Competing NZ interests ‘crash’ Indian log prices

New Zealand log exporters are scrapping in the Indian market and the buyers are the winners.

Zindia, an independent log export firm from Marlborough, is accusing the India Pine Exporters Group (IPEG), a group trying to be a single seller of New Zealand logs to India, of bad mouthing it to customers and "crashing" prices in the Indian market.

IPEG member Silva denies the claim. Chief executive John Palmer said many log exporters headed to India when the Korean market crashed earlier this year and Indian customers were playing exporters off against each other.

Jacob Mannothra and Rick Osborne, the principals of Zindia, said the company had been forced to cut prices after IPEG targeted its customers.

They claim IPEG bad mouthed them to customers and was inept in its marketing.

Silva is a log export company set up by Carter Holt Harvey and the receiver of the Central North Island Forest Partnership, owner of huge forests in the central North Island later sold to Harvard University's endowment fund.

The idea was to save money on shipping costs and to work together to stop "New Zealand competing with New Zealand" in export markets.

IPEG predated Silva. Its members included Fletcher Challenge, Carter Holt Harvey and Pentarch. The intention was to have a single seller to India. Silva joined IPEG and uses it as the vehicle for log sales into India.

Mannothra has worked with IPEG but the relationship soured this year.

Mannothra's own forest on Arapawa Island in the Marlborough Sounds was ready for harvest and he rounded up other forest owners in the top of the South Island to charter a vessel to India in June. The shipment was successful.

Mannothra said IPEG and Silva were not happy about independent shipments, but forest owners, contractors, truckers and Picton's port had all been supportive.

The Indian shipments found a market for poorer quality industrial logs, while the best logs went to local sawmills.

Forest owners typically have a dilemma when they harvest because they have to find markets for different quality logs from a single tree. Finding markets for poor quality logs can be crucial to the economics of the harvest.

Zindia claims IPEG's activities cut prices by US$20 a cubic metre at the time of its second shipment in October. It rebuilt the price but has again had to cut it for the third shipment due to leave soon.

"They've crashed the market. It's the ineptitude that galls me," said Osborne.

Palmer said IPEG was not a cartel but it was trying to be a single desk seller.