Tree planting upturn

December 20, 2011

The Emissions Trading Scheme is helping drive an upturn in levels of tree planting.

MAF's just-released National Exotic Forestry Description shows that an estimated 67.6 million seedlings went in during the year to April 2011, up from 53.2 million the previous year or a 27 percent increase. This estimate is based on reports from commercial forestry nurseries.

These plantings equate to an estimated 60,000 ha of plantings, comprising 12,000 ha of new plantings and replanting of about 48,000 ha that had been harvested.

Industry feedback suggests much of the increased planting was motivated by the ETS, say MAF analysts, along with a generally positive outlook for wood and wood fibre demand.

Nearly half of the estimated new planting was funded through MAF's Afforestation Grant Scheme and the East Coast Forestry Project.

According to the annual NEFD report, for which larger operators only (growing at least 1000ha) were surveyed, there was a similar area harvested (40,000 ha) as the previous year. However other sources show an increase in total harvest area for the year, which indicates that a higher proportion of harvesting and planting activity was done by smaller growers but not captured in the survey this year.

However, the per-ha yield was up 6 percent, which industry feedback suggests is due to higher log prices justifying better levels of recovery per tree and a small increase in the average age at harvest of the main exotic forest species radiata pine – at 28.6 years, up from 28.4.

Meanwhile, statistics reported in MAF's September quarter production and trade update show total forestry export earnings increased NZ$32.7 million (3 percent) to NZ$1.1 billion in the three months to September 30. This took the annual earnings to end of September to $4.6 billion, accounting for 10.1 percent of total merchandise exports.

Export earnings for logs remained relatively strong in this quarter, rising by $NZ77.2 million (25.8 percent) due to strong demand and high log prices. China continues to dominate New Zealand's log export market, with volumes rising 32.6 percent, to a record high of 2.2 million cubic metres.

However, at the same time sawn timber export earnings fell NZ$31.4 million (13.6 percent). Sawn timber production went down 0.113 million cubic metres over the quarter – due to high log prices, weak domestic demand and a high exchange rate. Wood processors have become more pessimistic about their prospects.

Demand from Japan for wood panel products, though, remains strong following the natural disasters in March 2011.

MAF analysts have also done a half-yearly update of forecasts in the annual Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) report which was published in June.

This half-yearly report indicates that the Chinese demand for New Zealand logs is now easing, as inventories there are now at record levels and there is increasing competition from other supplying nations.

This, combined with subdued construction activity, had led to a revision down from a NZ$4.69 billion forecast for the year to June 30 2012, to NZ$4.26 billion.

For more information, go to the full reports in the Publications section of the MAF website.

ENDS

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