[lhorie]

> Allow these timber companies to ship our timber overseas to create an intentional artificial shortage ( yes it is documented ).

Am I understanding right that this would mean US would be incentivized to not export lumber (since domestic demand would grow in response to the increase in canadian lumber prices), and conversely, Canada would just fill the export gap left open by the US, leaving Canada in a stronger, more diversified trade position and the US in a worse, nationalist position? Or am I missing something?

[kokanator]

I am having a difficult time wading through current "shortage" links to find the original information. However, here is the gist.

- The inventory of raw timber ( the type you see in log yards ) has grown too large.

- Lumber mills are lowering the amount they will pay for raw timber as a result. As well as the rest of the end lumber market.

- This causes timber companies profit per foot to drop.

- The timber companies decide to "export" raw timber overseas at a loss.

- This in turn raises the rate the Lumber mills and Lumber consumers pay out pacing the original loss on "exported" timber.

It is important to also note, most of this timber came from public lands to begin with.

The overall point is OUR resources were exported at a loss so OUR prices would increase. Forests are part of the wealth of our country. Letting a timber company send it overseas to increase domestic timber prices should be illegal.

[greeneggs]

> The overall point is OUR resources were exported at a loss so OUR prices would increase. Forests are part of the wealth of our country. Letting a timber company send it overseas to increase domestic timber prices should be illegal.

The same argument applies to cars, and to everything else we make or harvest. Should we ban all exports? (Please, no, it is a bad idea.)

[kokanator]

I didn't make any argument against exports. Obviously international trade is generally good.

The arguments is exporting our own resources in order to drive up the price of those resource domestically. Remember, they didn't make a profit exporting the timber, they exported it at a loss. With the sole purpose of driving up domestic prices.

[gruez]

>Remember, they didn't make a profit exporting the timber, they exported it at a loss. With the sole purpose of driving up domestic prices.

What's the evidence that is their intent (ie. they're selling at a lost as part of some sort of diabolical scheme to increase prices), or they're just strapped for cash and selling to whoever is willing to buy them?

[Matticus_Rex]

So you're suggesting what, exactly? It looks like you're making an emotional point based on some kind of national stake in resources. But it's not "our" timber -- it's the timber of some people who worked and invested in the capacity to cut it. If domestic timber prices are lower than foreign timber prices, making it harder for them to export timber just hurts the industry more. They're not sending it overseas to increase domestic timber prices; the domestic market has a glut, so foreign markets are willing to pay more -- that's how markets work, and interference in that process being bad for both domestic and foreign market participants is one of the few things most economists of all stripes are usually in consensus about.

[kokanator]

> They're not sending it overseas to increase domestic timber prices;

This is EXACTLY what they did. You missed the point.

They exported at a loss to drive up domestic prices.

[lhorie]

Not that I'm doubting you, I'm just trying to understand this claim. Can you explain the motivation behind exporting at a loss? If the argument is that there's too much timber supply driving down prices to the point that some of the inventory is sold at a loss, wouldn't it make more sense to just cut less trees?

[kokanator]

Say the market price of a tree had dropped to $1 from $5. If you can export a tree for -$1 and create a domestic shortage which causes a tree domestically to be worth +$4. You effectively double the value of a tree. ( hope the math is right just trying to make an example )

I am not sure why they didn't just cut less trees other than they probably had bids that would expire ( another policy problem ).

[Matticus_Rex]

Exporting at a loss is often the prudent financial measure just because of market conditions, and it does have the effect of increasing domestic prices (as a third-order effect), but the way you're describing it happening isn't plausible.

Do you have a citation that they're intentionally losing money in order to drive prices up to a target price? Because that, no offense, would be idiotic unless they have some kind of subsidization deal that would support it, as the export of any quantity of lumber even at break-even would not increase domestic prices enough to justify the losses of profit on that lumber if profit was available.

It sounds like the market is down, and they have lumber on hand, and it's better to sell at a loss and realize the revenue in most cases than to not sell at all.

[nkurz]

Upvoted because it's a good summary, but could you offer a source for your claim that "most of this timber came from public lands"? This is surprising to me, and I'm wondering if this is a local phenomenon rather than a national claim. The very quick searching I did (https://www.everycrsreport.com/reports/R45688.html) suggests that the harvest from NFS lands peaked at about 15% in the 1980's, and has been lower since.