9. The Value of the Indigenous Forest Industry
Based on current and projected SFM Plan and Permit approvals the following estimates of wholesale timber value are attributable to the indigenous timber industry:
9.1 Sawn Timber Value at Current Approved Harvest Levels
The following figures assume all approved harvests are uplifted and sold. Presently not all forests under approved SFM Plans are being managed and some are not being subjected to harvests up to the maximum allowable rate.
Table 4 Potential Indigenous Sawn Timber Value at 2001
(Includes Approved Harvests under SFM Plans and Permits and Estimates of Production from
SILNA Land and Timberlands West Coast Ltd for 2001.)
| Species | Total Roundwood (m3) |
Sawn Output (m3) |
Wholesale Sawn Timber Value ($) |
|---|---|---|---|
| Rimu & other Podocarps | 22 6002 | 12 200 (54 percent)4 | 23 180 000 |
| Beech and other Hardwoods | 81 6003 | 24 500 (30 percent)5 | 29 400 000 |
| Total Value 1 | 52 580 000 |
1 Based on average kiln dried sawn timber prices of $1 900/m3 for rimu and $1 200/m3 for beech;
2 Includes Timberlands programmed production of 12 600 m3 for 2001 and 10 000 m3 from private indigenous forests and SILNA land;
3 Includes 20 000 m3 total roundwood from SILNA land and 61 600 m3 from SFM Plans and Permits;
4 Assumes conversion of total podocarp roundwood to sawlogs of 90 percent and conversion of sawlogs to sawn timber of 60%;
5 Assumes conversion of total beech roundwood to sawlogs of 60 percent and conversion of sawlogs to sawn timber of 50 percent.
The actual production for 2001 will be less than indicated in Table 4 as not all approved plans and permits are currently being exercised.
9.2 Sawn Timber Value at Projected Levels of Harvest, 2010
The figures presented in Table 5 assume no further price movement in indigenous sawn timber. It is possible there will be some movement in the sawn timber pricing of some species (e.g. beech) with the further reduction in rimu availability but this will be limited by the price of available substitutes (e.g. European beech and tawa) and any perceived quality differences between them.
Table 5 Potential Indigenous Sawn Timber Value at 2010
| Species | Total Roundwood (m3) |
Sawn Output (m3) |
Wholesale Value ($) |
|---|---|---|---|
| Rimu & other Podocarps | 10 000 | 5 400 (54 percent) | 10 260 000 |
| Beech and other Hardwoods | 176 1002 | 52 800 (30 percent) | 63 360 000 |
| Total Value 1 | 73 620 000 |
1 Based on 2001 sawn timber prices, refer Table 4;
2 Includes 156 100 m3 from SFM Plans and Permits and 20 000 m3 from SILNA land;
The total projected sawlog value (at mill) in 2010 is $3.38 million for podocarps
(10 000 m3 x 90 percent conversion x $375/m3) and $21.12 million for beech (176 100 m3 x 60 percent x $200/m3). The economic multipliers associated with the conversion of sawlogs to kiln dried sawn timber are 3.0 for both podocarps and for beech. This is less than the figure of 6.5 derived by the NZ Institute of Forestry (Thorpe 1998) and the figure of 4 attributed by Thorpe to Pinus radiata, and reflects recent strengthening of sawlog prices.
9.3 Contribution of Indigenous Forestry to the NZ Economy
The estimated multiplier from sawlogs to sawn timber is less than that likely to be attributable to final processing of indigenous timber into finished products. Thorpe (1998) cites work by Timberlands West Coast Ltd. and the West Coast Regional Council and suggests that the appropriate economic multiplier from log revenue (mill door price) to final processing, is up to 11. Given that most indigenous timber is processed to finished product stage in NZ, in contrast to Pinus radiata (much of which is exported as logs or partially processed), a substantially higher multiplier than 4 is probably justified for the indigenous timber and manufacturing industry. The following is an estimate of the value of indigenous forestry to the NZ economy, applying the figure of 11 in Thorpe to the projected harvest levels (sawlog component) in Tables 4 and 5.
Table 6 Potential Value of Indigenous Forestry Industry
| Year | Podocarps ($million) | Beech ($million) | Total ($million) |
|---|---|---|---|
| 2001 | 83.9 | 107.7 | 191.6 |
| 2010 | 37.11 | 232.41 | 269.5 |
1 Based on 2001 log revenues ($375/m3 for podocarps and $200/m3 for beech).
Extrapolation of figures in Thorpe (1998), suggest a total economic value in the year ended 31 March 1997, of about $200 million. The projection for 2001 ($191.6 million) is only marginally lower, despite the fact that podocarp production has diminished markedly since 1997 (the recent movement in sawlog prices is a significant compensatory factor). As previously noted however, this figure is unlikely to be realised in 2001 because not all forest owners are presently exercising their SFM Plans and Permits.
The projection for 2010 ($269.5 million) reflects the predicted increase in the area of beech forest being managed under SFM Plans and Permits. This projection may well be conservative. Further upward price movement for beech timber is possible if there is a high level of substitution of beech for rimu in the manufacturing industry (given the current price differential between them). The contribution of indigenous forestry to NZ’s economy could by 2010, exceed by a substantial margin the $200 million figure attributed in the 1997 March year.
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