MAJOR PLAYERS

Since the days of forestry behemoths like Carters and Fletchers, New Zealand’s big plantation forests have become largely foreign-owned. They are represented by the Forestry Owners Association, whose members manage more than 1,158,000 hectares of the country’s 1,738,000 ha plantation forestry estate. The major players include: Hancock Timber Resource Group – Canadian-owned timberland investment manage 249,000ha, largely from Carter Holt Harvey in 2006. A balance of cutting rights, leases and 99,000ha freehold ownership. Kaingaroa Timberlands Ltd – holds cutting rights to the 189,000ha Kaingaroa Forest. Majority owned by Harvard Management, with NZ Super Fund. Matariki Forests – manages or owns 130,000ha, a consortium of US firm Rayonier, AMP Capital Investors, Phaunos and Deutsche Bank’s REEF Infrastructure Fund. Ernslaw One – manages 100,000ha of forest and owns half. Owned by Malaysia’s Tiong family. Also owns WIP International (formerly Winstone Pulp) Smaller players include Juken NZ Ltd (54,000 ha) and Crown Forestry (57,719 ha) Enza, where Enza is quite controlling, whereas the forest industry is a completely free market’’.

Hence, the variability in ‘‘wall of wood’’ forecasts – ‘‘it might all be cut earlier’’.

It is a very real danger, Dermer says.

In the past, he says companies ‘‘run by accountants’’ have cut trees as young as 18 in response to high prices. In the worst case, such actions can create timber quality issues; in others, they can create a long-lasting impression that New Zealand radiata is only good for less valuable products.

Big companies had realised the error of that strategy, but ‘‘I still have those concerns’’.

Woodco’s strategy is also likely to acknowledge that, though further processing is something of an industry holy grail, raw log exports will continue to play a major role. It provides a valuable release valve when volumes are heavy or local demand has dried up, Ducker and Stulen suggest.

China’s demand is heavily tied to the country’s economic fortunes, but Korea and earthquake-hit Japan are seen as ‘‘shining lights’’, as they take an increasing mix of wood products.

Orders from these countries have been vital while New Zealand’s new residential building activity lurks around 40-year lows.

Other bright spots on the horizon include the Christchurch rebuild, new forms of super-strong wood building products, and research into using wood for biofuels or chemicals.

‘‘For 18 months now, forestry has been living the log export dream,’’ Stulen says.

‘‘Now I’m as sympathetic as you are that it’s not the best value, but it is value, and we really need the housing starts to come back for the rest of the forestry market to boom.’’

Carbon credit regime C8