More trees planted but millers suffering

Based on reports from commercial forestry nurseries, MAF estimates 60,000ha were planted, of which 48,000ha (80%) were re-plantings.

Nearly half of the estimated new planting was funded through MAF's Afforestation Grant Scheme and the East Coast Forestry Project.

According to the annual National Exotic Forestry Description report, which surveys growers with at least 1000ha planted, about 40,000ha was harvested, on par with the previous year.

However, other sources show an increase in total harvest area for the year, indicating a higher proportion of harvesting and planting by smaller growers not captured by the NEFD survey.

Yield per hectare was up 6% probably due to higher log prices justifying better levels of recovery per tree, and a small increase in average age at harvest of the main species, radiata pine, at 28.6 years, up from 28.4 years.

Meanwhile, statistics reported in MAF's September quarter production and trade update show total forestry export earnings increased NZ$32.7 million or 3% to NZ$1.1 billion in the three months to September 30, taking annual earnings to end of September to $4.6 billion, accounting for 10.1% of total merchandise exports.

Export earnings for logs remained relatively strong in the quarter, rising $NZ77.2m or 25.8% due to strong demand and high log prices. China continues to dominate the export market, taking a record 2.2m cubic metres, a 32.6% increase.

Sawn timber export earnings fell NZ$31.4m or 13.6% with production down 0.113m cubic metres over the quarter due to high log prices, weak domestic demand and a high exchange rate. Wood processors have become more pessimistic about their prospects.

Demand from Japan for wood panel products, though, remains strong following the natural disasters in March 2011.

A half-year update of the annual Situation and Outlook for New Zealand Agriculture and Forestry indicates Chinese demand for New Zealand logs is easing with inventories at record levels and increased competition from other nations.

This, combined with subdued construction activity, had led to a revision down from a NZ$4.69 billion forecast for the year to June 30 2012, to NZ$4.26 billion.