Insight: Forests still five years from peaking

Forest Enterprises' investment forest in the Esk Valley. Photo / Supplied

While Napier Port might have just broken its log export record, the region's "massive" forestry and logging industry is still five years away from peaking and that means smart thinking is required to ensure infrastructure can cope.

Even with the restored Wairoa-Napier rail service due back on line next year, there will still be thousands of additional logging trucks needed.

Forest Enterprises, which manages 1289 hectares of investment forests in Hawke's Bay, intends to harvest a total of 1 million tonnes from its Hawke's Bay forests - a process that is still some years from really starting.

"They are our youngest forest investments and their harvest is a few years away from commencement," Forest Enterprises chief executive Bert Hughes said.

"Forest Enterprises Investment Prospectus set out the intended cashflows and returns based on harvesting at age 28, which was considered a prudent professional judgment for forest estate management at that time – so about 2024 for the 1996 planted forests.

"To best manage our projected volume, we are likely to harvest 1-2 years early and finish 1-2 years later. In practice, we could readily log about 75,000 tonnes per year per site given optimal planning.

"That means from 2021 we could harvest about 150,000 tonnes per year from our sites in the Esk and Kaweka regions, which would extend to approximately 2026 to complete those sites.

"We have about two years of harvesting in our forest in the Mohaka area from about 2026 to 2027 inclusive. We are still 4-5 years away from our main harvest programme in Hawke's Bay.

"When harvest volume from our Hawke's Bay forests is in full swing, Forest Enterprises' entire harvest programme will be well over 1 million tonnes per year. Therefore, we need to be highly organised and efficient to maximise the return to our investors, in a safe and environmentally responsible manner."

To ensure that the company was investing in best practice, scalable management and information systems, and competent, highly-educated staff.

Hughes said, unless demand from local sawmills grew, the company expected half its volume would be exported.

It also expected to extend its relationship with Pan Pac in Hawke's Bay.

"We are also a long-term committed supplier to Kiwi Lumber. Their Dannevirke sawmill is currently served from our Wairarapa estate."

Hughes also pointed out that the forest location meant it was unlikely to rail its logs to Napier.

"We plan to manage log storage on forest sites as well as the conventional Port and sawmill yard solutions. There is a general expectation that demand for log storage and uplift from ports will increase."