1. Canadian Wood Packaging Industry: Challenges and Opportunities

2. Association Overview Canadian Wood Pallet & Container Association : Since 1968 with 165 members Manufacturers, Pallet Pools and Associate members Impact of the recession has been severe Focus: Rebuild membership levels Establish Sustainability Program Non-Dues Paying Revenue Third Party Service Provider for the Canadian Wood Packaging Certification Program with 474 registered clients

3. Market Challenges Our Markets: Grocery & Hardware The Canadian Pallet Council (CPC) is struggling with declining membership, revenue and pallet purchases Canadas largest retailer announced it had withdrawn from the CPC pallet exchange program and accept PECO & CHEP on a one –way basis CPC member providing rental and logistics services acquired by pallet pooler Plan is for the CPC to continue into 2014 with a significant reduction in cost structure Costco continues to push for block pallets only on a one-way basis

4. Market Challenges Other Markets: Use of plastic Returnable Produce Containers (RPC) making inroads into retail supply chain Brewing industry- hardwood block pallet Petrochemical industry-hardwood stringer pallet Construction industry- white stringer pallet Export packaging and custom crating sectors

5. Supply Chain Challenges Timber Supply : Price volatility with wide swings in pricing driven by US housing market and China demand particularly for industrial grade lumber Lumber exports is a C$5.5B a year business Mills have had a very difficult past 4 years and looking forward to sustained demand Exports of fuel pellets progressing very slow Biofuel from wood residue not a serious threat to fiber supply

6. Timber Supply

7. Pest Management Challenges Regulated Forest Pests Emerald Ash Borer (EAB) continues to spread across Eastern North America Asian Long Horn Beetle has returned Brown Spruce Long Horned Beetle in decline

8. EAB Threat In Canada

9. EAB Threat in North America

10. Regulatory Challenges Canadian Heat Treatment Program : Canadian Food Inspection Agency (CFIA) regulatory body Priorities to provide Plant Protection and Market Access Export Programs - CWHTCP for Lumber and the CWPCP for Wood Packaging Quality Management Systems approach Alternative Service Delivery- Canadian Lumbers Standards Accreditation Board,Quebec Wood Export Bureau and CWPCA are program auditors CFIA audits performance of third party auditors Multi-step process- very successful at intercepting pests

11. Revenue Opportunity Canadian Wood Packaging Certification Program(CWPCP) Primarily clients in the Wood Packaging Industry Only supplier offering a national set fee program 474 clients/registered facilities CWPCP has 11 field based inspectors -1000 plus inspections per annum Inspection team is ISO certified Three year renewable agreement signed this year Operated on a Not for profit basis

12. Regulatory Challenges Canadian Heat Treatment Program Modernization: Change Drivers Federal Government Deficit Reduction Action Plan (DRAP) to constrain costs and provide incentives for operating efficiencies in the delivery of government programs Lumber industry is a C$ 5.5B a year export industry with most of the trade going to the US Harmonization with US levels on facility inspections Designed improve the effectiveness of the current program & bring in more competition

13. Regulatory Challenges Key Changes Performance based system with measurable outcomes – more accountable with penalties for poor performance Risk based approach depending on the product manufactured

14. Regulatory Challenges Status of the Removal of US /Canada ISPM-15 Bi-lateral Exemption on Wood Packaging Material (WPM): Canadian Food Inspection Agency (CFIA) and US department of Agriculture - American Animal and Plant Health Inspection Service (APHIS) handle negotiations Removal of the ISPM-15 Bi-lateral exemption between Canada and US is still under review Border agencies beginning to make their own determinations on what is acceptable and what is not

15. Summary Opportunity Our Association has an alternative source of stable funding Now better positioned to promote the wood pallet and container manufacturing industry More responsive to needs of wood packaging industry especially on dealing with regulatory issues Must learn how to better collaborate with regulatory agencies

16. Canadian Wood Pallet and Container Association Association canadienne des manufacturiers de palettes et contenants Thank You