In Canada 87% of the managed forest is in provincial ownership and only 13% is privately owned. In the U.S. about 75% of the forest land is privately owned and 25% is owned by the states or federal government. These facts are the source of a decades-long argument.
The U.S. Lumber Coalition complains that timber from provincially owned forest land is sold to Canadian lumber companies at ‘stumpage’ prices below market value and therefore constitutes a ‘subsidy.’ A tariff of 20% has been placed on most exports of lumber from Canada to the U.S. to compensate for this ‘subsidy.’ This affects sawmills that are supplied from public forest land as well as mills that buy their logs from private forest land in Canada even though they do not benefit from the so-called ‘subsidy’.
The sawmill in West Brome buys all their logs from private lands; 80% on private land in the U.S., the other 20% are cut on private lands in Quebec and Ontario. No ‘subsidy’ there. But they must pay a 20% tariff on all lumber exported to the U.S.
They employ 70 people in the mill as well as many more who work in the woods or drive log and lumber trucks.
Most of the production is hemlock; used for construction, treated wood for decks and posts for highway guard rails or white pine; used for interior finishing in houses.
Under the Softwood Lumber Agreement – #4, that expired in 2015, sawmills in Canada that got most of their wood from private lands were exempt from tariffs. This exemption covered sawmills in Nova Scotia, New Brunswick, PEI and mills along the Quebec/U.S. border. Much of the 25 million hectares of private forest land in Canada is found in these regions. Most of the 163 million ha of provincial forest is in the north and western regions of Canada. The new tariff is applied to sawmills across Canada regardless of the source of their logs.
Eventually this will be sorted out, after about 12 months of negotiation and enriching many lawyers in the U.S. hired to represent the Canadian lumber industry.
Fortunately the sawmill at Gilman’s Corner sells most of their production in Canada, only about 20% is sold in the U.S. The management have done their best to diversify their customers and a significant volume of white pine is sold to a customer in Asia.