This week marks the beginning of Chinese New Year celebrations, which now directly affect the New Zealand forest products industry.
As our single-largest market takes a breather, there is a corresponding lag effect for New Zealand operators.
Everyone connected to the New Zealand forest products industry will now be aware of our
22 million-cubic-metre annual log harvest - more than half of which is exported to China, Korea and India in log form.
This is a great outcome for the forestry half of the forest products industry, but it is now an industry of two halves. The other half is the value-added portion, where wood is processed into products, mainly for export.
Until the recent rash of sawmilling job losses, many people may have forgotten that, in the past two years, there have been many sawmill closures, leaving about half that sector viable compared to pre-recession levels.
Thanks to the 1981 global recession, New Zealand was forced to sell off State forest assets. The resulting multitude of privately held, and largely overseas-owned, forest holdings, means New Zealand operates the most open market system of all softwood forest product exporting countries.
Also, our Government wants to protect other important exports - particularly from the agriculture sector - from tariff barriers in buying countries.
The Government also does not want to attract undue criticism from the World Trade Organisation so, while other countries have tariffs in place to produce domestic wood processors, our Government does no such thing.
The Canadian Government is under constant siege from the United States forest industry and government about Canadian industry subsidies, which allegedly suppress stumpage prices for publicly tendered wood sales.
It's a game of ducks and drakes as the Canadian Government has now moved to subsidise market development for Canadian lumber exports to China.
One good reason why the New Zealand Government could consider some market intervention is to provide some stability in what is fast becoming a fragile market, too focused on export logs. Without any intervention, there is a risk of a continued reputation in forestry and wood products employers for boom/bust or start/stop business activity throughout the forestry economy here.
Past export booms and busts have seen forestry frowned on as a career choice by young people looking for certain futures.
In reality, low-value log exports mean the industry is absolutely booming with forest harvest production. For new entrants into forest contracting and for less-experienced employees in the bush, there is no tomorrow. There is only today, while the boom is happening.
Globally, log exports' success in China is not the result of a free market in operation. New Zealand logs are only competitive because the Russian Government has moved to impose tariffs on its log exports.
When tomorrow, and the next inevitable bust, comes in the harvesting sector, the harvest will reduce as sharply as it rose and leave commercial realities to hit those who came late, borrowed heavily at the wrong time or did not cut when they needed to after the peak production point passed.
But, right now, that's our market and our industry.
My thought for the day, or maybe for the year, is: "Long may the log boom continue, because no other action seems more likely to save us from ourselves or from our boom/bust habit."
- John Stulen is chief executive of the Forestry Industry Contractors' Association
