Regional Development and Forestry Minister Shane Jones has dispelled speculation he is contemplating a log quota amid his concerns the high premiums being offered by a revived Chinese market threaten the ability of local processors to get up to speed with a covid-19 recovery.
“A lot of forest owners believe it is not their job to solve the unemployment woes of the downstream sector, it is just to fulfil the requirements of owners.”
Proposals have been put forward by forest owners to establish an accord between owners and processors to ensure better flow of raw material timber into the domestic processing sector.
“We have had a robust meeting.
“They feel a bit ambushed that I have said we need to investigate the role forest owners have held, where they believe they are men of the manor and the processors water carriers,” Jones said.
One proposal is to ensure log mongers will be regulated,
Jones wants a higher level of professionalism, a code of conduct and possibly a register of log exporters.
“I have never said we will hobble exports but we want NZ forest owners to contribute to ongoing employment of New Zealanders downstream.”
Red Stag, the country’s largest timber processor, chief executive Marty Verry said processors are seeking only price and supply stability.
“After that foresters can fill their boots without any restrictions on exporting logs whatsoever. We definitely do not support quotas.”
Verry said many countries subsidise log processing, making it hard to establish operations in NZ and pushing up the ability of those countries to pay a premium for NZ logs.
Jones acknowledged the challenges that creates for domestic processors.
“I do know our trade negotiations have raised this issue on numerous occasions.
“It has featured in trade negotiations with China. I assume China, like any country desperate to look after its people and their growth rate, has come off significantly and the fact they pay the prices they do is good but we don’t want a level of financial pressure falling on processors with this price spike, fall and spike.”
Verry said most forest owners are good at smoothing the spikes but some do chase the one-in-25-year chance to make the most of prices.
“But I do not see it as a universal forester issue.”
Verry said if NZ timber was used to a greater extent here there is the potential for five million tonnes of logs to be used a year locally.
“This would take a big chunk out of our reliance on China.”
Log exports account for over 60% of total timber export earnings and China is 80% of the export log market.
Verry said there is an increasingly good conversation starting about wood procurement policies and use locally.
Jones acknowledged many local processors are not as robust as Red Stag.
But his ambition is to substantially increase the number of people employed in the processing sector. It has 30,000 working in the wood processing sector and he has a three-point plan to grow it.
It included better surety of raw timber supply, improving the power connection to Gisborne, a key forestry region, and investment in training and capital expenditure.
He is not including the Gisborne-Wairoa rail line.
“We are awaiting KiwiRail’s chief executive to come to us with a recipe for that.”
Verry said there is potential for forestry jobs to slump by 10,000 in the next couple of years but buying local could have a big effect on reducing that impact.
“NZ has to really start to think about where that dollar spent ends up and how many Kiwis it looks after.”