Farm Forestry New ZealandPresident's Comment
Neil Cullen, New Zealand Tree Grower August 2023.
The forestry outlook seems to be covered with dark clouds. Export log prices are in the doldrums with many commentators speculating that the Chinese building boom, which has dominated markets and taken 60 per cent of our log production, has peaked and demand will decline. The domestic market for timber is also in recession with high interest rates having an effect on new house starts.
The other stimulus for tree planting, the Emissions Trading Scheme, has also taken several hits from its creator the government, causing the carbon price to drop to the low $30s per unit. The combination of these factors has seen a lot of negative vibes throughout the industry and claims that new planting levels after the current season will plummet. Harvesting crews and logging truck firms are certainly suffering already.
Fortunately, most of our members appreciate that forestry is a long-term commitment and that the seedlings they plant today will live through several downturns and possibly more than ten elections before they are harvested. The fundamentals for forestry and reasons for planting as we all know remain sound.
What does NZFFA want to see from the government with regards to forestry? We would like a clear planting timetable between now and zero-carbon date of 2050. We would like an Emissions Trading Scheme which is confirmed to provide some incentive for production, permanent and transitional forest establishment especially on the erodible North Island hill country. We would like the government to enact a promised wood-first policy for state funded buildings to stimulate local processing. There are thousands of hill country farmers who want to do the right thing by planting trees. We will all benefit if that happens. It is far better for the government to support afforestation in New Zealand, rather than to buy billions of dollars in overseas credits when New Zealand misses its 2030 reduction target.
As I write this column the government has admitted it erred in not following the requirements of the Climate Change Response Act, and has retrospectively adjusted the settings which has led to the carbon price rising
to over $60. The clouds have lightened a bit. Our submission on the review of the Emissions Trading Scheme is still being prepared but will most likely favour the status quo over the other proposed options. There seem to be far simpler methods for governing afforestation rates than creating a dual market for credits. At a recent group forestry meeting with the Minister in the Beehive, the message was ‘Investor confidence has been badly damaged. Please reconsider.’
The Industry Transformation Plan which is supported by all parts of the forest industry has proposed a plan for our industry to improve value for the growing and processing sectors. The NZFFA has an important part to play in enacting this plan especially in the area of diversifying our forests. This has to be aligned with our ability to process alternative species and ensure architects and builders are looking closer to home for building materials. Millions of dollars of overseas funds are spent each year importing timbers of questionably sustainable origin when we have an increasing ability to substitute locally grown timber.
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