Forest loan could be repaid soon

00:00, Sep 28 2012

The Gordon Kear Forest near Palmerston North should be debt free after this summer's planned harvest.

Co-owned by the Manawatu district and Palmerston North city councils, the commercial forest returned less than anticipated last year because log prices were low.

But city council forester Mark Johnston said prices had improved since an early stop to logging in April and, as long as they held firm or increased, the city council would be able to pay the last $55,000 off its forestry encouragement loan this summer.

Manawatu District Council has already repaid its loans, and will be in profit. This will be the fifth year of a 10-year plan to clearfell the forest, with 34 to 52 hectares likely to be harvested.

The first 34ha is predicted to earn $385,000, which is below the $567,000 budgeted at the beginning of the process, when log prices were higher.

If prices improved, and Mr Johnston said that was a reasonable prospect, further stands of 4ha and 6ha were available to be logged.


Last season only 24ha, producing 12,728 tonnes of logs, was harvested. Further work was needed to clean up areas damaged by wind at Easter last year.

Logging ended earlier than planned, in early April, in anticipation of an improvement in log prices.

The net proceeds were $365,000, down from the $530,000 that had been expected.

About 42 per cent of the logs were sold on the domestic market, with 58 per cent exported, representing higher-than-expected exports and a weaker domestic market.

The coming summer's work programme would run from January until the end of April, depending on the weather and firmer prices.

The council has about $75,000 in its capital budget to cover costs associated with logging, including construction of skid sites, road maintenance, development of internal roads and consultancy.

About half the 161ha forest has been cleared.

It is being replanted to provide a source of revenue for the councils, and as part of the Emissions Trading Scheme.

The Gordon Kear Forest Management subcommittee approved the summer harvest programme at an extraordinary meeting in Palmerston North this week.

Manawatu Standard