Last year, Ottawa announced $1.2-billion in loan guarantees to help lumber producers with their operations.James MacDonald/The Globe and Mail
Ottawa is expanding its aid for the slumping forestry sector by providing $400-million in extra funding to help the industry diversify and pivot to markets beyond the United States.
The extra funding includes $300-million under the Regional Tariff Response Initiative and $100-million in the new Regional Development Fund.
Federal Natural Resources Minister Tim Hodgson made the announcement on Wednesday in the Victoria suburb of Langford.
The fresh funding is in addition to Ottawa’s commitment last year to provide $2.35-billion in financial supports for Canada’s forestry industry, which was hit by new U.S. import taxes last fall.
Ottawa rolls out supports for B.C.’s beleaguered forestry sector
“There is clearly a crisis in this industry and like the trade war, it’s one that Canadians did not ask for but it’s one we must collectively win by taking action to pivot, to grow, to modernize and diversify the forest products sector,” Mr. Hodgson said during a news conference with B.C. Forests Minister Ravi Parmar.
Last year, the federal government announced $1.2-billion in loan guarantees to help lumber producers with their operations and $500-million in grants and contributions in a bid to find new buyers overseas and reduce their dependence on the U.S.
British Columbia, which is the country’s largest lumber producer, is still feeling the effects of natural disasters in the past, including the consequences of mountain pine beetle infestations and forest fires.
On Wednesday, Mr. Hodgson also unveiled new recipients of previously announced funding, earmarking about $130-million for 56 projects across the country.
“These projects will develop new low-carbon wood technologies, expand the use of mass timber in construction, support Indigenous participation and forest sector businesses, increase manufacturers’ capacity to add value to wood products and help diversify our export markets,” Natural Resources Canada said in a news release.
The Forest Products Association of Canada welcomed Mr. Hodgson’s new funding announcement and expressed support for improvements to Business Development Bank of Canada’s program for loan guarantees. FPAC said the changes would “provide stability to the sector and its people during this challenging time.”
Minister of Energy and Natural Resources Tim Hodgson during Question Period in the House of Commons on Tuesday.Sean Kilpatrick/The Canadian Press
FPAC, the BC Lumber Trade Council, the Canadian Lumber Trade Alliance and the Independent Wood Processors Association of British Columbia are among the groups concerned about the fate of sawmills in Canada that are operating at below break-even levels.
While lumber prices have risen 10 per cent over the past 12 months, they are still down nearly 70 per cent from the record highs reached in the spring of 2021.
Mr. Hodgson also released a report on the state of the industry from the recently created Canadian Forest Sector Transformation Task Force. Ken Kalesnikoff of Kalesnikoff Mass Timber in B.C. and Frédéric Verreault of Chantiers Chibougamau in Quebec headed the task force. Among other things, the report warned of declining production and investment in the sector in Canada.
U.S. duties paid by Canadian softwood producers surpass $8-billion
“We have seen major publicly traded firms closing or curtailing Canadian operations while simultaneously investing in other countries,” according to the report.
Lumber producers with head offices and sawmills in B.C. that have invested in the U.S. South over the years include West Fraser Timber Co. Ltd., Canfor Corp. and Interfor Corp.
The softwood production of Canadian-based companies at U.S. sawmills is exempted from American duties levied against shipments originating from operations in Canada.
Canadian producers have paid more than US$8-billion in U.S. duties since 2017 in a softwood lumber trade dispute that dates back to the early 1980s.
U.S. import taxes on softwood total 45.16 per cent on most Canadian producers, but they could decline to 34.83 per cent later this year if the U.S. Department of Commerce moves ahead with planned cuts to duty rates.
U.S. reduces duty rates on Canadian softwood but levies still hefty
In April, the Commerce Department said it would reduce duties for most Canadian producers. The lower duty rates are intended to take effect by early autumn of 2026, subject to further revisions in a final determination.
The Commerce Department currently levies anti-dumping and countervailing duties totalling 35.16 per cent against most Canadian producers.
Last September, U.S. President Donald Trump announced new 10-per-cent tariffs on Canadian softwood on top of the existing duties. He cited Section 232 of the U.S. Trade Expansion Act, which allows him to invoke national security concerns to impose such levies.
Those tariffs, which were also imposed on other countries, took effect on Oct. 14.