Log jam highlights precariousness of our dependence on China
Tuesday, 25 February 2020
OPINION: Once again our reliance on the Chinese market for our logs has been exposed.
Last year, log prices crashed in China as a result of climate-affected trees being infested with beetles that would kill them if not harvested urgently.
This year it's coronavirus seizing up Chinese ports and industry.
In the future it will be the plethora of billion, and now trillion, tree policies around the world swamping the China market.
Over half of New Zealand's logs are exported, and of those, about three-quarters go to China. It's a precarious situation we find ourselves in.
China can afford to pay top dollar for New Zealand logs due to the layers of subsidies their wood processors receive. They then export wood products back into the markets that New Zealand processors compete in, passing on those subsidies by way of prices that local processors can't compete with.
It's no surprise then that we see monthly headlines about sawmills closing, and hundreds of layoffs. That will continue. Thousands of regional jobs are being lost, mainly iwi.
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But let's be realistic. There is not much little New Zealand can do to stop China subsidising its industries. But we can get smart about backing our wood processing sector by building with wood instead of imported steel and cement.
For years politicians have lamented the huge piles of logs going across our wharves and promised to do something about it if elected. At the last election the Labour Party promised to implement a wood procurement policy for government buildings up to ten storeys if elected. The New Zealand First and Green Parties both support the policy.
Its time has come.
Not only to support the industry and the regions and jobs affected, but also on climate change grounds.
A recent ThinkStep report estimated 10 per cent of New Zealand's greenhouse gas emissions were the result of the 'embodied carbon' in building construction. Embodied carbon is primarily the carbon released in the manufacture of building materials. Steel and concrete are the main offenders, responsible for between 10 and 13 per cent of global emissions.
Wood products have dual benefit. First they substitute steel and concrete, which has an immediate climate impact because the steel and concrete doesn't need to be manufactured. Second is that the products sequester CO2 as the trees grow.
Implementing the policy, or some sort of embodied carbon-neutral regulation, will place New Zealand with the world-leaders, enhancing our clean green reputation for all exporters. We can achieve carbon-neutrality in this area by 2030.
This 10 per cent of emissions is the easiest climate change win New Zealand can target. The leadership needs to start with government's own procurement and the ministers' responsible, Phil Twyford and his boss the Prime Minister Jacinda Ardern.
Last month 56 industry leaders wrote an open letter calling on them to honour the wood procurement election promise.
We now have the engineers, architects and construction companies capable of constructing these mid-rise wooden buildings. MBIE's head of procurement has confirmed the department has no technical concerns with the wood procurement policy, whilst the costs, speed of construction and traffic decongestion also stack up.
So to sum up; we're over-exposed to China, the climate is burning, and we're losing thousands of regional jobs. It's inconceivable that in this situation the Ardern government continues to favour international suppliers over local forestry and wood processing jobs.
C'mon ministers, let's get this done this year.
Marty Verry is the chief executive of the Red Stag group which invests in forestry, wood processing, pre-fabrication, Cross Laminated Timber (CLT) and property development