If the U.S. had Canada's stumpage system

Abstract

North American log markets function on different principles -- a profit allowance for the wood processor plays a role in timber pricing in Canada, while in the United States, it is a byproduct of the give and take of arm’s-length market negotiations. The former is characterized by high elasticities of price transmission and, at times of market weakness, by low elasticities of product supply; the other, by the opposite of these benchmarks. This can result in asymmetric supply responses in weak markets to the detriment of U.S. producers. Whether this is a subsidy in the sense of conferring a direct financial contribution by the government or merely a different pricing mechanism is beclouded by the dearth of market-based transactions. The challenge in the lumber dispute, then, is to devise a system of pricing in Canada that is more transparent regarding the underlying valuation of timber.

Citation

Spelter, Henry. 2006. If the U.S. had Canada''s stumpage system. U.S.-Canada forest products trade : a bilateral technical symposium. [East Lansing, MI] : Michigan Agricultural Experiment Station, 2006. Special report (Michigan State University. Agricultural Experiment Station) ; 125. Research report from the Michigan State University Agricultural Experiment Station, East Lansing: Pages 213-219.