Ottawa gives $127.5M boost to forestry sector

The federal government will dole out $127.5 million to help Canada's struggling forest industry, Natural Resource Minister Gary Lunn said on Thursday.

The funding part of a $400 million forestry bailout package introduced in the 2006 budget will promote innovation and will serve to expand global market opportunities as the Canadian sector searches for stable ground, Lunn said.

"This investment will help our forestry industry become a leader in research, to develop new technologies and products, attract investment, and develop and seize opportunities on a global scale," he said as he announced the funding in Montreal.

Quebec's vast forestry industry has been hit especially hard by a 24-month slump in the industry caused by the strong Canadian dollar and thesoftwood lumber dispute with the United States.

As Canadian companies struggled to maintain their market share, dozens of mills shut down and thousands of jobs eliminated.

About $5 million of the new fundingis earmarked for a human resource council to take stock of the industry's labour needs.

Some of the money will be used to create a national pest control strategy.

In January, Ottawa invested $200 million to tackle mountain pine beetle infestations, which is considered a major threat to B.C.'s forests and has been spreading eastward.