Canada plans to advance a national transformation of the forest sector by providing close to $130 million for 56 projects across Canada and by enhancing financing supports, including expanded regional funding and changes to Business Development Bank of Canada programs, Natural Resources Canada announced.
The federal announcement followed the Canadian Forest Sector Transformation Task Force process. The Task Force was launched on January 19, 2026 and delivered a final report on April 16, 2026, within the 90-day mandate to identify measures to stabilize and retool the sector.
The package includes enhancements to the Business Development Bank of Canada Softwood Lumber Loan Guarantee Program and two new direct loan programs to provide financing to companies across harvesting, manufacturing and pulp and paper. The release did not specify exact loan-amount limits or full terms for the new direct loan programs.
To support regional adjustment and diversification, the government is providing an additional $400 million to Canada's Regional Development Agencies. That includes $300 million for a Regional Tariff Response Initiative to help small and medium-sized businesses pivot to new markets and $100 million for a new Regional Development Fund to target regions significantly affected by disruptions in the forest sector.
The federal funding package and project list highlight several large investments. A $37 million Fibre Recovery project in British Columbia will increase collection, processing and transport of low-value and residual fibre for pulp, bioenergy, pellet production and other secondary manufacturing. FPInnovations will receive about $16.6 million for a workplan to develop and demonstrate automation, digital and low-carbon processes across harvesting, processing and transportation. National market-diversification projects include funding of about $14.9 million for the Canada Wood Group and about $13.1 million for BC Forestry Innovation Investment to expand export pathways and regulatory alignment in priority markets.
Selected capital and manufacturing projects include a $7.5 million retrofit in Huntsville, Ontario to produce a next-generation engineered wood panel; a $4.8 million project to establish a mass timber housing production facility in the Greater Toronto Area with capacity to produce up to 1,000 units annually; and a $4.5 million project to adapt pyrolysis processes to produce a biocarbon composite that could replace up to 50,000 tonnes of fossil coal annually in metallurgical applications.
Construction and demonstration projects include a $1 million Bond Tower in Winnipeg to design and build a seven-storey, 24-unit residential building using a hybrid prefabricated mass timber system that will test approaches such as a single-exit stair design while maintaining fire-safety standards. Projects to modernize manufacturing and introduce automation include a $4.0 million Phase 3 lumber inspection and glulam expansion and a $3.5 million automated production line for engineered wood products.
The funding package also included numerous Indigenous-led and community projects ranging from facility upgrades, mill commissioning and training to feasibility studies and capacity-building grants. Examples include a $1.11 million upgrade to a community value-added facility in Sand Point First Nation, Ontario, a $510,000 commissioning and optimization project for a mill in Wemotaci, Quebec, and multiple grants in the $45,000 to $50,000 range supporting stewardship, planning and local capacity.
Ministers from across Canada will meet at the Canadian Council of Forest Ministers to discuss the Task Force recommendations over the next two days. Following those discussions, the federal government will publish an Action Plan that will form the basis of a forthcoming Forest Sector Strategy.
