9 December 2024
The Future of Forestry in Aotearoa
(Originally published in "The Daily Blog")
Production forestry is not rocket science. Almost anyone who applies themselves to the subject can understand its basic principles. By the same token it is possible to misunderstand those principles, and quite easy to miss them entirely.
The three main elements essential to a knowledge of forestry are the biology of trees, silvicultural systems, and economics. If you understand something of each of those you can understand what is going on in the New Zealand forest industry.
It may be a truism to say that production forestry in New Zealand is unique. The forestry of any country or geographic region in the world has particular characteristics, but what distinguishes New Zealand forestry is that it is almost entirely based on plantations of one exotic species (radiata pine) grown on short rotations and exported in log form. Compared to the forestry practiced in other nations (notably European nations, but also many "third world" countries") it is crudely efficient, producing low quality product cheaply and in volume but at a high environmental cost and social cost.
Obviously there is a history to that, and a fascinating one, which I will briefly explore in this article. But the title is about "the future for forestry" and that is where I will be placing the emphasis, with one key and seemingly extraordinary claim which is that
"The quality, value and volume of New Zealand's forest produce, the nett revenues of growers, and the tonnage of carbon sequestered in our forests could all be dramatically increased, and environmental damage from slash and sedimentation significantly reduced through one simple regulation that set a minimum rotation age by species and site type".
(A rotation is the time interval between planting and harvesting of trees, and rotation age is the age at which trees are harvested).
That claim in bold above might seem "too good to be true" and the immediate response would be "If that is the case then why would you need a regulation? Why would not forest owners do that for themselves?". The answer lies in the economic principle of "rate of return to capital". Capitalist forest owners and investors do not try to maximize their return per hectare of forest. In other words, they do not try to maximize nett revenue. Instead they try to maximize the rate of return on each dollar invested. When combined with the growth habits of tree species (in particular radiata pine) which in the early stages of the life cycle follow the same basic trajectory as compound interest this leads to a demand for early felling and "quick returns" even though the cash yield per hectare per year would be higher on longer rotations.
In a normal forest of fixed size ("normal" is a technical term meaning a forest with "equal" areas in each of its age classes, from one year up to the rotation age), longer rotations mean you have more age classes in the forest, therefore less area in each age class, and, because the trees are older at harvest age, you have larger trees and more wood volume per hectare than would be the case with short rotations. Overall, if you set the rotation age at anything below the age of "peak mean annual increment" (the age at which the average production of wood per hectare per year is at a maximum, which is about 50 years in the case of radiata pine) then the higher the rotation age the higher the volume of timber produced per hectare per year over the forest as a whole, the higher the proportion of useful timber to slash (waste) and the smaller the area of forest which needs to be felled each year. Over the long term, and on average, that means less environmental damage. It also means that there is a higher volume of wood ("standing timber") in your forest than would be the case on a shorter rotation, and therefore more carbon sequestered in the forest. Furthermore, because the trunks of the trees are of a larger diameter there is proportionately less of the low quality "core wood" (the stuff that twists, bends and breaks when you buy it from the local merchant) and more of the higher quality outer wood (which is straighter, denser and harder). Because at any point in time there is a greater volume and value of wood standing out in the forest, there may be more value at risk from fire, storm, or pestilence and overall there is a higher value to insure. On the other hand, because adverse events impact differently on different age classes, a greater spread of age classes with small areas in each age class may actually reduce risk. Taken as a whole, long rotations are a win on every count except rate of return to capital.
Would New Zealand be out of step in setting a minimum rotation age? It would not. In Sweden, for instance, the minimum age set by legislation varies from 45 to 100 years depending on site productivity and geographic location. Radiata pine in New Zealand is typically harvested around 28 years of age. A progressive increase to a minimum rotation age of 35 to 40 years for radiata pine would still leave New Zealand's rotation age low by international standards, while having substantial economic and environmental benefits.
Why haven't we done that? The first and most obvious reason is that since the time of the fourth Labour government New Zealand capitalists have enjoyed an unparalleled freedom from regulation, and will resist any attempt to give up that privilege in the interests of the environment or the economy. The second is that most of New Zealand's forests are foreign owned and New Zealand's colonialist governments would rather impoverish their own people and destroy the planet than threaten the misguided interests of foreign investors. At Tai Rawhiti those forestry investors are threatening to "pull out" of the area if faced with greater environmental regulation. "Capital is mobile" they warn us. That is a hoax. Some capital is "mobile" or "liquid" and some is not. Capital tied up in forestry is not so mobile. If all foreign investors sold up, then the prices of standing forest would fall, and by definition New Zealand institutions and individuals would be the buyers. This would create the situation which would have applied from last century if the fourth Labour government had been comprised of far-sighted, patriotic and intelligent leaders. Unfortunately the fourth Labour government and all its successors from right or left have been neither patriotic nor far-sighted. The Lange-Douglas government explicitly decided that it wanted to transfer ownership of New Zealand's forest estate to foreign interests (as it was explained to me, in order to bring in foreign capital, help to balance the government's external account and provide an additional incentive for foreign investment in wood processing - all weak arguments).
Since 1984 the trend towards single species forestry, shorter rotations, lower quality wood and less domestic processing relative to log exports has only increased and New Zealand forestry is now facing difficulties on many fronts. The overseas markets for low quality logs, always unstable, are looking bleak. The environmental impacts of low cost short rotation forestry are becoming increasingly apparent in a time of adverse climate change. Socially, the contract labour system which replaced the "forestry villages" of the past has been hugely destructive. Contractors and their workers have become the meat in the sandwich between foreign forest owners and foreign log buyers. Forest owners can close the forest gate when log markets are down. The trees keep growing, but those who work as planting, logging and transport contractors starve, the banks will seize their assets and if they are the lucky ones they will have enough cash left to buy an airline ticket to Sydney or Perth.
That is not good enough. It is time to take back what we lost in the nineteen eighties, and a single simple regulatory change would go a long way towards that.
Comments
David Briggs September 23, 2024 At 8:21 am
There’s another change that’s essential, and this is to ban large scale clear-felling. This was demonstrated in the 1960s and ’70s to be hugely environmentally detrimental by the Hubbard Brook research in the USA. Since then, it’s been banned in most ‘developed’ countries – but not in NZ. It’s another way NZ steals a march on its competitors, by lowering environmental standards to lower costs. And another reason foreign companies like to grow low-value trees here.
Geoff Fischer September 23, 2024 At 1:37 pm
Large scale clear felling is probably not a problem on the North Island’s central plateau, but can be on the hill country. The New Zealand Forest Service established normal forest plantations which have smaller areas in each age class and therefore tend to be suited to smaller clear felling coups. Since the demise of the NZFS, a lot of private planting has been done, predominantly on hill country, with no attempt at normalization, which means very large contiguous areas can come ready for harvest at the same time, and naturally the owners then want to clearfell those large areas in the space of a few months or a few years. So if regulations encouraged normalization of individual forests and district and regional forest estates then we could move to smaller clear-cutting coups. I totally agree that we should be growing more high value trees, using a variety of approaches such as longer rotations, pruning, and planting of alternative species to radiata pine.
Killer white T-Cell September 23, 2024 At 9:57 am
@ Dave Briggs
You write:
“It’s another way NZ steals a march on its competitors, by lowering environmental standards to lower costs. And another reason foreign companies like to grow low-value trees here.”
I.E. Forestry is a scam. Just another fuckin scam and I think I know why.
For generations scammers have been scamming agriculture in the broadest sense of the term.
Dumbed down farmers allow sharpened up scammers to steal farmer money. There you go. I’ve just described our economy. spanning the last one hundred years.
Anything new, like forestry, is a means of laundering criminal politicians and after-farm-gate scammers. Who’s money do you think built Auckland, Hamilton, Wellington, Christchurch, Dunedin and Invercargill and the smaller cities and towns in between? Forestry? No. Tourism? No. 501’s growing dope? No. Sheep meat and wool and cow flesh and dairy. That was it. A bit of gold in Dunedin but that soon fizzled out. To make sense of something that involves the disappearance of money we must first start with the facts which will lead to the truth, then accusations can be made and if those accusations prove to be accurate then imprisonments must be the logical outcome. But not in Nu Zillind. Here, the criminals, some of them being cockies themselves get fucking knighthoods and/or become pudgy politicians on $ix figure$.
I could say you’re barking ( Ba ha ! ) up the wrong tree ( Another ba ha.) @ Dave. Growing pine trees is a dumb ass thing to do when we should instead be growing food. But! We can’t grow food because people who are not terminally stupid might ask ” Yeah-nah…hang on a minute…?” How come all this food an’ that is growing like it did but we’re making hundreds now, not tens? Was’ goin’ on? Where’s a money we made for the last 88 years since the wonderful, honest, caring natzo’s formed from two shady political parties which ominously coagulated out of Auckland? ”
Wikipedia
National formed in 1936 through amalgamation of conservative and liberal parties, Reform and United respectively, and subsequently became New Zealand’s second-oldest extant political party.[9] National’s predecessors had previously formed a coalition against the growing labour movement. National has governed for six periods during the 20th and 21st centuries, and has spent more time in government than any other New Zealand party.
There ya go, see?
Geoff Fischer September 24, 2024 At 1:02 pm
There are forestry scams, but I would not go so far as to say that “forestry is a scam”. Without forestry you would have no timber, paper, plywood, fence posts, cardboard, rayon fabric, cellulose tape, charcoal and a host of other products. Forest produce is necessary just as food is necessary for our survival.
It is fair to say though, that forestry in New Zealand has disappointed in the past four decades from when Roger Douglas promised that privatisation of forests would lead to “30,000 new jobs” (current estimates of those directly employed in forestry are around 20,000 and when indirect employment is added the total comes to less than 40,000). “Mum and Dad” investors who were promised huge returns at Year 24 of their investment in forestry partnerships establishing plantations on former farmland have in many cases obtained only a small fraction of what was promised. Anyone going to the local timber merchant to buy timber will often drive away with rubbish timber for which they have paid an exorbitant price. If you live on Te Tai Rawhiti you will see your beaches littered with forestry slash and your bridges smashed by the mass of logs being carried downstream in floods.
It doesn’t look so good, does it? However, in other countries forestry is better managed and regulated, fulfills an essential role in the economy and environment, and serves the needs of people well. It could be the same here if we were able to shake ourselves free from the bonds of neo-liberalism and colonialism.
Geoff Fischer September 25, 2024 At 7:52 am
There is one “forestry scam” that we need to talk about more, and that is the carbon credit scheme. European landowners who have registered under the scheme can sit on their deck sipping a wine and watching the trees grow while the money rolls in. They neither thin nor prune. They do nothing to “earn” their income. Then come winter they fly home to Europe where they spend the northern summer cruising the Danube or promenading the Riviera. I am not making this up. It actually happens. Meanwhile tangata whenua stay on the land twelve months of the year. If they laboriously plant a hectare of land in native trees they get no reward. Their holdings are too small to qualify for the credits.
How does any of this help the planet? How does it help the economy? The simple answer is that it does not. It is just a scam which is part of the larger hoax which says that New Zealand governments are doing something serious about mitigating climate change and are taking care of the environment, when all they are really doing is taking care of their mates.
Andrew September 23, 2024 At 10:44 am
A good summary but it’s only part of the story. I will add two more factors of equal importance.
Firstly, our massive forestry monoculture is very vulnerable to disease. As I see it, it’s only a matter of time before a pathogen arrives on the wind that decimates our commercial forestry assets.
Secondly, and this is a lot more complex, when I was a research engineer back in the 90’s, my team leader did a 4-year study on the NZ forestry industry. His model was both geospatial and economic, looking at every forestry block in existence at the time. Things may have changed a bit since then, but the gist of his message is still probably true:
1. About half the standing timber at the time was worth less than the cost to fell and transport it to the mill or port!
2. His model showed that we should be planting higher value species in the more remote blocks, for two reasons: Slower growing species would require less frequent felling thus reducing transport costs, and when they were cut would be worth many times more. Thus, making those remote blocks financially more viable. Close to the mill or port we should stick to radiata but further out Douglas Fir and then even further out maybe English Oak which is said to grow well in some places here.
The underlying issue here is once again the ‘dollar short and a day late’ attitude of Kiwis who also pride themselves on ‘No8 wire’ solutions rather than doing a job properly the first time.
Geoff Fischer September 23, 2024 At 2:05 pm
Yes, there is a risk of tree diseases crippling the radiata pine industry at some time in the future. Having said that, at present radiata pine is less affected by pathogens than many other alternative species, so radiata pine will remain the principal species in production forestry until such time as a fatal pathogen does arrive on the New Zealand scene.
And yes, many planted forests cannot be profitably harvested in a “normal” market. Higher value species and higher value silvicultural regimes make sense as a way of ensuring profitability in a range of market conditions.
Douglas fir has certain advantages, and many other species have potential. Part of the problem with species diversification is that the New Zealand industry has become so attached to radiata pine that it has forgotten (or never learned) how to successfully manage other species. For example you may see a lot of Acacia melanoxylon stands planted around the country that are good for nothing but firewood, but you can also find excellent stands of good form growing strongly on unfavorable sites. The difference comes down to the standard of management and understanding of the species growth habit.
As one involved in establishing native forest myself, I am aware of the difficulties, but still consider we could be doing more in that area.
Legislating minimum rotation ages for radiata pine would make slower-growing higher-value species a relatively more attractive option, so the proposal for rotation age regulation (applied to radiata pine only) would presumably have beneficial effects for species diversification.
Richard Christie September 24, 2024 At 1:43 pm
Long rotation species planting on privately (non-corporate/state) held land requires a mind set with an eye to the future.
Long-gone are the days where most NZ farmers valued bequeathing the family land to future generations. The farm is to be sold as retirement approaches and second beach homes and annual overseas trips beckon. The kids have long settled in the cities, they’d sell as soon as they inherit the place anyway. Why invest for yields 60 or120 years out? it’s not the kiwi way, here it’s always been the way reaping fastest return for low-value commodities with no added-value. The art of the fast buck.
It’s a kiwi disease. A permanent cultural trait, permeating our politics, business, finance, industry and primary sectors.
Some exotic decorative hardwoods can fetch prices many orders of magnitude higher than Pinus and their scarcity and value will only increase.
Wise is the man who plants a tree that he knows he will never live to enjoy the shade of.
Geoff Fischer September 24, 2024 At 7:12 pm
“reaping fastest return for low-value commodities with no added-value. … A permanent cultural trait, permeating our politics, business, finance, industry and primary sectors.” does sum it up. That trait is present in other countries, but in most such countries the state is there to think about and provide for the longer term. Not so in New Zealand. Here the state has abdicated responsibility, and foreign capital, which dominates the forestry sector, will ruthlessly exploit New Zealand’s lax environmental, economic and labour standards to the detriment of our present and future well-being.
However the good news is that despite the prevalence of the regrettable attitudes you allude to there are thousands of people in our motu planting higher-value slower-growing species, both native and exotic, and applying silvicultural regimes which add value, for example through pruning and thinning.
gordon walker September 25, 2024 At 10:36 am
As far a sslash goes would it not be prudent to leave 100 meters of trees at the bottom of the hill not cut .While still standing they may prevent slash entering water ways which in turn may well trap a large amount of the silt that ends up destroying the environment in all water ways and the ocean .One only has to see the growth in sea side estuaries of mangroves as soon as subdivision for houses starts .Once pristiene estuaries soon turn into massive groves of mangroves who are feeding on all the nutrients now flowing from the land in the form of silt .These areas turn from nice sandy bays into a mud hole and a mangrove swamp as they fight to prevent the pollution created by human greed .
Geoff Fischer September 28, 2024 At 1:14 pm
It should be standard practice to leave riparian strips along waterways during felling operations, although that is not always done.
Bozo September 30, 2024 At 12:31 pm
Its a understatement that monoculture plantations of one exotic species, radiata pine, frequently grown on marginal land and frequently subject to weather events and soil erosion, is not where we should be.
Japan, believe it or not has a similarly unique story, although in this case the monoculture is of a native species, Japanese red-cedar, otherwise called ‘sugi pine’, or simply ‘sugi’. And I suspect there the aim was not to export the logs but to use the timber domestically. As a forest tree it grows to large evergreen up to 70m in height, with a diameter of some 4m. Its the national tree of Japan and you can see old trees planted around the shrines and temples. As a milled timber such specimens are most likely very prized, if indeed they are now milled. After WW2 Japan converted much of its original (and diverse) forest to monoculture sugi, planted similarly to monoculture radiata pine. Grown like this it is quick growing, tall and straight but the timber from all accounts is of poor quality. My understanding is it has limited use and simply hasn’t lived up to expectations. And of course, the lack of diversity from monoculture alters the ecosystem – not to mention the ascetics of wilderness areas.
Geoff Fischer October 1, 2024 At 9:57 pm
You can see sugi growing in New Zealand as well, but more commonly as shelter belts on kiwifruit orchards than in production forests. Here it is known by its botanical genus, Cryptomeria. You would be right in assuming that sugi is grown in Japan for the domestic market.
The tendency towards single species monoculture has been evident in many countries since the early 20th century and is tied to capitalist economics. When economists analyze and compare the profitability of various timber producing species they come up with one species as “the best” or most profitable. Therefore that becomes the one and only species into which “rational” investors want to put their money. Then as that one preferred species becomes dominant in the market place, foresters become more familiar with its management to the exclusion of others, forest researchers concentrate their efforts on its improvement and utilization, processing industries install equipment specially designed to fit its particular characteristics and before you know it no other species can get a look in. This is what happened in the case of radiata pine in New Zealand.
One obvious danger is that markets can and do change through the course of a rotation, thus throwing into question the worth and profitability of the entire national forest estate. Thirty years ago investors were very bullish about the prospects for short rotation radiata pine. Now that the trees planted twenty five years ago are coming ready to harvest, things are not looking quite so rosy for New Zealand’s radiata pine crop.
Prior to 1984 the State Forest Service (later the New Zealand Forest Service) which was not strictly bound by the logic of capitalism, planted a wide range of species, including many exotics and some native species, in addition to the dominant radiata pine. The stands of Douglas fir performed impressively and in many cases delivered superior yields to to radiata pine when averaged over the life of the stand, yet despite that these stands were almost invariably converted to radiata pine after privatisation from the late nineteen eighties onward, because the rotation length for radiata pine is half that of Douglas fir. That was another case of the short term bias of capitalist economics conflicting with the goals of maximizing revenue per hectare and reducing the market and biological risks inherent in the radiata pine monoculture.
It would be nice if the capitalist dogma that “the market is always right” was correct. But it is not of course. If investors always got it right, there would have been no such thing as boom and bust in the New Zealand deer, ostrich and dairy goat markets, not to mention the sharemarket. Thirty years ago the forestry shills were touting investment in short rotation radiata pine forestry as certain of success. Now many lay people who invested in such enterprises are feeling disappointed at their less than stellar returns.