Otago and Southland Wood Availability Forecasts for the Period 2007–2040
Overview
The Otago and Southland wood supply region has a well-established forest growing and wood processing industry, with several forest owners now managing a third rotation crop. The region experienced strong growth in harvest volumes and processing activity during the 1990s and early 2000s. The industry was successful in attracting new investment for planting, sawmilling and remanufacturing. A key development was the establishment of a medium-density fibreboard (MDF) plant in 1997. The Mataura MDF plant processes much of the region’s lower-quality logs and wood residues.
To assist with future regional forest industry planning, MAF has compiled wood availability forecasts for the Otago and Southland region, covering the period 2007 to 2040. These forecasts have been undertaken in association with the region’s major forest growers. The forecasts show the range of harvest volumes potentially available from the planted forest estate of both large and small-scale growers. The forecasts are supply-based, but incorporate the long-term intentions of the larger owners. In interpreting these forecasts, users need to recognise that the ultimate determinant of harvesting activity at any particularly point in time is the demand for logs.
Readers who plan to use these wood availability forecasts for planning or investment decisions are urged to thoroughly review the forecasts, or to engage the services of a professional forestry consultant who is able to interpret the forecasts in the context of specific planning or investment decisions.
Otago
For Otago, the picture over the next 10 years is for relatively static radiata pine wood availability (from both large and small-scale growers). In the longer term, most of the growth in radiata log production will be from the small-grower estate. Production is projected to increase towards 2020. The large-grower estate has limited growth potential over the forecast period (2007–2040).
Douglas-fir production in Otago is dominated by the large growers and is projected to increase from the early 2020s. Increased availability after 2035 is possible from the small-grower resource. From 2027, production thinning is an important component of the potentially available volume.
Southland
For Southland, the forecasts indicate that little change is likely in the availability of radiata pine from large growers, during the forecast period. As in Otago, increased production is possible from the small-scale owners towards 2020.
The trends in Douglas-fir production mirror those in Otago. The resource is dominated by the large growers; while smaller growers are unlikely to contribute to production in a meaningful way until after 2035.
Combined Otago/Southland Region
The forecasts indicate that the availability of radiata pine and Douglas-fir, from the Otago/Southland estate, will remain relatively static over the next decade (2007–2015). The forecasts indicate a flat supply curve, but it is important to recognise that short-term fluctuations are possible, due to changes in market conditions.
Looking further out, the forecasts show that an increase in wood supply is possible after 2015, with substantial increases in wood availability towards 2020.
After 2015, the combined Otago and Southland regional harvest has the potential to increase from the current level of about 1.5 million cubic metres, rising to around 2.8 million cubic metres after 2020. Most of the potential increase in wood availability during this period is from the small-scale forest growers who established forests during the 1990s. The actual timing of the harvest from these forests will depend on market conditions and the decisions of a large number of small-scale owners.
Market conditions and logistical constraints (availability of logging crews, transport capacity, and wood processing capacity) will limit how quickly the additional wood availability from small-scale owners’ forests can be harvested towards 2020.
Some owners will be motivated to harvest early, while others may decide to grow their forests on longer. It is therefore likely that the harvesting of the post-1990 forest plantings will be spread out over an extended period. If log prices increased during this post-2015 period of more plentiful wood availability, harvesting rates could progressively rise to meet demand. Conversely, if log prices were to decline, then owners are likely to delay harvesting.
In the later part of the forecast period (after 2030), the total harvest is projected to decline. This is in line with the age structure of the resource. The timing (and level) of decrease will depend on the rate at which the region’s 1990 forests are harvested.
While there is limited potential to increase harvest volumes over the next 10 years, there are opportunities to more fully utilise the available resource. Several mills have moved (or are moving) to process some of the lower-quality logs that are currently exported.
Other species
Radiata pine and Douglas-fir make up 90 percent (194 100 hectares) of the forest area in Otago and Southland (A National Exotic Forest Description as at 1 April 2006, MAF, 2007). Species other than radiata pine and Douglas-fir have not been modelled in this analysis. There are about 21 600 hectares of other species in the two regions.
Eucalypts are the principal alternative species, and plantings total about 13 600 hectares. The majority of these plantings have been established in the Clutha and Southland Districts; and are being grown on a short-rotation basis for wood pulp production. The first of these short-rotation plantings reached harvest age in 2004, and production will progressively increase over the next five to seven years.
Contact for Enquiries
Parnell Trost
Policy Analyst
MAF Policy
Natural Resources Group
PO Box 5648
Dunedin
Ph: 03 951 4705
Fax: 03 951 4711
Cell: 029 951 4705
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