The wood processing sector in New Zealand

Wood processing and the economy

The wood processing sector consists of:

sawmills and peeler mills
pulp, paper, and panel mills
advanced manufacturers.

Wood processors use 40% of our annual log harvest. The sector mostly uses our:

highest grade pruned and structural logs
lowest grade pulp logs.

Wood products are crucial to other industries, such as construction. Wood processors provide thousands of jobs in local communities. They contribute billions of dollars to our economy.

The annual value of all forestry exports, including raw logs, is between $5.5 billion and $7 billion. Value-added wood products make up about 15% of our forestry export volumes. But they contribute over 40% of export revenue – close to $3 billion a year.

Table: Forestry export revenue 2021–2029

(Year to 30 June, NZ$ million)

	Actual				Forecast
Product	2021	2022	2023	2024	2025	2026	2027	2028	2029
Logs	3,830	3,627	3,388	3,225	3,310	3,380	3,450	3,490	3,530
Swan timber and sleepers	900	973	937	885	1,130	1,180	1,210	1,230	1,260
Pulp	669	816	846	629	720	810	820	820	830
Paper and paperboard	438	463	433	361	420	260	260	280	280
Panels	385	411	463	374	380	420	420	420	420
Woodchips	61	62	78	73	90	90	90	90	90
Other forestry products*	216	225	208	200	220	220	210	200	190
Total export revenue	6,499	6,578	6,353	5,748	6,250	6,350	6,450	6,530	6,600
Year-on-year % change	19%	1%	-3%	-10%	9%	2%	2%	1%	1%
* Other forestry products include structural or moulded wood, furniture, and prefabricated buildings. Note: totals may not add up due to rounding. Percentages are rounded to the nearest whole percent. Source: Stats NZ and MPI.

Wood processing and the environment

Forests and trees have roles in removing carbon from the atmosphere. And the wood processing sector is also helping to reduce the effects of climate change.

Sustainable wood products can replace materials that generate more carbon when they are being made. For example, the use of wood beams rather than steel beams in buildings.
Wood products, such as timber in buildings, lock away the carbon stored by trees, delaying emissions.
Wood residues can substitute fossil fuels to produce heat and energy. For example, the use of wood chips to fire industrial boilers.

How the wood processing sector works

Players in the wood processing sector overlap and depend on each other.

Sawmills are one of our main primary processors. They turn logs into sawn timber (55% to 65%) and residues (45% to 35%), such as wood chips. They sell product direct to the market and residues to other processors. Some sawmills make advanced products themselves, such as cross-laminated timber and plywood.
Pulp mills use the residues from sawmills to make pulp for paper and packaging. Advanced manufacturers turn timber and residues into all types of products. That’s everything from fibreboard to biofuels to chemicals and pharmaceuticals.

Diagram of the wood processing value chain

This diagram shows the wood processing value chain and how:

the sector uses wood from all parts of the tree
some logs and residues bypass the sector and head straight overseas
the processors in the sector rely on each other
residues from sawmills and peeler mills feed into secondary processors
secondary processors make many products – some simple, some advanced.

Show/hide description for this image:

This is a diagram that shows the inputs and outputs of the wood processing sector. The flowchart-style diagram is divided into 7 sections across the page.

The first section on the far left of the diagram is called “Growing forests”. It shows a pine tree with broken branches at its base. Green lines flow from different parts of the tree to other sections on the right. The lines show how we use each part of the tree for different purposes.
The second section is called “Logs traded”. It lists the types of logs that come from each part of the tree. From the bottom of the tree to the top, the list shows images of raw logs and wood chips, saw logs, peeler logs, pulp logs, and woody biomass. Green lines (showing primary products) flow from the logs. A light orange line (showing residues) flows from the woody biomass.
The third section is called “primary processing”. From bottom to top, it shows images of a sawmill, peeler mill and pulp mill. Green and orange lines (showing primary products vs residues) flow from each mill.
The fourth section is called “Products”. It shows images of primary products that come from each mill. Sawmills produce sawn timber. Peeler mills make veneer, poles, and plywood. Pulp mills make pulp, cardboard, paper, and packaging. Logs and primary products sit on a green line. Woody biomass and residues associated with each product sit on an orange line.
The fifth section is called “Secondary processing”. From bottom to top, it shows images of a remanufacturing facility, residue-based remanufacturing facility, and bioenergy and biomaterials facility. The first remanufacturing facility takes sawn logs and produces residues. The second remanufacturing facility takes pulp logs and residues. The bioenergy and biomaterials facility takes woody biomass and other residues. Logs and primary products sit on a green line. Woody biomass and residues associated with each product sit on an orange line.
The sixth section is called “Products”. It shows the products made by secondary processors. From bottom to top, the products include engineered wood products, fibreboard/MDF particleboard, and liquid biofuels, biocrude and solid biofuels. The engineered wood products and fibreboard sit on green lines. The biofuels sit on an orange line.
The seventh section is called “Markets”. From top to bottom, it shows a ship for our export market, a building site for our domestic market, and a collection of bioproducts for our bioeconomy market. A green line shows that many raw logs are exported straight overseas. Other green lines show that our wood products are either exported or used in our domestic market. A dark orange line shows that bioenergy and biomaterials from residues are used to make a variety of products.

Find out more about the products our wood processors make

Reports into the wood processing industry

Continuous cover forestry business models for Aotearoa New Zealand [PDF, 3.8 MB]
Identifies high-potential and priority business models; systemic barriers and enablers; an investment case; and recommended policies, market settings and initiatives to support the models. (December 2023)
Comparative economic analysis of pruned and structural products throughout the forest supply chain [PDF, 1.1 MB]
Explores the economics of pruned timber. Suggests further areas of research and highlights issues that prevent more widespread pruning. (Forme Consulting Group, 2021)
Managing a steady base flow of log supply to Northland mills and other supply constrained regions, through warehousing models [PDF, 2.8 MB]
Looks at a range of issues around log supply. Explores the aggregation of wood supply using warehousing models to improve certainty of log flow, particularly from small growers. (Scion, 2019)
Review of precompetitive activities in key forest products exporting countries [PDF, 5.9 MB]
An assessment of approaches used by main international wood exporting countries to support their sectors to be competitive. Includes in-country and international support. (Indufor, 2021)
Wood manufacturing clusters international case studies [PDF, 5.8 MB]
This report reviews the experiences of 13 countries that are taking very different approaches in adding value to their forestry resource, centred on regional clustering. (Cluster Navigators, 2022)

Find out more

Wood production and stock levels in New Zealand

Diagram of New Zealand’s forestry and wood processing supply chain [PDF, 480 KB]

New Zealand log grades for radiata pine, and what they are used for

Who to contact

If you have questions, email teururakau@mpi.govt.nz