New Zealand’s Log Exports Have Domestic Wood Industry Leaders Fearing for their Survival

Having sold off much of the Crown forestry estate over 30-years ago, most of New Zealand’s (NZ) forestry lands are currently in private hands. Today the NZ government is looking for those private forestry land holders to help them with carbon offsets, provide enough timber for housing, and earn export income and supply biofuels and biocoal to fill the countries’ vehicles and boilers. Those aims, some industry leaders believe, are in peril due to the sheer amount of timber exported overseas, in raw form and to one market. That market is China.

Last year, 80% of NZ US$2 billion (NZ$2.8b) log trade was earned in China. In less than 20 years, wood has become a big earner for NZ and forest owners say China has been a good customer. China is easily the world’s top importer of rough wood (logs), taking more than half of global exports. And NZ is China’s top supplier, contributing about a fifth of its log imports. Logs now make up about 5.2% of total NZ exports, and China is paying top dollar. However, the Wood Processors and Manufacturers Association (WP&MA) doesn’t see it the same way. The WP&MA claims NZ’s wood industry is not only too reliant on exporting but ignoring protectionism by our trading partners.

WP&MA chief executive Jon Tanner and chairman Brian Stanley claim China is subsidizing the logs when Chinese importers sell them to processors at a cheaper price than they were bought for. Tanner says that is artificially raising log prices, against World Trade Organization rules. But he claims that NZ won’t speak out.

In countering WP&MA claims, Forest Owners Association president Phil Taylor says that about 44% of logs are of higher quality and are not exported. So, the issue is not supply but price, he argues. Taylor went onto say that “The big challenge for the majority of our domestic processors is that they do not have the economy of scale. So, their response, given the log cost makes up a very significant proportion of their overall costs, is to try and get increased log supplies to compensate for that lack of scale and productivity.”