|
Industry
Comment
The
forest industry, much like the agriculture industry, runs in
cycles reflective of a number of variables. These variables are
mostly market driven such as labour market conditions, land
prices, and log prices. The East Coast Forest Industry is
currently in a state of depression, as it is in the rest of the
country.
Most
of the contributing factors for this current downturn are beyond
the control of forest owners, managers and processors. One such
factor is the low log prices we are currently experiencing as a
result of the strength of the New Zealand dollar.
New
forest plantings are down also this season. Locally, Juken Nissho
Ltd. is the only company with a large planting programme of new
forests, with the remainder of forest plantings being second
rotation. With farming enjoying a bit of “time in the sun” and
land prices on the increase, this is not surprising.
The
local silviculture market condition is also looking weaker, with
many company’s programmes on the decrease, resulting in an
over-supply in the labour market. For the forest owner and manager
this is not a bad thing, as this has induced a natural attrition
which has increased the overall calibre of contractors in the
market. This should in turn give managers better value for money.
The
same can be said for harvesting crews. Chinese based Huaguang
Forests Company Ltd. (HFL), with the regions largest harvesting
programme, has reduced its harvest production significantly.
However, the downfall in log prices this is not an incentive for
growers to increase harvest production due to the availability of
harvest crews. In fact, many owners are putting their harvesting
on hold till log prices are more favourable, thus exacerbating the
situation.
Recent
poor publicity about the regions largest grower, HFL, has
initiated a negative public perception of the industry. This
situation is frustrating for the other forest companies in the
region, and it is saddening that the industry is judged by one
performer.
However, despite the grim conditions we are currently facing, the
industry remains strong with Kohntrol Forest Services Ltd.
remaining at the forefront of forest management solutions in the
East Coast region.
Capital Rating
The
Gisborne District Council decided
recently to move in line with a number of other
councils throughout the country and introduce a Capital Rating
system for all rateable land in the district. For forestry they
believed this would effectively reduce rates for forest owners.
Unfortunately they also decided to introduce a roading weighting
for forest rates of 4 times. This is considerably higher than any
other roading weighting, such as farming which has been set at
1.5. In addition to this, individual forest lot owners would each
be charged the $380 utilities surcharge, rather than paying a
share of the charge over the entire estate.
Chairman of the Eastalnd Wood Council (EWC) Julian
Kohn said “despite significant lobbying by EWC we were unable to
persuade the council to reduce the weighting. They argued that
forestry caused more wear and tear on roads than any other user.
The group was able to provide reports and evidence to the contrary
but this held no weight with the committee”.
As a
result the EWC has decided to look at applying for a judicial
review on the grounds that due process was not undertaken. The
group is currently seeking a legal opinion on this and will make a
decision within the next few weeks.
The
council has asked to meet with EWC to discuss the issue in more
detail. They are hopeful that the decision can be reversed for
next years rating round.
|
CARBON
CREDITS:
Facts About the New Zealand governments Kyoto Policy and how it
affects forestry - Kyoto Forestry Association Newsletter August
2005
Large forest investment has virtually stopped
in the country. partly as a result of the Carbon Credit issue.
About half of the countries carbon emissions
come from the farming sector but the government is not proposing to
charge for these increased emissions. If each large Dairy herd
owner planted one hectare of trees each year that would absorb
enough CO2 to offset the herds methane emissions.
New Zealand wood products will receive price
subsidies supplied by the Carbon Credits from the forests.
A hectare of new forest harvested and replanted
in perpetuity is enough to absorb over 40 tonnes of carbon
dioxide. A half hectare is enough to compensate for a lifetime of
driving.
Successive governments were relying on planting
rates of 40,000-50,000 hectares per annum to satisfy their Kyoto
obligations. Planting was less than 10,000 hectares in 2004 and
does not look like increasing in the near future.
The Amazon rain forest was deforested at a rate
of 9 football fields or 5 hectares per hour for the 12 months
ending August 2004. The governments Kyoto policy is preventing new
planting at a rate of 5 hectares per hour.
Forestry prevents soil erosion and helps
maintain water quality. More native bird species are found in
Kaingaroa forest than in any other forest in New Zealand.
We have seen the value of the Carbon Credits go
from NZ$7.50 two years ago to NZ$39.00 currently.
Australia has not ratified the Kyoto protocol
yet Carbon Credits from their forests are selling well.
If credits were devolved as was intended then
we could have expected to see planting rates in excess of 50,000
hectares per annum until the end of the CPI in 2012. That is
500,000 hectares more of Kyoto forest worth around NZ$2.5 billion
in forest carbon sinks.
|
