
The department’s profits had dwindled since the second half of 2019, hit first by a market crash, and followed by the onset of the global pandemic. They reported a net loss of $1,405 for 2019.
But the “extremely positive results” of 2020’s fourth quarter have put them back in the green, according to a March 1 report to Mission council.
The budget forecasted a net profit of just under $488,600 for the quarter, but the department managed to pull in over $2 million, $983,200 of which was net profit. Fourth quarter profits for 2019 only brought in $133,500.
Patience was a key factor in the returns, as the department held off releasing their timber for bid until the prices improved during the second half of 2020. Their net profits for the year are just under $637,000, nearly double their budget projections.
“Lumber prices are through the roof, the markets are red hot,” said Chris Gruenwald, director of forestry. “We fully expect to meet our budgeted profit of $760,000 for 2021.”
Gruenwald said the recent price challenges forced them to make changes to their operations to improve. He said the reappraisal of a cutting permit in December, 2019 saved them $250,000 in stumpage costs in 2020, and they’ve worked to minimize costs, specifically rock blasting and road construction contacts costs.
The forestry reserve fund is also overperforming, sitting at nearly $2.7 million – $1.2 million over the optimal balance.
Mission councillors commended the department on the turnaround.
