Management's Discussion and Analysis of Financial Condition and Results of Operations.

These unaudited financial statements are those of the Company and its wholly owned subsidiaries. In the opinion of management, the accompanying Consolidated Financial Statements of Jewett-Cameron Trading Company Ltd., contain all adjustments, consisting only of normal recurring adjustments, necessary to fairly state its financial position as of May 31, 2008 and August 31, 2007 and its results of operations and cash flows for the three month periods ended May 31, 2008 and May 31, 2007 in accordance with U.S. GAAP. Operating results for the three month period ended May 31, 2008 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 2008.

The Company's operations are classified into four reportable segments, which were determined based on the nature of the products offered along with the markets being served. The segments are as follows:

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Industrial wood products

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Lawn, garden, pet and other

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Seed processing and sales

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Industrial tools and clamps

The industrial wood products segment reflects the business conducted by Greenwood Products, Inc. (Greenwood), a wholly owned subsidiary of Jewett-Cameron Lumber Corporation (JCLC). Greenwood is a processor and distributor of industrial wood and other specialty building products. A major product category is treated plywood that is sold to boat manufacturers and the transportation industry.

The lawn, garden, pet and other segment reflects the business of Jewett-Cameron Lumber Corporation, which is a wholesaler of wood products and a manufacturer and distributor of specialty metal products. Wood products include fencing and landscape timbers, while metal products include dog kennels, a proprietary gate support system, perimeter fencing, and greenhouses. JCLC uses contract manufacturers to make the specialty metal products. Some of the products that JCLC distributes flow through the Company's distribution center located in North Plains, Oregon, and some are shipped direct to the customer from the manufacturer. Primary customers are home centers and other large retailers.

The seed processing and sales segment reflects the business of Jewett-Cameron Seed Company (JCSC), a wholly owned subsidiary of JCLC. JCSC processes and distributes agricultural seed. Most of this segment's sales come from selling seed to distributors with a lesser amount of sales derived from cleaning seed.

The industrial tools and clamps segment reflects the business of MSI-PRO (MSI), a wholly owned subsidiary of JCLC. MSI imports and distributes products including pneumatic air tools, industrial clamps, and saw blades. These products are primarily sold to retailers that in turn sell to contractors and end users.

RESULTS OF OPERATIONS

Reclassifications

Based on a recent review of the Company's operations certain expense reclassifications are reflected in the operating results for the nine months ended May 31, 2008. As a result of making these reclassifications certain line items in the income statement for the three months ended May 31, 2008 are less comparable, when compared with previous quarterly results.

The reclassifications include sales; cost of sales; selling, general and administrative expense; and wages and employee benefits. However, these reclassifications have no effect on income for the three months and nine months periods ended May 31, 2008, nor were these reclassifications considered significant in the aggregate.

Three Months Ended May 31, 2008 and May 31, 2007

For the three months ended May 31, 2008, sales decreased $3,191,127 to $17,664,365 from $20,855,492 for the three months ended May 31, 2007. Primarily this reflects a relatively large decrease in sales at Greenwood that was only partially offset by an increase in sales at JCLC. Also, $974,759 of the decline is related to the reclassifications. Excluding the effect of the reclassification sales were down 11% from the prior year.

Sales at Greenwood were $7,540,185 for the three months ended May 31, 2008, which was a decrease of $3,488,193 compared to sales of $11,028,378 for the three months ended May 31, 2007. A slowdown in the boat manufacturing industry, where much of Greenwood's sales are targeted was a significant factor contributing to the decline in sales. Also, $234,575 of the declince is related to the reclassifications, and excluding the effect of the reclassifications sales were down 30% from the prior year. Operating income at Greenwood was down $36,605 or 11% in line with the sales decline. Going forward this fiscal year depressed conditions in the boating industry will likely continue to be a challenge for Greenwood. Also, beginning in July 2008 various boat manufacturing companies that are owned by Brunswick Corporation will start to conclude the buying they have been doing from Greenwood. These companies include U.S. Marine, which in recent years has been one of Greenwood and Jewett-Cameron's largest customers. Greenwood has been selling to the Brunswick group of companies under a two year contract, which ended June 30, 2008, and in bidding for a new two year contract Greenwood was not selected to be Brunswick's plywood supplier. The Brunswick business generated a relatively low gross margin. However, it was profitable, and the loss of this group of customers will negatively impact profitability going forward. On the other hand, a relatively large amount of inventory was required to support these customers, and the liquidation of this inventory will improve our cash position and improve Greenwood's return on assets.

Sales at JCLC were $8,859,943 for the three months ended May 31, 2008, which was an increase of $643,311 compared to sales of $8,216,632 for the three months ended May 31, 2007. The increase primarily reflects a significant increase in the sales of specialty metal products. Also, the reclassifications reduced sales in the quarter by $740,184 and excluding the effect of the reclassifications sales were up 17% from the prior year. Operating income was up $425,691 or 49% based on the fact that the gross margin on the sale of the specialty metal products is significantly higher than on wood products sales.
Going forward the sale of specialty metal products should continue to increase very significantly. Overall the operating results of JCLC are seasonal with the first two quarters of the fiscal year being much slower than the final two quarters of the fiscal year. This was evident in the third quarter, which just ended, and the fourth quarter should also be strong.

Sales at JCSC were $1,006,469 for the three months ended May 31, 2008, which was decrease of $289,442 or 22% compared to $1,295,911 for the three months ended May 31, 2007. Operating income declined by $160,211 to a loss of $21,390.

Sales at MSI were $257,768 for the three months ended May 31, 2008, which was a decrease of $56,803 or 18% compared to $314,571 for the three months ended May 31, 2007. Operating income increased from a small loss a year ago to a small profit in the current year.

Gross margin for the three month period ended May 31, 2008 was 17.7% compared with 15.1% for the three months ended May 31, 2007. Without the reclassifications, which reduced sales and reduced cost of sales, gross margin in the current year would have been 18.1%. This gross margin percentage improvement primarily reflects the increasing sales of specialty metal products at JCLC, which have higher margins than most of our other sales.

Operating expenses decreased by $303,519 from $1,846,534 for the three month period ended May 31, 2007 to $1,815,272 for the three month period ended May 31, 2008. However, $245,400 of the decrease was based on the reclassifications, and without the reclassifications operating expenses were down by $58,119. Without the reclassifications selling, general, and administrative expenses decreased by $65,894, depreciation and amortization decreased by $6,788, and wages and benefits increased by $14,563

Interest expense increased by $4,332 from $65,130 for the three month period ended May 31, 2007 to $69,462 for the three month period ended May 31, 2008.
The interest expense in the current year includes $32,149, which was paid at the conclusion of a tax audit related to the year ended August 31, 2006.
Without this unusual payment, interest expense would have been lower in the current year compared with the prior year.

Income tax expense for the three month period ended May 31, 2008 was $567,819 compared to $489,001 for the three month period ended May 31, 2007. The Company estimates income tax expense based on combined federal and state rates that are currently in effect.

Net income for the three month period ended May 31, 2008 was $961,178 or $.40 per diluted share compared to $756,897 or $.32 per diluted share for the three month period ended May 31, 2007, which is a 26% increase. This most recent quarter is the most profitable quarter in the Company's history.

Nine Months Ended May 31, 2008 and May 31, 2007

For the nine months ended May 31, 2008, sales decreased $5,764,236 to $47,010,755 from $52,774,991 for the nine months ended May 31, 2007. Primarily this reflects a relatively large decrease in sales at Greenwood that was only partially offset by increases in sales at the other three business segments.
Also, $974,759 of the decline is related to the reclassifications. Excluding the effect of the reclassification sales were down 9% from the prior year.

Sales at Greenwood were $22,908,955 for the nine months ended May 31, 2008, which was a decrease of $9,244,781 compared to sales of $32,153,736 for the nine months ended May 31, 2007. A slowdown in the boat manufacturing industry, where much of Greenwood's sales are targeted was a significant factor contributing to the decline in sales. Also, $234,575 of the decline is related to the reclassifications, and excluding the effect of the reclassifications sales were down 28% from the prior year. However, operating income at Greenwood was up $303,287 or 38% based on gross margin improvement and operating expense reduction.

Sales at JCLC were $17,901,504 for the nine months ended May 31, 2008, which was an increase of $3,367,931 compared to sales of $14,533,573 for the nine months ended May 31, 2007. The increase primarily reflects a significant increase in the sales of specialty metal products. Also, the reclassifications reduced sales in the quarter by $740,184 and excluding the effect of the reclassifications sales were up 28% from the prior year. The year ago period includes a $150,000 inventory reserve reversal, and if this is excluded then operating income for the current year was up $513,044 or 37% from the prior year.

Sales at JCSC were $5,398,978 for the nine months ended May 31, 2008, which was an increase of $102,193 or 2% compared to $5,296,785 for the nine months ended May 31, 2007. Operating income declined by $57,480.

Sales at MSI were $801,318 for the nine months ended May 31, 2008, which was an increase of $10,421 or 1% compared to $790,897 for the nine months ended May 31, 2007. Operating income increased by $58,796.

Gross margin for the nine month period ended May 31, 2008 was 17.8% compared with 15.4% for the nine months ended May 31, 2007. Without the reclassifications, which reduced sales and reduced cost of sales, gross margin in the current period would have been 18.0%. Also, if the $150,000 inventory reserve reversal that was reflected in the year ago period is excluded, then the gross margin in that period would have been 15.1%. The improvement in gross margin percentage reflects the margin improvement that occurred at Greenwood along with the increasing sales of specialty metal products at JCLC, which have higher margins than wood products sales.

Operating expenses decreased by $416,212 from $5,669,737 for the nine month period ended May 31, 2007 to $5,253,525 for the nine month period ended May 31, 2008. However, $245,400 of the decrease was based on the reclassifications, and without the reclassifications operating expenses were down by $170,812. Without the reclassifications selling, general, and administrative expenses decreased by $160,436, depreciation and amortization increased by $1,015, and wages and benefits decreased by $11,391.

Income tax expense for the nine month period ended May 31, 2008 was $1,147,319 compared to $895,445 for the nine month period ended May 31, 2007. The Company estimates income tax expense based on combined federal and state rates that are currently in effect.

Net income for the nine month period ended May 31, 2008 was $1,848,291 or $.77 per diluted share compared to $1,366,128 or $.57 per diluted share for the nine month period ended May 31, 2007, which is a 35% increase. If the $150,000 inventory reserve reversal that was reflected in the year ago period is excluded, then earnings per diluted share in that period would have been $.54, and the current year is a 43% increase over this level of adjusted earnings.

LIQUIDITY AND CAPITAL RESOURCES

As of May 31, 2008 the Company had working capital of $15,468,213, which represented an increase of $1,754,473 compared to working capital of $13,713,740 as of August 31, 2007. The largest components of the change in working capital were a $856,695 increase in cash, a $619,929 increase in accounts receivable, and a $294,966 decrease in accrued income tax payable.

As of May 31, 2008 accounts receivable and inventory represented 92% of current assets and 81% of total assets. For the three months ended May 31, 2008 the accounts receivable collection period or DSO was 35.5 days compared with 29.7 days for the three months ended May 31, 2007. DSO for the nine months ended May 31, 2008 was 36.1 days compared with 33.7 days for the nine months ended May 31, 2007. Inventory turnover for the three months ended May 31, 2008 was 58.7 days compared with 50.1 days for the three months ended May 31, 2007, and inventory turnover for the nine months ended May 31, 2008 was 68.0 days compared with 56.7 days for the nine months ended May 31, 2007.

External sources of liquidity include a line of credit from the United States National Bank of Oregon of $5,000,000 of which $300,000 is presently dedicated to standby letters of credit to support international transactions. At May 31, 2008 the company did not have a balance outstanding leaving $4,700,000 available. As of August 31, 2007 the borrowing balance was $1,059. Borrowing under the line of credit is secured by an assignment of accounts receivable and inventory. Prior to January 31, 2008 interest was calculated at either prime or the one month LIBOR rate plus 190 basis points. However, starting on January 31, 2008 the borrowing mechanism was simplified, and the interest rate is calculated solely on the one month LIBOR rate plus 190 basis points. As of May 31, 2008 prime was 5.00%, and the one month LIBOR rate plus 190 basis points was 4.40% (2.50% + 1.90%).

Based on the Company's current working capital position, its policy of retaining earnings, and the line of credit available, the Company has adequate working capital to meet its needs during the current fiscal year.

Business Risks

This quarterly report includes "forward-looking statements" as that term is defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," "anticipates," or "hopeful," or the negative of those terms or other comparable terminology, or by discussions of strategy, plans or intentions. For example, this section contains numerous forward-looking statements. All forward-looking statements in this report are made based on management's current expectations and estimates, which involve risks and uncertainties, including those described in the following paragraphs.

Risks Related to Our Common Stock

We may decide to acquire assets or enter into business combinations, which could be paid for, either wholly or partially with our common stock and if we decide to do this our current shareholders would experience dilution in their percentage of ownership.

Our Articles of Incorporation give our Board of Directors the right to enter into any contract without the approval of our shareholders. Therefore, our management could decide to make an investment (buy shares, loan money, etc.) without shareholder approval. If we acquire an asset or enter into a business combination, this could include exchanging a large amount of our common stock, which could dilute the ownership interest of present stockholders.

Future stock distributions could be structured in such a way as to be 1) diluting to our current shareholders or 2) could cause a change in control to new investors.

If we raise additional funds by selling more of our stock, the new stock may have rights, preferences or privileges senior to those of the rights of our existing stock. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. The result of this would be a lessening of each present stockholder's relative percentage interest in our company.

Our shareholders could experience significant dilution if we issue our authorized 10,000,000 preferred shares.

We registered 750,000 common shares with the Securities and Exchange Commission which became effective September 28, 2006; this could result in a substantial proportion of the voting power being transferred to new investor(s). The result would be that the new shareholder(s) could control our company and persons unknown could replace current management.

We have not established a minimum amount of proceeds that we must receive in the offering before any proceeds may be accepted. Once accepted, the funds will be deposited into an account maintained by us and considered our general assets.
None of the proceeds will be placed in any escrow, trust or other arrangement; therefore, there are no investor protections for the return of subscription funds once accepted.

The Company's common shares currently trade within the NASDAQ Capital Market in the United States and on the Toronto Stock Exchange in Canada. On NASDAQ the average daily trading volume for the three month period ended May 31, 2008 was 1,659 shares, and for the nine month period ended May 31, 2008 it was 3,159 shares. Trading volume on the Toronto Stock Exchange was significantly less than on NASDAQ. With this limited trading volume, investors could find it difficult to purchase or sell the Company's common stock.

Risks Related to Our Business

We could experience a decrease in the demand for our products resulting in lower sales volumes, which would give us less capital with which to operate.

In the past at times we have experienced decreasing products sales with certain customers. The reasons for this can be generally attributed to factors such as competition, wood products prices, and interest rates. If economic conditions deteriorate or if consumer preferences change, we could experience a significant decrease in profitability.

If our top customers were lost and could not be replaced.

For the three months and nine months ended May 31, 2008 our top ten customers represented 56.3% and 47.6% of our total sales, respectively. We would experience a significant decrease in sales and profitability and would have to cut back our operations, if these customers were lost and could not be replaced.
Our top ten customers are in the U.S. and are primarily in the marine, home improvement, and agricultural industries.

We could experience delays in the delivery of our products to our customers causing us to lose business.

We purchase our products from other vendors and a delay in shipment from these vendors to us could cause significant delays in our delivery to our customers.
This could result in a decrease in sales orders to us and we would experience a loss in profitability.

We could lose our credit agreement and could result in our not being able to pay our creditors.

We have a line of credit with U.S. Bank in the amount of $5 million of which $300,000 is dedicated to standby letters of credit to support international transactions, and $4,700,000 is available . We are currently in compliance with the requirements of our existing line of credit. If we lost this credit it could become impossible to pay some of our creditors on a timely basis.

If we fail to maintain an effective system of internal controls, we may not be able to detect fraud or report our financial results accurately, which could harm our business and we could be subject to regulatory scrutiny.

We are required to have completed a management assessment of internal controls as prescribed by Section 404 of the Sarbanes-Oxley Act by our year ending August 31, 2008. Furthermore, for the year ending August 31, 2010 our external auditors need to attest to the state of our Section 404 compliance.

We have retained the assistance of a consulting firm and a sole practitioner consultant to help us complete the management assessment of internal controls and expect to have this completed in a timely way by our year ending August 31, 2008. Although we believe our internal controls are operating effectively, we cannot guarantee that we will not identify any material weaknesses in connection with this process.

Compliance with the requirements of Section 404 is relatively expensive and time-consuming. If we fail to complete this evaluation in a timely manner, or if our independent registered public accounting firm cannot timely attest to our evaluation, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.

Item 3.