Forestry sector faces productivity challenges and environmental opportunities

6 August 2008

The Ministry of Agriculture and Forestry (MAF) says productivity improvements, increased focus on market and product development, as well as emerging opportunities such as carbon sequestration and alternative energy sources will shape future growth in the forestry industry.

MAF's Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) 2008 report released this week, shows forestry export receipts fell by just over 4% in the year ended in March to $3.4 billion.

Presenting in Rotorua on the SONZAF report today, MAF Director-General Murray Sherwin said MAF's analysis of the forestry sector shows an industry struggling with the high dollar, high shipping costs and weakening international housing markets.

Mr Sherwin said there has been little forestry productivity growth over the past ten years and the forestry sector is struggling to find new approaches to extracting value from its forests in order to achieve sustainable long term profitability

The SONZAF report shows log prices - particularly in Asian markets - have improved and the outlook is more encouraging with log and chip exports growing over the next five years, helped by increasing demand from Chinese and Indian buyers.

The continued phase in of restrictions on Russian log exports is also expected to provide opportunities in the Japanese and Korean markets.

The outlook for timber and panel exports is flat as American, Australian and Japanese housing markets remain weak.

Overall forestry export revenues are expected to begin rising again from next year, building to around $4.5 billion in 2012.

The industry is also expected to benefit from Treasury assumptions of gradually falling exchange and interest rates.

Global concerns over climate change and sustainability will also provide opportunities for the forestry sector, Mr Sherwin said.

"Forests are now more than just wood - reducing greenhouse gas emissions is a major global issue and carbon trading is a reality. This presents environmental investment opportunities in carbon sequestration and sustainable land management.

"The long-term future of the forestry industry will depend on how well it embraces these opportunities and reacts to the productivity challenges," Mr Sherwin said.

Copies of the report are available on the MAF website at http://www.maf.govt.nz/SONZAF/2008

ENDS

For further information contact:

Deidre Hill
MAF Communications
Tel: 04 894 0192, 029 894 0192

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