Forestry Commodity Levy Levels the Playing Field

14 February 2012

“Any short-sighted farm foresters who complain that the proposed commodity levy for forestry is ‘just another tax’ do not understand how modern markets or industries operate and have their head in the sand”, said John Stulen chief executive of the Forest Industry Contractors Association.

Throughout almost every agricultural industry today commodity levies have been a fact of life for many years. Farmers of all types up and down the length of the country in New Zealand have prospered from collective action and the strategic vision and action that comes from many small operators banding together with a small amount of money pooled to ensure an industry has risks covered and can meet market opportunities when they arise.

If the proposed levy goes ahead forestry, as an industry, has the chance, through the proposed commodity levy to take a huge strategic step forward. The commodity levy will ensure that small growers pay their fair share of costs that are currently being borne by only the larger growers.

In the past several decades since the end of the government’s forest service, it is large owners who, by and large, using donated time of technical staff, have organised and planned industry group responses to biosecurity risks including coordinating industry and government responses to pest incursions. The wealth of knowledge that has been built up over the years in forest management, biosecurity and market-awareness has come from the members of the NZ Forest Owners Association’s own voluntary membership fees.

Industry training for forestry workers has been funded, on behalf of everyone planting, tending or harvesting either woodlots or corporate forests – once again by voluntary fees paid by FOA members. Even workers who end up being employed in crews doing woodlot work have benefited from the training infrastructure paid for by a few of the big players.

It is short-sighted and self-serving of any farmer with forestry to argue with the logic of a commodity levy – it is quite an affordable system as all of the costs for industry standards for planting, growing, tending and harvesting a forest will only need to be paid for by a levy upon harvest. It would have been quite a bit more logical for forest owners to pay part of the proposed levy upon planting – so I think the proposal which is to pay on harvest is actually quite lenient.

What’s more – the owners of forests planted during the 1993 boom and the 5 years either side of that peak – will enjoy and upfront benefit from an increasingly coordinated and more strategic marketing programme which ultimately will lift their returns above the level they may have otherwise achieved were they left to do their own marketing and ultimately compete with their neighnbours for the very same markets which should be better and bigger through combined levies dedicated to more effective market intelligence.

ENDS

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