But, after two years waiting fruitlessly for the sector to develop a system to provide a viable supply of logs to domestic processors, he is now forced to act.
“Log exporters and forest owners have not solved the problem to date so I’m going to solve it for them,” he said.
Forest Owners Association chairman Phil Taylor said members have been seeking a solution, including introducing a supply accord.
Heavy-handed regulation could have unintended consequences such as the loss of jobs among drivers, in log marshalling yards and on the wharfs.
Jones says he is preparing a paper for Cabinet that will analyse three ways of ensuring domestic mills are adequately supplied with logs: imposing a levy on raw logs exports, licensing log exports and requiring forest owners to invest in processing.
“My message to log exporters is you have had your rights to profits by selling in a laissez faire way but you also have an obligation to fellow New Zealanders.”
The increased production of processed timber could be used domestically or exported.
Jones said he hassupported the forestry sector through the Billion Trees planting programme and simplifying foreign ownership rules.
“But an outstanding area is recalibrating the laissez faire rights to sell logs overseas to the highest bidder and ignoring their obligations to supply sufficient raw material of the right length, at the right time and at the right price to satisfy the needs of domestic processors and sawmillers.”
Asked how imposing these restrictions will be perceived by our trading partners Jones said his priority is trying to find work for the people who will lose their jobs in the coming months.
Taylor said forest owners, domestic mills and processors are all dependent on each othe but the issue for those industries has been spikes in log prices.
Log exports effectively stopped in February with covid-19 in China, which buys 80% of NZ’s logs, resulting in widespread layoffs among logging contractors.
Log prices are starting to recover in China as buyers respond to the lack of supply coming out of NZ and as prices improve so will supply, Taylor said.
China is looking to supplement soft wood log supplies with imports from the United States and Uruguay.
With the uncertain market dynamics the industry does not need changes that could create unintended consequences, Taylor said.
“The industry’s concern is that we don’t embed controls that have long-term implications on NZ’s ability to come out of covid-19.”
Most corporate forest owners take a long-term view to marketing their logs, which includes supplying domestic processors but small woodlot owners generally have one chance to maximise the return from their harvest and in recent years that has been export.
Taylor says there is no one reason for recent mill closures but common factors are insufficient scale and old and inefficient equipment and technology making the cost of production high.
“There are some mills that are very efficient and profitable under unconstrained log prices.”
