Regulating log exports - is this the answer?Friday 25 Feb 2022
Re: The Case for Log Export presented By Mr. M. Musson (Offcuts 11 February 2022) The case for regulating the export of raw logs. My argument is not that we need to cease the trade in raw logs it is that we need to level the playing field. The most graphic example of this distorted playing field I have seen was presented at an after-dinner talk provided by Dennis Nielson some years ago where he gave a talk on the Chinese sawmilling industry. The sawmilling industry at the time was very basic with multiple small units making up a sawmill “unit”. This may have had 30 small saws each with 3+ labourers that produced timber sold through a single entity. The single most telling part of the talk was when he presented a photo of the slab and sawdust pile. He informed us that this waste product was sold in China for USD $130 per tonne. This single item showed that no matter what our lumber price we are dealing with pricing that cannot be explained by a free market. The New Zealand wood processing industry faces tariff and non-tariff barriers in our export markets. The trojan horse of health and safety has led to the predominant use of mechanised harvesting systems with vastly increased capital tied up. This requires higher production levels to keep costs down. This means that the tail now wags the dog as any market has to take 280 to 400 tonnes per day to keep that mechanised beast afloat. A lack of certainty over the resource means any investment in processing is constrained. No sensible investor will commit to building new facilities when the raw material can be sold without any constraint to sustainability. The last 5 years have seen roundwood removals far in excess of the non-declining yield. We have a hole in our non-declining yield harvest of around 20 million cubic metres. The harvest and sale of forests aged 18 to 22 not only reduces the non-declining yield but makes a mockery of any carbon accounting that assume those forests will add at least 6 years of carbon or around 150 tonnes for every hectare of young age harvest. The solution to the coming crunch (in 5 to 10 years) and the means of levelling the playing field is to regulate the export of raw logs. The goal would be to reduce the unrestricted export of raw log to 10 million cubic metres per annum. This would be done in stages over 10 years starting with a cap of 20 million cubic metres and reducing by 1 million cubic metres each year. The Mechanism: The following would create an environment where the forest industry can prosper without undue influence on the property rights of the current forest owners: Unprocessed round log exports (of any grade or age) is regulated to ten million cubic metres per annum combined for Radiata pine and Douglas Fir distributed by a right to export raw log auction system. Further unprocessed logs can only be exported if it is independently certified to have been produced from stands that are 32 years old or older for Radiata pine and 50 years for Douglas fir. No other species may be exported as an unprocessed log. The Result: ● Wood quality of our forests will measurably improve (older is better) ● Industry will have the confidence to invest in processing knowing that the resource cannot be sold out from under them ● Current log buyers will move to at least semi-processed timber ● Substantial reduction in our use of Methyl Bromide ● Prices will rise and confidence will return to the forest industry ● Approximately 12,000 direct and indirect jobs will be created in the regions ● The value add will increase the return to NZ Inc. (Export GDP) by $1.4 billion on current market prices. This additional return is spread via direct wages, services, and profits across a much wider spectrum of the forestry sector. Paul Marshall (B.For.Sc., M.Sc.), Timaru, February 2022 | ||
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