- Downturn in forestry not expected to last long
FALLING prices for export logs have led to a downturn in the New Zealand logging industry, but an Opotiki businessman says he’s not expecting the slump to last.
Whakaari Logistics owner Karl Nyman said a slow-down in log harvesting and transport work due to falling log prices was not expected to last more than a few months.
“There is a slow-down in the export market, but the domestic market is still okay,” he said.
Speaking from Rotorua, Mr Nyman said he was taking the opportunity to get one of his three logging trucks serviced as there wasn’t as much work about as there usually was.
“The tap has been turned off regarding the woodlot jobs, but this often happens during the winter months, that they experience a lull period,” Mr Nyman said.
Woodlot jobs were smaller log harvesting and transporting jobs.
“They are farmer lots and privates, and there are a lot of those,” Mr Nyman said.
“They are smaller than the core investor forests.”
As Canada and Russia were in their summer months, forest owners in those large and Northern Hemisphere countries were harvesting their logs, creating an oversupply for New Zealand’s export markets such as China.
“The ice has thawed over there and they are hurrying up to get their logs out,” Mr Nyman said.
Meanwhile, Stuff reported that the drop in log prices had come unexpectedly.
Forestry Marketing and Sales managing director Allan Laurie said the fall in prices had taken the industry by surprise, while business development manager Scott Downs at PF Olsen said his firm was scaling back harvesting.
It was estimated there were about 200 subcontracting firms employing about 1000 people who may be without work or having to take an enforced holiday.
Mr Laurie said the price of logs had fallen between 15 to 20 per cent.
“Some of it is to do with tariff wars with the United States, which has affected confidence of buyers in China,” Mr Laurie told Stuff.
The market uncertainty had begun in late 2018 but the tipping point came as the Trump administration tariffs came into effect.
Canada and Russia had provided more logs to China, where construction had slowed because of the wet season.
“All these things have come together in a perfect storm,” Mr Laurie said.
“It will eventually bounce back.
“But the drop will have a short-term severe impact on logging crews as owners stop harvesting or impose restrictions rather than take low prices.”
The latest downturn had come against a background of overcutting young forests in recent years as the price of logs had boomed.