The forestry industry is beset by supply chain issues, port disruptions, oversupply in China, sky-high shipping rates, the Delta disaster …. and that’s before you even look at the difficulties of cutting down the trees.
On top of that the industry gets a bad rap from the rural sector for being a ‘spray and walk away’ business that’s eating up valuable grazing land, for damage done to the landscape, and for contributing to a lack of employment.
So why would anyone invest in a forest?
Forestry is not for the faint-hearted – but for the persistent, there are good rewards.
Today on The Detail Sharon Brettkelly talks to the Forest Owners Association; a small forest owner; and a forest manager and consultant who can’t believe some of the bad press the industry gets.
Allan Laurie is the forest manager.
“Nobody wrote the rule book on what the net impacts across your business would be in a Covid-infested world,” he says.
“We’re all challenged. But what we experienced with the last lockdown was a resurgence in business which was quite unprecedented. People with climate change awareness are looking at forests as investments. We’re getting an awful lot of inquiries for our business right across the scale from people wanting to plant a couple of hectares of trees to people wanting to plant several hundred hectares.”
They’re not just looking at radiata pine, but native and redwood species too.
At the moment a million cubic metres of logs are sitting on ships off China. Laurie says while that’s way too high, Covid has been something of a circuit-breaker in getting a back-log of logs moved off wharves in New Zealand and the stopping of production has been eating into what’s been a glut.
“The bottom line to all of this is that returns from growing forests on a per hectare basis across land in New Zealand remain some of the highest – certainly highest amongst the commodities. Even though shipping costs are more than double they’ve ever been, so are the prices in China – almost double historical levels.”
He dismisses concerns that half of New Zealand will finish up in trees, saying growing forests is only profitable on forest-growing land.
“Some of the higher value pastoral farming properties for sheep and beef, at $15,000 a hectare, forestry simply cannot afford to compete.”
Phil Taylor of the Forest Owners Association has been involved in the industry for over 40 years – and has made mistakes - but says he’s never been more confident about the future for forestry.
“It depends what your investment objectives are,” he says.
“Forestry is not for the faint-hearted. There are so many things that can trip you up.”
Those include a wealth of issues you must deal with that you didn’t have to worry about many years ago. Health and safety regulations; dealing with councils putting Significant Natural Area labels on your land that could stop harvesting; environmental issues; building roads; and harvesters not wanting to deal with small plots of land.
In today’s podcast, find out how 100mm of rain in a night was another blow to one small investor … and whether he thinks it’s all worth it or not.