Log exports jumped to $2.4 billion in 2013 up 34% from 2012, with New Zealand now in the top three softwood log exporters in the world and the number 1 supplier to China. At the Forestry Investment Market 2014 (FIMO) conference recently held in Auckland much of the focus was on the resurgent commodity pricing for NZ logs, predominantly a result of the insatiable Chinese demand coupled with the Russian excise tax on their exports, pricing the Russians out of the market.
Whether you believe the forecasts or not, one thing is clear. Deforestation in NZ is increasing again with harvesting outpacing re-planting or new planting.
The problem was touched on at the conference and in a recent article in Stuff 'Replanting a concern for logging industry'. Largely it comes down to the cost of land. Capital appreciation of land may outweigh the value of re-planting post harvest and the cost of purchasing bare land for new planting is prohibitive. In addition, many of the forests due for harvest over the next 10 years were planted by investors looking for a return on only a single rotation.
The current path will lead to an ever decreasing forest estate and is obviously bad news for the long term sustainability of the forest industry. It is also disastrous for New Zealand's greenhouse gas emissions. The forests planted in the 1990's are NZ's current climate change safety net, balancing our carbon deficit by capturing more carbon emissions than the increased pollution from industry such as transport and farming. New Zealand's gross emissions have increased 25% from 1990 and the Kyoto commitments were only met by virtue of forestry.
New Zealand need's policies from Government not only to reduce our countries emissions, but also to ensure the long-term health of the timber industry. If the predicted Chinese growth over the next 15 years turns out to be correct it would be good if NZ had the wood resource and capacity to meet such demand.