Thank you. Sorry to the interpreters.
It's worth noting that while Canadian manufacturers have suffered greatly in the last year, forestry has actually been in such a downturn for more than four years. During that time, due to our closures, New Brunswick has lost half our pulp mills and more than half our sawmills. In 1999 there were 99 registered sawmills in New Brunswick, and in 2009 there are 40 registered. But we just recently conducted an operating survey to our members, and in fact there are only 20 in the province that are operating right now. And of the ten pulp and paper mills that existed four years ago, only six are operating at this moment.
These closures and losses hit New Brunswick particularly hard, because New Brunswick is the most forestry-dependent province in Canada. Forestry contributes as much as 12% of our gross domestic product and accounts for more than $4 billion in economic activity. This is a significant contribution to our small province. Our sector provides an estimated 23,000 direct and indirect jobs, some of the highest-paying jobs in New Brunswick. According to Statistics Canada, we unfortunately lost 7,800 jobs in the last few years, and with more than 40 of our communities dependent on forestry, you can imagine the difficulties they have faced.
While there is no shortage of issues facing the sector that I could explore today, I've decided to limit it to three that I can match with a recommendation or a course of action the federal government could partner with us on.
Let me start with access to credit. Our member companies have identified access to credit and reasonably priced credit as a top issue to be addressed. The current global economic crisis has had a devastating impact on all industries' ability to access capital. This is particularly true for the forest industry. We have been considered high risk now for several years, and this has definitely added to the challenge. The expanding credit crisis is wreaking havoc. As companies scramble to cover debt in these difficult times, financial institutions are simply unwilling to lend at normal risk premiums. In the rare chance that an investor makes capital available to our industry, the industry faces ridiculously high risk premiums—premiums from 8% to 11%, which make it virtually impossible to survive.
We recognize that government has included access to credit as a title in the budget. But honestly, we're not sure we see the natural path this stimulus will take to reach our sector. That said, we recommend that the Government of Canada ensure that these funds make it to our sector. We'd like to welcome any initiatives that make capital readily available at a reasonable cost. Doing so will allow companies to weather the storm until better markets prevail, preserve ongoing operations, and invest in modernization and efficiencies.
Currently, if the industry were to swing back tomorrow, we would not have enough trained forest contractors and appropriate equipment to meet the harvest levels—and I believe that's what Mr. Dionne was just saying. The current state of the financial markets coupled with the challenges faced by the forest industry has made it virtually impossible for the industry to invest in new or replacement equipment for our primary harvesting operations—equipment such as for harvesting and for transporting of wood from the forests to our mills.
Independent contract harvesters, as well as our member companies, are facing a crisis, and we believe we have a potential solution to assist in securing reasonably priced and accessible credit. We can talk about that in the question period.
With the government balance sheets as a guarantee, we could reduce the risk premiums at virtually no risk to government—and this is for a project for New Brunswick—because our mills and our licensees and our sub-licensees would be willing to back the loans but would like the government to support it with their balance sheets. That would allow us to eliminate some of the high risk premiums, and this could be done through an organization like the BDC. This plan would be extremely helpful to the independent harvesters or contractors and our industry companies.
The second issue I wanted to bring up is black liquor, and my colleague from British Columbia mentioned it at the end of his piece. This is quite the issue. Recent subsidies being offered under the renewable energy initiatives to the pulp and paper companies in the United States are a great cause for concern here in Canada. The U.S. pulp and paper mills are eligible for substantial tax credits for burning black liquor in their boilers. Under this program, companies are eligible for a 50¢ per gallon excise tax credit on the use of concentrated pulping liquors, the residual waste that's created from the pulping process
Conservative estimates put the value of that credit at $125 to $150 for unbleached mills, and $175 to $225 for bleached mills. Other people have estimated that much higher, but I've used the conservative numbers on that one.
Analysis prepared by the Deutsche Bank estimated the U.S. industry could be propped by billions of dollars. Just to give you an example, they estimate that IP could receive a $1.2 billion cheque for their portion alone. Individual mills could be receiving multi-million-dollar credits, which is going to be very challenging for us.
These credits put Canada at a serious disadvantage. I believe if it's unaddressed, this may be catastrophic to our pulp mills on the Canadian side of the border. Let's face it, if a bleached hardwood market kraft mill can actually realize a benefit of $175 per tonne, it will put the cost structure of our Canadian mills at a huge disadvantage. This issue is new, and we are only starting to realize the potential impact.
I believe the forest industry in partnership with the Canadian government can work on this issue and address it very quickly. A potential course of action could include challenging these subsidies under trade laws or the free trade agreement, and I'm not a trade lawyer, so I don't know the specifics of that. Or Canada could look to provide similar types of incentives to level the playing field.
Their program is actually counterproductive. It's designed to reduce emissions, but in fact it's increasing them. We'll get into the details about that a little later.
My final issue today is on silviculture.
New Brunswick invests $26 million annually planting trees and thinning our forests to increase the yield and the quality of woods in our forests. New Brunswick has the longest history of planting trees. Today New Brunswick's forests are absorbing millions of tonnes of carbon dioxide and provide a sustainable wood supply that supports over 15,000 direct jobs in the province.
We've been planting trees for more than 50 years. However, we'd like to do something more, and introduce hardwood silviculture into our mix. We are looking to the federal government to partner with us. The federal government once was a partner with New Brunswick, the industry, and the provincial government in funding silviculture, and we'd like to bring them back to the table on the hardwood side of things. As you know, Atlantic Canada doesn't pay countervailing duties under the softwood lumber agreement, and that's because our wood is marketed at fair market value. The hardwood side of things doesn't interfere with the softwood lumber agreement, and we would like the federal government to consider that. We'd like the government to invest $7 million annually to introduce hardwood silviculture on crown lands. We also encourage the government to supplement the private woodlot owners silviculture budgets.
Quite frankly, if you're looking for an infrastructure program to stimulate the economy in the short term, with long-term benefits, there is no more shovel-ready project than reforestation. The long-term benefits are significant. We've been working with government officials over at ACOA and we've made presentations to Minister Ashfield. We're hoping, with the 2009 planting season about to begin in eight weeks, that we could get a decision as soon as possible. A recommendation from this committee would be a great help.
To conclude, I want to say that while we're very concerned about the short-term outlook for the industry, we're very optimistic about the long-term prospects. The good news is we believe the markets will improve. Long-term economic forecasts indicate a swing in the lumber and pulp prices. There are many opportunities that lie with new emerging forest-based products, biotechnologies, and the emergence of biofuels. In fact, I think this is very exciting.
We are looking forward to working with the governments and our partners across the country to address some of these concerns.