Saturday, April 13, 2024

Log rules might tighten exports

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The spectre of Government intervention has spooked forest owners worried about a proposal to regulate and certify log exporters.
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Three weeks ago Forestry Minister Shane Jones vowed to introduce greater regulation on log processing to ensure the domestic market has sufficient log supply rather than logs being sent to more lucrative markets.

Jones said he wanted to target logmongers, introduce a higher level of professionalism and possibly a code of conduct. 

Forestry advisers will be required to demonstrate they have the skills and experience to advise growers while log traders will need to pass a fit-and-proper-person test and meet record-keeping standards. 

The aim is to support a continuous, predictable and long-term supply of timber for domestic processing and exporting, Jones said.

His ambition is to substantially increase the number of people employed in the local timber processing sector and the Provincial Growth Fund has had several initiatives aimed at achieving that. 

Jones said the covid-19 crisis showed how an over-reliance on log exports to a few markets make the industry heavily reliant on them for its success. Meantime, he is concerned the domestic processing sector is missing out on log supplies. 

While reassuring foresters he will not introduce a quota, Jones aims to have a register of log exporters, traders and advisers who will be required to work to standards to strengthen the supply chain to domestic processors.

But Forest Owners Association president Phil Taylor said “At this stage the minister has only proposed enabling legislation but they still have to set the practice rules. At its worst, and there is no guarantee this will happen, it could lead to things like price controls and controls around competition and harvest.

“The Government speakers in the first reading debate seem to think giving a certificate to someone who buys and sells logs is going to lead to more logs being processed in NZ and not exported.”

He predicts an avalanche of clipboards as a result of the regulations, adding costs to the supply pipeline.

The log sector took a hit in August when international prices slumped and the market was knocked back again when China bore the initial brunt of the covid-19 outbreak earlier this year. 

More recently, log prices have surged again, up more than $50 a cubic metre from $130 a cubic metre before the lockdown. 

Over 60% of timber export earnings are from logs with China accounting for 80% of the market or almost half of NZ’s total timber processing revenue. 

Taylor is uncertain if the lift in prices was China refilling supply chains or a more structural shift in prices that will last into coming months.

But he is concerned any registration will only muddy the waters around increasing local processing capacity. He notes the Budget contained $5 billion for building new houses.

“We hope the Government will make sure timber is used extensively for this. Labour promised a wood preference policy in the last election.”

Estimates are that if regulations require NZ timber to be used in buildings to make them zero carbon about 5m tonnes of logs a year would be used domestically – about 15% of the total exported to China.

Forest Industry Contractors Association chief executive Prue Younger welcomes the chance to introduce a greater level of professionalism into log exports through a registration process. 

A wood-first policy is needed to underpin those efforts.

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