Many of Marlborough’s small forest block owners are looking at harvesting within the next few years, pumping millions into the region’s economy, industry experts say. Source: The Marlborough Express
Marlborough Forest Industry Association president Michael Cambridge said after years of volatility in log prices, small private owners were eager to take advantage of the strong, steady log market and low shipping costs.
“A lot of locally owned smaller blocks, which make up about 50% of the region’s forested land, are starting to harvest now,” Cambridge said.
“The international log market is strong and steady, and the domestic market is doing well, and that money will be coming back into Marlborough, unlike the corporate-owned blocks.”
The majority of forestry blocks in Marlborough were planted by the New Zealand Forest Service in the 1970s and were later sold to large companies, such as American-owned Rayonier and Nelson Forests, he said.
The large company blocks tend to harvest regardless of market price, to satisfy markets.
Owners of smaller blocks had been sitting on their investments, waiting for the best returns, he said.
“It’s quite a balancing act. Of course people want to harvest as soon as possible, because it’s a lot of money tied up,” he said. “But as the trees get bigger, harvesting costs less per tonne, and the bigger logs are worth more per cubic metre.”
Robinson Forest Management owner Aaron Robinson of Tuamarina said the steady international market was being driven by emerging Asian countries’ appetite for wood.
Meanwhile the harvest profile of the world’s major timber suppliers North America and Russia have flattened off.
The strong, stable prices were very attractive for small forestry block owners who have been “sitting on their one-shot investment” waiting for the right time, he said.
“The industry is certainly positive at the moment; there is a lot more inquiry from people looking at harvesting.
“Owners of difficult blocks in the Marlborough Sounds where the margins have been tight are pushing the go button.”
Robinson manages forestry blocks ranging from five hectares to 200ha. The bulk of small blocks in Marlborough were less than 100ha, he said.
However the smaller blocks had tighter margins, so he had been collaborating with another Marlborough forestry consultant, Merrill & Ring, to help reduce harvesting costs for clients who owned adjacent forestry blocks in Fabians Valley.
“We’re working in together to present a more attractive package to contractors to help get the forest owners a better result,” he said.
Last year, a little under one million tonnes of timber was logged in Marlborough, and the region’s harvest profile would continue to gradually increase over the next 12 years.
Marlborough contract forestry crews and sawmills have responded to the anticipated increase in logging activity by making improvements to capacity and efficiencies, he said.
The Kaituna Sawmill had resource consent to increase output from 80,000 cubic metres to 500,000 cubic metres. Forestry crews had invested in new equipment, health and safety, and training.
Forestry was an important industry to the region and was a “huge employer”, he said.
The 2007 Business and Economic Research Ltd report on the economic contribution of the region’s forest industry and its support services showed it employed 1100 fulltime equivalents and 350 businesses.
When the report was written in 2007, about 750,000 tonnes of forest was harvested, an output of $418 million and generating $170m in the region’s gross domestic product.
