Forests play an important role in the lives of Canadians on many levels. They are known for their natural functions and their environmental benefits. Forests are also a key part of the Canadian economy, both for their recreational use and as the source of numerous products. The forest industry generates significant revenues for Canada’s economy and supports thousands of jobs on which many rural and Indigenous communities depend. Many of these communities are also closely connected to forests as a form of natural and cultural heritage. Sustainable and effective management of forests is critical to ensuring the future of the forestry sector and for reaping all the benefits that wood products have to offer.

In recent years, Canada’s forestry sector has faced many challenges that had the potential to slow its growth and limit its capacity to innovate. The cyclical nature of forest products markets can cause fluctuations in demand for certain wood products, including lumber. Moreover, the pulp and paper subsector is dealing with a gradual decline in demand for some of its products. The health and economic crisis sparked by the COVID‑19 pandemic has exacerbated these challenges, accelerating the drop in demand for some products while increasing demand for essential goods or products needed in high-growth areas, including sanitary products, personal protective equipment and construction materials. Trade issues are another major concern for the sector, as the dispute with the United States over Canadian softwood lumber reduced access to the American market, hurting the sales of Canadian forest companies. These structural and economic challenges have created a climate of uncertainty for Canadian forest businesses. However, the committee learned that the forestry sector is also seeing new opportunities.

Forest resources have the ability to store carbon and reduce greenhouse gas emissions. In a world where countries are trying to reduce their carbon footprint, forests and forest products therefore confer a considerable competitive environmental advantage. To make the most of these attributes, Canada’s forestry sector is transforming itself and innovating to enhance its use of wood fibre and develop a new range of value-added products—called bioproducts or bio-sourced products—that can replace some higher-carbon-intensity products made in other industries.

In Canada, provincial and territorial governments have primary responsibility for managing and regulating forests and forestry activities within their boundaries. The federal government supports research and delivers financial aid to the forestry sector, including transformation and innovation in the sector and the development of new export markets for its products. Witnesses told the committee that the federal government should work with governments and partners on the ground to address the following priorities in order to foster the growth and long-term viability of Canada’s forestry sector:

•   Support initiatives to maintain sustainably managed and healthy Canadian forests. Natural disturbances such as insect infestations and forest fires affect the performance of forest ecosystems and are made worse by climate change. Investments and the sharing of best practices are needed to control and prevent these disturbances. A more selective use of wood damaged by natural disturbances should be integrated into forest management practices to optimize the use of this resource. Moreover, research to improve knowledge of the various tree species is essential to diversifying forest cover and ensuring it is resilient to climate change. More knowledge would result in more effective afforestation and reforestation activities across the country. Indigenous knowledge and expertise should be integrated into the process of identifying best forestry practices.
•   Renew support programs to maintain forestry sector competitiveness and innovation. Many Canadian forest companies benefitted from federal government programs to help the forestry sector. However, it would be useful to re-evaluate them to ensure they can effectively support the development and commercialization of value-added forest products. Access to these programs should be tailored to small and medium-sized businesses, including Indigenous businesses, which have difficulty participating under the current terms and conditions. Programs should also be reviewed in light of the specific needs of certain industries that face specific challenges starting up businesses or transforming their operations, such as the pulp and paper industry. The committee also learned that modernizing the operations and increasing the competitiveness of Canada’s forest industry in remote regions will require access to modern communication technologies.
•   Foster the development of a value chain for value-added products in the Canadian forestry sector. Canada has vast forest resources. However, the capacity to process these resources into value-added products is not fully realized. The committee heard many suggestions for ways to make best use of forest resources and open new markets. Examples include implementing a public procurement policy that favours the purchase and use of low-carbon-intensity products, including wood products, and changing the National Building Code to allow the construction of tall wood buildings. Higher environmental performance standards for buildings could also encourage the use of low-carbon-intensity materials. To expand the market for bioproducts, mechanisms enabling consumers to make informed choices regarding the composition and environmental impact of the products they buy should be considered. Finally, to build out a value chain for value-added products, training programs should be modified to incorporate new uses of wood, with the goal of ensuring a skilled workforce.
•   Continue efforts to eliminate trade barriers and diversify export markets for Canadian wood products. The softwood lumber dispute with the United States remains a key issue for Canada’s forest industry, and a lasting solution to this conflict would boost the sector’s economic recovery. Other avenues would also expand the industry’s trade opportunities, including increased exports of value-added products and new export markets. Further promoting Canadian wood products abroad by sharing information about mass timber construction and the sustainable and environmentally friendly nature of Canadian wood products with architects and engineers in countries that import these products would also be helpful.