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Mike Shusterman
Mike Shusterman
Musings from Big Lake Country
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Dianne Saxe
Environmental Law Specialist 
Dianne Saxe, PhD 
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Kevin Gaudet
 Canadian Taxpayers Federation 
Kevin Gaudet, Ontario Director CTF -  
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Elle Andra-Warner
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Millie R. Gormely, CFP, EPC
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Mike Shusterman
Mike Shusterman
Musings from Big Lake Country
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$8 billion black liquor subsidy

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THUNDER BAY, ON   ----  October 23, 2009 ---  A New Challenge to our Forest Industry and the Federal Government is Asleep at the Switch.

It is bad enough that the Canadian dollar has shown signs of reaching par again with our American counterpart, and now comes word that although the distorted $8 billion black liquor subsidy devised by the American paper industry is being phased-out by year’s -end in the U.S.; a new subsidy, yes it is a subsidy, is coming at us from our neighbours to the south at blinding speed, the result being another major blow to the sustainability of our pulp and paper, and other forest product facilities in Canada. Yet another blow to our resource –dependent communities. How much more can we endure?

The Black Liquor subsidy which permitted US paper mills to add diesel fuel to their black liquor through a cleverly disguised loophole had cancelled and then delayed any recovery in our paper mills until the pulp price just started to increase again recently. The black liquor dispute started when American pulp and paper mills took advantage of a fuel subsidy that encouraged motorists to switch to alternative fuel sources.

This time, the U.S. government, bowing to yet another lobby group is using another loophole from the so called Biomass Crop Assistance Program. This accounting dream is expected to create another $4 billion windfall for American papermakers. The original intention of this program was to entice the public to make the move from fossil fuels to bio-energy. Yes, this is purposely confusing it seems.

Forest Products Association of Canada President Avrim Lazar has called this latest challenge, “son of black liquor”, and our federal government leaders responded to this black liquor challenge and the $8 billion subsidy that was crippling our ability to be competitive with a paltry $ 1 billion olive branch, called the “Green Transformation Program”.

So here we are again, and in a typical reactive mode, our federal leaders are answering back to the industry with the following response from Natural Resources Minister Lisa Raitt, “The Government of Canada recognizes the challenges that the forest sector is facing and appreciates the potential of the Crop Assistance Program to disadvantage Canadian producers and distort markets. We have formally raised our concern about the impacts this initiative would have on the Canadian Forest Industry with the United States Department of Agriculture”. Is that reassuring or what? Here we go again, just when the price of pulp and some paper grades has increased to the point that it is feasible to re-open our mills in northern Ontario; we are faced with yet another challenge and have become non-competitive.

It is very frustrating that we seem to always be cowering to any concerns that our American competitors have with anything that they feel is even remotely close to a subsidy, yet they blatantly go after loophole after loophole with their own direct subsidies, and we never make an effort to challenge their claims. Our response is always too little, too late.

Can we not develop our own strategy to remain competitive in this global economy?  Surely we have the capability to keep abreast of the market and our competitors? Our response track record will be another well-delayed approach which does nothing to get our mills up and running again. We have the opportunity to be leaders in green technology, especially in biomass so why can’t we make it happen? Let’s get serious about implementing these biomass opportunities and if we do, we can re-start our mills and they can share in the biomass transition which will see our mills have a new sustainable product that will enable our workers to get back to work for the long-term.
 
Why is it that we cannot be pro-active? Our inability to do so just invites these types of unfair trade challenges. Where is the required leadership?


 After reading a letter regarding Ontario’s proposed tenure reforms from MPP Randy Hillier it is understandable why we are in the mess we are. We remain non competitive due to our over-regulation and stifling policies. The government seems to be quite successful at stifling our forest industry so we remain non competitive but when it comes to time to take the lead to start having us becoming competitive, they are nowhere to be found. A new plan is required to bring the forest sector back to being the leaders we once were.

 With the proper people brought together including government leadership that can together develop a made-in-Canada solution to the future of this very significant industry our northern communities can once again flourish. We have what the rest of the world needs, sustainable wood fibre.

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