Wood processors fear industry in jeopardy

Wednesday 16 Jun 2021

China's high prices leave wood industry fearing for its survival - Thirty years ago the Government sold off much of its Crown forestry estate. Today it's looking to forestry, now largely in private hands, to achieve many aims. Help offset carbon, provide enough timber for our housing industry, earn export income, and supply biofuels and biocoal to fill our vehicles and boilers.

But some in the industry believe those aims are in jeopardy because of the sheer amount exported overseas, in raw form to one market. Last year 80 per cent of our US$2 billion (NZ$2.8b) log trade was earned in China.

Under geo-political pressure, Foreign Minister Nanaia Mahuta recently urged exporters diversify their markets more widely. But her warning falls as international log prices have reached historic levels. Good news for exporters but bad news for domestic mills which have to pay the international price for local logs.

The Wood Processors and Manufacturers Association claims New Zealand’s wood industry is not only too reliant on exporting but ignoring protectionism by our trading partners. Association chief executive Jon Tanner and chairman Brian Stanley claim China is subsidising the logs when Chinese importers sell them to processors at a cheaper price than they were bought for.

Tanner says that is artificially raising log prices, against World Trade Organisation rules. But New Zealand won't speak out. “It's like world trade is a black and white board, and New Zealand is playing a game of checkers, and everyone else is playing chess,” he says.

In his view, other countries are acting protectively too, placing exporting bans to protect their own wood supplies. Canada has shut off its log exports so it can supply the United States housing market. Russia plans to stop exporting softwood and hardwood logs next year to encourage investment in its own lumber kilns, Tanner says.

However, New Zealand forest owners enjoying the high prices find it irrational that you would not make hay while the sun shines.

“We have responsibilities to our forest owners to optimise return on investment but also to manage and mitigate risk,” Forest Owners Association president Phil Taylor says. He also rejects a long-held claim by processors that the owners won’t offer long-term supply contracts to local mills, preferring the export markets.

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Source & photo credit: Stuff

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