NZX Agri reports signs in the housing construction sector have also ensured strong demand for locally milled logs and prices pushed to $117 a tonne, the highest level since 2014.
Despite reports of constricted supply to local mills, volume has been sufficient to keep them operational AgriHQ forestry analyst Reece Brick said.
Forest Owners Association president Peter Clark said despite a surge in volumes, sourcing tropical logs in countries including Papua New Guinea and the Solomon Islands was getting more difficult. That would help set a floor price for pine logs here.
Latest trade data released by forestry firm P F Olsen showed the trade in logs between NZ and China was the single largest roundwood flow between two countries anywhere in the world, at 13.3 million cubic metres this year.
That compared to the 11.7m cumec trade between Papua New Guinea and China and 9.3m cumecs between Russia and China.
The log trade with China was now the second largest source of export income after dairying, earning $1.8 billion a year.
The NZ industry was also experiencing a promising level of growth from India, thanks in part to a recent currency change that demonetised NZ$6b of currency, aimed at curtailing the “black money” market.
That was expected to make illegal importing of Solomon Island type hardwoods more difficult, resulting in NZ pine replacing these unsustainably harvested timbers.
Clark was also optimistic about recent Government moves on climate change that might signal more sympathy to the forestry sector and its ability to help NZ achieve its now binding Paris Accord goals.
“We are seeing a small response to climbing carbon credit prices for our 2017 plantings. The change in climate change minister is one reason for more optimism.
“I think the message is getting through to the business community and the early movers are going on and planting trees in anticipation of changes to the Emissions Trading Scheme (ETS) next year.”
The industry was still not entirely clear what the changes to the ETS would be but suspected more certainty over carbon price could be one outcome.
“To rely on carbon prices rather than wood returns is always going to be a risky thing when it is a political tool.”
He did hope for greater integration of agriculture into the ETS. For an average sheep and beef farm it could be possible to plant enough farm area into trees to offset the livestock methane losses.
Dairy farms would require more land but an integrated market could deliver that with farmers offsetting with neighbouring sheep/beef farmers and forest owners.
Changes in regional plans to allow for nutrient losses could also be a positive for the forestry sector, Clark said.
“With some plans requiring farmers to fence off waterways, which will just prove impractical, then planting the entire area in trees may prove a more economical and effective means. If it means you can destock on the steeper country and run the better country, trees may be the option.”
The processing industry has acknowledged problems sourcing logs for local timber supply in areas like Canterbury and Northland has been problematic recently.
But Clark said that was a reflection of 20 years of relatively low levels of replanting after the forestry boom times of the early nineties.
“You can blame all sorts of things, including foreign buyers of forests, but the last thing we want is restrictions on who owns forests.”
Some processors failing was part and parcel of an industry where upgrading and upsizing was a constant requirement for operators.
“The case of some mills not surviving is something that would happen anyway.”
