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NZ logs are growing with no signs of decline

Long truck and trailer units loaded with perfectly straight radiata pine logs are rumbling along the highway between Hawera and New Plymouth. Logs are a growing business for the rate payer owned port and they’re rolling in and out in record numbers. Source: Stuff NZ

That’s meant the port has had to adapt its operations to meet the needs of its forestry customers.

According to the port’s 2016 annual report, 357,000 JAS (Japanese Agricultural Standard tonnage) were exported during that financial year. That was well up on the 209,000 JAS shipped overseas in 2015. As a result, log revenue soared 80%, which helped offset a fall in commodity imports and exports.

That growth is showing no sign of easing.

According to the Port of Taranaki’s latest annual report, its “log business continues to grow exponentially”.

The report states that “favourable market conditions, low inventory levels in China, and large numbers of harvest ready trees in our catchment area have combined to produce another year of record growth.”

In the last financial year 486,000 JAS passed across Port Taranaki’s wharves. That’s a jump of 36%, which saw revenue generated from logs surge 29%.

It’s meant the port is having to change the way it stores logs. As well as stacking them higher, it’s also “investigating developing more land at the former power station site to store logs”.

I suspect the growth in log exports has meant more trucks on our roads. But that might not always be the case. The port is “examining means to extend our forestry catchment area and service the growing demand by developing a combined roadrail transport mode for logs”.

With rail facilities onhand the port says it has the infrastructure to make this practical and economically viable.

The log business is providing a lifeline for the port during a challenging period. Both revenue and profitability are down on the previous year.

One reason is the fall in farmgate milk prices. Farmers had less money to spend and the ripple effects were felt across the New Zealand economy, including in Taranaki.

Good growing conditions for grass and crops over the summer and autumn, combined with tight cashflows, saw revenue for the port’s dry bulk livestock feed business plunge 25%.

With the milk payout up and a wet spring – I suspect those figures will rebound this year because feed companies have been struggling to keep up with demand.

The latest figures follow a report published in March by the New Zealand Institute of Economic Research on the plantation forest industry, which highlighted its value to the economy.

It found the forestry and logging sector is worth NZ$1.4 billion to the national GDP. It’s hugely important to provincial economies like Gisborne and the surrounding area, injecting NZ$96 million annually. That’s nearly 5.55% of that region’s GDP.

In Taranaki, the figure for logging and forestry was only NZ$8 million. But wood product processing pumps NZ$50 million into the region’s economy.

The Ministry of Primary Industries forecasts that forest product export returns will reach NZ$6.15 billion by 2020, with increasing returns form sawn timber, wood panels and pulp and paper.

China’s our biggest customer, followed by Korea, India and Japan. China buys a lot of raw material such as logs, but Japan is by far our biggest market for fibreboard.

The report was commissioned by the New Zealand Forest Owners Association and Farm Forestry Association. They were eager to highlight forestry’s wider benefits, especially in carbon storage, erosion control, water quality and biodiversity.

It’s a refreshing change to hear positive stories about the forestry sector. As I’ve mentioned previously, I reported on politics in Tasmania for four years. During that time much of the political debate was dominated by the bitter and protracted wars between the timber industry and environmentalists.

One environmentalist lived up a tree for 14 months to prove a point, timber giant Gunns collapsed, sawmills shut and people lost their jobs. It was a grim time.

Australian taxpayers chucked millions of dollars at a peace deal designed to end the war. I hope New Zealand never ends up like that. When I see a logging truck I think about the jobs those logs create.