ETS costs cut 66% for forest owners – McClay
Additional reductions to costs for forest owners in the Emissions Trading Scheme Registry (ETS) have been announced by the Government.
The organisation says pressure has been exacerbated by the cyclone which hit New Zealand in February, but that pressure comes on the back of a tough three years characterised by Covid-19, fuel hikes, high inflation, and continuous wet weather.
Compounding those issues are additional problems that are impacting the primary sector overall, including increased operational costs, staffing issues, market instability, and contractual issues.
FICA spokesperson Ross Davis says the already low log price, which is expected to drop once again next month, will mean a reduction in harvest targets and cancelled contracts, something many cannot afford to endure.
“A recent survey of our members showed a widespread reduction in production over the past year,” Davis says.
He says 57% of respondents suggested their production had been reduced by 20% or more and 16% said their production was down by more than 30%.
“When asked if they could survive at an 80% production level for a year, only 26% of respondents indicated that they could,” Davis says.
He adds that currently, 21% of respondents do not have a current contract and a further 40% only have a one-year contract.
Recently, two larger Gisborne-based contractors have ceased operations after operating in the region for 15-20 years, he says.
“Each day we are getting phone calls that confirm more and more contractors are falling over. Our role at FICA does not stop at the forestry gate – we want to support our members.”
Davis says that working with the wider industry and the Ministry of Social Development on subsidy schemes is imperative.
He adds that FICA is working with the Ministry for Primary Industries, particularly Te Uru Rakau Forestry New Zealand to get better recognition at the Government level.
Davis says the forestry sector is the third biggest contributor to NZ export earnings alongside dairy and meat, and there is concern for contractors, workers, families, and communities that rely on it for income.
“We’re still seen as a turn-on, turn-off industry,” he says. “It’s not a blame game at all, but if we want logging contractors to be around in another 12-24 months then something needs to change now.
“We employ thousands of people, and we cannot keep operating at a loss. Jobs will be lost. Homes will be lost. Communities will be lost,” he says.
“Without enough contractors, the industry will really slow down and that is not something any of the sector groups want. It is a matter of becoming more business savvy and having a good partnership between contractor and principal with any negotiation being fair and demonstrating the sharing of the risk.”
