'Fonterra for forests' targets small owners

GERARD HUTCHING
Last updated 14:31 22/08/2014

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The Green Party is warning that a proposal to set up a forestry company for smaller growers will defeat its own purpose if it becomes controlled by foreigners.

The United Forestry Group (UFG), a group set up to help forest growers with less than 1000 hectares, is ultimately owned by Australian and Chinese interests, the party says.

UFG is aimed at New Zealand's "wall of wood", much of which is maturing on 500,0000 hectares of small or steep landholdings.

It aims to assist 1400 or so small growers who by themselves might struggle with the economics of harvesting and exporting.

Green Party forestry spokesman Steffan Browning said he welcomed UFG's co-operative approach but with the bulk of forests already being foreign-owned, he feared that the operation could end up controlled by foreign interests only interested in locking in unprocessed logs for one market, China.

Company Office records show that UFG is ultimately owned by a joint venture called Superpen, which is half-owned by Timber Audits and Technology of Australia, and half-owned by a company linked China's Xiangyu Group.

"UFG is owned by Chinese and Australian interests," Browning said.

"It is a company, not a co-operative, and it plans to sell the logs to one market - China. Not even Fonterra follows such a risky practice of selling into just one market."

He also questioned the company's commitment to processing.

"Rather than sending increasing volumes of low value-added raw logs overseas, we should be processing the logs into finished products such as structural timber."

However, UFG said the Company Office records were in the process of being changed.

Acting managing director Malcolm McComb said 30 per cent of UFG would be owned by the three New Zealand directors and a residential 10 per cent was being held unissued for other New Zealand shareholders.

"The ultimate aim is that it will be a New Zealand-dominated and controlled entity once the forest owners come in."

McComb also clarified that the company was not a co-op, and that forest owners could use its services without being a shareholder.

''It's not about the services really, it's about creating the scale amongst the forestry owners themselves so they effectively provide their own services."

McComb, a director of Superpen and managing director of Australian timber marketer Pentarch Group, denied that the company would target only China and unprocessed logs.

Pentarch had been in New Zealand for 15 years, "and we have always supplied logs to the domestic mills as well as exported".

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As for having one market, he said China "at the moment is the dominant procurer of logs in this particular industry".

"That changes from time to time over the years, so we maintain a strategic view where we're optimising the value and minimising the risk, and that requires you to have a presence in all markets."

FACTBOX

1.7 million hectares plantation forests

14,000 forests under 1000ha

Forestry exports worth $4.27 billion

Third largest export earner after dairy and meat

Goal to lift exports to $12b by 2022

China takes 60 per cent of logs

New Zealand is the world's largest exporter of softwoods

- Wellington

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