What do the Softwood Lumber dispute and the US Forest Service have to do with one another? At first glance, very little. However, there could be an unlikely connection. One of the main complaints from the US Forest Industry (Coalition for Fair Lumber Imports) has been that the Canadian Forest Industry had been subsidised with lower-priced logs. The argument was that the available supply and low prices allowed Canadian mills to ship lumber to the US market at a profit while US mills lost money and were harmed.
US Forest Industry History
Although there are some pieces of truth to that assertion, it only tells part of the story. The untold portion was that the US Forest Service was not substantially supplying the American mills. In the late 1980’s the Forest Service sold about 12 billion board feet per year, providing a steady supply of logs in up and down markets. By the early 90’s that volume dropped to below 2 billion board feet. This put a major strain, to say the least on mills.
US mills went bankrupt and out of business by the hundreds. This devastated communities and caused the entire industry to shift. On the other hand, the Canadian sawmills still had much of their raw material supply in place. Canada’s forest industry had its challenges, but nothing at the scale of what was going on in the American West.
Today the issues are different. Canadians are seeing their industry contract due to the devastation left by the mountain pine beetle epidemic. Mills have shut down and consolidated. This has prompted many of the major companies to look for other markets to build mills. This has caused a mass migration of Canadian sawmill knowhow and investment in the US South. Not only are mills closing a moving, but the supply model has shifted to a much more competitive purchase system which raises log cost.
The smaller, family companies in Canada are the ones that will most significantly feel the strain of the softwood lumber dispute and related duties because they don’t diversify their business by investing in US markets. The lumber from all the Canadian mills is important for the US lumber market, but there needs to be competitive balance.
Where the Forest Service comes in
So how can the US Forest Service help in all this? If there were to be a massive increase in the forest restoration efforts in the Western States, it could shift the supply dynamic enough to help keep US mills profitable during market downturns. If American companies had the ability to keep their mills profitable at lower prices, the harm from Canadian imports would be reduced.
Out of the 192 million Forest Service acres, 82 million acres are in need of forest restoration. This means the forests need actively managed by way of logging, thinning, and deferred maintenance. The by-product of this much-needed work could take medium and long-term pressure off the Softwood Lumber Agreement.
This isn’t the whole solution. We still have currency fluctuations and market pricing to deal with, but running sawmills has everything to do with supply. If we can help ease that, we may be able to reach an agreement that is good for North America.