NZ sawmills closures amid log shortage and inflated log prices caused by overseas subsidies

Sawmills in New Zealand find it hard to stay profitable when overseas competitors can benefit from subsidies, Wood Processors and Manufacturers Association (WPMA), New Zealand’s main timber industry organisation says.

The problem is so bad that one day all timber used in New Zealand may have to be imported instead, despite having around two million hectares of trees grown for timber locally, mainly pine trees, commented WPMA.

The comments followed a decision in principle by Carter Holt Harvey (CHH) to close its sawmill in Whangarei. CHH Timber chief executive Clayton Harris blamed continuing log shortages in Northland for the problem.

WPMA said there were further problems besides the wood shortage with high prices for timber caused by trade distortions overseas. WPMA’s chairman Brian Stanley said even if the wood could be accessed, it was way too costly.

3 SAWMILL CLOSURES IN THE LAST 12 MONTHS

“We have seen three sawmills close down in the last 12 months, and now this one in Northland,” he said, “It’s a serious trend and one that everyone in the country needs to start thinking about.”

According to Stanley, for years, overseas buyers were purchasing New Zealand logs for high prices knowing that subsidies from their own government would allow them to sell the logs at a loss to timber yards in their own country. This was especially so in China, but a report done just before Christmas by the economic consultancy Sense Partners found trade distortions of the log industry in 39 countries.

“The prices for logs in New Zealand have been driven up to unprecedented levels over recent years by foreign buyers operating on subsidies provided by their own countries,” Stanley said.

“These subsidies enable foreign buyers to artificially inflate prices here, effectively capturing the domestic log market by creating some of the highest softwood log prices in the world.”

“The fact that this grossly unfair market is occurring under NZ’s Free Trade Agreements with these countries should be extremely concerning to all New Zealanders … and the government should take immediate action to halt unfair trading conditions and prevent the loss of jobs and community to what is thoroughly unethical trade.”

This trend has been going on for many years, undented by the drop in log prices in the middle of last year.

Source: RNZ