Hundreds of forestry jobs in Northland under threat from low log prices

Andrew Widdowson of Hancock Forest Management says small forest owners would defer harvesting until the price of logs improves. Photo / Tania Whyte

Hundreds of jobs are at risk across Northland's forestry sector as a sharp fall in the value of logs exported to China threatens to stop local harvest.

However, Minister of Forestry Shane Jones wants to see prices drop even further which he says will help the local housing market that requires more timber.

Plummeting prices stems from logs sitting on the wharves at ports in China, not being sent to construction projects inland.

It has brought a sharp correction to a trend of strong growth that saw export revenue for logs rise from $4.683 billion in 2015 to $6.382 bn in 2018.

The latest fall, which happened in a matter of weeks, brought log prices down by 15 per cent on a take-it-or-leave-it basis demanded by Chinese log importers.

Northland Wood Council chairman Andrew Widdowson said smaller forest owners may defer their harvesting plans until the market recovered while larger ones would take a longer-term view.

Of the 20 million tonnes of logs exported from New Zealand each year, 2.6m tonnes go through Northport at Marsden Pt.

A surplus of logs in China could spell disaster for Northland forestry workers as export prices plummet. Photo / Michael Cunningham

Northport did not wish to comment.

Between 1200 and 1300 Northlanders are employed in the forestry sector and Widdowson said workers in the forestry and harvesting sectors would feel the impact of lower log prices more than others.

"Those under active harvesting will either wind up or decrease production in the short term, or lay off people. We're sitting tight and getting in touch with our export agents and not taking on too much capacity at the moment," Widdowson said.

He said it took about six weeks for an adjustment in production to come through.

On a somewhat positive side, Widdowson said the present situation took a bit of pressure off the industry in terms of the trucking industry that struggled to attract drivers.

Jones said the Government, through Te Uru Rakau is planning a forum after Parliament resumes in two weeks' time to identify what action the state may take to deal with the problem.

Forestry Minister Shane Jones expects the domestic housing market to benefit from further drop in the price of logs exported to China. Photo / NZME

A similar forum could also be held in Whangārei if necessary, he said.

"The price of logs is still above average and I want to see prices come down significantly that will help the domestic housing market where more timber is needed," Jones said.

"I expect overseas owners who think they have a social licence to own New Zealand's forests to change their business plan and to help the domestic processing sector.

"Any trade with China is both sweet and sour and where I see the most damage in New Zealand is capital-paying individual family businesses.

"What's happening is a warning to New Zealand's logging sector who intoxicated themselves into believing that China will continue to pay them well for the logs,"

Chairman of the Ngati Hine Forestry Trust, Pita Tipene, said those who owned trees could allow them to keep growing while waiting for prices to recover.

"Low export price is not a significant problem for Ngati Hine at the moment because we've come to the end of our harvesting.

"However, we have always made it clear that we don't want to export our logs in large volumes because we're always at the whim of the overseas markets in terms of the ebb and flow of international trade."

The trust owns 5,500ha of forests in Moerewa, Kawakawa and Whangārei.

Instead of mass export, Tipene said harvested trees could be used to support boutique industries making products such as tables and chairs.

Tipene said like some overseas countries, New Zealand should have a law banning the export of logs.

The New Zealand Forest Owners' Association is blaming low prices on several things, such as European growers cutting down their trees early to avoid an encroaching pest, the spruce beetle, and sending the logs en masse to China before they were infected.

The association believes some New Zealand growers would definitely stop selling to China at the new low rates demanded by their customers.

Along with the spruce beetle, an added impetus was China's Belt and Road policy, which saw 30 trains leaving Chongqing each week laden with goods for Duisburg in Germany.

Rather than return to China empty, the wagons were being loaded with logs for the journey back across Russia to China.

China's trade war with the United States has lowered the value of the Chinese currency, making imports more expensive.

It had also harmed business confidence in China.

As a result, logs were piling up on the docks in China, and not moving to customers inland.

That led importers to refuse to take any more, except at a discount.