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Leader's LetterSeptember 2006
Future of Forestry on Shaky GroundForestry has been going through a tough time in recent years. There are a number of reasons for this ranging from poor overseas prices, abundance of softwoods on the world market, the high dollar and a fragmented group of industry participants ranging from corporates to large foresters and investors, one of the largest being the Harvard University pension fund. At another level there are the forestry contractors who cut and carry the logs. These are mostly private contractors, but the machinery they use for felling, hauling and cartage can easily run to up to $10million for one contractor, which is a lot of money to be serviced if your contract is not renewed even for a short period. Add in wages and other overheads, and forestry contracting is a very risky business indeed. Then there are the mills, be they paper mills, sawn timber or medium density fibreboard (MDF). Unlike the dairy industry or even sheep and beef, there is not a co-operative in sight. This silo mentality that exists in the forestry sector is a problem, given that forestry is one of New Zealand’s big three exporters but there is no vertical integration or co-operation between the different sectors of the industry. Until the 1980’s vast areas of forest in New Zealand were owned by the government. Along came the New Right, and the flogging off of state assets to overseas buyers and corporates at bargain prices began. In the early days of New Zealand First we said we would take the forests back if elected. Nobody wanted to know, but the industry would have been a lot healthier if that had happened. Instead, what happened and what is happening is now a familiar story of privatisation, downsizing, outsourcing, streamlining, and all those buzzwords that mean that a state asset that has been built up over many years will be stripped bare and have the value fleeced out of it. Our biggest single forestry company, Carter Holt Harvey (CHH) which is also the owner of the Kinleith pulp and paper mill, has recently been the subject of a share buy-out and ultimate takeover by private interests. I fear that this large forestry concern is now in danger of being fragmented off into business units, with profit as the one and only goal. The long term sustainability of the forests will not necessarily be paramount if more profit can be made from clearing the land and using it for something else. This is not New Zealand for New Zealanders as we would want it. The business units of CHH may well go to overseas buyers, and there will be no advantage to the forestry industry of this buyout. On the contrary, there will be job losses and contractors out of work. Seventy percent of our forestry is in foreign ownership, and I can’t see the value to New Zealanders in that statistic. In New Zealand First we have what some would call an old-fashioned view in that we like our industries to be moving ahead. We like to see money spent on research, market development, new products and more exports. We think that government should encourage investment that increases productivity. Unfortunately in the case of forestry the horse has already bolted, and now we can only hope that the major players in the industry focus on growing the resource and not stripping it bare. Doug Woolerton MP
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