Winston Peters
The leader of the New Zealand First Party has been accused of playing politics with his claims that NZ’s raw log exports to China were out of control and being driven by greed. Sources: New Zealand Herald, Wanganui Chronicle
In speech in Whangarei, Winston Peters said forestry – the country’s third largest export earner – was heading for a major crash unless steps are made to restrain excessive exporting.
He claimed forests were being plundered through clear felling and harvested too early by owners more interested in quick profit.
But Marcus Musson, a director of Forest Owners Marketing Service Ltd (FOMS) in Feilding, the largest independent forest harvester and marketer in the lower North Island, said Mr Peters was “playing on rhetoric for political gain”.
“He says our industry would be improved by limiting the volume of logs exported by ensuring domestic sawmills are supplied on a quota basis as in Canada and that we should lock up forests and restrict harvest activity as in China,” Mr Musson said.
“Canada has very low returns to the forest owner (which is primarily the government) as the local market has first option for log purchase and therefore dictates the purchase price for logs rather than the free market.
“And China is locking their forests up not because they are looking for ‘cheap timber form overseas’ as Mr Peters states but because they have massive issues with erosion and water quality due to poor harvesting practices and poor soil quality.
“This is not Greenpeace waving a bunch of flags in protest. It’s a reality and harvest cessation and reforestation by the Chinese central government is a direct response.”
He said NZ’s log export market has grown on the back of an increased availability of logs from the planting boom of the late 1980s and early 1990s when Government subsidies encouraged large scale afforestation programs.
A planting boom extended into the early 2000s and also saw the current ownership of mature or semi-mature forests move from primarily government and corporate ownership to significant areas under private ownership.
He said the availability of logs has far exceeded the demand of domestic markets. He said it was primarily the lower grade logs being exported because many of the domestic sawmills and processing plants cannot economically process them into a value-added product.
Mr Musson said Mr Peters’ claim of forests being plundered and out of control log exports to China could not be farther from the truth.
“Forests are being harvested according to age and exports to China, as well as other export markets, are only happening as the domestic market can’t handle the volume of logs available.”
He said Mr Peters was overlooking a key fact with his assertions that forests were being harvested too early and for quick profits.
“Most forests are planted as an investment, not an instrument for the public good. These forests are owned by a range of different investors who, rightly so, expect a return on investment.
“The advantage of forestry as an investment is that you don’t have to harvest at ‘maturity’. You can generally harvest from age 20 onwards and make good returns, depending on the market and quality of the crop. It is a very tangible investment with no steadfast rules around harvest age or timing,” he said.
“Putting illogical barriers on harvest age, production rates, markets or introducing some form of regulation is madness and will undoubtedly have a significant negative impact on the return on investment of those forest owners and further increase the reversion from forestry to other land uses.”
He said it would a saw millers dream to be able to “cherry pick” the logs they want from the log supermarket and at the price they desire but this would only drive log prices one way and result in divestment of many forestry portfolios.
Mr Peters also argued that logs shouldn’t move offshore until policies were in place to protect the local industry.
“That’s all fine and dandy but what’s the local market going to do with the thousands of tonnes of logs that it has no use for?
“The log export sector is a large employer in most towns and cities with operational log ports. Each log is individually measured, barcoded and scanned, there are loader operators, stevedores, port workers. The list goes on.”
Mr Musson said in the last decade a large number of sawmills had closed due to difficult trading conditions and poor demand for sawn products.
The mills that survived were better positioned, had sound market strategies and were highly mechanised.
He said in a perfect world a government would introduce policies to encourage a greater use of sustainable wooden products in both commercial and residential buildings.
“We cannot use quota systems, production barriers or regulation to encourage this segment of the industry to grow. These products require recognition as a preferred building product in order to grow the market.
“But even if this sector grew five-fold, the sheer volume of harvest availability in coming years will require a very large export market in order for the forest owners to realise an acceptable return on their investment and in turn reinvest into the next crop rotation,” Mr Musson said
