New Zealand log exports hit a new record last year, underscoring the concerns of local manufacturers that the country is sending too many unprocessed logs overseas, posing a threat for local timber supply in the future and undermining the goal to add more value to exports.
The country exported $2.41 billion of softwood logs in the first 11 months of last year, surpassing all previous records for any full calendar year, according to the latest Statistics New Zealand figures. Data for the full year will be released on January 30.
New Zealand is experiencing strong demand for logs from China, which has clamped down on harvesting its own forests and reduced tariffs on imported logs to meet demand in its local market.
In the first 11 months of 2017, New Zealand exported $1.81b of logs to China, above the level for any full calendar year and accounting for 75 per cent of softwood exports.
Increased shipments of raw logs goes against the aim of successive governments to add more value to commodities and riles the wood processing sector, which says more manufacturing needs to be done at home to sustain the local industry.
It says an uptick in demand for wooden housing could see supply having to be met from overseas if the current situation prevails.
Prior to the election, the wood industry, representing New Zealand's third-largest export commodity group, was annoyed at the lack of attention it received from the Ministry for Primary Industries which it felt was more focused on food safety, agriculture, horticulture and biosecurity of the border. Forestry, it was felt, was at the bottom of the MPI pile and fronted by junior ministers and officials.
The industry starts this year in a more upbeat mood with the new coalition government's commitment to re-establish the Forest Service, plant more trees, focus on regional economic development, require greater scrutiny of overseas investment in forestry, and improve the Emissions Trading Scheme for forestry amid industry concerns that foresters couldn't compete with rival land users such as dairy farmers under the current system.
"We are certainly on the radar now with the government very much pushing in the right direction. The whole industry has a much higher profile now," said Jon Tanner, chief executive of the Wood Processors & Manufacturers Association of New Zealand. "Forestry worldwide has to have the hand of government."
While government initiatives gave the industry more optimism about the long-term future, Tanner said uncertainty remained around the shorter term issue for the domestic market of more unprocessed logs heading overseas.
"We are still very concerned about the competition in the market right now and where that is going and how that is going to be regulated and tackled," he said. "We have got a major problem in the set up of the market. We have got a lot of logs being exported, and it's being increased.
"The demand out of China, all the pundits are saying, it's just only going to increase."
Other wood exporting countries such as Canada and Russia support their local industries while Chinese wood manufacturers benefit from subsidies, creating an uneven playing field for New Zealand processors, according to the WPMA which would like to see the government take a complaint to the World Trade Organisation.
Tanner said the WPMA was contacted by its counterparts in Australia late last year who were starting to experience a similar problem of increasing log exports to China.