a duck walking on the beach

Image of a duck walking and talking like a duck.

You’ve all heard the phrase, “If it walks like a duck and talks like a duck, well, it’s probably a duck.”

Because turkeys proved so helpful in understanding B.C. timber supply complaints, we’re optimistic ducks can help explain why we use the word subsidy to describe current log markets in coastal British Columbia.

PFLA recently received feedback from other stakeholders in the coastal forest industry; specifically, a suggestion to tone down the use of the word subsidy in our communication efforts around Federal Notice to Exporters 102 and log export restrictions.

Mortified at the thought of being misunderstood, we set aside some time to explain our word choice.

What is a Subsidy Anyway?

In the spirit of ongoing cooperation, open dialogue and healthy discourse, a definition seems like a good place to start. Here are a few definitions we gleaned from various sources to help explain our understanding of the word subsidy.

  • A direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like. (dictionary.com)
  • A subsidy is a form of financial aid or support extended to an economic sector (or institution, business, or individual) generally with the aim of promoting economic and social policy. (wikipedia.org)
  • Money that is paid usually by a government to keep the price of a product or service low or to help a business or organization to continue to function (merriam-webster.com)

Why the word subsidy accurately describes the situation in B.C.

Mill #1 is located in coastal British Columbia. Thanks to government policy (Notice to Exporters 102) this mill owner is able to buy logs at suppressed domestic prices ($70 per cubic meter).*

Mill #2 is located in western Washington. This mill owner has to pay international prices for logs ($100 per cubic meter).*

Admittedly, this is a simplified scenario; however, based on the definitions above, it seems fair to say mill #1 is being subsidized.

Is the coastal log market the best example of a subsidy?

No, it’s not the best example. A better example is something like the auto sector in Ontario. In that case, government used public funds to subsidize the auto industry. We’re not opposed to the use of public funds to subsidize industry. In fact, it’s a better example of how people generally understand subsidies to work.

Nonetheless, in the example of coastal log markets, government intervention affords coastal mills an advantage. Unfortunately, it’s private forest owners, and not public funds, that shoulder the burden of the “pecuniary benefits” bestowed by government policy.

Why other stakeholders might not understand our use of the word subsidy

The stakeholders who suggest we minimize our use of the word subsidy don’t pay the subsidy. We do. Because we’re the people who pay the subsidy, we have a personal, daily experience of what that means.

When you’re in a position to lose 45 million dollars annually, and spend your time managing, on a daily basis, reduced revenues, economic uncertainty and increased costs, you start to feel like you can speak with some authority on the subject of what is and isn’t a subsidy.

So, while we’d love to use other words to describe the situation—words like functional market, open competition and international prices—we’ll continue to use the word subsidy because if it walks like a duck and talks like a duck, it probably is a duck.

*Please note, above quoted prices are for fir gang logs, typically used for lumber, and based on mid-March 2015 market prices.