Billion Trees will fail without Wood First policy

Friday 12 Jul 2019

 
OPINION: Marty Verry, CEO, Red Stag Group. Would you invest NZ$481 million in growing a product on the assumption that the price and demand for it in China in 28 years will be the same as it is now? Of course not. But you are. We all are through the Billion Trees programme.

China takes seventy-five percent of New Zealand’s logs. You could say we have all our logs in one basket. So, the question nobody has asked is, will the demand for our trees be there in twenty-eight years and at what price?

Tens of thousands of hectares of farmland has been snapped up by investors, giddy with grants from the NZ$481 million Provincial Growth Fund allocation to the Billion Trees programme. They have pushed land prices up forty-five percent according to the Real Estate Institute of New Zealand.

Farming communities are up in arms at the rapid change, and righty so in my view. No so much because trees are bad (they are great), but because many of these forests could become investment failures, never to be harvested, and a fire and forest disease risk for decades. A white elephant in every rural road.

So why the doomsday scenario, and what can be done about it?

Firstly, a reality check on relying on China long term for our billion trees. Despite MPI targeting having two-thirds of its 50,000 hectares extra planting annually going into natives, the Billion Tree cabinet paper acknowledges most will be in plantation crops requiring harvesting and re-planting. This seems right given MPI’s own CO2 sequestration look-up tables show natives only absorb one tonne CO2 per hectare annually after fifty years. Hardly a long-term solution to climate change, and certainly not a great return for investors.

What about manuka honey? Manuka is a nursery crop for the larger natives that will eventually take over. So, no long term putea for the mokopuna, as the forestry minister might describe the lack of money for the grandkids.

No, the majority of the billion trees will be radiata pine, and radiata pine needs harvesting and re-planting to make the feasibility models work and keep forests healthy. That relies on demand and pricing that covers the cost of land, planting, silviculture, harvesting and transporting the logs.

The problem arises because we are not the only country to work out trees sequester CO2, and launch a billion tree policy. There are a plethora of them around the world. India has planted a billion trees. So has Ethiopia. Pakistan has a ‘Billion Tree Tsunami’ programme underway. A UN billion tree campaign was so successful it was upgraded to a Trillion Tree programme. Even Australia has a billion tree policy.

So, will China need our one billion trees? Ten years ago, it temporarily stopped harvesting to replenish its own forest estate. New Zealand’s supply shot up to forty-three percent of China’s log imports. However, it recently announced plans to increase its own forestry estate by 11 billion cubic meters by 2050. China could be producing enough of its own wood products to replace log imports from New Zealand six times over.

This is before one factors in the huge increase in supply targeting China from the rest of world and New Zealand’s own increased production, and the fact that the demand now from China is largely driven by the huge urbanisation programme underway there which will be largely complete by the time our billion trees mature.

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