We're all in it together!
OPINION: Hill Country farmers and foresters have common concerns about regulations and climate change.
When they come to sell logs over the next four-five years they will contribute much to a growers’ levy. Small growers represent a new breed of forest investors and will be motivated by needs different from those of the forestry corporates when it comes to harvest time and deciding whether to reinvest in forestry.
To ensure you get maximum benefit from your woodlot, it is essential to have an input into how this levy is used and to voice your issues well before harvest date.
Small and medium forest owners (<1000ha) manage about 25% of the 1.7m ha plantation forest area in New Zealand. The exact area of small forests is not precisely known as the owners are hard to survey and generally not active in the wood sector politics. However, this is changing because of the boom in new land planting in the early 1990s and the associated ‘wall of wood’ from that period. Many small forests are now maturing and small growers are likely to become substantial levy payers, influencing the timing and quality of these new forests.
The NZ Farm Forestry Association and MPI have attempted to survey these growers, to characterise them, understand their intentions and seek better collaboration. The number of small growers is estimated at about 14,000 and they are likely to represent 60% of the wall of wood. Owners and growers range from individuals to small investment companies or trusts set up for superannuation purposes, etc. Some owners are joint venture partners with land owners and do not live at the woodlot location.
Many owners have less than 40ha and these can be found scattered throughout New Zealand.
Small growers have a lot of flexibility about the time to harvest and can attempt to sell only at optimal times. However, prior preparation is essential for the process to run smoothly and efficiently. This includes engaging consultants and preparing roads well in advance of the day you require a cash return. Usually three-four months are needed and harvesting is best arranged for summer or autumn. Collaborating with other woodlot growers in your district could also save costs and allow harvest dates to be planned to share contractors and markets.
A small woodlot owner might expect to pay a forest levy of $5000-$6000 when their logs are delivered to a mill or port. This estimate is based on a 2011 survey of 728 land owners with forests of 20-100ha; this survey found the median forest plantation area was 37ha (almost 10% of the median farm size of 400ha) and the forest levy is currently set at $0.27 per m3. The levy collects about $6.8 million annually and will run until the end of 2019.
Many new forest owners will evaluate their return on investment after the first crop. Their decision whether to reinvest or not will depend on the experience they have with the current crop, the sector performance and the value they get from the levy. Factors that will make re-investment more attractive include the outcomes of research, greater productivity, lower harvesting and roading costs for the second crop, and better log prices from emerging value adding industries.
Governments and regional councils have a role in providing improved rural roading, more wood processing options and better port facilities.
While much has been invested in rationalising the milk and meat sectors, a resilient wood sector can play an important role for farmers by providing an environmental counter-balance to the continual pressure to increase productivity coupled with a flexible harvest date and income diversification.
• Graham West is a principal technologist at Scion, Rotorua. The opinions expressed are the author’s.
