New Zealand becomes bullish on exports of forest products

AgExporter, April, 1993 by Aileen Mannix

Conquering the Processing Hurdle

One of the biggest challenges facing the country is to overcome the lack of a competitive processing capacity. The forest products sector is developing a market strategy to increase the export of processed products.

While supporting the idea of value-added exports, a report by the Forest Industries Council concluded that an investment of nearly US$4 billion would be needed to transform the sawmilling industry into an internationally competitive processing sector. Such an investment is unlikely without more foreign capital.

Addressing Transportation Problems

New Zealand's port capacity is expanding and is not seen as a constraint on shipping larger amounts of logs.

However, high shipping costs between Australia and New Zealand--an average shipping distance of approximately 1,100 miles--continue to be a problem.

Most agree that the problem can only be rectified through either a dismantling of the worker union accord, which limits sea transport jobs to only Australian or New Zealand crews, or reforming labor practices in Australian ports. Negotiations aimed at achieving a satisfactory solution are still underway.

Meanwhile, New Zealand has implemented port reforms over the past five years that have cut shipping costs substantially. Cheaper transportation and the Closer Economic Relations (CER) Agreement between Australia and New Zealand mean the United States is facing a strong competitor in the Australian lumber market.

As a result of recent developments in the restructuring of New Zealand's forest products sector, the world can expect to see that country as a growing participant in the world wood trade for years to come.

For more information about New Zealand forest products, contact the Forest Products Division, FAS. Tel. (202) 720-0638.

The author is an agricultural economist with the Forest Products Division, FAS. Tel. (202) 720-2849.