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The Economic Review, November 2004
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Forestry and Agrifoods

Forestry

Newsprint
Newsprint shipments totalled 538,600 tonnes in the first three quarters of 2004, 7.7% lower than the same period last year. Although shipments were down on a year-to-date basis, the decline was primarily the result of shipping delays rather than production decreases. Barring a prolonged loggers’ strike at Abitibi-Consolidated, shipments are expected to improve in the fourth quarter.

North American and Provincial
Newsprint Shipments
Click for larger view
f: forecast
Pulp and Paper Products Council; Department of Natural Resources; Economic Research and Analysis Division, Department of Finance

Over the past several years, North American newsprint manufacturers were forced to idle their least efficient mills and increase productivity elsewhere in the face of narrowing profit margins. The removal of this capacity appears to be finally paying off for producers by putting upward pressure on prices. Newsprint prices have slowly increased over the past two years after hitting a trough of US$452 per metric tonne in the second quarter of 2002. At the time of writing, newsprint was trading at US$555 per metric tonne. The estimated value of newsprint shipped from the province in the first nine months was $390 million.
 





While North American production has declined significantly over the past several years the province’s mills have managed to keep shipments at relatively high levels as illustrated in the accompanying chart.

On July 7, 2004, Abitibi-Consolidated and the Communications, Energy and Paperworkers Union (CEP) reached a five year collective agreement providing unionized mill workers with wage increases totalling 11% over the contract term. Negotiations with the company’s 400 woodlands workers, however, were unsuccessful. Loggers and silviculture workers set up picket lines at the company’s mills in Grand Falls-Windsor and Stephenville on October 5th. The company recently announced that almost 400 mill workers will be laid off at its Grand Falls-Windsor facility in early November as a result of the loggers’ strike.

The collective agreement between Corner Brook Pulp and Paper (CBPP) and its woodlands workers expired on December 31, 2003 and the agreement between the company and its mill workers expired on May 31, 2004. Negotiations with both groups are currently underway.

CBPP recently obtained national certification to CAN/CSA Z809-2002—Canada’s national standard for sustainable forest management. This certification applies to almost two million hectares of forest on the island portion of the province.
Corner Brook Pulp and Paper Limited’s mill

Newsprint Shipments by
Destination, 2003
Provincial North American
United States 41% 73%
Canada 3% 8%
Europe 30% 5%
Asia 4% 8%
Latin America 19% 5%
Africa 4% 1%
Pulp and Paper Products Council; Department of Natural Resources; Economic Research and Analysis Division, Department of Finance

Lumber
Lumber production is estimated to have declined by over 30% in 2003-04 to 98 million board feet. This reduction was the result of the shutdown of the province’s two largest mills due to a combination of wood supply and financial constraints. Both these mills have since re-opened and production levels are expected to rebound in 2004-05 to about 125 million board feet.

Lumber prices have been soaring in 2004, and are expected to hit a record level of US$410 per thousand board feet by year’s end, up 48% over 2003. High levels of residential construction in both Canada and the U.S. have been the catalyst for the sharp price increase.

Agrifoods

Farm Cash Receipts
Total farm cash receipts increased by 4.3% in the first six months of 2004 to $40.5 million. The main contributors to growth were egg production (up 13.9% to $6.7 million); floriculture and nursery products (up 7.2% to $5.8 million); and dairy products (up 5.2% to $14.4 million).
 

Mink Farms and Fur Tanneries
In recent years there has been renewed interest in the province’s potential for commercial scale mink farming and fur tanning operations. The local mink industry has seen the establishment of two commercial mink farms in 2004 and three more are expected to be operational within the next two years. Several local fur producers have also diversified their operations to include mink.

Barry Group Incorporated (BGI), a locally owned and operated company and one of the largest fish processing companies in the province, recently opened a mink farm (NU Mink Inc.) at Cox’s Cove on the province’s West Coast, utilizing the offal from its nearby fish plant as its primary source of feed. BGI estimates that the mink farm will directly employ more than 15 workers (full and part-time) within five years.

Also, BGI plans to establish a fur tannery (Nu Tan Inc.) in Corner Brook to process mink, seal, fox and beaver hides into value-added products for sale to furriers. The fur tannery will directly employ up to 50 workers within the next ten years.

In addition, two major Danish fur producers, Peter Noer and Eric Dalsager, have established Viking Fur Inc., a commercial mink operation in Cavendish, Trinity Bay, which currently employs five full-time and three part-time workers.

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This information was current as of October 25, 2004.
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