New Zealand becomes bullish on exports of forest products

AgExporter, April, 1993 by Aileen Mannix

New Zealand, a country roughly the size of Colorado, may be better known for its high proportion of sheep to people--55 million to 3.5 million--but it is becoming increasingly important on the world stage as a producer and exporter of forest products.

Although the country's forest industry has gone through some difficult transitions in the past, New Zealand has invested heavily in its forest plantations. The country is now seeing the fruits of that labor with a vibrant and potentially lucrative industry.

Presently, New Zealand is producing around 14 million cubic meters of roundwood, almost all of which originates from forest plantations. Radiata pine accounts for about 90 percent of the plantation species, with the rest consisting mainly of Douglas fir and other softwood and hardwood species.

Of total roundwood harvested, two-thirds is exported, mainly as logs to Japan and Korea, lumber to Australia and pulp to Japan and Australia.

Production To Rise Sharply

The nation's roundwood production is projected to grow to 19 million cubic meters by the year 2000 and 24 million cubic meters by 2010. With this potential increase in production, New Zealand would be producing more than it could consume, thus setting the stage for further expansion of exports.

As an export earner, forest products have moved into third place behind meat and dairy products, contributing about 6 percent of the country's gross national product.

New Zealand's Export Prowess

New Zealand is considered a competitor of the United States in the Pacific Rim, and its own market offers little sales opportunities for U.S. wood products. New Zealand's exports of wood products increased 148 percent over the past five years.

New Zealand has surpassed the United States in supplying softwood lumber to Australia, Korea and Taiwan. In addition, New Zealand is among the top suppliers of softwood logs to China, Japan and Korea, and is the No. 1 supplier of medium-density fiberboard to Japan.

What Does the Future Hold?

What does the future hold for New Zealand's forest industry and what impact will this growing industry have on U.S. exports of wood products?

In the sense that New Zealand is an additional player in the wood products trade, its presence in Asian markets is challenging U.S. efforts to expand wood product exports. New Zealand's log production is multiplying, its exports are expanding, active government and industry marketing efforts are improving radiata pine's quality perception and the country's processing capacity is growing, although slowly, with more foreign investments.

To underestimate New Zealand's ability to compete in the growing Asian and Oceania markets would not be wise, but to overstate New Zealand's threat to U.S. solid wood exports also is unwarranted.

New Zealand's wood production capacity is quite small vis-a-vis the United States, Canada, Russia and Chile. Nonetheless, recent developments have created conditions more favorable to New

Zealand's forest products industry. These include joint ventures with Japan, closer economic ties with Australia, greater export marketing efforts and the increasing availability of logs for export.

All wood production from joint ventures with Japan is shipped to the Japanese market and competes directly with U.S. wood products, specifically glue-laminated lumber and veneer. Closer economic links with Australia impact on U.S. exports of softwood lumber to that market.

New Zealand's marketing programs that target furniture and interior design uses compete with U.S. hardwoods. Logs are New Zealand's top forest product export, and this gives New Zealanders an edge in trade to log-oriented Asian markets.

History of New Zealand's Forests

New Zealand is a relatively young country, settled 600 years ago by the Maori people of the South Pacific. In the early 1800s, the British, led by Captain Cook, arrived. Colonization increased the demand for agricultural land and housing. Prior to its habitation, New Zealand was about 75 percent forested. Today, forested land accounts for 28 percent of land area, or 7.5 million hectares.

In 1897, due to the rapid depletion of forest resources, New Zealand began its involvement in forest plantations. Gold miners from the United States jumped the Pacific to New Zealand, bringing with them the species Pinus radiata.

However, it was not until 191 9 when the New Zealand Forest Service was established that large-scale planting of radiata pine plantations began. The period up to the late 1960s saw significant growth in New Zealand's forest estates.

Currently, there are 1.3 million hectares of forest plantations, and each year a larger proportion of these trees is reaching the harvestable age of around 30 years.

Restructuring the Forest Sector

Since 1984, New Zealand's forest sector has been in a state of dynamic change. The appeal of open-market economies led to deregulation as well as to the privatization of many government agencies.

The Forest Service, which managed New Zealand's forest resources, came under scrutiny from various governmental and environmental agencies. Concerns centered on the management of multi-use forest lands with respect to economic performance, recreation and conservation.