Forestry in New Zealand: The Role of Japanese …SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED....

Forestry in New Zealand:The Role of Japanese Companies

43rd Joint Meeting of the

Japan New Zealand Business Council

on 23 Nov. 2016

SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED.

Introduction: Business Field

1

Domestic

Overseas

Forestry &

environment business

Overseas tree planting

business

Domestic forestry

business

1950～1691 1960～ 1970～

Upstream Midstream Downstream

Distribution of timber

and building materials in

Japan and overseas

Wooden building

materials distribution

business

Domestic

manufacturing

business

Overseas

manufacturing

business

Wooden building

materials manufacturing

business

Housing-related

business

Custom-built home

construction & sales

business

Remodeling, leasing, other housing-related

business

Overseas housing

business


Introduction: Our Forest

2

Hokkaido

18,199 ha

Kyushu9,181 ha

Shikoku14,783 ha

Honshu4,280 ha

PlantationsNatural

forestOther =500 ha

Company-owned forests in Japan

46,443 ha

Indonesia160,000 ha

Papua New Guinea31,000 ha

New Zealand36,000 ha

=3,000 ha

Owned or managed overseas plantations

Approx. 230,000 ha As of March 31, 2016 As of June 30, 2016


General Information of NZ’s Forests

3

Source: NZFOA (2013) / Dana (2014)

• Land area:27.1M ha(Japan: 37.8M ha)

• Forest area:10.1M ha(Japan: 25.1M ha)

• Forest cover:38.6%(Japan: 66.4%)

• Forest owner:Public 60%Private 40%

43%

26%

24%

6%

Pasture/arable Other (non-forest)

Naturan Forest Plantation

SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED. 4

Plantation Forest in NZ

• Almost all logs are produced from plantations。

• There were 3 plantation booms which occurred: in the 1930’s,from the late 1960’s and early 1980’s.

• Current plantation area is about 1.75 million ha. This is about 6% of the land area and 20% of all forests areas.(41% of the forest area is plantation in Japan)

• 56％ of plantations are FSC certified as at 2014.


Radiata Pine

• Radiata pine accounts for 90% of plantations.

• Radiata pine is suitable for the climate of NZ and it growth relatively fast.


History of Plantation Forestry in NZ

• 1st plantation boom (1925-1935)• Plantation by public and private sector is actively

conducted.

• 2nd plantation boom (late 1960’s - early 80’s)• Government subsidies for private plantations.

• Newly established/expanded pulp mills.

• 3rd plantation boom (1991-1999)• Triggered by the privatization of state forests (1989).

• Rise in the price of logs accompanying the development of forest industries.

• Restoration of tax incentives for plantation investment by revision of income tax law.

• Conversion of pasture to plantation.


Ownership of Plantation Forest

• Classification of owners;• Forest processing company

• Investment fund

• Small/medium scale owner

• Investment for acquiring forests due to the privatization of state-owned forest since 1989.

• Characterized by many large-scale owners.

• Acquisition of plantations by US investment fund.• Privatization of state-owned forests and improvement

of investment environment lead to the ownership of forests by overseas investment funds.


Ownership of Plantation Forest

• TIMO: Professional fund manager who owns forest assets backed by investment funds.

• Main incomes are 1) gains on sale of logs, and 2) gains on sale of timber land, and plantations are sold after a certain period of time.

• 5 of 6 large-scale owners are TIMOs.

Owner Area (ha) Category

Hancock Natural Resource Group 200,000 TIMO

Kaingaroa Timberlands 175,000 TIMO

Rayonier/Matariki Forests 123,000 TIMO

PF Olsen 109,000 TIMO

Ernslaw One 113,000 Private

Global Forest Partners 85,000 TIMO

Forest owners (> 50,000ha)

TIMO: Timberland Investment Management Organization


Expansion of Plantations in NZ

• 1.26M ha in 1990 to 1.83M ha in 2003, and has stabilized around 1.75M ha in recent years.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

1,0

00

ha

Radiata P. Douglas fir Other conifer Non conifer


Increase in Resource Amount

• 233 million m3 in 1991 to 502 million m3 in 2015.

0

100

200

300

400

500

600

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

Mill

ion

m3


Production: Round wood

• Resource volume is increasing based on expansion of plantations.

• Production volume has also continued to increase.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

19

51

19

54

19

57

19

60

19

63

19

66

19

69

19

72

19

75

19

78

19

81

19

84

19

87

19

90

19

93

19

96

19

99

20

02

20

05

20

08

20

11

20

14

1,0

00

m3

Natural log Planted log


Export & Domestic use

• About half of the logs produced are exported as logs.

5 000

10 000

15 000

20 000

25 000

30 000

35 000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1,0

00

m3

Export Domestic use

Source: NZ MPI


Exports from NZ

13

$3,518M

(7.2%)

$=NZD (FOB)

• Forest products are the 3rd biggest export value.

• Forestry is an important industry next to dairy farming.

2015

Dairy Products Meat Forest Products Fruits

Drinks Special categorised Others

2014

Dairy Products Meat Forest Products

Special categorised Fruits Others

2014

$50,075M

$3,668M

(7.3%)

2013

Dairy Products Meat Forest Products Special categorised Fruits Others

2013

$48,044M

$3,859M

(8.0%)

$48,974M

2015

2015

Dairy Products Meat Forest Products Fruits

Drinks Special categorised Others


Trend of Main Forest Products

• Despite the fact that log exports are increasing, the export value of products such as lumber, wood panel & pulp are flat.

• New Zealand needs to increase exports of value-added products.

Source: FAOSTAT

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000M

illio

n U

SD

Industrial roundwood Sawnwood Wood-based panel Wood pulp


Forest Management by JPN Company

• Japanese companies have not only plantations but also factories (pulp mill, MDF factory, sawmill) in NZ.

Company Group Area (ha) Location

Pan Pac Forest Products Oji 35,000 Napier

Juken NZ Wood One 32,000 East coastWairarapa

Tasman Pine Forests,Nelson Pine Industries

Sumitomo Forestry(SFC)

36,000 Nelson

Summit Forest NZ Sumitomo Corp. 24,000 Northland

Southland Plantation Forest Company

Oji, Itochu, Fuji Xerox

10,000 Invercargill


Forest Industries

Company Group Location Business

Oji Fibre Solution Oji Auckland Pulp, paper

Daiken NZ Daiken Rangiora MDF

Juken NZ (JNZ) Wood One Kaitaia, GisborneMasterton

plywood, LVL, sawn wood, PB

Marusumi Whangarei Marusumi,Marubeni

Whangarei Wood chip

Pan Pac Forest Products Oji Napier Pulp, Lumber

South Wood Export Itochu Invercargill Wood chip

Nelson Pine Industries Ltd. SFC Nelson MDF, LVL

• Forest management (upstream) and manufacturing (downstream) tie up.JP companies are exporting added value from NZ.

• JP companies aim to maximize the value of plantations from a long-term perspective and conduct forestry management rooted in the region.


China Australia Korea Japan India

(NZD FoB) $ 1,969 M $ 693 M $ 462 M $ 434 M $ 271 M

Logs & poles

80.5% 0.3% 69.6% 21.6% 87.5%

Sawntimber

6.5% 21.8% 7.4% 6.3% 0.8%

Wood pulp 9.2% 12.3% 16.6% 14.0% 2.7%

Paper & paperboard

2.3% 16.3% 4.6% 0.1% 2.9%

Panel0.9% 12.5% 1.7% 43.9% 1.6%

Others 0.6% 36.9% 0.1% 14.1% 4.5%

Total 100.0% 100.0% 100.0% 100.0% 100.0%

Top 5 Export Destinations

• China, Korea & India are mainly importing logs. On the other hand, Japan imports products.

• There is no added value in logs.


Creation of New Value: LVL

• LVL (Laminated Veneer Lumber) is excellent in strength and dimensional stability, and attracts attention as a structural material.

• In Japan, construction of large buildings using LVL has also been started.

• It is expected to be a new value-added product.

LVL Large scale building with LVL under construction by SFC


19

Conclusion

• Forest management by Japanese companies involves high value-added products processing such as pulp & MDF.

• Add value in NZ. Protect industries in NZ.

• Japanese companies & NZ companies work together to develop the forests and the forest industries of NZ.

Forest management

rooted in regionProcessing in NZ

Export and domestic use

the added value products

Tasman PineForests Ltd.

Nelson Pine Industries Ltd.

ExportDomestic use

Forestry in New Zealand: The Role of Japanese …SUMITOMO FORESTRY CO., LTD. ALL RIGHTS RESERVED....

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