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Sacred cows and cursed trees

John Ellegard's blog
Sunday, March 20, 2016

News that the forestry industry is likely to fall short of its aim to treble the value of wood exports by 2022, (as revealed on page 5 of the latest Logger magazine), may come as a shock to some, but the cards were always stacked against it.

And what makes this situation so much harder to swallow is that our very own government has been largely responsible for undermining the industry's growth efforts.

In spite of what various government ministers — and the PM himself—have espoused about the importance of forestry to this country since coming to power, they have actually been working against the interests of forestry when you analyse their actions.

Our government has encouraged the wholesale chainsawing of the best forestry assets in the central North Island and made it much more difficult, if not impossible, for future investors to secure sufficient wood to supply processing plants of significant scale. Don't believe me? Look at Landcorp, a government-owned business that is right at the forefront of converting forests to farms, despite facing millions of dollars in losses on its dairy operations.

Dairying is currently a cot-case and could remain so for many years to come. But this government is so in love with dairy cows it cannot see that.

Ministers have gone even further to help farmers, at the expense of forestry, by shielding them from the ETS and then deliberately driving down the value of the carbon credits it gave to forest owners. Such policies have boosted the price of farmland and made it too expensive for anyone in their right minds to think about planting new forests.

And the argument that allowing market forces to determine where farms and forests go is the best approach, is a joke, because the government has tweaked the policy levers to make sure it isn't a level playing field.

Consequently, market forces are distorted and forestry cannot win in the face of such overwhelmingly favourable treatment of farming. Why treat forestry different? Maybe it's a perception forests are all overseas-owned, which is not true - New Zealanders own more plantation forests than foreigners.

The government tell us it is working hard to boost the use of wood and attract new investment into our industry. How naïve. Sure, it is trying to encourage foreign investors to build new high-tech mills in the central North Island to turn the wave of exported logs into value-added products. But there's no guarantee they'll get the supplies they want at prices they can afford. Government policies and actions have seen to that.

It only serves to demonstrate this government has no understanding of how forestry works.

Forestry is unique. It works in 25-plus year cycles and cannot be treated like any other agrarian business. It requires policies and actions that reflect its uniqueness. It requires strategies devised for the long term, not the next election. What we are seeing now is the result of shonky thinking and actions at the national level.

Take forestry seriously, treat it right and it will achieve great export returns. Better than dairy, in fact.

Who is going to make that happen?

John Ellegard
New Zealand Logger www.nzlogger.co.nz

The forestry message

John Purey-Cust Ponders
Saturday, March 19, 2016

I’ve just finished my Monday mail speed-read of the week’s first two Ag freebies. People say that the future of forestry lies with the ‘small’ forest owner but forestry isn’t obviously there in these papers.

There is quite a lot to say about Landcorp’s dumping of dairy from its pine conversion pro- gramme in the Waikato. Alternatives are men- tioned but there is no analysis of the place of forestry amongst them. The suspicion hovers that for a while now the forest might have paid better and that its removal is more of a crusade than economics.

One or two once-forestry people are there.

Chris Perley will be worth another more leisurely read, there are two Beltons (one on clams and the other one forestry credits), and a popular ag- ricultural soil scientist tells (entertainingly and as usual) the market to eff off if it doesn’t agree with his science.

Two more papers will come later in the week. All four will have tables and graphs illustrating the primary product markets of the day and all will exclude forest products. Why?
At the moment the only writer that I know of to regularly cover the ups and downs of the forest products market is Allan Laurie in the Tree Grower. He does an excellent job measuring the ebb and flow of prices in the log market, but he doesn’t aim at the person who needs convincing that commercial forestry has a place on his farm.

There are also occasional articles of value on the subject (see Peter Gresham in the Novem- ber 2015 Tree Grower), but no one offers the full package. The big value of forestry is as an ac- cumulator of wealth, quite a lot of it in fact, something which a routine agricultural crop doesn’t always do, and there is value too in eco- nomic diversity

How do we measure this, express it simply? Weekly price tables aren’t needed - too often; we won’t miss a day by day change and can usually hold off for another year or two anyway. The trees don’t go bad if left where they are, nor do they cost money growing, in fact they make it - a unique virtue.

Economic analysis labours over these problems and becomes enormously complicated, no help to everyday decision making. We need to keep it simple. Perhaps it is as simple as (for radiata) ’20 tonnes/year @ $100/tonne x 30 years = $60,000 per hectare.

Don’t come back to me with a pack of split infinitives and if and why and but and when. Just adjust the figures to suit.

Disclaimer: Personal views expressed in this blog are those of the writers and do not necessarily represent those of the NZ Farm Forestry Association.

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