Strong growth for logs

By NZPA

Wednesday 18th December 2002

New Zealand's forestry sector looks likely to cope with soaring tree harvests by boosting its log exports more than value-added timber over the next four years, government analysts say.

New Zealand will enter the next decade sending nearly half its forest harvest offshore as logs, to have value added offshore, according to the latest Ministry of Agriculture and Forestry (MAF) economic outlook for the sector.

Limited short to medium term investment in wood processing means the ratio of log export to total production will jump from 36 percent in the year to March 2002, to 41 percent in 2005-06 and 45 percent by 2009-10.

"Total production of roundwood is projected to be 25.6 million cu m by March 2006," MAF policy analyst John Eyre said today.

In the year to March 2002, roundwood production was 20.5 million cu m, up 6 percent on the previous year.

But export volumes of logs for the March 2002 year were 7.38 million cu m, an increase of 24 percent on the previous year, even though these log exports were valued at $714 million, virtually the same as the previous year.

Logs and lumber (sawn timber) accounted for 70 percent of total production in roughly equal proportions, with the rest mostly going to would pulp, paper and panel manufacture.

Lumber exports for the March 2002 year were 1.64 million cu m, 43 percent of the 3.85 million cu m milled, an increase of only 8 percent on the previous year.

"Increases in wood available for harvesting in New Zealand will push production up as companies seek to maximise utilisation and cash flow", Mr Eyre said. But with a steady domestic market, the extra logs will have to be exported, while only one-third of the increase in lumber production is projected to be exported.

Compared to the year to March 2002, log exports are projected to increase 43 percent and lumber to increase 18 percent through to 2006.

Another likely effect will be for the industry to face a gradual increase in the age at which pine trees are harvested, from 27 years to a 30-year cycle .

"In itself, this is not a bad thing, as generally radiata pine wood properties improve with age," said the MAF report released today, Situation and Outlook for New Zealand Agriculture and Forestry.

The report argued that the main external constraints to investment in log processing were trade access barriers faced by New Zealand exporters, particularly in Asian markets.

The higher the value of timber products, the greater the escalation of tariffs, as importing countries protect their own industries.

He said a successful conclusion to the World Trading Organisation (WTO) Doha Trade Round could help to lower trade barriers to forestry products, and boost the opportunities to expand the trade into higher-value markets. But there are also non-tariff barriers in importing countries that were not addressed by the WTO process, including taxes and prescriptive building codes and standards, which made New Zealand forestry products more expensive in these countries.

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