Why do we continue to export logs?
OPINION: Every ship leaving Picton with a load of logs is sending away jobs that are desperately needed here. That came through in spades earlier this month when I visited local timber mill Flight Timbers with primary industry spokesman Damien O'Connor and forestry spokesman Chris Hipkins.
New Zealand's forestry and wood products industry has grown in volume, but struggles to add value.
More than half of the trees harvested in the June 2013 quarter were exported as logs. We surpassed Russia as the largest softwood supplier to China. Yet New Zealand continues to import processed timber; made by others from our own logs.
China has replaced Australia as New Zealand's top export market, accounting for 21 per cent of total exports. The latest IMF report shows this is up from 4.5 per cent a decade earlier.
"Our rapid transition and reliance on China as an export destination for raw logs exposes New Zealand's forestry industry to the vagaries of the Chinese market. at the cost of local regional wood businesses," the report says.
In recent months, log prices paid at the Picton port gate have dropped 35 to 40 per cent, to $75 a tonne, depending on grade and individual export buyer. The new pricing hits forest owners, loggers and trucking companies as the gates shut because harvesting trees will not be economic.
Flight Timber injects $4.5 million through direct site wages into the Marlborough economy, and is a major employer in our region.
Many timber mills have closed down across the country, unable to compete in an aggressive timber commodity market.
It is essential for regional economies like Marlborough that timber processing companies are supported by central government, ensuring viability for the long term. Simply exporting raw logs doesn't work.
Labour's forestry and wood processing policy will ensure mills like Flight Timber will continue to contribute to the Marlborough economy by adding value to wood products.
Labour's wood policy will see encouraged investment, moving the focus from logs to higher-value products, through a "tax" deferral for investment in plant and equipment by means of an accelerated depreciation provision.
Also reintroduced will be a tax credit to encourage private investment in high-quality research and development, leading towards advanced wood construction technologies.
What impressed the Labour team when visiting the Flight plant was the use of precision technology to achieve maximum yield from the raw logs.
The ability though technology to turn low-grade timber into structurally strong, useful building timber required considerable and commendable investment in technological processes by the company.
Local timber companies need a supportive regime to stay in business, contributing to the local economy. Forestry in Marlborough must remain a significant contributor to the economic future of the region.
As a region and a country, we need to add value rather than simply volume to our export timber products.
- Janette Walker is the Labour Party candidate for the Kaikoura electorate, which includes all of the Marlborough region.