Timber export volume grows

By Mark Reynolds

Timber exports are soaring, despite a big contraction in Asian demand for raw forestry commodities.

Exports of sawn timber have risen 24 per cent over the past two years and topped $540 million in the 12 months to the end of March, according to data compiled by the Timber Industry Federation.

The rise in overseas sales of sawn wood compared with a $255 million drop in earnings from log sales over the same period, said federation executive director Wayne Coffey.

The contrasting fortunes in the two sectors of the forestry industry highlight the benefits of investing in technology to further process raw commodities.

"It shows that it is worthwhile spending on new facilities to add value to the forestry sector," Mr Coffey said.

Encouragingly, the timber industry is putting more money into processing facilities, with the timber federation data revealing sawmillers invested $50 million in their plant last year. That investment is forecast to double to $100 million this year. The investment is in facilities like kiln drying plants and cutting equipment.

The data was compiled from a survey of 50 members of the Timber Industry Federation. Most of the members are medium-sized family-owned operations.

"The fact that we are seeing this investment and export growth at a time when Asian markets and prices for logs and wood products have been in such a slump is encouraging," Mr Coffey said.

While a change in the value of the New Zealand dollar had contributed to the gains, the rise in sales was mainly due to volume growth, he added. The export revenue for the timber industry was forecast to rise a further 10-20 per cent this year, he said. That forecast was based on the exchange rate remaining steady.

The timber industry federation embraces companies producing a variety of products, ranging from house-framing timber to wood lengths sold to overseas furniture manufacturers.

Mr Coffey said that in some ways the Asian financial crisis, which had pushed down commodity prices, had been good for the timber industry. "It has made forest growers and log suppliers recognise the need to become more responsive to customer needs."

Devon McLean, chief executive of wood products for Carter Holt Harvey and the newly appointed chairman of the Forest Industries Council, said New Zealand now needed to focus on improving access to markets like China, India, Indonesia and Malaysia for engineered wood products, panels and packaging materials.

"The ability of our forest product manufacturers to compete in these expanding, high value market niches will likely be the most important driver of further investment in processing in New Zealand."