Overview of Canada's forest industry

Canada's forest industry by the numbers

Forests are a major source of wealth for Canadians, providing a wide range of economic, social and environmental benefits.

In 2022, production in the forest sector contributed $33.4 billion (1.2%) to Canada’s real gross domestic product (GDP). In a global context, Canada continues to maintain a strong forest product trade balance. In 2022, Canada's total forest product exports were valued at $45.6 billion, with the majority destined for the United States. Although softwood lumber exports dropped by 17%, other sectors such as newsprint and printing paper saw significant increases of 35% and 33% respectively, contributing to Canada's prominent role in global forest product trade. While other countries may produce more of one product or another, no nation derives more net benefit from trade in forest products than Canada, and the gap between Canada and the second largest net trader (Sweden) has been expanding continuously since 2009.

There are three main forest industry subsectors:

Solid wood product manufacturing – Firms in this area engage in both primary (such as softwood lumber and structural panels) and secondary (such as millwork and engineered wood products) manufacturing for domestic consumption and export. This subsector has grown significantly, accounting for over two-thirds of the forest sector's contribution to the environmental and clean technology products sector, which increased from $1.4 billion (2.0%) in 2019 to $2.4 billion (3.3%) in 2021.

Pulp and paper product manufacturing – Companies in this area produce a wide range of products, covering everything from newsprint and household tissues to dissolving pulp for rayon production. Between 2021 and 2022, Canadian production of most forest products decreased, with softwood lumber production down by 9.5% and structural panels by 0.7%. In this subsector, production of printing and writing paper increased by 6.8% in 2022, while wood pulp and newsprint production decreased by 4.7% and 2.6%, respectively.

Forestry and logging – Firms in this area are responsible for field operations and harvesting of timber, including felling and hauling it to the mill. As of 2022, this forest sector contributed approximately $33.7 billion to Canada’s economy, which is about 1.2% of the national GDP. This represents a significant increase from previous years, reflecting the sector's growth and evolving role within the economy.

Forest sector transformation

Forest product markets are cyclical, experiencing significant ups and downs over the economic cycle. This constant state of shifting circumstances creates both challenges and opportunities. In recent years, Canada’s forest industry has undergone an especially deep cyclical decline, coupled with structural changes in world markets. In particular, the rise of electronic media has resulted in deep decline for paper-based communications products—including several products (such as newsprint) that have traditionally been critical to the Canadian pulp and paper subsector.

In response to these challenges, the forest industry has begun to transform itself along four distinct lines: market development, operational efficiency, business process change and new product development. One of the most exciting elements of this transformation has been the new and innovative products, materials and services being produced in Canada’s forest sector. These include new building materials, biofuels that can substitute for fossil fuels, and biochemicals that can be used to produce bio-based pharmaceuticals, biodegradable plastics, personal care products and industrial chemicals. Chief among these are cellulosic fibrils and nano-crystalline cellulose—next-generation pulp-based products with the potential to revolutionize the pulp and paper sector.

These and other emerging technologies and business processes offer new ways of generating social, economic and environmental values for Canadians from our abundant forest resource. They generate value from a wider range of forest products and processes than traditional milling and pulping. Whether co-located with an existing establishment or a result of a greenfield investment, these new technologies and business processes increase overall industry productivity: additional revenue streams are available from each log harvested, diversifying product lines to stabilize economic performance and boosting the share of renewable products in the marketplace. These new technologies will also create opportunities for new entrants, enhancing competition and entrepreneurialism in the industry.

 

Find out more

• Industry transformation
• Forest products and applications
• Forest bioeconomy, bioenergy and bioproducts
• Land reclamation and forest science
• Forest industry tools and research