Ottawa Announces $6.5-Billion Forestry Package, but Delayed Start Raises Concerns for Struggling Mills
The Canadian federal government has unveiled a $6.5-billion funding package for the forestry sector to be rolled out over six years starting in 2027-28. While industry leaders praised the commitment, concerns persist that the delayed timeline may not prevent further mill closures amid U.S. tariffs and weak markets.
The Canadian federal government has announced a historic $6.5-billion funding package for the country's forestry sector. The investment is proposed to be rolled out over six years to help modernize aging mills, boost productivity, and develop new products. However, money from the plan is not expected to start flowing until the 2027-28 fiscal year.
Derek Nighbor, president and chief executive of the Forest Products Association of Canada, described the $6.5-billion commitment as "precedent setting." Despite welcoming the announcement, Nighbor warned that 2027 will likely be another difficult year for the sector due to weak housing starts and persistent U.S. tariffs.
The delay in funding arrives as mills across the country face immediate operational threats. AV Group NB Inc. temporarily idled its pulp mill in Nackawic, New Brunswick, affecting about 350 workers. In Témiscaming, Quebec, Rayonier Advanced Materials halted production at its facility, affecting more than 300 unionized jobs. Additionally, Domtar UFS-N announced in August it would indefinitely idle its Bayview Fibre chipping facility and Howe Sound pulp mill in Port Mellon, British Columbia, affecting about 400 employees.
Ken Farr, president of the Canadian Institute of Forestry, expressed concern that the funding may come too late to help some struggling mills. Farr stated the industry faces a "perfect storm" of U.S. tariffs, aging facilities, and limited access to affordable timber supplies.